Sunday Times

Fintech funds pour into Africa


● Fintech companies in Africa raised more capital than in the past despite the Covid-19 pandemic, in contrast to emerging-market peers such as Latin America, which saw a decline.

Fintech funding in Africa, including mergers and acquisitio­ns, grew to $1.35bn (R19bn) last year from $1bn in 2019, according to a report by BFA Global’s Catalyst Fund and Briter Bridges.

Indian and Latin American fintech companies raised more money than those in Africa, but their volumes fell from the previous year as they battled to close later-stage deals.

“The numbers of pre-seed and seed deals in Africa are increasing,” the report says. “While Latin America and India are seeing a growing number of mega-deals, African markets are only beginning to see a few such late-stage deals.”

Africa’s growing population of 1.2-billion people, rising smartphone ownership and a drop in internet costs are among the factors contributi­ng to the region’s allure. Investors also see opportunit­y among its large unbanked population of 350-million, which accounts for 17% of the global total.

Most investment­s on the continent flowed to Nigeria, Kenya and SA, according to the report, which surveyed 177 start-ups and 33 impact investors across emerging markets.

The region’s fintechs haven’t yet raised funding through an initial public offering but they have enjoyed fast-growing merger-andacquisi­tion activity from internatio­nal companies including Visa, Network Internatio­nal Holdings and Stripe.

Nigeria has especially benefited from the fintech boom that has put much of Africa at the cutting edge of the revolution in mobile money. In 2020, Stripe paid $200m to acquire Nigerian start-up Paystack.

Flutterwav­e, based in Lagos and San Francisco, raised $170m this year, becoming Nigeria’s second fintech start-up with a valuation of more than $1bn, after Interswitc­h.

In Latin America, Brazil, Mexico, Uruguay and Colombia made up 99% of regional fintech investment, while India, Singapore and Indonesia were the most popular destinatio­ns for funds in South Asia and Southeast Asia. India netted $3bn for fintechs alone.

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