By Claire Moraa

Total fintech funding in Africa fell 45% year-on-year to $857M, down from $1.6B in 2023

Despite the low funding, fintech revenues are projected to surge to $47B by 2028

At the forefront of Africa’s startup ecosystem, fintech has consistently snatched up the top spots because of the large population of unbanked people bringing in the convenience of mobile payments and setting up a much-needed financial infrastructure. However, it seems the light is slowly dimming on the fintech side and funds are either drying up from VCs or being diverted elsewhere. Global fintech funding has seen a three-year downturn with 2024 the worst performing year yet at $95.6 billion.

Why This Matters: Fintech startups, just like any startup may find it harder to raise capital in the short term, particularly early-stage or high-risk ones. So it’s not that the demand for fintech services has gone down, it’s just a tougher funding climate at the moment. From the ever-rising inflation rates, high interest rates and economic uncertainties, investors have become more risk-averse. They are chasing sustainability more than profitability so entrepreneurs have to prove themselves that they have a solid plan. The infrastructure must be laid out and air-tight checking off all compliance requirements.

While the investments may not be forthcoming, at least for now, the fintech is not entirely dead. In fact, the industry is expected to burgeon into a $47 billion revenue by 2028. 350 million unbanked individuals is a significant population that needs to be tapped and no investor will leave money on the table. As conditions stabilize, stronger fintechs will emerge with even clearer paths to profitability and capital is likely to return. However, it will flow toward startups with proven models, real traction, and sustainable growth strategies.

Situational Awareness: Fintech may look like its shrinking at face value but in true sense, it is shape-shifting. It is becoming more resilient to previous challenges and navigating newer channels and markets with new-found information with minimal funds wastage. In the long run, it only creates a sustainable model that is able to keep up with market demands and generate even more revenue.

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