Cairo is Africa’s Leading Fintech Ecosystem in 2020, Kampala Leads Sub-Saharan Africa- Report
Egypt’s capital, Cairo is Africa’s leading Fintech Ecosystem and the only African Ecosystem listed among the world’s top “Ecosystems to watch” in 2020.
This is according to the Global Fintech Ecosystem Report (GFER) produced by Startup Genome LLC. The report is released annually in partnership with TWC, Crunchbase, Dealroom, Bella Markets and Tech Nation.
Surprisingly, Lagos did not feature on the list in spite of some significant news from the Fintech space in 2020. Prominent among these is Stripe’s acquisition of Paystack, a Nigerian payment aggregation startup. The ecosystem was only listed on the regions/ecosystems to watch list.
The ranking is based on a mix of quantitative (e.g., funding, exits, talent, focus and legacy) and qualitative factors (founders, experts and policymakers in the ecosystem).
The three most important factors considered in ranking the ecosystems include performance, funding and talent & experience.
The other ecosystems listed in the category include Bahrain, Copenhagen in Denmark, Curitiba in Brazil, Frankfurt in Germany, Kampala in Uganda, Kuala Lumpur in Malaysia, Manila in Philipines, Melbourne in Australia, Nur-Sultan in Kazahstan, Riyadh in Saudi Arabia, Sri Lanka and Tokyo, Japan.
How Cairo Fared…
Funding: According to the report, in 2019 Cairo attracted the largest number of investment deals in MENA, with Fintech being the top destination. Recall that Fawry, a local e-payment service provider filed an IPO for processing a billion transactions worth over $3billion.
Cairo has several fintech accelerators and funds. These includes the Central Bank of Egypt’s $58 million funds and Disruptech’s $25 million fund.
Market: Egypt has 95 million mobile users, the highest penetration in EMEA. It also has 14 million e-wallets, a young population, and several government initiatives aimed at financial inclusion.
With a young population of 20 million tech-savvy consumers, Cairo provides a perfect testbed for innovation and an attractive market for scalabilities such as expansions of Amazon’s Souq and Uber’s Careem.
Talent: The report shows that Entrepreneurs in Cairo can draw talent from over 150 universities and institutes producing over 500,000 annual graduates. The ecosystem also has over 40 incubators/accelerators and 80 working spaces.
Policy: In the wake of the COVID-19 pandemic, Egypt announced support for businesses through tax exemptions, additional social spending and business support policies such as tax and loan payment deferrals.
A Brief About Kampala
From 2016 to 2018, Uganda’s fintech industry had an average annual growth rate of 35 per cent, with almost half of the nation’s approximately 80 fintech startups operating in the payments sector.
DusuPay, a leading B2B payment gateway operating in 115 countries, integrates with mobile payment platforms in many African countries to promote intra-African trade.
Xante and Eversend are other examples of successful fintech companies that have raised pre-seed funding rounds ($100,000 in 2018 and $120,000 in 2019 respectively).
The country has over 16 tech incubation hubs, including The Innovation Village, Outbox Hub, Hive Colab, Design Hub, Makerere Innovation and Incubation, The Tribe etc.
Global top 20 Fintech Ecosystems Performance
Of the over 270 startup ecosystems studied for the report, the top 5 global Fintech ecosystems are Silicon Valley, New York City, London, Singapore and Beijing.
No single region dominates this year’s ranking, although the US is by far the strongest performer at country level with six spots in the top 20.
2018 has been described as a record year for the creation of Fintech unicorns across the globe. The increase was largely due to a bumper year in China which became the first country to produce the same number of $1B+ companies as the US.
The US has seen a steady increase in that tally while China has been dominated by a few major players (Tencent and Ant Financial). In 2019, 20 Fintechs globally achieved unicorn status bringing the total of Fintech unicorns created from 2014 to 77.
The report shows that overall, the growth in Fintech funding is slowing down globally. The median Seed round in 2020 stands at $500,000 (same as 2019). The median Series A round has increased slightly from $4,279,000 in 2019 to $5,000,000 in 2020.
Series B+ funding has seen a clear increase in both the number of rounds as well as total funding value with the sharpest increase in total funding value coming from the US, Europe and South America.
Fintech has remained a strong contributor to the global startup economy having delivered constant exit growth. Today, Fintech exits account for 19% of global exits across all subsectors.
You can download the full report here.
