M-PESA’s success proved that Africa’s financial system was ready for inclusive innovation, and that widespread trust was attainable.
Africa’s financial technology revolution didn’t happen overnight, but its speed and general impact in the past 15 years has been – and continues to be – nothing short of inspiring. Over the last decade and a half, the breadth of financial services Africans have access to has been greatly widened, from digital payments processing and seamless global remittances to accessible premium banking services and even crypto investments.
At the start of the 2010s, using debit cards to withdraw cash from Automated Teller Machines (ATMs) was arguably the most impactful financial advancement in many African countries. However, in Kenya, the mobile money revolution was in full swing with M-PESA, which launched a few years earlier and fundamentally affected the landscape of financial inclusion.
With just T9 keyboard phones, Kenyans could deposit, send, receive and withdraw money through a network of agents and retail outlets, services that would typically require trips to bank branches. Targeted at the unbanked population, M-PESA, fronted by telecommunication giant Safaricom, was immediately popular and lauded as “the most successful mobile phone‐based financial service in the developing world.”
The blistering success of M-PESA was an indicator that Africa’s financial services system was in need of inventive approaches to widen possibilities. It also showed that widespread trust – a longtime issue in the sector – was attainable. “What M-PESA really did was to put some doubt into that idea that many of Africa’s unbanked did so because they didn’t trust banks,” economic consultant Gregory Hunpiyah tells OkayAfrica. “It takes a lot of boldness to get people to buy into having a wallet on phones that aren’t smartphones and it paid off.”
Although their contexts are different, there’s correlation between the explosion of M-PESA in Kenya to the breakouts of Fawry in Egypt and TymeBank in South Africa, and the fairly recent ultra-ubiquity of Opay in Nigeria. The premise of making financial services available to unbanked and underbanked populations represents an opportunity that has led to the launch of dozens of products across the continent, while traditional banks have also had to evolve accordingly.
Leveraging the internet as the ultimate technological advancement and coinciding with the rise of smartphone technology, fintech in Africa quickly diversified and has grown more effective over the years.
When Interswitch started operations in Nigeria in 2002, its ambitions as an integrated payment processing platform for businesses and banks was lofty. The process itself was cumbersome, requiring upfront payment and filling of multiple forms. In its evolution, Interswitch offered digital and data solutions to banks, was key to the ATM revolution, launched its own payments card company Verve, and ran the popular payment platform Quickteller. By 2019, Interswitch became the first African fintech company to be valued at $1 billion and earn the unicorn status.
“Interswitch obviously paved the way for Flutterwave, Paystack, HUB2 and these other payments companies,” Hunpiyah says. Late last year, HUB2 closed its Series A investment round, securing $8.5 million in funding as it looks to expand its payment solutions services across French-speaking African countries. Founder Ashley Gauzeresaid his company is “creating infrastructure and unifying payments in the region like a Stripe-like platform,” referencing the well-known American payments unicorn.
Even amidst the market correction, the number of fintech companies in Africa almost tripled between 2020 and 2024
Design by Miguel Plascencia for OkayAfrica.
In October 2020, Stripe acquired Nigerian startup Paystack, which had been referred to as “the Stripe of Africa.” The merger and acquisition deal, which was reportedly worth about $200 million, was momentous, further proof that African fintech companies are creating world class products.
“That was the second deal that year that everyone went, ‘Wow!’ It was a little surreal,” Hunpiyah says. Two months before the Stripe-Paystack deal, cross-border payments company WorldRemit announced it was acquiring Sendwave, a remittance-focused company, in a deal worth over $500 million. “Granted, Sendwave operates from the U.S. but its focus is in Africa, and that’s what made the deal possible in the first place.”
During the COVID-19 pandemic, dozens of African tech companies received millions of dollars in investments, a show of optimism in a growing ecosystem. That funding spree has slowed down as the limitations of operating fintech startups in Africa have surfaced over the years, including low but growing level of internet penetration, stiff competition and oversaturation, regulatory obstacles, and a few cases of financial mismanagement. With investors, mainly outside the continent, being more selective about who to back, the question of scale and profitability have become more prominent than ever.
“A lot was made out of potential during COVID,” Hunpiyah says. “I think hard lessons were learnt after that and, to be positive, I think it’s shown that African startups can be resilient. Many companies have scaled back and tried new execution strategies to figure out what can work, which is something to write home about.”
Even amidst the market correction, the number of fintech companies in Africa almost tripled between 2020 and 2024, according to a report by the European Investment Bank. It signals a positive future outlook for fintech growth across the continent, as new unicorns are minted and more join the club. Last year, TymeBank and Nigeria’s Moniepoint joined the billion-dollar valuation list, stamping their impact on retail commerce and their role in improving the accessibility of banking services.
In its report, ‘Redefining Success: A New Playbook for African Fintech Leaders,’ McKinsey suggests that fintech revenues could reach up to $47 billion, depending on penetration across the continent reaching 15%. The report also shared six dynamics shaping trends in the ecosystem, including the acceleration of product innovation and fintechs integrating into other verticals. Opay is a great example of the latter, it evolved from the popular browser Opera into a superapp where users can open a bank account just with their phone numbers and carry out a myriad of transactions.
“It’s impossible to miss the impact of fintech companies that have proven themselves by just growing,” Hunpiyah says, referencing MNT-Halan, Egypt’s first fintech unicorn that started as a digital lending service. MNT-Halan has expanded into e-commerce and also offers buy now, pay later solutions.
Hunpiyah concludes that as much as it is about profits, the social aspect of African fintech will always be relevant because “these products are clearly improving quality of life for many Africans.”
