Article Summary:
- Fintech in sub-Saharan Africa has seen significant growth in 2023, especially in countries like Nigeria, South Africa, Kenya, Egypt, and Ghana.
- Despite economic challenges and decreasing funding, fintech startups and innovation hubs have emerged, supporting payments to SME services.
- Financial inclusion has been radically improved, presenting accessible, affordable financial services to previously underserved populations.
- However, the fintech sector faces challenges such as cybersecurity threats and investment shortages.
- The sector anticipates more vigorous activity from regulatory bodies in 2024, to encourage fintech growth while protecting consumers and investors.
In recent years, the fintech industry has played a critical role in transforming Africa’s economic landscape. Despite decreasing funding over the past two quarters, in line with global economic realities, the sector has flourished. Financial services have become more accessible and affordable to previously underserved populations, particularly in countries like Nigeria, South Africa, Kenya, Egypt, and Ghana.
One crucial trend for 2024 is the active participation of Government and regulatory bodies. In Nigeria, for instance, the Federal Competition and Consumer Protection Commission (FCCPC) began cracking down on non-registered fintechs categorized as loan sharks in 2023. This action resulted in many fintechs being delisted, while others were placed under conditional approvals.
Another focus for fintechs in 2024 will be on customers (KYC) and profitability over excessive growth. With an increasing awareness of cybersecurity threats, it will be crucial for fintechs to improve user verification and engagement. Moreover, companies will need to focus on sustainable growth, as declining funding rounds are prompting a shift away from unsustainable growth models.
There’s also an anticipation of more mergers and acquisitions across fintechs in Africa. The number of publicly announced acquisitions grew by 270% between 2019 and 2021. Consolidations of efforts among Fintechs and even larger corporates can be expected to explore synergies. M&As can be seen as a strategic tool to overcome the current funding landscape whilst also delivering returns for stakeholders.
The emergence of new active angels/VCs across the continent is also predicted, as Africa has demonstrated positive results return-wise and impact-wise. This trend is likely to continue, with new funds and angel investors emerging to fill the gaps experienced in 2023. Finally, the SME lending space is predicted to grow stronger in 2024, with various policies supporting more micro-lending opportunities for SMEs to sustain jobs across the continent.
In conclusion, despite various challenges, the African financial space remains resilient, and the fintech sector is set for a positive transformative change in 2024. As fintech continues to evolve in Sub-Saharan Africa, the impact on economic development and financial inclusion is poised to be substantial.
