Africa’s fintech landscape has undergone a remarkable transformation in recent years, characterized by rapid growth and innovation. Despite significant headwinds, the market remains one of the most dynamic and promising in the world, with notable optimism among fintech leaders and investors. Key fintech players we interviewed indicated they were excited about opportunities across Africa, as reflected by our optimism survey, on which they returned an average score of 4.5, where 5 indicates the most optimistic.
As one partner at a local investment firm commented, “We are still only scratching the surface. There are still millions of Africans yet to be served by fintechs and yet to have access.”
As the industry matures, it’s clear that what has made players successful before may no longer serve them in the future. Fintech leaders are having to adapt their playbooks as investors shift their focus from short-term gains and growth at all costs to long-term sustainability. The investment landscape has become more selective, with a noticeable shift in funding dynamics for fintechs. This report explores the evolving fintech landscape, unpacks the lessons learned to date, and explores emerging trends and opportunities across the continent. It builds on the analysis contained in our 2022 report on the state of fintechs in Africa.
Fintechs in Africa are still expanding, but the landscape has changed
The operating landscape for fintechs in Africa is an undeniably challenging one. Over the past two years, African economies have grappled with a complex set of macroeconomic headwinds. Rising living costs, decelerating GDP growth, high interest rates, rapid local currency devaluations, and tightening global financial conditions have compounded the challenges posed by the increasing effects of climate change, the lingering impacts of the COVID-19 pandemic, and escalating geopolitical tensions.
Despite this, the African financial services sector, which includes both traditional financial services and fintechs, continues to show strong growth, maintaining an average annual revenue growth of 8 percent from 2018 to 2023, with growth expected to accelerate to nearly 10 percent per year between 2023 and 2028.
Africa’s favorable demographics—the continent is home to the fastest-growing population on the planet—coupled with increasing digital adoption continue to be key enablers of future expansion. Growth is also being fueled by deepening mobile money penetration, with mobile subscriber penetration projected to reach 49 percent by 2030. Funding into less mature business models such as small and medium-size enterprise (SME) lending, embedded sector-focused fintechs, and remittances is also expanding.
McKinsey analysis suggests that, with these tailwinds, fintech revenues could reach up to $47 billion by 2028, representing about a five-fold increase from its value of $10 billion in 2023 (Exhibit 1). This would depend on the continent achieving 15 percent fintech penetration (similar to the current penetration rate in Kenya, the pioneering global leader in digital payments and mobile wallets). Currently, fintech penetration in Africa is between 5 to 6 percent of the market; for comparison, penetration in more developed markets such as Germany and the United States is between 6 and 16 percent.
However, persistent macroeconomic headwinds could temper the sector’s growth. At the same time, the investment environment is tightening. Since 2021, capital inflows for fintechs have slowed substantially, driven largely by declining equity funding. Fintech funding in Africa contracted by 37 percent from 2022 to 2023, a trend that continued in 2024, with funding in the first half of the year down by 51 percent compared to the same period in 2023, from $864 million to $419 million.
The funding crunch has affected fintech players, especially those that are reliant on external capital, leading some to downsize, merge with other entities, or even close. Mergers and acquisitions (M&As) have also risen as funds have retreated.
Debt has significantly increased, growing by 182 percent CAGR between 2022 and 2023, which could be a sign that investors now have greater faith in more mature fintechs. As the market matures, fintech funding in Africa has shifted toward more advanced verticals such as lending to individuals and small-to-medium enterprises (SMEs) and non-commoditized payments, including merchant payments and cross-border payments, which collectively attracted around 70 percent of funding value in 2022 and 2023. While wallets and blockchain or cryptocurrency ventures received significant investment in 2022, accounting for around 20 percent of funding, investment in these verticals dropped sharply in 2023 (Exhibit 2).
Beyond funding constraints, African fintechs also face regulatory complexities and increased competition for talent. Approximately 38 percent of African developers surveyed in 2024 are working for at least one company headquartered outside Africa, and more than 80 percent of executives we surveyed reported that it is moderately or very difficult to hire tech and product-related or strategic talent on the continent.
Africa is also a hotspot for fraud and cybersecurity, a rising challenge globally. In 2021, INTERPOL estimated that the financial impact of cybercrime in the region was more than $4 billion—about 10 percent of Africa’s total GDP—and the volume and impact of these crimes are growing faster than in other world regions.
Other global trends that are affecting African fintechs include the rise of generative AI (gen AI), an increased regulatory focus on data protection and privacy, and concerns about sustainability and climate change. Out of all developments in the financial services sector, leveraging gen AI in financial operations has been shown to have the largest potential. African fintech executives we spoke to expect gen AI to have the greatest influence in improving customer experience by delivering highly customized products at speed, raising productivity, and preventing fraud. Most feel that gen AI offers significant growth potential for fintech players that leverage it effectively.
