Report: Fintech Firms Received 62% of the $4.9 Billion Raised by African Tech Companies in 2021
Fintechs account for nearly two-thirds of the $4.9 billion that was raised by African technology firms during the past year. Fintech groups also dominate in terms of funding that exceeds $50 million, with a 40% share of the total number of tech firms. The Covid-19 Factor
Out of the $4.9 billion in funding that was raised by African technology companies in 2021, almost two-thirds of this went to fintech companies, data from a new report has shown. In terms of deals wherein the capital raised exceeded $40 million, fintechs accounted for 40% of such deals. Source: Africa Investment Report 2021.
As shown in the latest Africa Investment Report, the fintech dominance in 2021 eventually culminated into a period with “the highest number of single, non-M&A [mergers and acquisitions] deals above $100 million” on record so far. The report also shows that Nigeria has the biggest share of fintech firms that raised more than $100 million.
Meanwhile, the report suggested that the Covid-19 pandemic could well be the main explanation for the surge not only in the funding of fintechs, but non-fintech firms as well.
“Logistics and energy follow by volume of funding but the most recent wave of digitization — perhaps boosted by Covid-19 — is propelling sectors such as e-commerce, agriculture and healthcare,” concluded the study report.
Funding Highly Concentrated
However, the same report does concede that most of the funds raised in 2021 were concentrated in a few projects. The report explains: Although highly concentrated in a few cases, [which] only represents less than 3% of total disclosed deals but captures over 55% of total disclosed funding, this investment size carries significant weight and acts as a pull factor for several investors.
Besides equity financing, the Africa Investment Report data shows that debt financing is increasingly becoming a viable funding route. To support this assertion, the report points to the fact that 6% of total disclosed funding in 2021 was debt financing. Source: Africa Investment Report 2021.
In terms of the origins of the late-stage investors, the data shows that the United States is by far the biggest source of capital for Africa tech companies with a 62.5% share. In a distant second place was the United Kingdom, which had a share of 7.5%, followed by South Africa 6%, and Canada which accounts for 4%. Tags in this story Africa fintech, Capital raise, COVID-19, disclosed funding, MAS
What are your thoughts on this story? Tell us what you think in the comments section below. Terence Zimwara
Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route. Social Media Giant Wechat to Support China"s CBDC, Platform Expected to Boost Adoption Rate FINTECH | 2 days ago Jamaican Central Bank Says It Has "Successfully Completed CBDC Pilot" FINTECH | Jan 4, 2022
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