Africa’s fintech sector is on a remarkable growth trajectory, set to quintuple its revenues by 2028. According to McKinsey, the continent’s unique combination of digital adoption, youthful demographics, and untapped potential is paving the way for a transformative future.
Fintech in Africa: a market full of untapped potential
McKinsey’s Redefining Success: A New Playbook for African Fintech Leaders report highlights that Africa’s fintech industry is gearing up for explosive growth, with revenues expected to jump from $10 billion in 2023 to $47 billion by 2028. What’s driving this surge? A young and tech-savvy population, combined with increasing digital penetration, is creating fertile ground for innovation. By 2030, mobile money usage is projected to reach 49%, cementing its role in advancing financial inclusion.
However, fintech penetration in Africa still lags behind global standards, currently at 5–6%. By comparison, Kenya, a leader in digital payments, has hit 15%, while the U.S. and Germany are between 6% and 16%. McKinsey identifies this gap as a massive opportunity for fintechs to address unmet needs through solutions like SME lending, embedded finance, and cross-border payments.
Despite macroeconomic challenges such as inflation and currency devaluation, the fintech sector has demonstrated resilience. Annual revenue growth has averaged 8% over the past five years and could accelerate to 10% annually by 2028, according to McKinsey.
Investment trends and challenges
The investment landscape for African fintechs is evolving rapidly. Between 2022 and 2023, equity funding fell by 37%, while debt financing surged by 182%, signaling a shift toward mature and stable ventures. According to McKinsey, this funding crunch has prompted a rise in mergers and acquisitions, consolidating smaller players into stronger, more competitive entities.
Regulatory hurdles and talent shortages remain significant barriers. Africa’s fragmented regulatory frameworks limit cross-border expansion, while the global demand for tech talent has drawn 38% of African developers to work for companies based outside the continent.
Nevertheless, innovation continues to thrive. Generative AI (gen AI) is becoming a game-changer for African fintechs, enhancing fraud detection, personalizing customer experiences, and streamlining operations. McKinsey highlights gen AI as a crucial tool for scaling businesses in an increasingly competitive market.
Collaboration fuels financial inclusion
Strategic partnerships are playing a vital role in Africa’s fintech ecosystem. According to McKinsey, collaborations between fintech disruptors, telcos, and banks are expanding access to digital services, including SME lending and cross-border payments. These partnerships leverage the strengths of each sector to create scalable and cost-effective solutions.
Emerging markets like Angola and the Democratic Republic of Congo are also showing potential, thanks to improved infrastructure and regulatory support. McKinsey notes that a strategy of “verticalization,” where fintechs deepen their presence in core markets instead of rapid geographical expansion, is proving effective for sustainable growth.
Mergers and acquisitions are further reshaping the landscape. By combining startups with complementary strengths, investors are creating robust entities capable of navigating an increasingly selective funding environment. This trend positions fintechs to scale while staying operationally focused.
Blockchain: driving africa’s fintech revolution
Blockchain technology is becoming a cornerstone of Africa’s fintech growth. While global blockchain fundraising dropped by 64% in 2023, Africa showed resilience with a modest 9% decline in the first half of 2024, according to a report by CV VC and Absa. McKinsey attributes this resilience to growing local adoption of decentralized solutions, which are helping address structural economic challenges.
In 2023, blockchain ventures in Africa raised $135.4 million through 17 transactions. Despite a challenging global environment, the first half of 2024 saw 12 new deals worth $34.7 million, a 9% increase compared to the same period in 2023. Blockchain now accounts for 6.4% of Africa’s venture capital funding and 12.5% of transactions—well above global averages.
McKinsey highlights blockchain’s ability to cut transaction costs and enhance transparency, making it essential for cross-border payments and financial inclusion. Remittance fees, which cost Africa an estimated $5 billion annually, could be reduced by up to 90% with blockchain-based solutions. The technology also addresses key challenges in identity verification and fraud prevention, providing scalable options for underserved populations.
As blockchain adoption deepens, its role in driving Africa’s fintech revenues to $47 billion by 2028 is becoming increasingly evident. According to McKinsey, blockchain is not just a trend—it’s a critical driver of innovation and transformation in Africa’s financial ecosystem.
Moral Lesson : In Africa, wherever there’s a phone, a fintech revolution is underway!
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