BlockchainFintechIs FinTech in Africa Overcrowded?

Joyce ObuyaFebruary 4, 202321713 min

Fintech has continued to capture a sizable portion of investments in companies across Africa hence the notion by some of fintech in Africa being overcrowded.

According to statistics from digital industry researchers Disrupt Africa, fintech got 50% of the over $2 billion funded by African tech companies in 2021 alone. In 2021, total investments in the industry exceeded $1 billion, matching the amount invested the year before in the larger African tech startup ecosystem. Since 2015, when Disrupt Africa began compiling statistics on the African tech scene, this has been the trend.


Due to their success, five of the seven fintech businesses have become unicorns in the larger tech African ecosystem, making them the most attractive area for attracting investors. The buzz around the fintech industry has greatly benefited from this success. However, this enthusiasm has been over-indexed, which has led to social media discussions about the oversaturation of the African fintech market.

In addition to financing, another cause for this discussion is the misunderstanding that fintech is not only about payments; the industry is far broader than that. There are 573 fintech firms in Africa throughout the many business sectors, including Paytech (payments and transfers), Lendtech (Jumo), Banktech (digital and neo banks), Insurtech, Blockchain, and Cryptocurrency, according to statistics from 2021 provided by Disrupt Africa. Investing and trading, managing personal finances, and other related topics are covered by a number of additional fintech sectors.

According to Forbes, it is said Nigeria, for instance, has 144 fintech companies; payment, mobile money, and digital banking account for 38% of the country’s fintech market, while lending accounts for 23%, savings, investments, and crowdfunding account for 15%, business services and infrastructure accounts for 13%, infrastructure accounts for 8%, cryptocurrency accounts for 8%, and insureTech accounts for 3%. This EY data points to a highly dispersed ecology.

In actuality, Nigeria and Africa’s fintech industry’s payment sector is by far the most active. However, the claim that there are “too many fintech” is untrue for a continent with 1.2 billion people and 200 million people (Nigeria, respectively).

Despite the hoopla, fintech has just begun to scratch the surface of the issues facing the continent, which is still characterized by a population that lacks access to banking and a poorly developed financial infrastructure.

To ensure that more Africans have access to financial services that might spur economic growth, the problem of financial inclusion is still riddled with innovation and technological needs. Without financial inclusion, economic progress is all but impossible, and Africa is currently trailing behind other continents in this regard.

Beyond what is now possible in Africa, such as money transfers, payment acceptance, agency banking, and remittance, financial inclusion extends much beyond. An efficient infrastructure that enables people and companies to participate more actively in the economy is still needed in Africa.

Apart from payment, fintech also develops new and inventive solutions for organizations and people. Sub-verticals like crowdfunding, digital lending, and the relatively recent phenomena of regtech all require additional participants.

By enabling consumers to save, invest, and borrow money without having to go through the drawn-out and laborious process of traditional banking, these fintech sectors are bridging the gap between people and financial services in various ways. The fourth industrial revolution will use augmented reality, blockchain technology, and artificial intelligence to improve the consumer experience for fintech, but there is yet more to come.

The notion that there is “too much fintech” in Africa often only refers to Paytech. To take advantage of the enormous opportunities presented by Africa’s expanding economy, more participants are still needed in even this sub-sector.

Paytech has the chance to grow from a minor sector to a significant one because of the quick development of digital. The need for online and digital payment options will increase due to the constantly shifting client expectations, which will lead to more growth in the Paytech sector.

Non-cash transactions are already being accepted more and more throughout Africa, and e-commerce sales are also predicted to continue expanding. Paytech solutions are becoming more and more necessary to service Africa’s unbanked due to population growth, rising mobile and internet usage, and increased mobile penetration.

Because it deals with how people trade with money the main economic driver paytech is the most well-known. With more individuals now using mobile and digital payment methods, that sub-vertical has transformed how we conduct business.

So does Africa need more Paytech & fintechs ?

With innovation and technology, there is a huge chance to improve the payment experience and create additional payment infrastructure to link African firms globally. Businesses must benefit from the fact that six million Africans get access to the internet annually. Reaching as many people as you can is the only way to scale. The infrastructure that links Africa to the rest of the world and to itself is what is actually required.

More than 70% of the continent’s more than 150 million enterprises still do not have access to cross-border payments, making it a significant barrier for firms there. The current payment infrastructure is ineffective; on average, settlements take days and a transaction costs a lot of money.

Due to this obstacle, Africans are unable to participate in the global economy. Despite these difficulties, Africa managed to maintain an intra-trade value of $69 billion in 2019, contributing just 3% of the total volume of global commerce, far less than other continents.

To significantly decrease poverty and develop their economies, African enterprises must increase and diversify their involvement in international commerce and global value chains. Without a simple movement of wealth throughout Africa and the rest of the world, this cannot be accomplished.

For more on fintech in Africa:

How Mobile Money Dominates Fintech Investment in Africa.

Fintech Investment in Africa

COVID-19: A Year in the Payments Ecosystem

Joyce Obuya

Relevant experience as a content writer. Highly proficient in Keyword Research and its tools. Experienced writer in both short-form and long-form blogs as well as Business Publications

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