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State of FinTech: Africa

Written by Rafat Kapadia, Head of Investments, Elevandi

Aanault Lee, Investments Strategy Lead, Elevandi

11 May 2024 - FinTech funding in Africa witnessed a significant decline in 2023, mirroring a global trend. Compared to 2022, FinTech deal value on the African continent dropped 45% to US$1.0 billion (B), and the number of FinTech deals fell 54%. Despite this cooling climate, Africa's FinTech landscape is not without its bright spots. 2023 still witnessed significant deals, with established players like Halan, an Egyptian lending platform, securing US$250 million.

While Africa's FinTech sector faces macro-economic headwinds, its longterm potential remains bright. The success of African FinTech hinges on its ability to navigate this evolving landscape while capitalizing on its inherent potential for growth. This potential stems from several key factors. Africa boasts a young and rapidly growing population, with a median age of just 20 years. Additionally, Africa is experiencing strong economic growth, with a projected eleven of the world's 20 fastest-growing economies residing on the continent in 2024. Finally, digital transformation is rapidly sweeping across Africa, with mobile phone penetration and internet access on the rise. This creates fertile ground for FinTech solutions that can address the African continent's substantial financial inclusion gap and unlock its economic potential.

Looking ahead, several trends are worth watching. Increased investor interest, driven by Africa's long-term growth prospects, is expected to return. The continued adoption of digital assets, despite recent market turbulence, highlights their potential to solve financial challenges in Africa. Finally, the momentum in artificial intelligence (AI) adoption across the continent presents exciting possibilities for FinTech innovation and financial inclusion. By capitalising on these trends and its unique strengths, Africa's FinTech sector can weather the current storm and emerge as a global leader in financial innovation.

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