(Ecofin Agency) - Fintech remains the top choice for investors in Africa's startup ecosystem, with 2024 continuing the strong momentum seen in recent years.

In 2024, African financial technology startups raised $1.034 billion, representing 47% of the total funding secured by startups across the continent. This marked an increase from 42% in 2023, according to data published by Africa: The Big Deal on January 13. Fintech continued to lead fundraising efforts, ahead of the energy sector, which raised $440 million, and transport and logistics, which garnered $288 million.

Last year, 2/3 of the startups funding in Africa went to only 2 sectors ?

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— Africa: The Big Deal (@AfricaTBD) January 23, 2024

The year began slowly for fintech companies. In Q1, they secured just $105 million, accounting for 23% of the total funds raised. By midyear, their share dropped slightly to 22%, with $185 million raised. This decline coincided with significant investments in the transport and logistics sector, including $100 million for Nigeria's Moove and $50 million for Benin's Spiro.

Fintech regained momentum in Q2, boosted by major deals. Nigeria’s Moniepoint raised $110 million, Egypt’s MNT-Halan secured $157.5 million, and South Africa’s Tyme attracted $250 million. These were among the largest funding rounds of the year.

Despite this rebound, the fintech sector continues to face a downward trend in overall funding since 2021. That year, fintech startups raised $2.4 billion, which fell to $1.8 billion in 2022, $1.2 billion in 2023, and $1 billion in 2024.

This decline raises concerns about the sector’s future. Fintech startups remain appealing due to their crucial role in driving financial inclusion and innovation, but they face growing competition and more selective investors. Meanwhile, the rising prominence of other sectors, such as energy and transport, may shift investment priorities in Africa.

To sustain their appeal, African fintech companies will need to innovate further, improve profitability, and explore new markets. These efforts will be critical to shaping the future of the continent's startup ecosystem.