According to a report by Boston Consulting Group (BCG) and QED Investors, Egypt, Kenya, Nigeria, and South Africa are at the forefront of Africa’s fintech growth. The report, titled “Global Fintech 2023: Reimagining the Future of Finance,” projects Africa to be the fastest-growing region, with a compound annual growth rate (CAGR) of 32% in fintech revenue until 2030. These four countries are expected to play a crucial role in driving this growth.
Globally, the report predicts that fintech revenue will increase sixfold, from $245 billion to $1.5 trillion by 2030. The study analyzes the growth of fintech companies across various sub-sectors, including payments, lending, deposits, insurance, wealth management, and financial infrastructure. It also examines the regulatory landscape for fintech companies and the impact of emerging technologies such as artificial intelligence, API-based open connectivity, and distributed ledger technology.
Despite facing some challenges in recent months, the report highlights the immense potential for fintech growth in Africa. Although African fintech funding experienced a 17% reduction compared to the same period in 2022, Nigeria remained the most active country in terms of fintech deal-making, accounting for a 32% share of total deals. Overall, African fintech companies raised $71 million in the quarter.
BCG and QED Investors emphasize that the fintech journey is still in its early stages, both globally and in Africa, and will continue to transform the financial services industry.
Even though financial services remains one of the most profitable sectors of the economy worldwide, it struggles with innovation and customer experience remains poor.
More than half the world’s population remains unbanked or underbanked, with the majority in emerging economies, and technology continues to unlock new use cases in leaps and bounds.
All stakeholders must therefore seize the moment. Regulators need to be proactive and lead from the front, while incumbents should partner with fintechs to accelerate their own digital journeys.
The rise of new technologies has created a need for next-gen infrastructure that can facilitate complex transactions in a more digital world – and systems that facilitate the delivery of essential services and benefits to the general public, such as digital ID and verification, can promote economic expansion, especially in emerging markets.Caio Anteghini, Partner at BCG, Johannesburg
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 is even greater. QED remains more bullish than ever about the future of fintech and its promise to improve the lives of billions of people across the world.Nigel Morris, Managing Partner, QED Investors