Africa's FinTech sector is growing at a fast pace, with the number of start-ups operating in the space growing by more than 60% in the last two years, while funding has hit new records.

This is according to Disrupt Africa's Finnovating for Africa 2019: Reimagining the African financial services landscape report, which finds the number of active FinTech ventures across the continent has grown to 491 from 301 in 2017.

According to the report, South Africa, Nigeria and Kenya remain the main three markets, with 141, 101 and 78 active ventures respectively, accounting for 65.2% of Africa's FinTech start-ups.

"Yet the share of the overall total claimed by these three countries is in decline as the sector spreads across the continent, with FinTech start-ups tracked in 28 African nations. Though the big three markets are growing, the biggest developments are occurring in other markets, with countries like Uganda, Ghana and Egypt in particular seeing their local FinTech spaces explode," according to Disrupt Africa.

A similar trend can be seen in terms of the type of platforms being rolled out by FinTech entrepreneurs, the company suggests.

Though start-ups in the payments and lending spaces remain the most prevalent, the fastest growth is occurring elsewhere, with the number of start-ups active in areas such as investtech and insurtech, for example, more than doubling in the last few years.

Rebundling services

"Meanwhile, there is a marked increase in the amount of companies focusing on two or more distinct types of financial services, as African FinTechs begin to 'rebundle' and we see moves towards fully-fledged, all-service digital banks on the continent. This is a process that is quickening as the amount of funding coming into the sector grows. African FinTech companies have raised just shy of US$320-million in funding since January 2015, and last year's total of US$132.8-million was the best year yet," Disrupt Africa continues.

Gabriella Mulligan, co-founder of Disrupt Africa, said: "The financial services landscape in Africa is following a very unique trajectory, as compared to other geographies. Most remarkable about this trajectory, is that is it being driven by entrepreneurs and their home-grown innovations. We hope this report affords our readers an interesting insight into the FinTech revolution taking place across Africa."

Tom Jackson, co-founder of Disrupt Africa, added, "No space has quite the potential impact of the FinTech space when it comes to impact - and profits - in Africa, with start-ups operating such platforms able to significantly address the major issue of financial exclusion on the continent and thus promote development in all sorts of other areas. It is exciting to see the speed at which the sector is developing, therefore, but also heartening to see the signs of maturation and consolidation that will ensure its ultimate success and longevity."

Investment in Africa

Of Africa's general environment for investment, Darryl Bernstein, Head of Dispute Resolution at Baker McKenzie in Johannesburg, said tech companies should ensure that their compliance with local content law is legitimate and upholds the purpose of the framework, and that the local criminal offense of "fronting" is not committed (the feigned use of a black economic empowerment partner to obtain contracts without actual value-add by the partner).

"Any company doing business in Africa should consider conducting a practical, risk-based compliance assessment of all their operations in Africa, tailored to the company's operation and following best practices. This includes investigating all reports of illegal or improper activities and promptly remediating all issues that are identified."