Analysis: How COVID-19 accelerated investment in Africa’s fintech space

The fintech space in Africa is experiencing a surge in investment, with a particular focus on growth stage businesses. According to Johan Bosini, Partner at Quona Capital, there has been a significant increase in startups raising capital, driven by a combination of high demand and supply. Foreign investors are increasingly attracted to Africa's fintech sector, with a growing interest in markets beyond traditional hubs like South Africa, Egypt, Kenya, and Nigeria. The recent acquisition by Network International in the payment space and the excitement surrounding PASDAQ are contributing to this trend. The pandemic has further accelerated the growth of fintech in Africa, as there is a pressing need to digitize financial services in response to increased demand. This has led to a flourishing ecosystem with early stage investors, growth stage investors, and late stage strategics all showing interest in acquiring businesses, driving more entrepreneurs to launch new ventures. The outlook for 2021 remains positive, with continued growth expected in Africa's fintech sector. Platform Capital takes a sector-agnostic approach to investment and sees a diversification trend in the tech space, driven by the impact of COVID-19. Apart from fintech, there is growing activity in sectors such as healthcare, food and agriculture, gaming, and media. The pandemic has spurred innovation in these areas, with companies leveraging technology to optimize processes and deliver new services. This trend is not unique to Africa but is also observed in other emerging markets globally, indicating a shift towards tech-driven solutions across various industries. While traditional investment hotspots like South Africa, Kenya, and Nigeria continue to attract significant attention, emerging markets like Egypt, Tunisia, Senegal, and Ghana are also showing traction in terms of venture capital investment. Egypt, in particular, is emerging as a promising market for disruption in financial services, fueled by the success of unicorn companies like Fawry. The outlook for smaller countries in Africa is positive, with notable growth expected, albeit not at the same scale as the larger markets. Overall, the venture capital landscape in Africa is diverse and dynamic, with new players and markets gaining prominence. Platform Capital's review of over 400 deals last year revealed key trends in the investment space, particularly in fintech, communication, and event digitization. The rise of contactless technology and the shift towards digitizing services in response to the global events industry's downturn were prominent themes. Companies are adapting to the pandemic by innovating and creating resilient business models, with a focus on addressing evolving consumer needs. In a recent funding round led by Platform Capital, Carabao raised $3 million for its pre-series A round, marking the firm's first investment in Nigeria. Carabao's unique approach to savings and wealth management, targeting low and middle-income populations, has caught the attention of investors. By democratizing access to financial services through mobile and internet platforms, Carabao is driving financial inclusion and promoting retail investor participation in formal capital markets. The company's focus on financial education sets it apart, emphasizing the importance of building wealth management understanding across the market. The venture capital landscape in Africa's fintech sector is thriving, with a diverse range of investment opportunities emerging across various sectors. The pandemic has accelerated the adoption of technology and innovation, leading to a robust ecosystem of startups and investors. As Africa continues to position itself as a hub for tech-driven solutions, the future looks promising for the continent's fintech space.