African fintechs projected to reach $20bn turnover by 2028, growing at 30% annually (Report)

While a high proportion of their populations remain unbanked or underbanked, emerging and developing countries in Africa, the Middle East, and Latin America will be the main drivers of fintech sector growth in the coming years.

The combined revenue of startups specializing in financial technology (fintechs) operating in Africa is projected to reach $15 to $20 billion in 2028, up from $3 to $4 billion in 2022. This growth signifies an average annual growth rate of 30% during the period, according to a report published on October 24 by the consulting firm McKinsey & Company, entitled "Fintechs: A new paradigm of growth."

The report specifies that the revenue of African startups disrupting the finance world is expected to have the second-highest growth rate globally after fintechs operating in the Middle East (35% on average per year between 2023 and 2028).

In Latin America, fintech revenue is expected to grow at an average rate of 27% per year by 2028, compared to 18% in Europe and 12% in North America and the Asia-Pacific region. The global average is anticipated to be 15% per year.

On a global scale, the total revenue of fintechs stood at $150 to $205 billion in 2022, accounting for 5% of the total revenue in the banking sector. However, it is expected to more than double in the coming years, reaching $325 to $463 billion by 2028.

Emerging and developing countries in Africa, the Middle East, and Latin America will be the main drivers of this growth, considering their largely unbanked or underbanked populations.

The report also highlights that the fintech sector has experienced significant growth worldwide over the last decade. As of July 2023, publicly traded fintechs represented a total market capitalization of $550 billion, a figure twice the amount recorded in 2019. Additionally, over 272 fintech companies achieved unicorn status in 2023, with a combined valuation of $936 billion, compared to only 39 financial startups valued at over a billion dollars five years ago...Read more on Ecofin Agency

Source: Ecofin Agency