Financial technology (Fintechs) is still the leader in Africa’s startup ecosystem in terms of funding and exit activities, a report by Disrupt Africa has established.
The report titled ‘Finnovating for Africa’ 2023 notes that the investments channeled to fintech across the continent have remained on an upward trajectory and have seen tremendous growth in the last two years.
According to the report, the number of funded ventures in the fintech space has almost doubled since 2021, with more than $2.7 billion having been channeled into the ecosystem in the two years duration.
Furthermore, the report has established that fintechs have not only attracted funding in the recent past but continued to be acquired.
“Disrupt Africa tracked 26 fintech startup acquisitions between June 2021 and July 2023 compared to just seven between 2019 and 2021,” an expert from the report stated.
“This should serve to embolden both investors and entrepreneurs in the sector as exits are the name of the game.”
What’s more, the report notes that fintechs account for the most startups to have taken in accelerator programs.
Gender Diversity Concerns
In terms of gender diversity, however, the report shows that fintechs lag with only 99 out of the 678 fintech startups that were tracked having a female co-founder and only 52 led by a female CEO.
This is lower than the female co-founders and leaders in e-commerce, retail, logistics, and eHealth startups.
Big Three Dominance
Further, the report shows that South Africa, Kenya, and South Africa continue to hold the lion’s share of fintech activities, with 459 (67.7%) out of the tracked 678 startups hailing from one of three countries.
The imbalance in terms of financial inclusion in Africa through fintech activities is further evident as the report states that fintech activity is only focused on the larger markets.
A whopping 86.7% of fintech activity is concentrated in six countries namely Nigeria, South Africa, Kenya, Egypt, Ghana, and Uganda, as per the report, which is up from 85.4 % in 2021.
Of the “Big Three”, Nigeria’s position as Africa’s leader in fintech activities is clear having overtaken south Africa and established itself as the most attractive investment destination in the sphere.