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Africa's fintech sector has been growing and maturing over the past years. More startups are active in the space than ever before, while investment and acquisitions are taking place at an unprecedented degree.

The Funding Landscape in Africa

Africa-focused fintech company OPay announced a fundraiser of $400 million led by SoftBank Vision Fund 2 this August, giving the company a Unicorn status with $2 billion in valuations. Nigeria, Africa's most populous nation with large parts of the population underbanked and unbanked, makes for one of the most promising digital sectors in the country for fintech players. The same holds for the continent as well.

SoftBank joins the growing list of prominent investors putting their first cheques in African ventures this year. As the continent's economy grows and its startups continue to show promise, fintech remains its poster child. Around half of the startup investments raised this year have emerged from this sector.

The Power of Fintech in Emerging Markets

Emerging markets can be a fertile ground for the disruption of the financial services industry. Wherever users have mobile phones, they have onboarded the latest banking trends such as mobile banking, digital onboarding, and fully digital banks.

Around 57% of the population of Africa (95 million people) do not own a traditional bank account which limits their economic options. Conquering this limitation brings in new opportunities via smartphones.

African mobile phone distribution is leading the way, and Sub-Saharan Africa is the world's fastest-growing mobile phone market. Seven hundred forty-seven million SIM connections in Sub-Saharan Africa serve 75% of the population. Smartphone sales in Africa have reached 6.6% of the global market.

Banking Innovation and Services in The African Landscape

Neobanking is famous for offering customers a previously inaccessible range of services and features, such as transferring money to family and digital lending.

African startups offering services in payments and remittances have gained the highest amount of investment, being the most established and populated category within the fintech space.

The services address a fundamental issue of how to pay and get paid affordably and quickly. The payments and remittance space are also home to companies with proven track records. Investors favor areas with a proven value, which have already attracted other prominent investors.

Author: Benedict Xavier, Head - Payments Specialist Digital Banking


To learn more about how FSS is driving the financial innovation in Africa, write to[email protected].


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