Fintech, as it is more often known, is a term used to describe emerging technology that aims to enhance and automate the provision of financial services. Fintech is primarily used to assist organizations, entrepreneurs, and consumers in better managing their financial operations, procedures, and lives.
In the 24 months leading up to July of this year, Kenyan fintech businesses received $174.2 million (Sh25.2 billion) in funding, placing the nation fourth in Africa by total sums received, behind Nigeria, Egypt, and South Africa.
According to research firm Disrupt Africa’s “Finnovating for Africa” report, Kenya’s capital inflow during the review period, raised in 104 funding rounds, accounted for 4.8 percent of the overall funding reported on the continent.
Even though the report omitted the names of the recipients, a quick check reveals that Power Financial Wellness, a prominent provider of financial services, is one of the noteworthy industry firms to have recently received investment, receiving Sh376 million.
According to the report, “the ‘big four’ startup ecosystems in Africa receive the vast majority of fintech funding, accounting for 91.2 percent of the investment, with Nigeria, South Africa, Egypt, and Kenya taking the lion’s share from the 93 percent recorded in a similar period ending July 2021.”
Ghana and Uganda, with respective financial shares of three and two percent, were other nations that placed highly.
Payments and remittances, which account for 43.4 percent of sector-funded enterprises, are followed by loans and financing, which account for 37.8 percent.
Other categories include blockchain (4.9%), insuretech (2.6%), invest tech (2.4%), business administration (2.3%), security and ID (1.8%), personal finance (1.3%), and others (3.5%)
Historically the two dominant sub-sectors of African fintech, the payments and remittances as well as lending and financing categories, increased their combined share of African fintech funding to 81.2 percent between 2021 and 2023, from 77 percent two years previously,” says the report.
“The two most populated categories, this pair have always also been the most attractive to investors, and there is little sign of that changing.”
The report further noted that investment tech and personal finance had grown strongly over the period, almost doubling their market shares to 2.4 percent and 1.3 percent respectively.
During the review period, only one fintech startup was acquired in Kenya, compared to 10 and nine in South AfricaHistorically the two dominant sub-sectors of African fintech, the payments and remittances as well as lending and financing categories, increased their combined share of African fintech funding to 81.2 percent between 2021 and 2023, from 77 percent two years previously,” says the report.
“The two most populated categories, this pair have always also been the most attractive to investors, and there is little sign of that changing.”
The report further noted that investment tech and personal finance had grown strongly over the period, almost doubling their market shares to 2.4 percent and 1.3 percent respectively.
Only one fintech startup was bought during the review period in Kenya, as opposed to 10 and 9 in South Africa and Nigeria, respectively.
The research is released at a time when the continent’s fintech ecosystem is expanding quickly; according to the most recent McKinsey prediction, sector companies on the continent will produce $30 billion (Sh4.3 trillion) in revenue by 2025.
