November 28, 2022

African Fintech Funding Drops By 57% In The Third Quarter Of The Year

The African tech ecosystem has taken a significant hit in Q3 2022 due to a lack of funding from investors.

In 2021, fintech startups successfully raised $2 billion in funding and once dominated the African startup funding space, but the significant increase signifies a problematic time for African startups – so why is that?  

Several factors have contributed to the slowdown, from the economic downturn which has forced many investors to deploy less capital to the decline in venture capital funding for crypto startups together this has caused global fintech funding to plummet drastically. Despite the negative numbers, fintech funding remains healthy and the decline in funding is a reflection of the wider economic picture right now.

According to the CB Insights State’s report, African startups raised just over $100 million in the last quarter of the year. Recent figures show that funding for African fintech startups has dropped by 57% in Q3 representing a significant decline from last year and the first quarter of this year.

The fintech market made unimaginable growth last year, making this year’s figures almost impossible to top. However, as the economic downturn continues to force many investors into deploying less capital, the lack of fintech funding has come as no surprise.

In the second quarter of the year, following the significant slowdown, many startups across the globe started to see a subtle decline despite being immune to the global downturn at first. The lack of investment negatively impacted many startups worldwide, but it had an even more catastrophic impact on African businesses. 

Additionally, the number of African tech startups also fell by 13% in the same quarter signifying a massive slowdown in African investment. 

Despite this news, early-stage fintech startups are still estimated to raise the most money, with TempApt’s $50 million funding round still being the highest amount an African fintech has ever raised. 

Kumba Kpakima

Kumba Kpakima is a tech reporter at POCIT. A documentary about the knife crime epidemic in the UK got her a nomination for the UK's #30toWatch Young Journalists of the Year.