Payments and lending are the biggest components of the South African fintech ecosystem, with 23% and 21% of fintechs specialising in these areas, broadly in line with their shares at the global level. Two areas that are overweighted in South Africa versus other emerging markets are insurtech and investech. Although the insurance and investment management industries are already well-established, coverage does not typically extend across the mass market.
In contrast, blockchain and software solutions are two areas with lower weights versus the global EM average, perhaps reflecting a small local skill base in these areas.

If we compare our current survey with that carried out in 2020, there has been growth in the proportion of insurtech firms, from 10% to 14% of the total ecosystem. This bucks the global trend, where insurtech has seen its share of fintech firms drop substantially. ‘Other’ fintechs have also seen their share of the pie rise, with areas like crowdfunding growing strongly.
In contrast, investech has dropped from 19% to 13% of the local universe; this may reflect the heavier regulatory burden that has recently been imposed. Payments’ weight has also declined, from 28% to 23% of the sampled firms, possibly due to increased competition in the market from traditional financial institutions and telecom companies (like Telkom), which is deterring new entrants.

Dealflow has slowed substantially in 2022
According to Fintech Global, South African fintechs secured US$389mn equity funding in 2021 via 53 deals, compared with US$82mn in 2020 (54 transactions) and US$69mn in 2019 (49 deals). Investment in 9M 22 reached US$182mn, via 24 transactions, although Q3 saw only four equity deals being completed. Super-app Curve recently raised US$1bn in loans from Credit Suisse.

The average value of South Africa’s digital payments transactions is rising steadily
The value of digital payments transactions in South Africa has increased by 15% CAGR over the past four years, reaching US$14.3bn in 2022 (annualised from 10M data). Of this total, US$10.4bn relates to digital commerce, US$0.2bn is from digital remittances and US$3.7bn is from mobile payments.
Key players in this space include PayPal, Google Pay, Apple Pay, traditional bank and card companies and fintechs. According to Mordor Intelligence, the top operators in real-time payments are PayU, iVeri, Fiserv, MyGate and Peach Payments; and, due to new entrants in the South African payments market, the market is moving towards fragmentation rather than the consolidation trend we are seeing in other EMs.

Our Ultimate Guide to South Africa fintech gives a more comprehensive overview of the sector and can be accessed here.