Fintech and open banking have transformed the traditional lending system by improving credit-risk assessment and instant payments, as well as expanding financial services to remote areas. In developing African nations, fintech, together with integrated artificial intelligence (AI) algorithms, offers even more opportunities to enterprises.
The continent’s rapid surge in the use of mobile technology and the increasing demand for microloans favor the use of AI. With approximately 28 million registered mobile money agents in 2024 and at least US$330 billion untapped credit demand in Africa, AI-powered fintech is becoming a necessity. By using AI-driven credit scoring systems, automated payments, and loan approvals, fintech start-ups are delivering tailored financial services to SMEs and underserved communities.
According to Global FinTech, Africa will lead the global fintech revenue surge, with the continent’s income projected to increase thirteenfold to US$65 billion by 2030. These estimates indicate that digital resources integrated into financial platforms will open the door to expanding income sources to enable businesses and economies to develop.
AI enables financial institutions to access untapped markets, evaluate borrowers’ credit risks, and quickly expand financial inclusion. Using machine learning models, AI chatbots, and automated credit scoring, start-ups can personalize loan approvals and payments and improve customer experience. For instance, in Ethiopia, Kifiya, an AI-driven lending service, has facilitated roughly US$150 million in digital lending for more than 382,000 micro, small, and medium enterprises. AI–powered lending is therefore increasing financial inclusion by expanding accessibility to credit via mobile apps, alternative data, and embedded finance.
Who are the most active donors to Africa’s fintech and banking development?
Multilateral funding institutions, development financial institutions, and private investors are supporting Africa’s fintech industry via equity investments, loans, and grants. Among the most active investors during the past three years are Norfund, Development Partners International (DPI), Visa Inc., and the African Development Bank (AfDB).
In 2023, the AfDB co-financed a US$525,000 grant to create the African Fintech Hub, which acts as a single access point for all fintech activities in Africa. The amount of investment funding for Africa’s fintech sector rose to US$1.5 billion in 2023.
In 2024, the investments declined sharply, dropping to US$857 million. The recent mega deal whereby Egyptian fintech company MNT-Halan received US$157 million from the International Finance Corporation and DPI, amongst others, had a significant impact on the results of the year. Another investment that had a positive impact on the market was the DPI co-investment of nearly US$100 million in Moniepoint, a top Nigerian banking provider and one of the fastest-expanding fintech companies in Africa. Visa, a strategic investor, also channeled over US$10 million into Moniepoint, accelerating the integration of contactless payments and the expansion of fintech solutions.
Africa’s half-yearly fintech funding deals,2023-2024
Source: Africa FinTech Landscape 2024 Year in Review
In 2025, the Norwegian Development Finance Institution (Norfund) invested US$20 million into OmniRetail, a Nigerian-based fintech. This e-commerce platform is using digital apps to strengthen financial integration and access to credit, thereby enabling the growth of Africa’s SMEs.
The African Digital Financial Inclusion Facility (ADFI) has also received a more than €3 million additional commitment from the Agence Française de Développement (AFD) this year, which will bring AFD’s aggregate financial support to Africa’s digital financial inclusion solutions to over €5 million.
AI-powered fintech and banking as the backbone of Africa’s development
According to the World Bank, countries with a strong financial architecture and sector enjoy more economic development and a swift reduction in poverty and income gaps. The use of AI-powered lending in the fintech sector is therefore driving Africa’s development by:
Empowering underserved populations to have fairer and instant financial services: Most of Africa’s population is unbanked or underbanked due to the traditional banking process that increases the operational costs of SMEs, particularly women-led businesses. However, modern fintechs are using AI tools to analyze client data and new user registration to deliver effective and faster digital banking services in rural areas. For instance, Carbon, a Nigerian fintech, uses AI-powered chatbots and a mobile app to facilitate account creation and financial services without the need to physically visit the bank.
Capitalizing on non-traditional data for credit evaluation: Fintechs are using credit methods to assess spending patterns and the creditworthiness of borrowers who lack a credit history. Using AI algorithms, fintechs are automating risk scoring and loan approval, making small and short-term lending more accessible to SMEs.
“Fintechs are now becoming essential intermediaries for individuals, small family businesses, and SMEs to access finance by bridging the gap between financial institutions and users,” explained Ibrahim Ekmen, Senior Banking Specialist.
Simplifying payments, personalized lending, trade, and remittances: Fintechs such as Kenya’s M-KOPA integrate AI into their business by providing a pay-as-you-go (PAYG) model for solar energy kits and smartphones. The model enables customers to make affordable daily payments through mobile platforms like M-Pesa, and the synergy between AI and blockchain allows quick and secure transactions. AI analyzes variables such as compliance, transaction traffic, and cost variables to choose the effective routes and change fees accordingly.
Creating job opportunities and supporting investments: By developing new digital products and creating demand for skilled tech talents, AI-based fintech are creating an equitable financial ecosystem where MSMEs are obtaining funding, fostering innovation, and creating employment. For instance, in Kenya, M-KOPA reaches more than 3 million customers, has created over 16,000 jobs, and has injected at least KES 17 billion (US113.5 million) into the local economy. Essentially, the fintechs are changing how financial services are accessed and revamping the economies of Africa’s developing nations to enable sustainability.
Challenges and the way forward
Despite the opportunities and developments delivered by AI-powered fintechs, challenges nevertheless persist. One key concern is the skewed training of AI models, which reinforce biases in lending. Societal biases present in the training data prevent underserved rural communities from accessing credit. A few African nations have also initiated steps to directly regulate AI to protect clients’ data and ensure compliance with AI policies. As a result, the risks of privacy infringement and online fraud are rising. In addressing bias, the fintech sector requires continuous auditing and updating of AI algorithms to ensure equitable outcomes. Strengthening the regulatory policies and adopting ethical AI standards will also ensure the privacy of users’ data.
Wrap up
The fintech sector in Africa is transforming rapidly due to investment and AI integration, thus opening new opportunities for the continent’s development. Through innovations in predictive analysis and automation, AI enables instant loan accessibility to underserved populations, improving credit risk assessment, and simplifying payments. As a result, fintechs are promoting Africa’s sustainability by expanding access to capital and innovation and creating new jobs in finance ecosystems.
