Africa’s fintech sector is growing at a fast pace, with the number of startups operating in the space growing by more than 60 per cent in the last two years, while funding has hit new records.
Following a successful first edition in 2017, Disrupt Africa has released Finnovating for Africa 2019: Reimagining the African financial services landscape, which finds the number of active fintech ventures across the continent has grown to 491 from 301 in 2017.
South Africa, Nigeria and Kenya remain the main three markets, with 141, 101 and 78 active ventures respectively, accounting for 65.2 percent of Africa’s fintech startups. Yet the share of the overall total claimed by these three countries is in decline as the sector spreads across the continent, with fintech startups tracked in 28 African nations.
Though the big three markets are growing, the biggest developments are occurring in other markets, with countries like Uganda, Ghana and Egypt in particular seeing their local fintech spaces explode.
A similar trend can be seen in terms of the type of platforms being rolled out by fintech entrepreneurs. Though startups in the payments and lending spaces remain the most prevalent, the fastest growth is occurring elsewhere, with the number of startups active in areas such as investtech and insurtech, for example, more than doubling in the last few years.
Meanwhile, there is a marked increase in the amount of companies focusing on two or more distinct types of financial services, as African fintechs begin to “rebundle” and we see moves towards fully-fledged, all-service digital banks on the continent. This is a process that is quickening as the amount of funding coming into the sector grows. African fintech companies have raised just shy of US$320 million in funding since January 2015, and last year’s total of US$132.8 million was the best year yet.
Most of these firms need to come together – a lesson on what is happening in China could be necessary. Many of the fintech firms especially those on peer to peer are closing shops.
Approximately 5,700 platforms had already been suspended as of May, with 914 still in operation, according to industry data provider Wangdaizijia. Total P2P loans also shrank 30% on the year to around Rmb700 billion ($102 billion).
Some major platforms were closed including Dongguan-based Tuandai.com, which was accused of designing and selling fake financial products. Its bankruptcy in March prompted thousands of protesters to take to the streets and demand their life savings back. Tencent-backed social e-commerce platform Mogujie (often dubbed China’s Pinterest) also shut down its P2P platform Zhongdoubao in March due to the need to “ensure the security of funds”.