Africa's fintech space sees fast-growing M&A activity: report

Africa's fintech sector has been experiencing rapid growth in recent years, with a significant increase in merger and acquisition activities involving global brands, according to a joint report by the Catalyst Fund and Briter Bridges. Despite this surge in M&A deals, the region has yet to witness a fintech initial public offering (IPO), setting a distinctive trend in the global market. The report also highlights the higher proportion of investors investing at the pre-seed stage in sub-Saharan Africa compared to other emerging market regions. Dario Giuliani, Founder of Briter Bridges, and Maelis Carraro, the Managing Director of Catalyst Fund, recently provided valuable insights into the findings of the report in an interview with CNBC Africa. Giuliani noted that while Africa hasn't seen many fintech IPOs, there has been a rise in merger and acquisition transactions in the fintech space. However, the market still lags behind regions like India and Latin America in terms of IPO activity, with only a few large deals recorded on the continent. Carraro shed light on the increasing number of pre-seed deals in Africa, although the average deal size remains lower than in other regions like Latin America and India. She emphasized the growing maturity of the fintech ecosystem in Africa, indicating a positive trajectory for future investments in the region. Despite the lower average deal size at the seed stage, Carraro expressed optimism that as more investors recognize the opportunities in Africa, the ecosystem will continue to expand and attract larger investments. The report also highlighted the concentration of investments in specific product categories within the fintech sector across different regions, with payments and credit emerging as key focus areas. Giuliani pointed out the significant growth in the payment space, attributing it to the rise of companies like Flutterwave, Paga, and Chipper Cash. In addition to payments, lending, digital banking, and neobanks have also attracted substantial funding in markets like Nigeria, India, and Brazil. Furthermore, the discussion touched upon inclusivity at the founder level in fundraising activities. While raising funds from friends and family can provide a valuable runway for startups, Carraro emphasized that it is not a prerequisite for fundraising success. The report highlighted that companies that did not secure friends and family funding were still able to raise capital through subsequent investment rounds, emphasizing the diversity of funding sources available to entrepreneurs. In conclusion, the joint report by the Catalyst Fund and Briter Bridges paints a comprehensive picture of the evolving fintech landscape in Africa. With a surge in M&A activities, a growing number of pre-seed deals, and a focus on key product categories like payments and credit, the region's fintech sector is poised for further expansion and investment in the coming years.