The African fintech market is projected to reach Ksh.9.1 trillion ($65bn) by 2030, representing a 13-fold increase over 2021.
This is according to a new study conducted by consulting firm Boston Consulting Group (BCG) and QED Investors, a global VC based in the US.
This will make it the world’s fastest-growing region, alongside Latin America, which is predicted to see 12.5-fold growth.
North America, in contrast will only see a 4.4 times increase, although revenues there and in the Asia Pacfic region will remain far ahead of the rest of the world.
The study also projects a compound annual growth rate (CAGR) of 32 percent for African fintech revenue until 2030.
BCG tracks global revenue pools for financial institutions and services (such as banking and insurance) and applies a proprietary methodology to project these revenue pools until 2030.
The firm also tracks funding and descriptive data for nearly 32,000 fintechs worldwide.
Aparna Pande, a consultant at BCG and co-author of the report, explains that the projections rely heavily on these two proprietary data sources, along with the input of internal and external experts, the experience of VC partner QED in the sector, and interviews with top global fintech CEOs to test the projections against historical and expected performance.
“While we can never project anything with utmost certainty, we feel the projections are good directional indicators for the success of tracked segments and regions,” she says.
Growth due to ‘leapfrogging in technology’ and new fintech champions
BCG attributes Africa’s fintech sector growth to “leapfrogging in technology” and the emergence of new fintech champions.
The continent’s youthful population, which is increasingly digitally literate, combined with its low credit card penetration, presents a tremendous opportunity for digital banking.
“In Nigeria, 73% of adults own mobile phones, yet the penetration of credit cards is a mere 2%. This discrepancy presents a significant opportunity for fintech companies to bypass the limitations of traditional banking systems,” says Pande.
According to the New-York based consultant, payments and remittances are the most funded segments 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.