African Fintech Boom: 270% Surge in Acquisitions in 2 Years

African Fintech surge in acquisitions

A report on the African fintech ecosystem shows the sector is in its prime. Additionally, the sector is driving financial inclusion on the continent.

For starters, the African fintech sector remains the most funded in the continent’s start-up ecosystem. Since 2015, fintech has raised more than 3 times any other start-up niche across Africa. According to the report by Disrupt Africa, African fintechs have raised $3,635,823,965 in the last 8 years. In contrast, start-ups in the Agritech sector have raised $1.8 billion in the last decade.

The last 2 years in particular has witnessed more funding towards fintech ventures. Hence, there has been a rise in new fintech ventures across the continent.

African Fintech Acquisition Spree

Funding is not the only aspect fintechs take the lead. Notably, the fintech sector has quite a high number of acquisitions. In fact, it is barely a month since Moniepoint Inc. was given the green light to acquire KopoKopo, a Kenya-based company offering payment services and credit to businesses.

Within the last 2 years, there has been a 270% increase in African fintech acquisitions. Between June 2021 and July 2023, there were 26 exit deals reported. A look at the preceding 2-year period of 2017 to 2019, shows only 7 such deals occurred.

In total, since 2011 there have been 43 fintech acquisitions in Africa. In that time, 60% of the exit deals have been done between 2021 and 2023.

South Africa Leads Acquisitions

South Africa is where most deals have been made. In the last 24 months, 10 of the 26 exits involved South African fintech start-ups. Thus, the country represents approximately 41.67% of all the deals.

Looking further since 2011, a total of 16 fintechs from the country have seen exits. For example, in 2011, mobile financial services provider Fundamo was acquired by Visa for $110 million.

Nigeria is another vibrant fintech market in Africa. In the 24 months in focus, the country was just behind South Africa with 9 exit deals. In recent years, Paystack’s reported $200 million acquisition by Stripe was one of the stand out exit deals.

All in all, it’s worth noting that the numbers are small if compared to other fintech ecosystems globally. However, the exists indicate a clear and growing desire to acquire innovative fintech solutions. This is a source of encouragement and should give confidence to both investors and founders in the sector.

Graph From Disrupt Africa Report

African Fintech Big Four

The African Fintech space remains the most-populated vertical within Africa’s wider tech ecosystem. Since 2021, the number of start-ups operating in the space grew by 17.7 cent to 678. Overall, the number of fintech start-ups active in Africa has increased by 125.2 per cent between 2017 and 2023. Of the currently active fintech ventures, about 40% were launched after 2019.

As is common in the tech sector in Africa, fintech startups in Africa are concentrated in the big four tech hubs. Nigeria leads the way with 217 start-up ventures (32%), South Africa is second with 140 (20.6%) and Kenya comes third with 102 (15%). Closing out the top four is Egypt with 65 fintech ventures (9.6%).

The four countries represent 77.2% of the 678 start-ups tracked in the Disrupt Africa report.

Notably, in the last two years Nigeria start ups have received 41.6% of all the funding allocated to African fintechs. In this period, major rounds have been raised by Moove, FairMoney, Yellow Card, Smile ID, Nomba, Flutterwave and others. For the referenced period, the west african country received US$ 1,511,188,000 in total funding.

Image from Disrupt Africa Report

Worth noting that the vibrant sector also has a high churn rate. Since, its previous survey in 2021, Disrupt has reported that 576
Fintech start-ups are no longer in operation. Payment and remittance companies registered the biggest failure rate with the most closures witnessed in the big four.

South Africa had 36 closures, Kenya 25 and Nigeria had 24.