These elements are all testing the resilience of fintech players on the continent. In this environment, fintechs with a strong value proposition, positive unit economics, and a focus on operational efficiency are likely to be better positioned for success. A clear competitive advantage, strong leadership, and robust corporate governance are also essential for building trust and reliability.
Six dynamics are shaping the emerging African fintech landscape
Africa’s fintech landscape is shaping up to be substantively different from fintech markets in the rest of the world. Our analysis points to six key dynamics that are shaping the future of the African fintech industry.
1. New partnerships are emerging
Open-loop interoperability, which allows for transactions across multiple unaffiliated entities, is fostering new types of partnerships between fintech disruptors, telcos, and banks based on strategic alignment at the executive level, win-win arrangements, and complementary technology and capabilities. These partnerships are helping to drive innovation and expand market reach.
Three main archetypes are emerging in this area(Exhibit 3). First, disruptors and banks are leveraging their complementary strengths to deliver more streamlined and expanded services and improve the value proposition for underserved markets. Second, disruptor and telco team-ups are helping to expand access to financial services beyond traditional mobile money offerings, including payments, international money transfers, lending, savings, and more. Third, partnerships between banks and telcos are focusing on using extensive mobile network infrastructures and data to expand the distribution and service quality of financial products.
Some players are choosing to go it alone. For instance, some telcos are diversifying beyond traditional wallet products, leveraging their infrastructure and existing customer base to offer financial services across verticals. Meanwhile, bank-led incumbents are using their existing customer base, infrastructure, and regulatory licenses to offer digital financial products and services that compete with standalone fintech companies.
2. Market consolidation is on the rise
We’ve seen M&As accelerating in 2024, driving consolidation across the market. During the first quarter of 2004, eight fintech deals were struck in Africa compared with 12 over the whole of the previous year. Very often, these deals are prompted by investors looking to consolidate start-ups to create bigger and more profitable entities. For instance, in Nigeria, Ventures Platform confirmed it played a part in the recent acquisition of Traction Apps, a payment provider and inventory management solution for small businesses, by B2B e-commerce start-up OmniRetail. Ventures Platform had previously invested in both startups. The venture capital firm also played an active role in the acquisition of financial management and banking platform Brass by the Stripe-owned payment gateway Paystack.
3. Product innovation is accelerating
African fintech companies are innovating quickly, and the market is seeing a flowering of new products and services, processes, experiences, and business models as fintechs look to solve old problems in new ways, transforming how financial services are accessed and used.
These emerging technologies and solutions signal a move toward integration and interoperability. In the payments space, for example, where innovation is reaching its plateau, the scaling opportunity is in innovating in-person payments through the range of point-of-sale (POS) terminals and scan-and-pay services.
As the chess pieces on the board shift, innovative players are finding new ways to drive competitive advantage. For example, LemFi, a company that initially targeted Nigerian migrants in Canada, offering multi-currency accounts that enabled them to send money back to their home country, is expanding its offering across the continent through a series of strategic partnerships with trusted local partners to both enhance its services and ensure compliance with regulatory standards.
4. Fintechs are integrating into other verticals
In 2019, a general partner at a prominent venture capital firm forecasted that every company would eventually become a fintech company, and we are seeing this starting to play out in Africa. Fintech innovation and M&As are reshaping the market landscape as banking and financial services are increasingly integrated into non-financial apps and services, increasing access to fintechs across sectors like agriculture, transportation, health, and hospitality.
In the logistics and transport sector, for instance, Nigerian mobility fintech Moove offers vehicle financing integrated into ride-hailing apps and logistics platforms, and the company recently received a significant vote of confidence via a funding injection from Uber.
5. Fintech players are taking different roles across different regions
The African fintech landscape is diverse, with varying levels of maturity and development across regions. For instance, broadly speaking, while North African disruptors are scaling rapidly, West African incumbents are focusing on specialization as banks in the region develop their own fintech divisions, and East and Southern Africa are witnessing deepening partnerships between fintechs and banks as they grow regionally.
As these regions continue to develop their offerings, frontier markets like Angola, Algeria, the Democratic Republic of Congo (DRC), and Ethiopia are catching up with more established fintech markets, showing positive markers of fintech growth and disruption such as deepening internet penetration and rising GDP per capita. These developments are largely attributable to investments and an improved regulatory environment.
