Africa’s fintech business is predicted to grow significantly over the next six years, reaching a valuation of $65 billion, with potential increases in work, investments, and policies.
The fintech revenue in Africa is expected to rise at a compound annual growth rate (CAGR) of 32% by 2030.
By then, the African fintech market would have a valuation of over $65 billion, based on a recent analysis from QED Investors and Boston Consulting Group (BCG).
According to the survey, the leaders of Africa’s fintech race are South Africa, Nigeria, Kenya, and Egypt.
A portion of this can be attributed to the absence of legacy infrastructure preventing these nations from investigating novel financial ecosystems to cater to their underbanked and unbanked populace.
In Africa, there are less than 500 million unbanked people and just over 410 million underbanked people.
Partner at BCG Johannesburg Caio Anteghini stated: “With smartphones offering significant opportunities in payments and lending for local champions with full-stack attacker models, fintech could be the vehicle to solve the access issue.”
“The fintech journey is still in its early stages globally and in Africa, and it will continue to revolutionize the financial services industry as we know it,” he continued.
According to BCG, Africa is leading the way in the fintech growth race, and by 2030, growth of 13 times is expected. Latin America, with a growth rate 12.5 times faster than the continent’s, comes in second.
Europe is predicted to increase by 5.5 times, and Asia-Pacific by 8.5 times. North America is predicted to grow four times by 2030.
But remember, these are growth rates rather than total revenue values. The smallest value of all is predicted for Africa’s fintech business, which is estimated to be around $65 billion by 2030.
The fintech industry is predicted to reach $125 billion in Latin America, $190 billion in Europe, $500 billion in North America, and over $600 billion in Asia-Pacific by the year 2020.
Nigel Morris, managing partner of QED Investors, stated, “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.”
According to the survey, financial services are one of the most profitable industries globally, but they also suffer with innovation and consumer happiness, which is why Africa is well-positioned for the fintech market’s expansion.
It stated that African businesses have taken advantage of the chance to close gaps in the market by offering creative fintech services that provide local customers some financial independence. African carriers are commonly offering mobile money services.
BCG observed that several banks have introduced fintech services in addition to telcos entering the financial services industry in an effort to maintain market share and quicken their own digital transformations. It emphasised that certain banks provide their own digital currencies or point-based reward programs even in South Africa.
Fintech may be able to address the access problem in Africa, where cash is still king despite the fact that the majority of people are either completely unbanked or underserved by banks.
“Demographic shifts and earning-power increases will deepen the need for financial access 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,” the paper states.
