A recent report by Disrupt Africa's "Finnovating for Africa" reveals a remarkable surge in funding for African fintech startups, totalling more than $2.7 billion over the last two years.

The fintech startup ecosystem continues its growth trajectory from a business activity standpoint, with the number of startups operating in the sector surging by 17.7% to 678 in 2023, compared to 2021.

However, funding has been the spotlight of unprecedented growth over the past couple of years. Since the publication commenced tracking funding in the African tech startup arena in 2015, 540 fintech startups spanning 25 countries have raised an astonishing $3,635,823,965. This sum is estimated to be at least threefold greater than any other sector.

Since the last analysis of the sector in June 2021, there has been remarkably impressive growth. Back then, 277 fintech ventures across the continent had accumulated a collective $874,968,465. In the subsequent two years, the number of funded ventures has essentially doubled, accompanied by an explosion in total funding. Over $2.7 billion has flowed into the ecosystem in the last 24 months alone.

READ ALSO - Kenya and Egypt Surpass Nigeria in Startup Funding Value for H1 2023

The annual total investment has been on a consistently upward trajectory since 2016, with a minor dip in 2019, reaching almost $1.5 billion in 2022. However, the ongoing year seems poised to experience a dip due to the impact of the global capital shortage. By mid-2023, just over $600 billion has been raised by fintech firms thus far. With a significant portion attributed to Egypt's MNT-Halan, it is likely that figures will reduce further as 2023 concludes.

Unquestionably, Nigeria leads the African fintech investment landscape. Since January 2015, the country has witnessed over $1.5 billion in investment across 257 rounds, significantly more than any other nation.

Remarkably, Nigeria tripled its total raised funding in the past two years, securing over $1 billion in investments for its fintech startups during that period.

READ ALSO - Tunisian Startup SeekMake Sets on Global Expansion with $539K Investment

Predominantly, fintech funding across Africa is channelled to the "big four" startup ecosystems: Nigeria, South Africa, Egypt, and Kenya. Together, these nations account for 91.2% of investment. Although this percentage is marginally lower than the 93% shared by the same four countries in 2021, a minor "trickle-down" effect is becoming apparent.

Traditionally, the two prominent sub-sectors within African fintech—payments and remittances, as well as lending and financing—have increased their combined share of funding to 81.2% between 2021 and 2023, up from 77% two years earlier. These categories have always held investor appeal due to their prominence in the industry.

Yet, the dynamic between the two has shifted. Payments' share of total funding has fallen significantly, from 62% to 43.4%, while lending's share has surged to 37.8% from 15% in 2021.

Culled from DisruptAfrica