Just a decade ago, mobile phones propelled Africa into the tech ecosystem, especially with the arrival of mobile money. The untainted success of mobile money technologies in Africa is most likely responsible for the increasing presence of mobile networks in Africa’s FinTech industry. In a region where just 17% of people have bank accounts, the FinTech sector was responsible for a third of venture funding raised by African startups in 2017.

According to a report from Disrupt Africa, venture capital funding for African startups increased by 51% in 2016 to record a $195 million investment last year. Africa’s FinTech sector has benefited largely from these funding investments more than any other tech sector on the continent. In fact, African FinTech was the biggest attraction for investors in 2017, with 45 startups raising one-third of total funding in Africa’s techsphere.

Africa’s “Big Three”

2018 may witness new players coming into the funding space. But countries like Nigeria, South Africa, and Kenya have remained top among economies that raised the highest amount of funding, consistent with their record from previous years.

Away from the big three countries, investors also gambled on Ghanaian and Egyptian startups. Investors have also shown a profound interest in Somalia-based startups while a funding momentum is gradually picking up in Uganda, Tunisia, and Morocco.

Fintech venture capital funding in Africa-2017

Photo Credit: Quartz Africa. Funding momentum mounts towards more African countries

Despite South African startups raising most funding in 2017, Nigeria’s funding still managed to surpass South Africa’s. Nigerian coding school, Andela raised a hefty $40 million – almost equivalent to what all Nigerian startups jointly raised in 2018.

Though Africa’s entry into the digital economy was late, it also happened to be an opportunity in disguise. Africa’s population is growing and many Africans are consistently relying on technology to solve its growing array of problems. The continent is therefore poised to become the world’s first truly digital-first region. Thus, many foreign investors are scrambling to be part of Africa’s growth story.

Stats don’t lie

Between 2015 and 2017, African FinTech startups collectively raised more than $ 100 million in venture funding, including big names like Flutterwave and Paystack.

Until recently, two investment giants have partnered to invest in African startups with a particular interest in the FinTech sector. This recent partnership proves that Africa’s FinTech sector will continue to gulp the highest amount of funding from international VCs.

However, agri-tech and e-commerce startups also attracted global investors to Africa in 2017. E-commerce startups, for instance, saw venture funding quadruple to $ 16.7 million.

Africa’s FinTech sector gulped the largest share of venture funding in 2017. But a plethora of new players is sure to emerge this year. In fact, Africa in 2018 is likely to eclipse record-breaking growth and be driven by more post-seed capital.

 

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