African FinTech in 2022: What’s New?

With its strong labour force and economic mobility of the consumers, Africa has attracted quite an interest by the international investors and multinational companies have less man-power and limited capital.

But that interest is also fuelled by the economic growth and political stability in emerging African countries with their own local brands doing intra-Africa business.

And the FinTech sector is leading the front like never before. Due to internet penetration in the last decade, companies like Jumia, the continent’s first ever billion-dollar technology company, has seen tremendous success.

Internet Penetration: A Boon for FinTech in Africa

Africa accounts for 11.5% of internet users in the world with Kenya, Libya, Mauritius leading the front. There are 281 million online shoppers in Africa.

Share of Internet Users in Africa Statistics


As per Satista’s March 2021 report, Kenya led with an internet penetration of about 85.2% as of December 2020. This has been attributed to the Vodafone M-Pesa in Kenya, a mobile wallet service that offers a secure payment system. As of October 2020, the report continued, major web traffic in key digital markets in Africa was reported via mobile devices in Nigeria, which ranks third in internet penetration. The web traffic was recorded 75 percent which came via smartphones across the nation with only 24 percent accounting for the desktop PC devices.

This has been made possible by the fact that mobile devices and connections are cheaper and do not need the infrastructure required for traditional desktop PCs which typically have fixed-line internet connections.

This rightly witnessed the same phenomenon as its counterpart across the globe and encouraged mobile payments. E-commerce played a role too. But now mobile payments are increasingly being used for brick-and-mortar stores too.  So, while Opay and Flutterwave in Nigeria, MyBucks in South Africa, M-Pesa in Kenya, Zeepay in Ghana, and Fawry in Egypt lead the FinTech sector with its customer base, there have been innovations as well since they tend to be more convenient and cost-effective solutions.

Telecom Offering Traditional Banking Services

While there were concerns that telecom companies would find it tough to enter the market space due to companies already established in Africa, MTN and Airtel continue their expansion with their local presence. With regulations easing, MTN Nigeria Communications Plc (MTNN) and Airtel Africa Plc, two leading telecom companies, have been granted permission by the Central Bank of Nigeria (CBN) to start their payment service banks. These new banks will offer a full range of financial services, including mobile money transfers, bank accounts, insurance policies, and microfinancing as well.

Central Digital Currencies: New Pastures  

Nigeria is rolling out the central bank digital currencies (CBDCs). eNaira is one such example. Then there is bitcoin and cryptocurrency too with countries across the globe mulling over regulations.

Traditional Financial Institutions: Transitioning And Innovation

It is an established truth that traditional banks face many regulations across Africa and typically after meeting those, banks are classified into commercial, retail, investment, cooperative, savings, loans firms, and credit unions but to reiterate there are services that are typical to consumers and investors, which are:

  • Lending
  • Foreign currency exchange
  • Consultancy
  • Insurance
  • Investments
  • Bank guarantees
  • Remittance of funds
  • Credit & debit cards
  • ATM services
  • Mobile banking
  • Private banking

Nigerian government implemented the new Banks and Other Financial Institutions Act (BOFIA 2020) in order to regulate banking transactions within its borders. Ghana too closed 72% of its microfinance institutions with stringent regulations for the banks. But banks too have the opportunity to start their online services. Thus, banks have transitioned to digitizing regulatory risk management. This allows them to offer digital banking solutions which allow banks to retain higher profitability as opposed to the fast dominance of Fintech. Because consumer trust and cybersecurity are a factor as well.

So, traditional remittance and banking services are finding it beneficial to adopt financial technology.

Banks are now looking at replacing or adding to their legacy systems with modern technology infrastructure, focussing on working on their own front-end, interactive web, and mobile applications in order to mark and encourage their market presence online.

Banks can also look at the acquisition of FinTech startups and bring new technical talent for in-house to offer viable digital solutions to build on existing consumers.

Collaboration: Banks And FinTech Startups Joining Hands

Also, fintech startups are now building partnerships with the banks. The co-dependence offers banks an insight into innovative digital solutions and at the same time offers FinTech startups in building consumer trust through their partnership with these rational banks.

Start-Ups: The New Players  

Flutterwave secured $170 million earlier in 2021. Opay valued at over $2 billion, becoming Africa’s latest FinTech unicorn, noted Benjamin Dada. So, there are new Fintech startups on the block such as Chipper Cash, Bayport Financial Services, and Tala, apart from Flutterwave and Opay. As per the FinTech Magazine, between them, these start-ups have raised nearly US$1.71 billion in funding, a record for startups in the African continent.

It is Only the Beginning For FinTech in Africa

But the African market is far from saturation point. In fact, it is only the beginning. There are greener pastures yet. According to the World Bank, North Africa has up to 20 million unbanked adults, including 7 million in Egypt. It was noted that they tend to use cash or over-the-counter money transfer service providers like MoneyGram or Western Union to receive or send domestic remittances.

Another key point is that the traditional role of middlemen is being eliminated as consumers/customers and merchants make full use of it even as legacy firms suffer disruption due to services provided by the FinTech sector.

So, clearly, besides its labor force and domestic brands, untapped consumer market and legacy firms can reap these benefits too.

So, if you are an entrepreneur or a business, trying to look at the market entry in the African market or a legacy business transitioning to a new service, connect with Africa Business Venture.

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