Verdant IMAP Financial Institutions and FinTechs Survey, end of 2024/start of 2025: Key Insights Shaping Africa’s Financial Landscape
Africa’s financial sector is undergoing significant transformation, as institutions navigate a complex interplay of funding challenges, digital advancements, and evolving market dynamics. Verdant IMAP’s Financial Institutions and FinTechs Survey 2024 provides a detailed analysis of these trends, offering investors and industry leaders critical insights into the forces shaping the continent’s financial future.
Access to funding in 2024 proved more challenging for a substantial portion of the sector, with 46% of respondents reporting increased difficulty compared to 2023. The primary obstacles cited included rising borrowing costs, limited access to international capital, and weaker financial performance. Specifically, when institutions reported difficulty in securing funding, 33.33% cited limited local funding and 33.33% cited challenges accessing international funding, highlighting the dual pressures from both domestic and global markets. Consequently, 72% of institutions secured at least 25% of their funding from global investors, driven by the difficulty in raising local funding (44%) and a strategic preference for foreign capital (22%).
Despite these challenges, the demand for funding remains robust. All surveyed institutions plan to raise additional debt in 2025, and 56% are also seeking equity financing to support operational growth and portfolio expansion. This reflects the sector’s proactive approach to addressing funding needs amidst tightening liquidity and rising financing costs, which continue to influence capital-raising efforts across the continent.
Amid economic uncertainty, financial institutions have shown resilience in loan performance. A significant 77% of respondents reported improvements in Non-Performing Loans (NPLs), attributed to stronger credit monitoring, enhanced collection systems, and a focus on resilient borrower segments. However, inflationary pressures have led to increased operational costs for 77% of respondents, primarily due to rising wages and currency depreciation. Adding to the financial pressures, 67% of respondents anticipate further increases in hedging costs in 2025, reflecting ongoing currency volatility and higher interest rates.
The financial sector continues to prioritise technological innovation, with 78% of respondents implementing digital loan processing and automation systems in 2024. These advancements are not only enhancing operational efficiency but also reshaping customer engagement and risk management. Looking ahead, 67% of respondents plan to further automate internal processes, and an equal proportion are exploring embedded finance solutions to enhance efficiency and service delivery.
Sustainable finance is gaining momentum, with 56% of respondents allocating up to 25% of their capital toward climate-related projects. This underscores the growing recognition of the role financial institutions play in driving environmental sustainability. Additionally, social impact initiatives, such as gender-focused lending, have been widely adopted, with 56% of respondents integrating these programmes and 40% reporting a strong impact on client engagement.
Despite economic uncertainties, financial institutions and FinTechs demonstrate agility, adapting to funding constraints, digital transformation, and evolving regulations. The increasing emphasis on climate finance, embedded finance, and digitalisation signals a sector poised for long-term growth and innovation. The market outlook suggests that institutions prioritising adaptability, digital advancements, and strategic funding diversification will be best positioned to navigate the evolving financial landscape.
For investors, the opportunities in Africa’s financial sector are evident—institutions that embrace structured capital-raising, leverage technology, and integrate ESG principles are best positioned for successful fundraising. As the market continues to evolve, staying ahead of these trends will be essential for those looking to capitalise on Africa’s financial transformation.