How can African fintechs secure investment?

At the recently concluded 2024 Nigeria Fintech Week, held in Lagos from 8 to 10 October, PalmPay’s managing director for Nigeria, Chika Nwosu, highlighted the need for fintech founders to strengthen investor confidence to drive more investment across the continent

He emphasised that working closely with investors is crucial for creating value.

Investment challenges

Nwosu pointed out that while the fintech ecosystem is not saturated, founders should focus on building investor confidence amid challenges such as currency devaluation and rising interest rates. “We have seen that most of the currencies of sub-Saharan Africa have plummeted against the US dollar, including the Egyptian pound, Naira, Rand, Cedi, Congolese franc, and Kenyan shilling. This devaluation is impacting the value of investments, which in turn, lowers investor confidence and makes it difficult for fintech startups to secure funding,” he said.

During a panel discussion titled "Safeguarding the Funding Pipeline for Fintech in Africa," Nwosu suggested that founders can tackle these challenges by diversifying revenue streams and expanding into multiple regions. He noted that dependence on one market could expose fintechs to economic fluctuations. “By entering diverse markets, fintechs can spread their risk and minimise the impact of instability in any single region,” he added. PalmPay, for instance, operates in Nigeria, Tanzania, Ghana, and other markets.

The 2024 Nigeria Fintech Week, themed "Positioning Africa’s Fintech Ecosystem to Accelerate Growth," focused on attracting investors with a long-term vision for Africa. According to FintechNGR president Ade Bajomo, “Investments in the fintech sector in Africa declined significantly, dropping 77% to US$186 million from US$826mn in H1 2023. The number of deals decreased 30% year-on-year and average deal size fell to US$4mn in H1 2024 from US$10.5mn in H1 2023. However, we still have many growth opportunities in the continent.”