Africa’s Fintech Industry Expected to Grow 10% Yearly With Revenues Hitting $230 Billion

A new report by McKinsey & Co said the fintech industry in Africa would record 10% growth annually, with revenues soaring to $230 billion by 2025, up from the current level of $150 billion.

The report, titled Fintech in Africa: The end of the beginning, explained that the projection is based on the current pace of fintech penetration across the continent.

Fintech is the fastest growing startup industry in Africa, driven by the increasing smartphone ownership, internet penetration, declining internet cost and the continent’s tech-savvy youthful population.

Information contained in the report also showed that fintech services are not only efficient, but they are also 80% cheaper compared to those offered by traditional financial services providers such as banks. And this is yet another factor driving their adoption.

Among the fastest growing fintech products are payments and mobile wallets, followed by account management, wealth management and remittance services.

Note that the projected growth in the African fintech industry will not be uniform across the continent. Asides from South Africa which currently accounts for approximately 40% of the continent’s annual fintech revenue, Ghana and Francophone West Africa are expected to record 15% and 13% of the projected growth, respectively. This would be Nigeria and Egypt would each record 12% growth during the forecast period.

“Overall, we anticipate that the growth opportunity in fintech is likely to be concentrated in 11 key markets: Cameroon, Côte d’Ivoire, Egypt, Ghana, Kenya, Morocco, Nigeria, Senegal, South Africa, Tanzania, and Uganda, which together account for 70 per cent of Africa’s GDP and half of its population,” part of the report said.

Meanwhile, as African fintechs continue to grow, the report by McKinsey & Co has identified four key challenges they may have to grapple with soon. The challenges are: reaching scale and profitability, uncertain regulatory environments, managing scarcity and building robust corporate governance structures.