African Fintechs are tapping into a market valued at US$150-billion, according to a new report by McKinsey which showed that this market will likely grow by 10% per year to US$230-billion by 2025.

According to the market research and analysis firm’s Fintech in Africa: the end of the beginning report, Fintech firms have made strides in bumping up financial inclusion through digital finance offerings in markets including Kenya, Nigeria, South Africa and Ghana.

An excerpt from the report reads: “McKinsey analysis of multiple data sources shows that, as of 2020, the financial services market in Africa that is addressable by Fintech companies-including both Fintech and formal banking- was worth $150 billion.”

Payments and mobile wallets from Africa are “likely to grow fastest at around 20% per year” up to 2025. South Africa has a bigger share of this market at about 40%, other regional markets such as West Africa, including Ghana and Francophone West Africa are also poised for growth of 15% and 13% respectively over the next three years.

The report continues: “We anticipate that, as Fintech accelerates on the African continent, 11 key countries are likely to be at the centre of the market’s evolution. These countries, Cameroon, Côte d’Ivoire, Egypt, Ghana, Kenya, Morocco, Nigeria, Senegal, South Africa, Tanzania, and Uganda, together account for 70 percent of Africa’s GDP and half of the population of the continent.” According to the research, these 11 regional markets offer Fintechs and investors a favourable environment, including increased digital readiness and higher mobile and internet penetration.

Mobile penetration is more than 100% in most of these markets.

Africa’s Fintech start-ups have also been attracting the highest volumes of venture financing. Between 2020 and 2021, the number of tech start-ups in Africa tripled to around 5,200 companies and almost half of these are Fintechs.

These African Fintechs “have already made significant inroads into the market, with estimated revenues of around $4 billion to $6 billion in 2020 and average penetration levels of between 3 and 5 percent, excluding South Africa.”

Trends such as increasing smartphone ownership, declining internet costs, and expanded network coverage, as well as a young, fast-growing, and rapidly urbanising population are fuelling Fintech.