Despite growth and early-stage investment flowing into Africa’s fintech sector, most prominent fintech companies remain absent from the continent’s capital markets.
This was a central topic at the African Fintech Summit in Washington, DC, in the United States during a panel discussion themed “The outlook for capital market in the African fintech space” with Chuba Ezenwa, Managing Director, Head of Investment Banking Sub-Saharan Africa at Bank of America, and Miguel Azevedo, MD, Vice Chair, Investment Banking, Citigroup.
Over the past year, African startups raised over $1 billion in funding, according to Africa: The Big Deal.
The data insight firm that tracks funding of $100,000 and above noted that the sector’s share of total start-up funding increased to 47 percent from 42 percent in 2023, marking its highest proportion since 2021.
Yet, none of these companies transitioned to debt or equity capital markets for expansion funding, instead relying on venture capital, private equity, and strategic partnerships.
Ezenwa, the BofA investment banker, points to a confluence of issues stalling this shift. One is perception, or perhaps more accurately, reality. For years, African capital markets have struggled with limited investor confidence, weak liquidity, and inconsistent regulatory environments.
According to the investment banker analysts, several high-profile public offerings in recent years have left a sour aftertaste for institutional investors, leading to hesitancy around future listings, particularly in emerging tech sectors.
“There’s a credibility gap,” Ezenwa said. “Investors are not only cautious due to past IPO performance but also because fintechs themselves haven’t built a track record in public transparency and regulatory scrutiny.”
On the debt side, opportunities remain largely untapped. Instruments such as commercial paper and short-term notes could offer fintechs a steady path to fund lending operations, especially as many scale into credit, payments, and remittances, Azevedo, the Citigroup investment banker, said.
He added that low levels of market sophistication and regulatory fragmentation have made even simple debt raises cumbersome for private digital lenders.
He highlighted successful examples like Nigeria’s Moniepoint, which funds its lending through deposits (effectively becoming bank-like), and Egypt’s MNT-Halan, which partners with banks to securitise and sell its loan portfolio.
Turning to the stalled IPO landscape, the Citigroup boss reiterated the initial expectation of 2025 being a year for fintech IPOs. While he believes this will still happen, global challenges cannot be ignored.
He pointed out that markets with vibrant IPO activity typically have a strong local captive investor base, which is largely absent in Africa outside of South Africa, Nigeria, and perhaps Egypt.
“The lack of a natural home exchange for fintechs with regional strategies further complicates matters, leaving them vulnerable to global market sentiment. When the US IPO market falters, African fintechs are further down the queue for reopening,” Azevedo said.
Despite the current lull, both experts expressed optimism for the next 12 to 18 months. Azevedo anticipates seeing African IPOs, with a potentially new trend of listings on Middle Eastern exchanges, particularly Abu Dhabi, gaining traction.
Ezenwa, on the other hand, highlighted the ongoing convergence among larger FinTech players (payments moving into credit, remittances, etc.), potential consolidation in the sector, and the keen interest of strategic investors.
