Seeds of Opportunity: The African Growth Series
September 2024 | Issue 2
In this week's issue, you will learn more about:
- The Rise of Fintech in Africa: A Post-Pandemic Transformation
- AFRICA TREND: News Accessibility in Africa Making Headway in Global Trends
- AFRICA OPPORTUNITY: Golden Nuggets of Growth
- AFRICA TREND: Cobalt - The Hotly-debated Critical Mineral
- UPCOMING WEBINAR: FDI Masterclass – Attracting FDI for Scaling-up Agro-Industrials Processing in Africa
- UPCOMING EVENT: Critical Minerals Africa Summit 2024 | Cape Town, South Africa
- UPCOMING EVENT: Africa's Green Economy Summit 2025 | Cape Town
The Rise of Fintech in Africa: A Post-Pandemic Transformation
Since the onset of the COVID-19 pandemic, Africa's fintech industry has experienced remarkable growth, characterized by rapid expansion, increased investment, and a significant shift toward digital financial services. The surge in fintech and mobile money adoption has provided financial inclusion to the unbanked population, as nearly half of the continent’s 1.4 billion people still lack access to a traditional bank account. This has created a unique opportunity for telecommunications companies and fintech providers to reach communities that banks cannot, as the majority of citizens have access to a mobile phone and SIM card.
Innovation and greater access to technology have further accelerated this growth, positioning Africa as the fastest-growing fintech market in the world. Seed investments in the sector now average between US$3 million and US$10 million, reflecting the increasing investor confidence and the rising capital inflows.
Figure 1 - Fintech startups in Africa attracted over US$ 960 million in investment in 2023. The amount followed an overall increasing trend; however, it dropped compared to the last two years.
The pandemic served as a catalyst for digital transformation. With limited physical interaction, there was a marked increase in the demand for mobile and online financial services. This shift has been particularly advantageous for fintech companies, which expanded their customer bases as more individuals embraced digital payments, lending, and insurance solutions. Notably, payment solutions have led fintech innovation, attracting substantial venture capital across the continent.
Africa’s young, tech-savvy population has provided fertile ground for continued technological advancement. Currently, South Africa, Nigeria, Egypt, Kenya, and Ghana are leading the way in fintech investment.
Among these, South Africa stands out as a leader in financial innovation, offering a blend of developed technological infrastructure and a strong business-to-business (B2B) ecosystem. Despite global challenges and a decline in venture capital funding in 2023, South Africa's fintech market has remained resilient. Recent investments in companies like Peach Payments and Stitch demonstrate growing investor interest in the region.
Looking ahead, the next decade promises even more exciting developments for Africa’s fintech landscape. We can expect fintechs to offer increasingly tailored solutions for niche population segments, becoming more agile and cost-effective than traditional financial institutions. As a result, fintech companies will be better positioned to serve the unbanked and underserved populations.
Future investments in the sector will likely focus on building and integrating financial systems, transforming financial services into a horizontally integrated foundation for all sectors, rather than the current vertical approach. This integration will redefine the role of financial services, embedding them into daily economic transactions across the continent.
Figure 2 - The adoption of fintech in Africa is driven by several factors, including increased mobile phone penetration, rising internet access rates and the growing demand for digital financial services.
As Africa continues to embrace digital transformation, the fintech industry will play a pivotal role in shaping the continent's economic future. With sustained innovation and investment, fintech has the potential to revolutionise access to financial services, driving inclusive growth and fostering economic empowerment across Africa.
AFRICA TREND: News Accessibility in Africa Making Headway in Global Trends
The majority of Kenyan, Nigerian, and South African populations use online social media platforms to access news. Learn more in this video as Consultant Sarah Slabbert from Frost & Sullivan Africa discusses how people engage with current affairs, the benefits and risks of current practices, and how free speech is prioritised today.
AFRICA OPPORTUNITY: Golden Nuggets of Growth
With gold prices surging past USD 2,500/ounce, African nations are leveraging their vast gold reserves for economic stability. In this video by Frost & Sullivan Consultant Hannro Steenekamp, discover how countries like Zimbabwe, Ghana, and Tanzania are turning to gold to navigate global financial challenges.
AFRICA TREND: Cobalt - The Hotly-debated Critical Mineral
Cobalt is a strategic geopolitical resource that is predominantly found in the Katanga region of the Democratic Republic of Congo (DRC). Currently, the DRC single-handedly owns 56.99% of all known cobalt reserves in the world. It also produces 76.34% of the total global production and produces between 10- to 37 times more than its closest country competitors (Indonesia and Australia). Mining accounted for 17.85% of GDP, which shows that this sector is vital in maintaining and growing the country's economy. Yet, despite a near monopoly on cobalt, the DRC is among the five poorest countries in the world, according to the World Bank.
However, one should be optimistic about the DRC leveraging this resource for economic empowerment. As the old adage goes: A rising tide lifts all boats. But, this will depend on three key factors: (1) creating further stability in the region, (2) the government addressing human rights issues and enforcing labour standards, and (3) including local communities even more such that local economic hubs are created and spillovers from mining are reaped.
UPCOMING WEBINAR: FDI Masterclass – Attracting FDI for Scaling-up Agro-Industrials Processing in Africa
Frost & Sullivan Africa CEO & Partner Hendrik Malan will participate in the upcoming FDI Masterclass titled "Attracting FDI for Scaling-up Agro-Industrial Processing in Africa." The event will take place on Friday, October 10, 2024, from 12h00 to 13h30 SAST via Zoom.
This Masterclass is designed to convene industry leaders to explore strategies for attracting foreign direct investment (FDI) and advancing the development of Special Agro-Industrial Processing Zones (SAPZs) across Africa.
Don't miss this chance to gain firsthand knowledge from Africa's foremost business strategists.
Register now to be part of the conversation: https://lnkd.in/dWZXF_dB
UPCOMING EVENT: Critical Minerals Africa Summit 2024 | Cape Town, South Africa
Join us at the Critical Minerals Africa Summit (CMA) in Cape Town on 6-7 November at the CTICC, Africa's premier investment platform for the critical minerals sector.
Do not miss the session titled Unlocking Economic Growth through Corridor Projects: The Case of the Lobito Corridor and Beyond on 7 November at 14h00 SAST. This session will explore how corridor projects like the Lobito Corridor are driving economic growth, regional integration, and market access. By examining key infrastructure investments in Angola, the DRC, Zambia, and beyond, it highlights the potential for these projects to reshape regional value chains and boost socio-economic development.
This session will include the following industry experts:
▶️ Christopher Vandome, Senior Research Fellow, Africa Programme - Chatham House
▶️ Craig Parker, Research Director - Frost & Sullivan Africa
▶️ Tim George, Executive Director & CEO - Pensana
▶️ Martin Lokanc, Senior Mining Specialist - The World Bank
▶️ Teddy Onserio Onserio, Africa Investment Advisor - U.S. Development Finance Corporation (DFC)
🔗 Book your delegate pass: https://hubs.la/Q02QKCQL0
🔗 For sponsorship, exhibition, and delegate inquiries, get in touch: https://hubs.la/Q02QKHhk0
UPCOMING EVENT: Africa's Green Economy Summit 2025 | Cape Town
We are 5 months away from AGES 2025! Keep up with the event updates and news by pre-registering for the event today!🌍🌿
👉 Pre-register for AGES25 here: https://lnkd.in/dNb89zph
To find out more about the event, download the brochure here: https://lnkd.in/dd-fdbMW
To find out more about opportunities in Africa, please get in touch with Lynne Martin.
