- Nigeria received $1.2 billion in 2022 to fund and support fintech-based startups.
- South Africa led in electronic bank transfers, with 49.1% of respondents selecting their preferred payment methods.
- Kenya took the lead on the best payment automation stem, with 83.4% stating that their B2B payment systems were semi-automatic or fully automatic.
Within the past decade, the world economy has revolutionized into a more digital era. The technological progress of the continent is attributed to the rising technologies, ushering in the fourth industrial revolution. Among these emerging markets is Africa’s fastest and most lucrative economic activity; Fintech.
Africa’s fintech industry has grown exponentially over the past two decades. The endeavours of entrepreneurs and innovators have fueled a new approach to traditional financial systems. Essentially, it has ushered in a new B2B payment system that is reliable, scalable, available and faster.
This new trend met high enthusiasm from several countries within the region. Nigeria has steadily rained over Africa’s rising B2B payment industry by adopting new technology like blockchain. Unfortunately, its reign is shortly coming to an end as South Africa has taken a massive leap, followed by Kenya. It’s safe to say that Africa’s fintech industry has attained new top figureheads.
Nigeria’s fintech industry tops the continent’s market
With the new age of Web3 steadily ushering in a new approach to technology, numerous governments have urged their citizens to venture into such franchises. Among Africa, several names have to appear when talking about Africa’s digital transformation, but often Nigeria always comes first. In the past, Nigeria’s fintech industry has exceptionally grown through its government support and interventions.
Nigeria’s fintech industry is among the fastest-growing sector within the region. It is home to three out of the six unicorn startups in Africa that deal with B2B payment systems. In a recent article from Disrupt Africa, Nigeria received $1.2 billion in 2022 to fund and support fintech-based startups.
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It came as no surprise since the region has significantly supported its citizens to achieve complete financial inclusion.
Furthermore, according to PWC, Nigeria is among the first countries to embark on the fintech market. They reported that between 2011 and 2018 Nigeria’s fintech industry recorded more than $200 million. Remember, during this period, not many governments warmed to the idea of abandoning traditional financial systems to introduce new B2B payment systems. Africa significantly lacked the proper channels for marketing and the need. It was only during the COVID period did Africa’s fintech Industry gain its much-appreciated fame.
According to the CLS report, Nigeria’s fintech Landscape encompasses over 250 fintech companies, vital stakeholders, enablers and funding partners. Its positive approach to B2B payment systems has also developed its stakes in Africa’s crypto industry.
Nigeria is the first African country to establish a CBDC token by implementing similar technology behind the B2B payments system. Thus, Nigeria’s fintech industry has stood at the pinnacle of Africa’s market. This glory has, however, been challenged consistently through the efforts of Kenya and South Africa.
South Africa and Kenya dethrone Nigeria’s top rank in B2B payment systems
Competition is the best environment for innovation. The consistent struggle to become the best or better than your peers has driven the government to improve their country’s development. This urge for success has driven Africa’s fintech industry to where it is today.
According to Duplo, Nigeria’s long reign as the best B2B payment ecosystem has recently received quite the opposition. The report entitles “Exploring the State of B2B Payments in Africa,” surveyed over 1200 professionals from vital markets throughout Africa.
The candidates were distributed between Kenya, Ghana, South Africa and Nigeria, and experts initially expected the latter to dominate. According to the report, South Africa led in electronic bank transfers, with 49.1% of respondents selecting their preferred payment methods. Nigeria closely followed behind at 48.5%, Ghana at 34% and Kenya at 31.9%.
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Kenya took the lead on the best payment automation stem, with 83.4% stating that their B2B payment systems were semi-automatic or fully automatic. Nigeria trailed behind at 79.9%, South Africa and Ghana followed at 71.69% and 67.23%. South Africa took the lead again in invoice processing speed at 39.93%, barely surpassing Nigeria at 9.74%.
According to the World Bank, the African B2B payment sector represents a $1.5 trillion opportunity. Digital payment systems have now become a must-have component in homes and businesses. After the COVID pandemic, it became painfully clear that the digital age was necessary, and a rat race began between these countries to top the African market.
South Africa’s road to dominance
For some time now, South Africa has become the centre of most tech-based articles. Its government has recently made significant strides within its B2B payments sector as it continues to implement new laws to regulate the new financial system.
This comes as no surprise since South Africa consistently clarified its intent to dominate Africa’s tech industry. As the continent’s most industrialized region, many expected to lead from the get-go. Unfortunately, due to several setbacks like power failure, corruption, and undefined regulations, its B2B sector is steadily tracked behind Nigeria.
However, in recent times, South Africa has eagerly urged its citizens to embrace the B2B payments system and even support most fintech-based startups. In addition, South Africa is home to Africa’s largest Bank, Standard Bank Group, which recently announced its plans to venture into fintech. South Africa is also home to FirstRand, Absa Group, Investec and Nedbank Group, who have poured millions in investments to support the region’s fintech Industry.
Cape Town accounts for 75% of the country’s venture capital deals. Of the 500 entrepreneurial organizations, 20% are in e-commerce and Software-as-a-Service, while 15% are in Fintech. According to the VC funding, from January 2015 to May 2022, over 357 individual startups have raised $993,684,600 in funding slightly above Nigeria.
Within this figure, 28% (representing the highest portion) represented its fintech industry, showcasing its dedication to B2B payment systems. South Africa is also the home of Luno, a leading B2B payment system offering multiple capabilities.
As South Africa continues to dominate Africa’s fintech industry, we must not rule out its fall. The competition to dominate Africa’s B2B payment and Fintech sector continues as Kenya, Ghana, Tanzania, and Egypt improve their systems. Despite the Nigerians losing the battle, the war is far from over.