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Nigeria, Other African Fintech Markets to Hit $65b in Six Years – Report

By Adeyemi Adepetun

With possible increase in the levels of work, investments and policies done, Africa’s fintech market is expected to see huge growth in another six years, taking it to $65 billion.

Precisely by 2030, Africa’ fintech revenue is projected to see a compound yearly growth rate (CAGR) of 32 per cent.

Then, the African fintech market will be worth around $65 billion, according to a recent report by Boston Consulting Group (BCG) and QED Investors.

The report found that South Africa, Nigeria, Kenya and Egypt lead the fintech race in Africa. This is partly due to a lack of legacy infrastructure holding these countries back from exploring new financial ecosystems to serve under- banked and unbanked citizens.

Less than 500 million people in Africa are unbanked, whereas just over 410 million are underbanked.

Caio Anteghini, partner at BCG Johannesburg, said: “Fintech could be the vehicle to solve the access issue, with smartphones presenting major opportunities in payments and lending for regional champions with full-stack attacker models.”

“Globally and in Africa, the fintech journey is still in its early stages and will continue to revolutionise the financial services industry as we know it,” he added.

BCG explained that Africa is currently winning the growth race for fintech, with a predicted 13 times growth to be achieved by 2030. The continent is followed by Latin America, with a 12.5 times growth rate.

Asia-Pacific is expected to grow by 8.5 times and Europe by 5.5 times. By 2030, North America is expected to grow by four times.

However, these are growth rates, not overall revenue value. While Africa’s fintech market is expected to be worth $65 billion by 2030, this is the smallest value of all.

The Latin America fintech market is expected to be worth $125 billion; the European market will be $190 billion; the North American market will be $500 billion, and the Asia-Pacific market will top $600 billion by 2030.

“We expect to see continued growth not only in developed markets in the US and Europe, but also in developing fintech markets in Latin America, Asia and Africa, where the inertia and friction are even greater,” said QED Investors managing partner Nigel Morris.

On why Africa is in a good position for fintech market growth, the report noted that globally, financial services are one of the most profitable sectors, but it struggles with innovation and customer satisfaction.

It informed that African companies have seized the opportunity to plug holes in the market through innovative fintech services that provide some financial freedom to local users. Mobile money services are a common trend among African telcos.

BCG noted that in addition to telcos joining the financial services sector, many banks have also launched fintech services to retain market share and accelerate their own digital journeys. It stressed that even in South Africa, some banks offer points-based reward systems or digital currencies of their own.

“In Africa, although cash is still king, fintech could be a vehicle to solve the access issue, as most of the population is still either underserved by banks or fully unbanked.

“As the youngest and fastest-growing region globally – with a median age of roughly 19 and projected population growth of an additional 1.2 billion people by 2050 – demographic shifts and earning-power increases will deepen the need for financial access,” reads the report.

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