A fintech boom is underway in Africa, fueled by increased digital and fintech literacy and access to smartphones.
Foreign investor confidence in Africa’s fintech and startup scene received a significant boost with startup Flutterwave’s $250 million Series D capital raise and its $3 billion valuation.
Venture financing inflows to the sector are expected to surpass the $4 billion raised in 2021.
According to B Capital Group, which led the latest investment round for the Nigerian fintech, a fintech boom is underway in Africa, fueled by increased digital and fintech literacy and access to smartphones.
“Investors are betting on huge growth, despite the economic issues and soaring inflation in Africa,” says Longji Dafur, an analyst at Lagos-based Financial Derivatives Company. “What we are seeing now is foreign investors racing to be a part of Africa’s fintech and payments sector before it’s too late.”
Of the $4 billion that venture capital channeled into Africa’s tech startup scene last year, fintech remained the largest sector in Africa to attract funding, at approximately $2.3 billion, reports the newsletter Africa: The Big Deal.
According to a note by Priya Banerjee and Matt Levinson, principal and partner, respectively, at B Capital Group, the imperative to invest into one of Africa’s biggest fintechs pivots on the internet economy’s “potential to contribute $180 billion to Africa’s economy and grow to more than $700 billion by 2050.”
“While noncash payments in Africa remain relatively low … the transition away from cash is happening exponentially–with further acceleration driven by Covid-19 in the past two years,” they explain.
Flutterwave processes more than 140 million transactions, worth more than $9 billion annually in a market with other robustly growing fintechs, such as OPay, Interswitch and Fawry. It wants fintech investment flows to be complemented by rapid growth in Africa’s logistics and commerce arenas.
If the logistics within and outside of Africa get fixed, it means that brilliant kente fabric makers can sell to customers in Los Angeles, receive payments promptly, process the deliveries and the customers receive their bright-colored dresses in good condition, according to Flutterwave officials.