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MENA had second-highest growth rate for fintech VC funding in 2015-2023
The Middle East and North Africa (MENA) had the second-highest growth rate for fintech venture capital (VC) funding between 2015 and 2023, with an annual average growth of 33%. The volume of funding in the region tripled between 2020 and 2023 and MENA was the only region to see funding growth between 2021 to 2023, according to a new report by the World Economic Forum and McKinsey & Company.
The report – entitled Fuelling Innovation: Closing Fintech Funding Gaps – said global VC funding for fintechs grew steadily, from $18 billion in 2015 to $92 billion in 2021, driven by the low-interest rate environment as well as pandemic-induced digitalization.
However, this explosive growth quickly reversed as geopolitical instability and rising interest rates dampened valuations, leading to a decline to $30 billion in 2023 – marking a 67% decrease from the 2021 peak.
Exceptional fintech growth in some regions is bucking the decline in global VC fintech funding and highlights the potential of these markets to attract investment and foster a thriving fintech ecosystem.
The fintech funding landscape is marked by significant geographic disparities. Sub-Saharan Africa (SSA), LAC and MENA collectively received only 10% of global fintech funding during 2020-23, yet are projected to generate 15% of global fintech revenue by 2028.
Latin America and the Caribbean (LAC) has notably seen the highest compound annual funding growth, at an annual average of 37% between 2015 and 2023, despite an 81% decrease since the 2021 peak.
Despite this downturn, the fundamental drivers of fintech adoption remain strong, with the industry’s growth rate expected to outpace retail banking between 2022 and 2028.
The fintech industry has become the second most prolific creator of unicorns – start-ups that exceed a $1 billion valuation – just behind enterprise software. As of 2023, approximately 362 fintechs globally have reached unicorn valuation, and nearly 150 fintech unicorns have realized an exit.
As the global economy recovers and investor confidence returns, the fintech industry is well-positioned to attract renewed interest, fuelling the next wave of innovation and growth.
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