Historically, people have invested in mobile wallets like Mpesa (Kenya) and Opay (Nigeria), as well as payment APIs like Yoco (South Africa), because they had to manage cashless transactions. However, a majority of Africans were compelled to completely switch to cashless commerce with the onset of the Covid Pandemic. As the numbers compounded and this form of money transfer gained popularity, there was a substantial record surge.

With more African entrepreneurs launching and scaling tech-enabled solutions to the most important issues facing the continent, the continent’s digital ecosystem continues to thrive and evolve. Just between 2020 and 2021, the number of tech start-ups in Africa increased to reach almost 5,200 businesses. Slightly under half of these are Fintech companies, whose goal is to replace and improve conventional financial services. The sector has been on an upward rise trajectory as in 2022, citing a recent report by the African Private Equity and Venture Capital Association (AVCA), 54% of all capital invested in the first quarter of 2022 went to Fintech.

Fintech continues to clinch the top position for most popular investment sectors in Africa. If we dig a little deeper into what’s fueling this constant rise, it’s crucial to remember that the ‘big four’ investor-attracting countries in Africa that are at the top of the rankings, namely Nigeria, Kenya, Egypt and South Africa, have all received sizable investments in their respective Fintech Sectors. McKinsey Africa’s August 2022 report endorses this, stating that financial services on the continent are at a turning point as Fintech develops, and several African nations have a tremendous chance to take advantage of the momentum of recent years to unlock even more potential in the sector.

The most common industry for startup investment in Nigeria is Fintech. With 8,653 employment opportunities – an average of 50 per startup, the Nigerian Fintech Sector employs by far the most people in the country’s larger startup ecosystem. Disrupt Africa cites RenMoney, Cowrywise, Flutterwave, TeamApt, FairMoney, and Kuda – all Fintech Companies – as six of the top 10 employers in Nigeria’s startup sector. The Big Deal Africa ranks Nigeria as the leading nation of the “Big Four”, adding that the country has raised $864 million in VC Funding from 160 deals as of H1 2022. This pattern is only becoming stronger. $507 million has already been invested in the area in 2022, which makes up 67.8% of Nigeria’s total funding for the year. It is also astounding to see how much more money is being invested in Nigeria’s Fintech Industry, especially in the last few years as overall fintech funding has started to surpass the half billion dollar level.

Kenya, which currently ranks at second place amongst the big four, has raised a figure of approximately $820 million during the first half of 2022, nearly double what was raised in a similar period last year. This data is from the analysis of 76 deals signed by Kenyan startups. Fintech Firms at the forefront of these deals are Pezesha, a digital financial ecosystem that connects the Ministry of Small and Medium Enterprises to Capital, FinAccess, which digitizes Savings and Credit Cooperative Organizations (SACCOs) and farming cooperatives in the East African Region, and Mara, an online platform for digital wealth learning for cryptocurrency. The Big Deal attributes the numbers to the Fintech Sectors in Kenya, further stating that VC Funding in H1 2022 represents a 422% growth compared to a similar period last year when funding totalled $157 million.

Towards the end of March 2022, UAE-based Global Ventures set aside a dedicated fund to support the Fintech Sector in Egypt. In a webinar captured by The National News, Basil Moftah, General Partner of Global Ventures, supported this move. “There’s just so much happening in the FinTech Space that we believe having a dedicated vehicle for that is a great opportunity for investors, but also to help Egypt make progress on the financial inclusion side of sustainability. The reality is that Egypt is not digitized – that’s what we think Fintechs are solving, and that’s why we think they’ll grab a lot of market share.” Holding true to this statement, Egyptian Fintech Startups attracted $167 million worth of investments during the first half of 2022, according to a recent report by Fintech Galaxy.

According to the South African Venture Capital Association (SAVCA), South African Fintech trends are continually growing. Tanya van Lil, the CEO of SAVCA, is quoted saying that foreign venture capitalists are becoming more interested in South African fintech startups by online publisher FA News in South Africa. “Given how tech-savvy our young yet underserved population is,” she says, “it’s not really unexpected that we’re seeing a surge of interest in Fintech Venture Capital.” More than $800 million was invested in South African start-ups in 2021, and as of May 2022, several high-profile Fintech agreements had been reported. Follow-ups with venture capital firms on South African Fintech Companies like Sendmarc, an email security platform, Mobiz, a mobile marketing company, and Flow, a real estate platform, are amongst some of the key achievements for the fintech sector in the nation. The recent $48 million series B investment round for the Payments business Ozow, as reported by TechCrunch, has also been a huge success for the country’s fintech industry.

Yellow Card Financial is an excellent illustration of an organization that is garnering attention in the African Fintech Sector. Recently, the Pan-African cryptocurrency exchange company announced the completion of its $40 million Series B Funding Round, which will allow the company to accelerate business growth, continue its continental expansion, create new products, and strengthen strategic alliances. Yellow Card Financial has worked to make Bitcoin, Ethereum, Stablecoins, and other cryptocurrencies available to everyone in Africa since its 2019 launch in Nigeria. It presently operates in 16 nations and recently surpassed one million users.

African Fintech trends are continuously evolving. Some of the key trends driving change in digital payments in Africa, according to Fintech Magazine, include Cryptocurrency, Web3 Payments, BNPL (Buy Now, Pay Later), SaaS and The African Metaverse. The Central African Republic at one point accepted bitcoin as legal money. Other countries, like Nigeria, have acknowledged the need for central bank digital currencies to serve as the state’s representation of digital currencies. Many other African nations are currently looking into this possibility. African BNPL services, such as Nigeria’s CredPal, Kenya’s LipaLater, and Egypt’s Sympl, are also notable innovations in financial tech services that influence and facilitate the purchase and payments landscape.

African Banks are also joining the Metaverse. Major companies in trade and industry are ready to create unique experiences in this digitally enhanced world as the metaverse’s economic journey into the digital realm picks up speed. As the first African financial services company to enter the metaverse, Nedbank, one of the biggest financial services companies in Africa, has teamed up with Africarare, the continent’s first metaverse, and acquired a 12 by 12 hamlet in Ubuntuland.

Is the industry’s quick expansion in the continent too fast, not fast enough, or just right? Whatever your take might be, one thing is undeniably true: Africa’s industry of choice is Fintech, which is undoubtedly on the rise. Nonetheless, investors not only want to venture into Fintech, but also African Fintech Companies that are solving problems. The Fintech Eruption, which seems to be in full throttle, continues to impress and encapsulate the attention of both domestic and international investors.