MORE than $2.7 billion has flooded into the African financial technology (fintech) ecosystem in the last 24 months as Nigeria maintains Africa’s most fintech-populated country ahead of South Africa and Kenya.
The latest release of Disrupt Africa’s fourth edition of ‘Finnovating for Africa: Reimagining the African financial services landscape 2023’ has shown.
The report, released every two years, revealed that the Nigerian fintech space had added more than $1 billion to its total in the last two years, more than tripling its total figure and making up more than one-third of the staggering $2.7 billion invested in African fintech since July 2021.
It showed that Nigerian fintech companies grew to 217 in the review year, up 50.1 per cent on 144 in 2021, which had, in turn, been up from 101 in 2019 and 74 in 2017.
The country’s total market share rose to 32 per cent in 2023 from 25 per cent in 2021 and 20.6 per cent in 2019.
Nigeria has assumed a market-leading position when it comes to activity it has long held in the area of fintech investment. Of the about $3.64 billion in funding secured by African fintech ventures in the last 8.5 years, about $1.51 billion or 41.6 per cent went into Nigeria-based companies.
While Nigeria accounts for 32 per cent of Africa’s 678 fintech startups, South Africa holds 20.6 per cent, and Kenya, 15 per cent, fall into the second and third positions, respectively.
The “big three” markets maintained their share of fintech activity with 459 or 67.7 per cent of the 678 startups in the 2023 report, which barely differs from a 67.9 per cent share in 2021 and 65.2 per cent in 2019.
When moved up to the “big six” markets, adding Egypt, Ghana and Uganda to the equation, the countries account for 86.7 per cent of startups, up from 85.4 per cent in 2021 and 81.7 per cent in 2019.
A deep dive into the continent’s fintech startup ecosystem revealed that three new fintech markets – Burkina Faso, Lesotho and Namibia – emerged for the first time in the 2023 edition.
“The fintech space is by far and away the leader within the wider African startup ecosystem when it comes to both funding and exit activity.
“Since Disrupt Africa began tracking funding in the African tech startup space in 2015, 540 fintech startups from 25 countries have raised an extraordinary US$3,635,823,965, three times more than any other sector,” the report indicated.
Meanwhile, not only are African fintech startups more likely to raise funding than their peers, but they are also more likely to be acquired.
Between June 2021 and July 2023, about 26 fintech startups were acquired, compared to seven between 2019 and 2021, and accounted for over 60 per cent of the 43 such deals reported since 2011.
While fintech companies in Nigeria rose to 217, the report added that the number of ventures per country ranges from one in Algeria, Burkina Faso and Mali.
Fintech’s operations have, however, brought many concerns, including privacy concerns, data protection, cybersecurity and fraudulent transactions.
A report on Frauds and Forgeries in Nigeria Banks showed that the total amount of money lost to fraudulent activities surged by 207.9 per cent in the three months ending September 2022. It rose to N3.6 billion in the third quarter from N1.2 billion in the second quarter.
The ICIR has, in several reports, flagged fintech lending and loan apps over concerns of infringing on customers’ data privacy.
In recent reports by The ICIR, the federal government, under the auspices of the Federal Competition and Consumer Protection Commission (FCCPC), has been putting measures in place to prohibit fintech lending and loan apps from accessing customers’ contacts and images, and in conjunction with Google has clamped down on some loan shark apps assaulting their customers.