Flash Report /
Africa

Africa Fintech: Jumo funding shows VC appetite remains strong

  • Jumo recently closed a US$55mn funding round, bringing total capital raised to date up to US$146mn.

  • South Africa can still lay claim to the most vibrant and innovative fintech scene in Africa.

  • Our research shows that, like Jumo, many African fintechs are looking to move into new geographies.

Africa Fintech: Jumo funding shows VC appetite remains strong
Rahul Shah
Rahul Shah

Head of Corporate & Thematic Research

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Tellimer Research
5 March 2020
Published byTellimer Research

Jumo recently closed a US$55mn funding round, bringing total capital raised to date up to US$146mn, according to Crunchbase. The firm is active in six African markets (with plans to add Nigeria and Ivory coast on the continent, and Bangladesh and India in Asia). It has a suite of savings, lending and insurance products, and has disbursed over US$1bn of microloans to date, serving over 15mn individuals and SMEs. The firm employs over 300 staff across 11 countries.

African fintech is still in demand

A combination of poor levels of financial inclusion, a young and growing population, and increasing mobile phone usage (including growing smartphone penetration) makes Africa an attractive environment for fintech disruption. In 2019, African fintechs raised US$1bn (up 74% yoy). 

Table 1: Fintech funding over the past 5 years

Source: Partech Africa Tech VC report. *ROA – Rest of Africa 


South Africa still calls the shots

South Africa is home to around one-third of all African fintechs, including Jumo. Although the last couple of years have been fairly disappointing from a funding perspective (with Kenya and Nigeria attracting a growing share of capital), this Jumo deal shows that South Africa (and in particular, Johannesburg) can still lay claim to the most vibrant and innovative fintech scene in Africa.

Payments is the most active area in African fintech

Payments companies account for c40% of African fintech firms, with lending the second-most common activity (with around a quarter of all fintech firms). Around half of capital raised in 2019 was directed to payments-focused fintechs, including Visa’s US$200mn investment in Nigeria’s Interswitch, creating Africa’s first fintech unicorn.

It hasn’t all been plain sailing for Jumo

Jumo’s partnership with Letshego and MTN ran into some difficulties in Ghana last year, with a high level of delinquencies leading to a pull-back in loan disbursements. Jumo’s ability to raise additional funding despite this experience shows that investors believe in the fundamentals of the business model, and that improved data analytics will help Jumo steer clear of bad credit risks in the future.

Where to next?

Our research shows that, like Jumo, many African fintechs are looking to move into new geographies. Expansion of the product suite is also an area where fintech management is active. Other core growth strategies include identifying new customer segments/ niches, while investment in technology is also top-of-mind for senior management and shareholders.