For instance, the Democratic Republic of Congo’s advancements in financial services, including Mastercard’s e-commerce initiatives and the expansion of Equity Bank and KCB, position the country for increased financial inclusion and fintech penetration, while in Algeria, which enjoys a relatively high internet penetration of 73 percent relative to the rest of Africa, recent regulatory changes have opened the payment sector to non-bank players, paving the way for fintech growth through increased competition and innovation.
6. Africa’s regulatory landscape remains complex
Strong regulatory tailwinds continue to support the growth of the fintech industry in parts of the continent. These are primarily focused on strengthening customer protections, improving access to financial services, facilitating cross-border trade and interoperability, and the digitization of financial services.
In Kenya and Nigeria, policies that prioritize consumer protection and data security, and which strengthen the safety of fintech operations and protect against fraud, are becoming a key focus, while in Rwanda and Tanzania, policies aim to drive digitization in their economies and create an enabling environment for future fintech growth. At the same time, initiatives like the African Continental Free Trade Area (AfCFTA) and the Pan-African Payment and Settlement System (PAPPS) are bolstering intra-continental trade by simplifying cross-border payments, while GIM-UEMOA, or Groupement Interbancaire Monétique, which manages the interbank payment system for the Union Economique et Monétaire Ouest Africaine (UEMOA), has taken steps to improve interoperability and standardize payment processes across the region through partnerships with various stakeholders such as Nexo Standards and GIMpay.
Leading fintechs throughout the continent continue to engage with regulators to gain sustainable growth potential and protect consumers. Our analysis indicates that a key challenge remains in the highly fragmented regulatory landscape, with frameworks across countries evolving at varying speeds.
Creating a new playbook to unlock fintech 3.0
The fintech industry in Africa has been a growth market over the past decade, and this can continue despite headwinds. The past two years have highlighted the importance of profitability, scale, and specialization to secure continued growth for fintechs in a tightening environment. Our research has identified four key themes that fintech players can embrace to unlock their next stage of growth on the continent.
Focus on value creation
Financial discipline is likely to be critical for the sustainability of fintech companies going forward. In a tightening economic environment, investors are prioritizing profitability over growth. While previously, soaring valuations were driven primarily by rapid growth, investors are now more interested in establishing positive unit economics, balancing growth and profitability, and scaling sustainably. Market consolidation is likely to continue, and grit, resilience, and effective burn-rate management may differentiate winners from losers.
In this new landscape, founders are also increasingly looking for investors who do not just write a check, but who bring additional value to the relationship. Investors are well placed to foster collaboration among the companies in their investment portfolios and broader networks, where potential synergies may exist. This could include facilitating knowledge sharing, joint ventures, or strategic partnerships where appropriate. Moreover, supporting high standards for governance, risk management, and compliance among portfolio firms could be crucial for ensuring the long-term sustainability of the sector.
Explore untapped opportunities
There are still numerous untapped opportunities in the African fintech market. Cross-border payments, asset-backed lending, SME-focused offerings, and embedded finance all present potential for disruption. Additionally, under-developed markets like Angola, Algeria, and the DRC are showing promising signs of fintech growth.
Verticalize products where possible
Because rapid geographical expansion can be challenging, and scaling rapidly in localized markets can lead to increased cost and complexity, it may be more effective for some fintech players to focus on deeper penetration within core markets. Significant opportunities exist in adjacent sectors such as energy, health, and education to integrate fintech services that have proven business models.
Think with the end in mind
Strong governance, internal controls, and compliance can all help to drive long-term success for African fintechs. To create a future that benefits all stakeholders, fintech players can work with regulators to advance policy harmonization, facilitate cross-border interoperability, and create a supportive operating environment that safeguards consumer rights. At the same time, the development of best-in-class governance, strong internal controls, and compliance frameworks are likely to be fundamental for long-term success and survival.
Building strategic partnerships can also continue to deepen distribution, unlock cross-border opportunities, and combat challenges like fraud and cybercrime, while emerging technologies like gen AI can help address key challenges, drive access, and build resilience on the continent. Fintech executives expect gen AI to have the greatest influence in improving customer experience by delivering highly customized products at speed, raising productivity, and preventing fraud. Most feel that gen AI could help unlock significant growth potential for the African fintech landscape, offering potentially extensive opportunity for fintech players that leverage it effectively. Fraud detection, prevention, and climate-related financial services are areas to watch.
Despite recent headwinds, the African fintech market remains full of promise, with significant opportunities for growth and a large untapped market potential. African fintechs can unlock these opportunities and contribute to the region’s economic development. The next wave of innovation has already started, with pockets of excellence across multiple regions showing the way. As digital adoption continues to increase, fueled by a young, digitally-savvy population that shows no signs of slowing down, and regulatory environments become more supportive, the market will likely grow substantially. In so many ways, the best of the fintech industry in Africa is yet to come.