Economic and industry analytics firm, Stears, has said that fintech companies in Africa are now receiving less attention from investors because investment focus is shifting towards energy.
The Co-founder and COO of Stears Abdul Abdulrahim, stated this while presenting a keynote at the IATF 2023 conference held in Cairo recently.
While dissecting the investment climate in Africa, Abdulrahim said the shift to energy, especially, renewable energy has led to low investments in fintechs this year.
According to him, investments in African fintechs so far in 2023 is still less than $3 billion. Earlier, a report by Fintech Global revealed that African fintech companies collectively raised $189 million during Q2 2023, marking a significant 64% decrease compared to the funding raised in Q2 2022.
Changing landscape in tech investment
Highlighting the trend of the changing landscape of technology investments at the conference, Abdulrahim said:
- “While fintech has historically been a major attraction for investors, this year witnessed a decline in technology investments across the region, potentially falling below $3 billion. The focus is shifting towards essential sectors like energy and water, recognizing the fundamental importance of addressing basic needs for sustained economic growth.”
- “Energy investments in Africa are experiencing a shift towards renewables, reflecting a global trend towards sustainability. Climate resilience and protection have become crucial factors for investors, both from a development finance perspective and in terms of long-term sustainability for the continent,” he added.
Shift from countries
The shift in investors’ interests did not only affect fintechs but also countries. According to the Stears Co-founder, in the realm of foreign direct investment (FDI), there has been a notable shift in countries of interest to investors in recent years.
He noted that traditionally, dominant players like South Africa, Nigeria, and Ghana are witnessing a redistribution of investment interests, with countries like Rwanda, Senegal, and the Democratic Republic of the Congo garnering increased attention.
Summarising the critical drivers for Africa’s economic outlook, the conference underscored the importance of continued investments, both public and private. Adequate monetary and economic policies addressing challenges like foreign exchange and inflation were emphasized. Investment policies aimed at attracting and safeguarding investor interests and the regional integration facilitated by the African Continental Free Trade Area (AfCFTA) were identified as critical pieces of the puzzle.
In a follow-up fireside chat at the conference, Miguel Azevedo, Head of Investment Banking, Middle East and Africa, Citigroup, and Ismail Talbi, Senior Partner and MD Egypt, AfricInvest, shared perspectives on Africa’s current investment climate, challenges, and opportunities.
