Justin Asher, Head of Strategy & Marketing at Upnup.

Anyone looking to launch an African start-up in 2023 must be sorely tempted to do so in the Fintech space (provided they have the relevant background and expertise). After all, Fintech has been on something of a streak on the continent. Most of the continent’s unicorns (start-ups valued at over US$1-billion) are, for instance, Fintech companies. It’s also the technology sector that’s attracted the most VC funding over the past couple of years. In the first half of 2022 alone, there were more than 123 deals, an increase of 84% on H1 2021 when it was already the dominant sector in terms of funding.

It’s also true, that despite the proliferation of African Fintech start-ups – there are at least 573 according to one estimate – opportunities to solve numerous financial roadblocks across the continent exist all around. These opportunities include solutions-based Fintechs geared towards banking the unbanked, payment apps, machine learning and AI powered Fintechs, the list goes on. Some of those are caused by government inefficiencies while others are the result of private sector players that are unable or unwilling to embrace the innovation needed to address them.

Knowing that, what lessons should anyone starting up an African Fintech in 2023 consider and apply before doing so?

Shifting consumer sands

In order to answer that question, it’s important to understand the broader context which has resulted in Fintech’s African explosion in recent years.

As both connectivity and devices (predominantly smartphones) have become cheaper and more prevalent in recent years, a growing number of African consumers have come to expect the same kind of experiences as their peers around the world do. Aided by the COVID-19 pandemic, this confluence of affordability and ubiquity helped fuel significant growth in areas such as e-commerce and online entertainment (earlier this year, Spotify revealed that Nigeria was the country with the second most streams globally).

But those factors have also allowed hundreds of entrepreneurs to address critical financial roadblocks in a number of areas including mobile money and digital banking, lending, savings, investment and crowdfunding, and cryptocurrency. All of these areas could, however, be broadly viewed as falling under financial inclusion.

And that’s critical given that around 65% of adults in sub-Saharan Africa are unbanked. Providing those people with the same kind of services and convenience as customers of even the most digitally-advanced banks is critical to the continent’s growth and future prosperity. But many of these players also innovate in areas that banks and other traditional players can’t, making their contributions invaluable, even to banked Africans.

Room for growth

The proliferation of Fintechs in Africa does not, however, mean that there isn’t still opportunity in the sector. Far from it. As an article published in Forbes Africa earlier this year points out, “Fintech has not scratched the surface of challenges in the continent still characterised by less developed financial infrastructure and an unbanked population.”

The trick for any entrepreneurs is figuring out which problems they’re best suited and skilled to provide solutions for. We firmly believe in Bitcoin as both an asset and a store of value. But we also recognised that, despite the high level of cryptocurrency activity in Africa, there are still people who are either wary of buying Bitcoin or who aren’t sure where to start.

As such, we figured that allowing them to buy Bitcoin by rounding up their day-to-day purchases would be an ideal introduction to the world of cryptocurrency.

There are dozens upon dozens of these opportunities across Africa, they just need to be identified and matched with the right solutions.

It’s also worth noting that the total addressable market is only growing too. While there is a long history of Fintech innovation that doesn’t depend on mobile internet connectivity, it’s noteworthy that by the end of 2020, just 28% of the Sub-Saharan African population was connected to the internet. Of those who aren’t connected, more than half live in areas with mobile broadband coverage but, for a variety of reasons, are unable to use it. As connectivity and device costs continue to fall, so will the usage gap, bringing additional opportunities for new and existing Fintechs.

Embracing opportunity

Ultimately then, anyone looking to launch an African Fintech in 2023 shouldn’t be disparaged by the high level of activity in the sector. We have barely scratched the surface when it comes to financial inclusion and innovation on the continent. In fact, as more and more Africans come online, the number of opportunities will only keep growing.

But what is crucial is that entrepreneurs identify the problems they’re best placed to solve, however basic they might seem and use their solutions as a base from which to expand and grow.