Africa’s fintech industry has transformed since the Covid-19 pandemic, experiencing “remarkable” growth characterised by rapid expansion, increased investment and a significant shift towards digital financial services, says Frost & Sullivan senior consultant Yaa Ngonyama.

Innovation and greater access to technology have further accelerated this growth, positioning Africa as the fastest-growing fintech market in the world.

The pandemic served as a catalyst for digital transformation and, with limited physical interaction, there was a marked increase in the demand for mobile and online financial services, she continues.

This surge in fintech and mobile money adoption provided financial inclusion to the unbanked across the continent, where nearly half of the 1.4-billion population still lack access to a traditional bank account.

In addition to creating a unique opportunity for telecommunications companies and fintech providers to reach communities that banks cannot, as the majority of citizens have access to a mobile phone and SIM card, the shift has been particularly advantageous for fintech companies, which expanded their customer bases as more people embraced digital payments, lending and insurance solutions.

“Notably, payment solutions have led fintech innovation, attracting substantial venture capital across the continent. Seed investments in the sector now average between $3-million and $10-million, reflecting the increasing investor confidence and the rising capital inflows,” Ngonyama points out, adding that Africa’s young, tech-savvy population has provided fertile ground for continued technological advancement.

South Africa, Nigeria, Egypt, Kenya and Ghana are leading the way in fintech investment.

According to Ngonyama, South Africa stands out as a leader in financial innovation, offering a blend of developed technological infrastructure and a strong business-to-business ecosystem.

“Despite global challenges and a decline in venture capital funding in 2023, South Africa’s fintech market has remained resilient.”

Overall, fintech startups in Africa attracted over $960-million in investment in 2023. While this followed an overall increasing trend, it represented a decline compared with the preceding two years.

However, recent investments in companies like Peach Payments and Stitch demonstrate growing investor interest in the region.

“Looking ahead, the next decade promises even more exciting developments for Africa’s fintech landscape. We can expect fintechs to offer increasingly tailored solutions for niche population segments, becoming more agile and cost-effective than traditional financial institutions,” she says.

As a result, fintech companies will be better positioned to serve the unbanked and underserved segments of the population.

Future investments in the sector will likely focus on building and integrating financial systems, transforming financial services into a horizontally integrated foundation for all sectors, rather than the current vertical approach.