Saturday, December 14, 2024

High funding costs hinder climate and digital transitions for Fintech

Fintech companies in Africa have nearly tripled in number since 2020, improving access to finance for people and businesses across the continent, according to a new EIB report released today. The report, Finance in Africa 2024 , highlights improvements in the African financial sector as well as constraints for the region’s economic growth.

“Fintech is revolutionising the way we think about finance in Africa,” said EIB Vice-President Thomas Östros. “By leveraging technology, we can improve access to finance for millions and foster sustainable economic growth.”

Africa’s fintech sector is thriving as digital finance expands much faster than traditional banking. The number of African companies offering new products and services in the area of finance jumped to 1,263 at the start of 2024 from 450 in 2020.

Yet obstacles to finance remain a significant constraint on economic development, with private-sector credit falling from 56% of gross domestic product in 2007 to 36% in 2022. The decline hinders growth in productive economic assets, impeding industrialisation on the continent.

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