Fintech funding continues to flow to developing regions across Asia, the Middle East, and Africa. Surprisingly, Nigeria has been a significant beneficiary of funding throughout 2021. That is part of the ongoing growth of fintech startups across Africa as new key hubs materialize.
Africa Attracts More Fintech Funding
The year 2021 has been solid for the fintech industry across the African continent. There is tremendous growth in startups entering the market (+81%) over 2020. Moreover, new fintech hubs have emerged in South Africa, Kenya, and Nigeria. Other countries continue their push for financial innovation but have to catch up to these three nations.
New research by Mastercard confirms the influx of fintech funding in Nigeria. As there were over 560 fintech startups in Africa in 2021 – compared to 311 in 2019 – it is normal to see an increase in overall funding. In addition, African fintech represents 61% of all funding deployed across the continent in 2021. That is a staggering representation, highlighting the need for new financial products and services.
It is also worth noting overall fintech funding increased by over 850% for African startups. It is the highest annual growth recorded since 2018. While it is too early to claim 2022 will offer more of the same, there is still plenty of excitement in the industry. Especially Sub-Saharan Africa continues to warm up to financial innovation and improvements.
Nigeria Leads The Class
With $1.56 billion in 2021 fintech funding, Sub-Saharan Africa is the outspoken region to keep an eye on. Most funds went to startups in Nigeria as the country continues to expand its presence in financial technology. Moreover, it is now widely considered one of the emerging fintech hubs for the coming years. It is home to one-third of all startup funding for Africa, Pakistan, and the Middle East in 2021.
Venture capital has a way of ending up in Nigeria. The Mastercard report confirms 71% of all venture capital in Nigeria for 2021 is tied to fintech. Nigeria is also where alternative payment solutions, including cryptocurrencies, continue to attract tremendous attention. That helps explain why fintech continues to boom in the region.
Another crucial observation is the dominant position payment-oriented startups hold in the country. The Naira has become an inconvenient vehicle to transfer and store value. In this modern age, new and innovative ways to send and receive payments are direly needed. Money is any economy’s lifeblood, perhaps even more so in developing continents like Africa.
Interestingly, Nigeria “only” produced two fintech unicorns in 2021. That may come as a surprise, although it is still a respectable number. Achieving unicorn status should be exceptional, and having two emerge in the same country in the same year is significant. It is a further testament to Nigeria’s strong fintech market position. That will undoubtedly attract more fintech funding in the coming years.
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