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In 2021, African fintech startups accounted for 61% of the $2.7 billion in venture capital funding that was deployed on the continent, a new study has found. While its share of global fintech funding is just over one percent, the continent\u2019s fintech sector still recorded one of the highest year-on-year growth rates globally.<\/strong><\/p>\n According to the findings of a new Mastercard study<\/a>, African fintech startups \u2014 whose number grew from 311 in 2019 to 564 in 2021 \u2014 accounted for \u201c61% of the USD 2.7 billion deployed across Africa in 2021.\u201d The findings also show that fintechs\u2019 share \u201cof the record-high number of deals closed\u201d in that year was 27%.<\/p>\n When compared with the $131.5 billion that was raised globally, African fintech\u2019s share of the total remains very low \u2014 just over 1% of the 2021 total. However, in terms of the funding growth rate, the study noted that the continent \u2014 the Sub-Saharan Africa region in particular \u2014 had one of the highest year-on-year growth rates globally. The study report explained:<\/p>\n In the Sub-Saharan Africa (SSA) region, fintech startups recorded 894% year-on-year growth in funding in 2021 \u2013 the second highest in the Middle East, Africa, and Pakistan region during the period, and the highest yearly growth rate over the past five years. SSA received USD 1.56 billion in funding, the highest in the region by a wide margin.<\/p>\n<\/blockquote>\n Concerning the funds raised by fintech startups per country, the study findings show that Nigeria, which is home to some of the continent\u2019s fintech unicorns, had in fact emerged as a leading fintech hub not just in Africa but across the Middle East and Pakistan. According to the study\u2019s findings, the West African nation\u2019s fintechs alone \u201caccounted for a third of all funding deployed into fintech in 2021.\u201d Within the country, fintechs\u2019 share of all venture capital raised during the same period topped 71%.<\/p>\n<\/p>\n Regarding why the fintech sector continues to get a disproportionate share of the funding, the study, titled the \u201cFuture of Fintech in Africa,\u201d points to the continent\u2019s longstanding financial exclusion gap and how fintechs are \u201cbuilding inclusion from the ground up.\u201d<\/p>\n Much of the sector\u2019s past and projected success in the future is also tied to improved smartphone penetration. As shown in the 2022 GSMA report<\/a>, there is an expectation that the number of smartphone connections will grow from the 6.2 billion seen in 2021 to 7.5 billion by 2025.<\/p>\n Meanwhile, the report suggested that Nigeria, along with South Africa and Kenya, will continue to drive the sector growth. However, the study suggested that the fintech sector growth rate will depend on regulators\u2019 and policymakers\u2019 continued prioritization of \u201caffordable internet and mobile penetration.\u201d<\/p>\n\u2018Record-High Number of Deals Closed\u2019<\/h2>\n
![\"Mastercard](\"https:\/\/www.cryptocabaret.com\/wp-content\/uploads\/2022\/11\/mastercard-study.png\" "\\"Mastercard")
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Fintechs and the Financial Exclusion Gap<\/h2>\n
![\"Mastercard](\"https:\/\/www.cryptocabaret.com\/wp-content\/uploads\/2022\/11\/gsma.png\" "\\"Mastercard")
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