Uncovering the next tier

#themes: Hidden gems; Partnership opportunities 

Scope of fintech focus: In this first of a two-part series, we dive deeply into five fintech sub-verticals in sub-Saharan Africa (SSA), namely Neobanks, Remittances, CFO Stack and BaaS (or “Banking-as-a-Service”), Lendtech and Connected Finance. We touch on opportunities in North Africa, but the focus is on SSA. In part II, we will cover Payments, Mobile Money (which cuts across most other sub-verticals), Merchant Acquiring and Cards. Our aim is to assess the landscape and the threats to the incumbent financial institutions, and to uncover opportunities for them to partner with fintechs or make strategic acquisitions. Our research includes interviews with executives from four fintechs with head offices in four different countries, namely Moniepoint (Nigeria), Kuunda (South Africa), Asaak (Uganda) and eShandi (Zambia).  

Fintechs pose sizeable threats to incumbents: We estimate a Total Addressable Market (TAM) of $225bn-$237bn annual revenues for fintech in Africa. In 2023, African fintechs had 5.3% of the total financial sector revenue pool, but tailwinds for fintechs in Africa (large unbanked populations, growing mobile phone penetration, a young population and healthy GDP growth) will likely drive their share to 10%-15%, more in line with other markets. Disintermediation for banks in lending and foreign exchange (FX) trading pose genuine threats.   

The window of opportunity: The African fintech funding drought of 2022-24 showed signs of easing in 2025, with a 38% increase in median absolute deal value and 18% increase in absolute exit valuations in 2025 (although revenue multiples have remained under pressure in the last 18 months). However, the biggest pressure point on unprofitable fintechs is to carve out a path to profitability. This will likely lead to some commercial pricing changes to improve unit economics, but it also creates a window of opportunity for large financial institutions, and fintechs with strong balance sheets to acquire or partner with others that have strong franchises but are not yet (or are barely) profitable. There has been a 2.5x increase in the number of fintech exits in Africa from 2023 to 2025, including three initial public offerings (IPOs), indicating that large deals are back on the table.

Small and medium enterprises (SME) lending is where the biggest opportunity lies: We estimate that there is a $341bn funding gap for small businesses in Africa (12.3% of Africa's total nominal GDP, including 7% for the informal sector). This is the gap between the demand from small businesses for lending and the supply of loans to them. Sub-verticals that stand to benefit the most from this include Lendtechs (and Connected Finance), Neobanks with a lending focus on SMEs, and the Lending-as-a-Service (LaaS) infrastructure players.   

Risks faced by the fintechs: Of all the risks faced by African fintechs, we believe the key ones are generating a path to profitability, currency devaluation, the cost of retaining local tech talent and cybercrime (which has been enhanced by artificial intelligence, or AI). We thought AI might present more threats than opportunities, but the executives we spoke to believe that, on balance, AI is good for the fintech sector. We have assessed how recent regulatory changes are altering the landscape. With some exceptions, the regulators across Africa seem to be making responsible decisions that promote innovation, particularly with developments in cross-border remittances, but are also tightening oversight and governance of lending fintechs and personal data privacy to bolster consumer protection and promote trust in the digital financial system.  

Read PDF