Nigeria lagged behind Egypt, South Africa, and Kenya in terms of funding raised by fintech startups in the first six months of 2023, a new data has shown.
The data by Afridigest, an African data and research platform shows that among the big four countries, Egypt led with the highest fintech funding of $402 million followed by South Africa ($304 million), Kenya ($304 million) and Nigeria ($90 million).
Egypt is emerging as the tech powerhouse in Africa as recent data reveals its substantial lead over Nigeria in securing the most funding during the first half of the year, according to experts.
A breakdown of the report shows that Nigeria’s fintech startups raised a total of $90 million through 31 deals monitored during the period.
“This is the highest number of deals reported in H1. Followed by Kenya with 13 deals, South Africa with 11 deals, and Egypt recorded seven deals,” it said.
It said 75 African fintech startups tracked by the African funding startup collectively announced the raising of $1.2 billion in risk capital through 85 transactions.
While the overall fundraising in H1 witnessed a 21 percent decline compared to the same period in 2022, the disparity becomes notably pronounced when distinguishing between equity and debt financing.
Authors of the report disclosed that equity funding for African fintech companies experienced a drop of 42 percent in the first half of 2022 compared to the previous year.
“Conversely, debt financing exhibited robust growth, surging by 86 percent to $719 million for equity and $473 million for debt funding.”
This is an indication that venture capitalists and private equity firms which have flocked to Africa especially in Nigeria in recent years to take positions, are beginning to apply the brakes on investments.
Experts say this reflects a global response to high volatility and inflationary forces in many economies forcing investors to rethink their risk appetite, especially in the global tech ecosystem. In Africa, investors are demanding a lot more from founders and tech companies before committing to fund their ideas.
The aspect of funding raised among startups includes entities within the Banking/Lending sector, encompassing lending platforms such as MNT-Halan and Lulalend, digital banks like TymeBank and FairMoney, as well as asset financing platforms like M-Kopa and Planet42.