Fintech in Africa : Rapid growth but persistent challenges
Africa’s fintech ecosystem triples in four years, but funding remains an obstacle.
The number of fintech companies in Africa has nearly tripled between 2020 and 2024, rising from 450 to 1,263, according to the Finance in Africa 2024 report by the European Investment Bank (EIB). This rapid expansion highlights the crucial role of digital solutions in financial inclusion across the continent, where access to traditional banking services remains limited.
Fintech is revolutionizing the way we think about finance in Africa
“Fintech is revolutionizing the way we think about finance in Africa,” said EIB Vice President Thomas Östros. “By leveraging technology, we can improve access to finance for millions and foster sustainable economic growth.”
Innovative solutions to bridge the financial gap
African fintech companies provide a wide range of solutions, from mobile payments to digital credit, insurance, and blockchain services. Their rise is partly driven by the popularity of mobile transactions—Africa now accounts for nearly 70% of global mobile money transactions.
However, access to financing remains a challenge. Nearly one-third of African banks cite a lack of capital and the high cost of funding as major obstacles. This issue is even more critical as private sector credit has declined from 56% of GDP in 2007 to 36% in 2022, limiting industrial growth.
« Fintech without borders must leave no one behind. Africa leads in mobile fintech, especially cross-border remittances. To support AfCFTA, we urgently need digital merchant payments for traders at land borders, » said Nshuti Mbabazi, Managing Director of the Better Than Cash Alliance.
A shifting regulatory landscape to support growth
The rapid expansion of fintech requires regulators to adapt. “As a financial regulator, we need to understand what digitalization is about and also its impact on SMEs… we cannot regulate without undergoing the transformation process ourselves,” emphasized Soraya Hakuziyaremye, Deputy Governor of the National Bank of Rwanda.
The report also highlights the importance of gender inclusion in fintech. Seventy percent of banks report better loan repayment performance among women-led businesses, prompting 17% of them to adopt a gender strategy.
Despite challenges, fintech continues to reshape Africa’s financial landscape, offering innovative solutions to bridge gaps in traditional banking.
Read the report : Finance in Africa 2024
