FairMoney goes to India

FAIRMONEY, A LICENSED NIGERIAN online lender that provides instant loans and bill payments to underserved consumers in emerging markets, is on its way to further...

AS DATA FROM CAT ALYST FUND, RTB House, 4Di Capital, Villgro Africa, Lateral Capital, Otundi Ventures, and Quona Capital on investments within the African start-up space showed that growth in fintech investment was slowing down, based on the funding figures it generated in 2019, other sectors such as e-commerce and retailtech, e-health, logistics, energy, recruitment and HR, transport, and agri-tech had an impressive year. Some naysayers would go with the view that fintech, one of Africa’s most luring space for tech start-up funding, could possibly be losing some of its shine.

The number of fintech startups that raised funding did witness slowed growth notwithstanding, but its share of total backed ventures was greater in 2020 than in 2019, showing a 12-month view that differs from such pessimism.

The fintech space has shown quite a level of positivity when you take into consideration funding for African tech ventures. As a matter of fact, last year, 99 start-up companies within the space raised investment to the tune of over $160 million — a 49.3 per cent leap against the previous year, which then landed the sector a good chunk of the continent’s total than what was achieved the previous year (22.9 per cent compared to 19.1 per cent in 2019), thereby taking advantage of that opportunity to leapfrog its next-placed marker – e-health – in ranking.

The sector has really come a long way and is still maturing rapidly, with substantial potentials for startups to keep thriving within it, take for example those that have successfully built a decent customer base in payments solutions and lending, such as M-Pesa, which has succeeded in Kenya and ten other African countries, by enabling more than 30 million users to transfer money, take out loans and make deposits using their phones, it even addresses access challenges in other spaces like logistics and transport — in Nigeria for example, Flutterwave a fintech solution platform is employed to enable smooth e-bookings within the country’s transport space.

Fintechs have also succeeded in increasing their collaborations with — rather than competing against banking incumbents thus leading to established African banks coming aboard as active investors in the continent’s fintech space, take for example Nigeria’s Wema Bank, South Africa’s Nedbank and Standard Bank leading the way here, even Central banks and regulators also increasingly launched sandboxes to afford fintech brand’s the chance to solve nation-specific challenges and plug into national systems.

All these place fintech in a pole position to be more attractive to Africa-focused tech investors.

This is not to say that positive developments aren’t taking place in other sectors, the overall growth in investment coming into African tech startups is by no way solely attributable to fintech. The entertainment sector was another huge growing one in 2020, with the number of companies raising funding leaping by 1,765 per cent. By the same metric, recruitment and HR grew 272.4 per cent, e-health by 257.5 per cent, and prop-tech by 191.5 per cent.

What is noteworthy is that there is impressive, if sometimes unsteady, progress on most fronts, and as 2021 progresses, fintech still remains an undisputed front runner when it comes to attractiveness to investors of all shapes and sizes.

In all of this, there is still huge potential to grow from, being it from geographic and product perspectives, innovative solutions breaking down barriers, massive addressable target markets, and growing links with both corporates and regulators, thus leading to strong and sustained investor interest and confidence in Africa’s fintech space, one can be expectant that fintech will retain this status as a market leader for a reasonable measure of time.