Fintech Startups in Africa: Oversaturated or Just Enough?

I recently stumbled on a post online where someone advised entrepreneurs to focus on solving Africa's energy problems rather than building more fintech solutions. He argued that we have enough fintechs already, and the energy sector is far more pressing. While I chose not to respond directly to the post, it made me reflect deeply on the African fintech space. This article will do justice in providing another context and perspective.

The African fintech landscape has grown rapidly in the last decade. With the rise of mobile phones and a young, tech-savvy population, the continent has become a hub for financial innovation. Startups are springing up everywhere, offering tools to send money, pay bills, get loans, and more. Companies like M-Pesa, Flutterwave, and OPay have made it easier for people to access and manage their money.

But is this growth too much? Have we reached a point where the market is overcrowded? Or is there still room for new players?

The Reality of Fintech Growth in Africa

To understand the situation, we need to look at the bigger picture. Africa has a population of over 1.4 billion people, and a large percentage of them do not use traditional banks. In fact, many rely on informal methods to save and borrow money. This gap is where fintech companies have stepped in.

Mobile money platforms, for instance, have been a game-changer. M-Pesa in Kenya paved the way, showing how technology can bring financial services to rural areas. Other companies followed suit, creating apps for everything from quick loans to investment options. These solutions have made life easier for millions, but the demand is still enormous.

There are also different needs across the continent. What works in Nigeria might not work in Tanzania. A digital bank in South Africa might face challenges if it tries to expand to Senegal. Each market is unique, creating opportunities for niche solutions.

Why Some People Think There Are Too Many Fintechs

Yes, many fintech startups are popping up, investors are pouring money into the space, and new ideas are emerging almost every month. This has created intense competition, especially in major markets like Nigeria, Kenya, and South Africa.

Some people argue that the market is too crowded because startups often tackle similar problems, or reinventing the wheel like payments, wallets, or loans, without much differentiation. It’s not unusual to see ten or fifteen companies offering the same type of service in one country. This can lead to a struggle for the same customers, which makes it harder for smaller players to survive.

The Untapped Potential

Despite the competition, Africa's fintech market is far from saturated. Millions of people still do not have access to formal financial services. These are the unbanked and underbanked populations, and they represent a massive opportunity.

For example, traditional banks often overlook rural areas. Many fintech solutions still focus on urban areas, leaving room for innovators to reach these underserved regions. Sectors like agriculture, health, and education are ripe for fintech integration. A smallholder farmer may need better tools to access credit, while a teacher may benefit from a savings platform tailored to their profession.

The rise of new technologies like blockchain, artificial intelligence, and open banking also means the industry constantly evolves. These tools can help solve problems in ways that were impossible a few years ago, creating opportunities for fresh ideas.

Challenges Fintechs Face

Of course, building a fintech startup in Africa is not easy. Infrastructure issues, like unreliable internet and power supply, can make operations difficult. Regulations are another hurdle. Each country has its own rules, and startups often struggle to navigate the legal maze.

There’s also the issue of trust. Many Africans are still cautious and skeptical about digital platforms, especially when it involves their money. Startups need to invest heavily in cybersecurity to protect their users and gain their confidence.

Finding skilled workers can also be a challenge. The fintech industry requires expertise in both technology and finance, and this talent pool is still developing across the continent.

Should We Focus on Other Sectors Instead?

The post I came across argued that entrepreneurs should focus on sectors like energy. There is no denying that Africa faces a serious power problem, as millions continue to live without access to electricity, and this affects everything from healthcare to education. Solving this issue would have a transformative impact, no doubt.

But the idea that we must choose one sector over another is flawed. Africa’s challenges are interconnected, and progress in one area often fuels growth in another. For instance, fintech solutions can help fund solar energy projects by offering microloans to rural households. Similarly, better financial tools can empower businesses in the energy sector to scale up and reach more customers.

The Way Forward for Fintech in Africa

Now, the question is not whether there are too many fintech startups, but whether these startups are solving the right problems. Because the market is big enough for players who understand the unique needs of their users. Success will come to those who focus on underserved markets, build trust with their customers, and leverage technology to create real value.

We dare say that fintech in Africa is still in its early days. And while some markets may feel crowded, the opportunities for innovation and impact are vast. Entrepreneurs should not shy away from this space out of fear of competition. Instead, they should focus on creating solutions that make a real difference in people’s lives.

So, is Africa’s fintech sector saturated or just beginning? The answer depends on where you look and how you choose to innovate.