Nigeria’s fintech landscape has witnessed a noteworthy development over the past year, with startups in the sector securing a total of $243 million in funding. However, this figure places Nigeria at the lowest end among the “Big Four” African nations, according to data compiled by Afridigest, a prominent African data and research platform.
Despite facing a 16% decline in funding throughout 2023, several notable Nigerian startups managed to attract substantial investments. Companies such as Moove, which secured an impressive $66 million, and Lemfi, with a funding of $33 million, demonstrated the resilience and attractiveness of certain ventures in the Nigerian fintech space.
In the broader context of the “Big Four” nations in Africa, Egypt emerged as the leader in fintech funding for 2023, securing a substantial $541 million. Following closely were South Africa with $367 million, Kenya with $301 million, and Nigeria with $243 million.
While Nigeria reported the highest number of deals in a single year, reaching a total of 60, South Africa recorded 25 deals, Kenya had 23, and Egypt reported 17 deals, as detailed in the Afridigest report. The collective data revealed that a total of 150 African fintech startups announced raising a significant $1.55 billion in risk capital through 169 transactions.
Despite an overall 24% decline in fundraising compared to the same period in 2022, the report highlighted an interesting trend when distinguishing between equity and debt financing. Equity funding for African fintech companies experienced a notable 43% drop in 2023 compared to the previous year. In contrast, debt financing showcased robust growth, surging by 34% to reach a total of $647 million.
The top three fintech sectors that attracted the most funding were identified as the Banking/Lending sector, payments/cards, and financial management solutions. This shift in financing trends suggests a changing approach among venture capitalists and private equity firms, who appear to be more discerning in the face of global economic volatility and inflationary pressures.
Experts point out that this shift in investment strategies reflects a global response to economic uncertainties, prompting investors to reassess their risk appetite, especially within the tech ecosystem. In Africa, investors are increasingly seeking greater assurances from founders and tech companies before committing to fund their innovative ideas.
The funding landscape in the African fintech space indicates a nuanced evolution in the dynamics of investments across different nations, with each country showcasing distinct patterns in fundraising and investor preferences. The disparities observed underscore the need for a tailored approach to fintech investments, taking into account the unique economic, regulatory, and technological landscapes of each African nation.
As the fintech sector continues to evolve, stakeholders and policymakers are expected to closely monitor these trends and leverage insights from the funding data to inform strategic decisions. The story of fintech in Africa is one of resilience, adaptation, and ongoing transformation, and the coming years are likely to witness further developments as the industry responds to changing market conditions and investor expectations.
Source: LeadershipNG