Egypt's fintech funding is expected to hike by 919% y-o-y in 2021, reaching an estimated $296m — compared to the $29m recorded in 2020 — according to Citi's latest report 'Africa & Middle East FinTech & e-Commerce.' The report looks at why fintech is booming globally and why the sector took off in Africa and the Middle East (AME) this year. According to the report, fintech companies in countries like Egypt and Pakistan are on the cusp of gaining traction/adoption. Meanwhile, Nigeria and Kenya are seeing growing interest beyond digital payments into new forms of credit, open finance, and cryptocurrencies. "Lack of access to basic financial services and growing affordability of mobile phones/data has created structural opportunities for new startups to serve the underbanked through internet enabled business models," according to Citi. It also mentioned that the availability of risk capital and a supportive regulatory backdrop are further fuelling the fintech agenda across the region. The report showed that fintech is booming globally, mentioning that 2021's annualised VC investments are up by 164% y-o-y, reaching escape velocity in the AME. Moreover, it mentioned that 2021 AME fintech investments are up by six-fold y-o-y. "The AME region is also home to leading examples of new business models, such as mobile money and P2P cryptocurrencies," according to Citi. Furthermore, the report found out that Africa was a pioneer of mobile money adoption, the GCC is experimenting with new technologies such as blockchain and new products such as BNPL, but in much of the AME region cash remains king. The report added that the AME is the region with the highest cash usage globally. According to Worldpay, cash accounted for over 50% of the AME's point of sales (PoS) transactions; 2.5 times the global average. According to MasterCard, cash accounts for more than 90% of transactions in Africa. Citi expects that the AME's growth in digital payment will continue at a high double-digit rate, especially in Africa, adding that among regional markets, the UAE is the most developed. Regarding the current popularity of crypto currencies, the report mentioned that the MENA/Sub-Saharan Africa had the highest growth rates for P2P crypto trading volume in 2021 by region — 62% and 51%, respectively — and four of the top ten countries with the highest crypto adoption rates were from Africa. Citi noted that the availability of capital and a supportive policy environment is being met by an increasing supply of fintech founders and tech talent — many of which have been trained internationally — who are heading home to build a digital future for their country.
