report from Master Card Credit Card It demonstrated that smartphone use will continue to drive adoption of fintech, even as it predicted a boom in business in Nigeria and sub-Saharan Africa.
With smartphone usage expected to rise to 75% in the region by 2025, Mastercard says this will drive revenue growth for African fintech companies to around $40 billion by the same year.
According to the report, of the nearly 400 million new mobile subscribers expected to register globally by 2025, the majority will come from frontier markets such as Africa, with Nigeria taking the lead.
Nigeria leads: Nigeria currently has the highest mobile subscriptions in Africa, with active subscriptions rising to 211.8 million as of September this year.
In the study report entitled The future of fintech: rapid growth attracts smart capitalMastercard noted that Nigeria has emerged as a leading Fintech hub in the Middle East, Africa and Pakistan (MEAP) region, with startups there accounting for a third of all deployed Fintech funding in 2021. It added that within Nigeria, FinTech accounted for 71% of all Venture capital.
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- Fintech startups in Africa have grown from 311 in 2019 to 564 in 2021, with South Africa, Nigeria and Kenya emerging as major hubs. The sector accounted for 27% of the record number of deals concluded and 61% of the $2.7 billion USD deployed across Africa in 2021. The space featured mega deals of over $100 million each.
- “In Sub-Saharan Africa (SSA), fintech startups recorded 894% year-on-year growth in funding in 2021 – the second highest in the MEA region during this period, and the highest annual growth rate. Over the past five years, Sub-Saharan Africa has received $1.56 billion in funding, the highest in the region by a wide margin.”
You need Fintech for smartphones: While Mastercard noted that smartphones are the most important tool for fintech adoption in Africa, Mastercard said removing the affordability barrier will increase the rate of adoption.
- “With efforts to remove the affordability barrier, smartphone use is likely to increase to 75% by 2025. In Africa, widespread broadband use and smartphone penetration are filling the infrastructure gap to enable digital financial technology services. While cash dominates, Newer e-payment solutions by banks and non-bank companies are likely to grow.The domestic e-payment market in Africa is expected to see revenue growth of 20% annually (compared to 7% globally), reaching around US$40 billion by year 2025,” Report added.
Fintech growth in Africa: Commenting on the report, MasterCard Senior Vice President for Partners and Digital Enablers Eastern Europe, Middle East and Africa, Ngozi Migwa said:
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- “It is encouraging to see the growth of the fintech landscape across the region, creating multiple opportunities for startups and small and medium-sized businesses (MSMEs) to attract more people to the digital space. At Mastercard, we help further accelerate fintech by providing access to our expertise. and our network and technology. We provide a suite of technology solutions, APIs, developer tools, partner networks, startup programs, and a community experience for every fintech and payments developer, helping turn their bold ideas into reality.”
Other key points: Fintech companies have linked up with banks, mobile network operators (MNOs), and other stakeholders to develop large-scale solutions for consumers and micro and small merchants.
- Regulators across many African countries have adopted a collaborative approach to enable new solutions to be offered by FinTech companies
- The growth in the number of fintech companies in Africa reflects global fintech funding that jumped to a new record high of US$131.5 billion in 2021. The number of unicorn fintechs reached 235, of which 34 were single-born in the fourth quarter of 2021.
- Fintech companies now account for more than 20% of unicorn’s total tech value, compared to 15% a year earlier.
- On the demand side, the role of MSMEs has been crucial to the growth of FinTech. MSMEs are using FinTech and e-commerce solutions to expand, source and access.
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