Owing to the growth prospects of tech-focused start-ups, they will increasingly remain an investment bright spot, Vice President responsible for Legal and Strategy at the Ghana Fintech and Payments Association, Richard Nunekpeku, has observed.
Despite estimates by management consultant Mckinsey and Company that Ghanaian fintech revenues could reach US$18.6-billion by 2025, some analysts have expressed concerns that the broader global economic crunch will have a grave effect on funding to less-established entities in 2023 – particularly those in the fintech space, as investors adopt a more cautionary stance over returns.
However, Mr. Nunekpeku expects the recent performance of Ghanaian startups – which raised almost US$400million in 2022 – to be sustained, as existing and emerging products continue to address real-life issues; not only locally but also internationally.
On the domestic scene, 2022 was considered a very successful year with 47 deals valued at over US$400million according to data aggregator, Big Deal Africa.
This amount is nearly eight times more than the country achieved in 2021. As a result, Ghana was ranked fifth in funding raised on the African continent in 2022.
Nunekpeku stated that the value afforded by fintechs and their growth potential will ensure funding remains – even as the Ghanaian fintech penetration rate is expected to reach 8 percent by 2025, better than the continental average of 5 percent.
According to McKinsey’s analysis, the financial services industry in Africa has the potential to expand by approximately 10 percent annually; resulting in a market worth of around US$230billion in revenue by 2025, with the country expected to grow at 15 percent annually until 2025.
Already, the transactional solutions provided by fintechs could be 80 percent cheaper compared to those offered by conventional service providers.
As Mr. Nunekpeku notes, Ghanaian firms are getting out of their shells and expanding into other markets; and hopefully they will only continue to push boundaries further.
The youth-bulge represents a critical challenge to economic development; however, the fintech space offers veritable opportunities to the youth who are buzzing with ideas, energy and innovation, and we believe this is a latent potential that must be fully tapped.
With the right investments and continued progress through the demographic transition, in time large youth populations can become large, economically-productive populations which can drive economic gains – a phenomenon known as the demographic dividend.
