•Regional deals drop by 69 per cent
Nigeria is expected to play a key role in the next seven years and beyond, as fintech revenues will grow sixfold from $245 billion to $1.5 trillion by 2030 globally.
Boston Consulting Group (BCG) and QED Investors, in a new report, observed that Egypt, Kenya, Nigeria and South Africa are the markets leading fintech growth in Africa.
In the report, ‘The Global Fintech 2023: Reimagining the Future of Finance’, it forecasts that Africa will be the fastest growing region and projects a compound yearly growth rate (CAGR) of 32 per cent until 2030, with the four countries playing a vital role.
Analysis of the report focused on the growth of fintech companies across various sub-sectors, including payments, lending, deposits (including neo-banking), insurance, wealth management, and financial infrastructure, saying there have been major developments across the ecosystem.
It also examines the regulatory environment for fintech companies and the impact of emerging technologies such as artificial intelligence, API-based (application programming interface) open connectivity, and distributed ledger technology.
While forecasting massive growth of fintech, despite the sector experiencing headwinds in recent months, the BCG and QED report disclosed that African fintech deal activity dropped 69 per cent year-on-year in the first quarter of 2023.
Fintech Global Research’s latest study said African fintech funding ended the quarter at $331 million, a 17 per cent reduction from the same period in 2022.
In the period, Nigeria was the most active country for fintech deal making in Africa with 12 deals, a 32 per cent share of total deals.
Overall, African fintech companies only raised $71 million in the quarter, according to the report, which was also analysed by Itweb Africa.
The BCG and QED report noted that globally and in Africa, the fintech journey is still in its early stages and will continue to transform the financial services industry.
Partner at BCG, Johannesburg, Caio Anteghini, comments: “Even though financial services remains one of the most profitable sectors of the economy worldwide, it struggles with innovation and customer experience remains poor.
“More than half of the population in the world remains unbanked or underbanked, with the majority in emerging economies, and technology continues to unlock new use cases in leaps and bounds.
“Stakeholders must therefore seize the moment. Regulators be proactive and lead from the front, while incumbents should partner with fintech to accelerate their digital journeys.”
Speaking on behalf of QED investors, Managing Partner and Co-Author of the report, Nigel Morris, said: “We expect to see continued growth not only in developed markets in the US and Europe, but also in developing fintech markets in Latin America, Asia, and Africa, where the inertia and friction are even greater. “QED remains more bullish than ever about the future of fintech and its promise to improve the lives of billions of people across the world.”
Going forward, the principals of the report want regulators to consider levelling the playing field.
According to them, enabling faster pathways for banking and payment institution licenses, facilitating an open banking ecosystem, and supporting digital public infrastructure will help ease operational challenges faced by the sector.
