Global Investments in the Fintech Sector: Africa Defies the Negative Trend

Global investments in the fintech sector have decreased this past year. Word has spread that times are not the best for investments in fintech. CB Insights has analyzed the status quo on the global playing field in more detail and come to the conclusion that the average deal volume in 2022 fell by almost 40 percent compared to the previous year.

The median deal volume, however, fell by only 14 percent. Mega-investments are therefore currently on hold.

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Global investments in fintech: Africa on the rise

Comparing the median values of investments in the fintech sector across international territories, however, reveals an interesting swing. While in the USA, Asia, Latin America, the Caribbean, Canada, and Australia the median value of investments has decreased without exception, and in some cases dramatically, Africa defies the negative trend.

There, the median value of investments rose from $1.2 million to $1.5 million. Nevertheless, Africa is still in last place by a wide margin in the median KPI comparison. The upward swing nevertheless gives cause for hope, as a look at Latin America and the Caribbean shows.

There, the value in 2018 was only just above Africa’s current best and developed into a median of $5 million by 2021. This put Latin America/Caribbean even ahead of Europe and moved surprisingly close to the primus, the US.

Global investments in fintech: the African payments industry as a fintech driver

Egyptian-listed Fawry, for example, saw its share price rise 21 percent at the end of 2020 due to pandemic-related customer growth, while Nigerian company Flutterwave successfully raised $170 million from U.S. investors in March 2021, followed by another $250 million in February 2022.

According to London-based market research firm Briter Bridges, African fintech companies received a total of $2.8 billion in investment in 2021. That’s more than half of the total $4.9 billion invested in tech companies on the continent. Around $1 billion was raised from payment service providers, highlighting the growing importance of the sector within the African fintech market.

In contrast, there is a need to catch up when it comes to unicorns. Only three such mega-fintech companies have been built originally in Africa, with Fawry, Opay, and Wave Mobile Money. Two others (Chipper Cash and Flutterwave) have relocated their headquarters to Accra in Ghana and Lagos in Nigeria after being founded in San Francisco.

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