Fintech startups in Nigeria raised $243 million within a year, acquiring the least funding among the Big Four.
The data by Afridigest, an African data and research platform revealed that despite Nigeria experiencing a 16 percent decline in funding in 2023, notable startups such as Moove ($66 million) and Lemfi ($33 million) raised substantial amounts.
However, among the big four countries in 2023, Egypt led with the highest fintech funding of $541 million followed by South Africa ($367 million), Kenya ($301 million) and Nigeria ($243 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 a year, according to experts.
A breakdown of the report shows that Nigeria’s fintech startups raised a total of $243 million through 60 deals monitored during the period.
“This is the highest number of deals reported in one year. Followed by, South Africa with 25 deals, Kenya with 23 deals and Egypt recorded 17 deals,” it said.
It said 150 African fintech startups tracked by the African funding startup collectively announced the raising of $1.55 billion in risk capital through 169 transactions.
While the overall fundraising in 2023 witnessed a 24 percent decline compared to the same period in 2022, the disparity becomes notably pronounced when distinguishing between equity and debt financing.
The report disclosed that equity funding for African fintech companies experienced a drop of 43 percent in 2023 compared to the previous year.
“Conversely, debt financing exhibited robust growth, surging by 34 percent to $647 million and $900 million for equity.”
Briters Bridges report revealed that Nigerian startups have raised $415 million in debt financing in over ten years.
“Debt financing experienced a notable increase while equity funding declined, despite the decline in equity, debt funding continued its upward trajectory, making up over a quarter of the total funding allocated to innovative companies in Africa,” it said.
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 report further disclosed the three top fintech sectors that acquired the most funding include the Banking/Lending sector, payments/cards and the financial management solution.