In 2023, African Fintechs Face Investor Neglect, says Stears

Infostride News reports that the landscape of technology investments in Africa is undergoing a significant transformation, with fintech companies experiencing a decline in attention from investors. The Co-founder and COO of Stears, Abdul Abdulrahim, delivered a keynote address at the IATF 2023 conference in Cairo, shedding light on this shifting investment focus.

Abdulrahim highlighted that the surge in interest towards energy, particularly renewable energy, has led to a reduced emphasis on fintech investments in the region. In his analysis of the current investment climate, he revealed that investments in African fintechs in 2023 have not surpassed $3 billion. A report by Fintech Global further detailed that African fintech companies collectively raised $189 million in Q2 2023, marking a substantial 64% decrease compared to the funding raised in the same quarter of 2022.

The evolving landscape of technology investments in Africa became a focal point during Abdulrahim’s presentation. Traditionally, fintech has been a magnet for investors, but this year witnessed a decline in technology investments across the region, potentially falling below the $3 billion mark. The spotlight is now shifting towards essential sectors such as energy and water, acknowledging the fundamental importance of addressing basic needs for sustained economic growth.

Abdulrahim elaborated on this shift, stating, “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.”

Interestingly, the change in investment focus is not limited to specific industries but also extends to countries. Abdulrahim pointed out that there has been a noticeable shift in the countries capturing investors’ interest in terms of foreign direct investment (FDI). Traditionally dominant players like South Africa, Nigeria, and Ghana are now experiencing a redistribution of investment interests. Countries such as Rwanda, Senegal, and the Democratic Republic of the Congo are gaining increased attention from investors.

Summarizing the critical drivers for Africa’s economic outlook, the conference emphasized the significance of continued investments, both public and private. Adequate monetary and economic policies addressing challenges like foreign exchange and inflation were underscored. Additionally, investment policies aimed at attracting and safeguarding investor interests, along with the regional integration facilitated by the African Continental Free Trade Area (AfCFTA), were identified as critical pieces of the economic puzzle.

The IATF 2023 conference provided a platform for further exploration of Africa’s investment climate in a fireside chat. Miguel Azevedo, Head of Investment Banking, Middle East, and Africa at Citigroup, and Ismail Talbi, Senior Partner and MD Egypt at AfricInvest, shared their perspectives on Africa’s current investment climate, discussing challenges and opportunities in the region.

As the tides of investment interests continue to shift, Africa finds itself navigating a dynamic landscape where traditional sectors like fintech are facing subdued attention, giving way to the rising prominence of energy and other essential industries. This shift not only impacts specific sectors but also redefines the geographical focus of investors, signaling new opportunities for countries that were previously overshadowed by their more established counterparts. The outcomes of these changes will likely shape Africa’s economic trajectory in the coming years, influencing policy decisions and strategic investments across the continent.