• Thursday, March 28, 2024
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BusinessDay

Nigeria rides on Fintech to secure top investment destination in Africa

Fintech industry

Nigeria was ranked the top startup investment destination in 2019, thanks to its attractive Fintech industry with raised most of the funds, an annual funding report by WeeTracker shows.

Africa’s largest economy was ranked top both for the number of deals done and for their value as startup investment received grew nearly fivefold compared to 2018.

Nigeria accounted for 49.5 percent share of African venture capital in 2019, by country. This was followed by Kenya’s 32 percent and Egypt’s 5.9 percent.

“The bumper rounds were largely recorded in fintech with the sector dominating startup funding yet again thanks to sustained interest from global payments giants backing African fintech companies,” WeeTracker said.

In November 2019, Visa paid $200 million for a 20percent stake in Nigerian payments processor, and also Interswitch made it Africa’s first Fintech unicorn.

Nigeria and Kenya were the continent’s top startup investment destinations, jointly accounting for 81.5 percent of investment received in 2019.

Egypt also recorded strong growth with investment more than doubling in the last year, largely thanks to the funding raised by Swvl, the bus hailing company, which raised $4 million in June and has also expanded across and beyond the continent.

In contrast, South Africa, typically a top startup investment destination, recorded decline in 2019 with both the number and value of deals dipping.

In gathering the data, WeeTracker’s used a methodology that covered private companies that raised investment to operate in Africa irrespective of where they are headquartered. It also only covered deals that were verifiable via press release, the startup or investor or regulatory filings.

New interest in African Fintech emerged from China with OPay and PalmPay, two new payments companies in Nigeria, jointly receiving over $210 million in funding predominantly from Chinese investors.

Last year, startups operating in Africa received a total of $1.3 billion in startup funding. Going by to Weetracker’s methodology, it’s the first time annual Africa-focused startup funding has crossed the $1 billion mark.

Analysis of the data revealed that the sizes of funding rounds also got bigger in 2019 as 26 deals (equaling 6% of the deals total), accounted for 83percent of total funding raised in 2019.

 

ENDURANCE OKAFOR