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Historically, geopolitical, technological and economic factors have often hindered the growth of the financial services industry across Africa, leaving millions without access to basic banking products. But in recent years, the continent has awoken to a new dawn.

Despite the challenges faced by the global economy due to the pandemic, Africa has experienced an influx of venture capital investment from around the world. Between January 2022 and May 2022, African start-ups received $2.7 billion in funding according to Bloomberg. This exceeded the amount invested in the same period in 2021 by more than double.

The journey to financial inclusion

Digital access to non-traditional banking and financial services has played a key role in overcoming financial inclusion challenges in the region. Greater access to financial services is particularly relevant for those who operate in the ‘informal economy’. Some examples include; the farmer who cannot obtain insurance on his crops, the mother who can’t save for her children’s future education, or the informal trader who can’t obtain a loan to grow their business and hire employees. By leveraging new technology, African-based fintechs are building solutions to resolve these economic issues.

Such is the story of long-standing Mambu customer and Pan-African microfinance bank, Carbon Finance. Their journey began in Nigeria as a lending platform to fill the gap of affordable micro-business lending. Sharing similar missions of empowering all people with financial access through modern banking experiences, Carbon selected Mambu to take their services to new heights.

In 2020, Carbon received a banking licence and kicked off a rapid evolution into a full-service, customer-centric bank and continues to support the underserved.

Africa’s growing importance on the world stage

Africa holds huge opportunities and displays many promising indicators of a region ripe for fintech investment and development.

In January 2021, the continent launched the Africa Continental Free Trade Area (AfCFTA), becoming the world’s largest free trade zone, which will ease how cross-border business is conducted and inspire new developments. In addition, The Brookings Institution predicts the potential workforce in Africa to be amongst the largest worldwide by 2030. The continent also holds a young and digitally-savvy population with an average age of just 19, comparatively, the UK average age is 40. The convergence of all these factors and developments has created massive market opportunities with potential of scalability and growth.

Kenya-based Mambu customer 4G Capital identified the gap between innovators seeking better financial access for scale and development. To bridge this gap, they aim to boost the creation of generational success through capital and knowledge.

4G Capital provides unsecured business loans along with enterprise training and access to digital solutions. This is achieved through a blend of relationship management with proprietary AI technology to minimise default risk. Clients can benefit from gaining access to solutions relevant to their current life and business stage.

The list of successful fintech start-ups continues to grow and unsurprisingly the solutions are closely related to what is happening on the ground. According to Disrupt Africa, the most funded fintech sector in 2021 was payments and remittance at $542.8 million, a growing demand largely driven by the diaspora sending funds back home to assist their families across the continent. Second, at $130.9 million in deal value, is lending, followed by blockchain at $46.2 million.

Despite the economic slowdown, Africa’s fintech industry is coming of age, and investors would be wise to take note of this digital shift.

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