Africa’s Fintech Startups Are Overwhelming Favourites For Acquisitions

In Africa’s vibrant fintech landscape, recent data underscores its robust growth and crucial role in enhancing financial accessibility.

The sector’s momentum has particularly surged in the last two years, witnessing a sharp increase in funding and spawning a wave of new fintech ventures across the continent. During this period, there has also been a remarkable uptick in acquisitions, with 26 exit deals recorded between June 2021 and July 2023, a report from Disrupt Africa shows. This represents a remarkable 270 percent surge compared to the preceding two-year period, indicating a growing interest in acquiring innovative fintech solutions.

South Africa has emerged as a key player in this trend, accounting for 41.67 percent of all fintech deals, with ten exits recorded in the last 24 months. Nigeria closely follows, securing 41.6 percent of all funding allocated to African fintechs during this period, totalling an impressive USD 1.51 B. These statistics reflect a robust investor appetite for Nigerian fintech startups, underscoring the country’s position as a prominent fintech hub.

According to the latest report from Disrupt Africa, the fintech sector has emerged as the continent’s most funded startup niche, securing a staggering USD 3.64 B in funding over the past eight years. This substantial figure significantly outpaces other sectors highlighting fintech’s dominance in Africa’s startup ecosystem.

Currently, there are 678 active fintech startups in Africa, marking a 17.7 percent increase since 2021. The majority of these startups are concentrated in the continent’s top tech hubs, namely Nigeria (32 percent), South Africa (20.6 percent), Kenya (15 percent), and Egypt (9.6 percent). This clustering emphasizes the pivotal role these countries play in driving fintech innovation on the continent.

However, amidst the industry’s dynamism, there is a notable challenge in the form of a high rate of truncated enterprises. Disrupt Africa’s data reveals that 576 fintech startups, especially those in payment and remittance, are no longer operational. South Africa, Kenya, and Nigeria have witnessed the highest number of closures, indicating the competitive nature of the fintech sector.

Despite these challenges, the African fintech ecosystem remains buoyant, with increasing investments, acquisitions, and startup activity. This thriving landscape not only fosters innovation but also provides investors and founders with a promising environment to explore groundbreaking financial solutions in the continent’s ever-evolving market.