A new study by Boston Consulting Group (BCG) and QED Investors predicts that Africa’s fintech market will reach $65bn in revenue by 2030, representing a 13-fold increase over 2021.
The study, which was conducted in partnership with the African Fintech Network, found that the African fintech market is growing at a compound annual growth rate (CAGR) of 32%. This is significantly faster than the global average of 12%.
The study attributes Africa’s fintech growth to a number of factors, including the continent’s youthful population, which is increasingly digitally literate, and the low penetration of traditional financial services.
“In Nigeria, 73% of adults own mobile phones, yet the penetration of credit cards is a mere 2%,” said Aparna Pande, a consultant at BCG and co-author of the report. “This discrepancy presents a significant opportunity for fintech companies to bypass the limitations of traditional banking systems.”
The study also found that the payments and remittances segments are the most funded in African fintech, and are likely to remain areas with the greatest immediate potential for innovation. Banking services, on the other hand, offer opportunities for disruption in the long run.
However, the study also acknowledges that there are a number of challenges that need to be addressed before 2030. These include regulation, the low level of large-scale funding, and the increasing brain drain.
“However, the increasing interest from institutional investors is expected to boost funding and facilitate successful business exits, thereby encouraging local talent to innovate within the region,” said Pande.
The study concludes that Africa’s fintech market is poised for significant growth in the coming years. However, the success of the market will depend on the ability of governments and regulators to create a supportive environment for innovation.