African fintech market poised for exponential growth, predicted to reach $150 billion by 2025

McKinsey’s analysis shows that fintech companies provide significant value to their customers. Their transaction solutions can be up to 80% cheaper, and interest rates on savings can be up to three times higher than those offered by traditional players. The cost of transfers can also be up to six times cheaper through fintechs.

The combination of funding and supportive regulatory frameworks suggests that African fintech markets may be at the beginning of a period of exponential growth similar to that seen in more mature markets such as Vietnam, Indonesia and India. According to the report, the key markets for fintech growth are Cameroon, Ivory Coast, Egypt, Ghana, Kenya, Morocco, Nigeria, Senegal, South Africa, Tanzania and Uganda, which together account for 70% of Africa’s GDP and half of its population. Within these markets, South Africa currently has the largest share of the market (about 40% of revenues), but Ghana and Francophone West Africa are expected to show the fastest growth at 15% and 13% respectively annually until 2025. Nigeria and Egypt is also expected to show strong growth of 12% annually during the same period.

The report noted that opportunities in each market will vary based on the level of digital maturity. Countries with more mature financial systems and digital infrastructure, such as South Africa and Nigeria, are likely to see more innovation in advanced financial services. Markets with growing financial systems and infrastructure, such as Egypt, are likely to see advances in basic financial services.

The report concluded that as the fintech industry in Africa continues to grow, it is important to consider ensuring the long-term sustainability and continued growth of the sector. “This may involve developing supportive regulatory frameworks, increasing access to finance and investment, and focusing on delivering value to customers through responsible and transparent operations. By addressing these key areas, fintech companies and other stakeholders, including governments and investors, can work together to create the necessary conditions for sustainable growth of the fintech sector in Africa,” McKinsey researchers said.