Despite having been one of the least financially inclusive and one of the most costly regions to send money to, Sub-Saharan Africa (SSA) has become a global leader in money transfer services. This rise is mainly due to the different profitable African fintechs operating in the world’s ten fastest-growing economies and mobile payment services.

As technology advances infrastructures and sustainable development, fintech is particularly critical for emerging economies as the digital payments market is expected to reach a volume of $175.8 billion by 2026, according to Strategy&. By 2030, digital currencies and embedded fintech (integrated financial technology within other environments and ecosystems) are expected to elevate the cross-border payment sector to $2 trillion worldwide.

Here’s what we can learn from the fintech challenges and innovation climate in Sub-Saharan Africa, where payment solutions make for a renewed African industrialization of the 2020s.

Fintech: An infrastructural building basis

Having previously lagged behind in electricity accessibility, internet penetration, and technological readiness, Sub-Saharan Africa today is at the forefront of mobile money accounts per capita, mobile money outlets, and volume of mobile money transactions. And with a growing network of payment providers, the region has become one of the world’s leading payment services continents with an exponentially growing entrepreneurial environment.

Where 20 percent of the population has a bank account compared to 92 percent in advanced economies and 38 percent in non-advanced economies, mobile banking services in SSA inherently transform the region’s technology fabric. Ultimately, this brings greater exportability (as big and small transactions are more accessible), higher productivity, and inclusivity.

As a result of the mobile payments renaissance, Africa’s annual infrastructure investment has doubled to around $80 billion a year despite governmental restrictions. So, now that it’s clear that this is the region to pay attention to, how can we replicate the same impressive curve in other parts of the world?

Fintech’s role in improved socio-economic development is undeniable. And based on the African case where mobile data traffic and new broadband connections have increased by 30 percent since 2000, sustainable developments towards equality in any country are more than promising.

With 548 million active mobile money accounts registered in 2021 and more mobile money providers than ATMs or bank accounts, Africans have become less dependent on traditional banking products and improved connectivity considerably. These developments have opened the door to a more decentralized system and an accessible market. This shows why five of the ten most improved countries are African, and one-third of all financial reforms recorded globally goes for SSA. However, long-lasting significant technological or economic transformation is not without barriers or challenges for fintech or crypto companies—the same structural implications for innovation anywhere.

The African entrepreneurial landscape: From barriers to business

There has been an expansion of local cross-border banks on the continent since the mid-2000s. The African banking market is the second-fastest growing in the world and the second most profitable regionally. But with disruptive fintech laying down digital infrastructure, the advancements are most evident in money transfer services and mobile banking.

Africa is now the fastest-growing mobile telecom market globally and has become the world’s second-largest mobile market behind Asia. For example, The Nigerian mobile money startup Paga already has more than 8 million users in less than a decade of operations and processes $2 billion a year in payments. Based on their model, the company marries financial inclusion on the continent with timely, cross-border payment solutions, significantly strengthening technological cohesion in the region.

With other providers now taking the spotlight, including OPay, Mukuru, Sendwave, and TEMPO Payments, there is no doubt the rest of the world has a lot to learn from Africa, and not just Asia when it comes to building a fintech environment for the sake of national economies; blockchain technology seems to have been the missing ingredient.

You probably wonder how blockchain-based technology can change the game at the national level? Enhancing trust in economic exchanges is one approach, resulting in an increased focus on digital payment services from both the consumer and provider perspective and in Africa specifically. We already know that blockchain applications provide a secure digital way of verifying identity and securing feasible digital transactions. In addition, blockchain protects property rights as it traces copyright ownership by storing original data. This is obviously a preferred feature for fintech start-ups regardless of product. However, the possibilities of using blockchain are not without restrictions or regulation.

In addition to laws and regulations, scalability and high energy consumption are what challenges technological products. Blockchain technology or distributed ledger technologies (DLT) enhance efficiency, security, and transparency and provide lower trading costs. These computer log systems process, validate, and authenticate data and are even tools in the fight against corruption and cyberattacks. The South African Reserve Bank is one of SSA’s banks actively experimenting with distributed ledger technology-based payment systems. The bank has been a vital part in assessing the emergence of fintech, specifically regarding blockchain and DLT and its regulatory implications.

How security solutions transfer to other countries depends on how a financial framework can make DLT services widespread and not niche-specific. The Malta Digital Innovation Authority is a regulatory example tailored for fintech business if we look beyond Africa. And the so-called regulatory sandbox seems to be the way to go regarding blockchain applications, as in the Nigerian case where The Central Bank of Nigeria, along with the Nigeria Inter-Bank Settlement System, has come together to facilitate digital innovation by fintech companies. These are actors and initiatives entrepreneurs need to have onboard to expand their reach.

It’s also worth noting that the rise of financial inclusion and fintech in SSA has not been without governmental support or foreign investments. The pandemic has also caused a boost from a slow adaptation of new technologies to meet the demand. But more importantly, Africa has been a case where governmental support has happened for the sake of the entrepreneurial sector. SSA fintech alone has received fundings from the private and governmental sectors, expanding business opportunities and more fintech professionals in every societal area. Due to the growth in digital financial services, even micro-lending, insurance, and savings management are now all executed via mobile services and SMS, as an example. The central bank of South Africa has recently joined an initiative looking at how one can use digital currencies for international settlements. This is one example of how fintech challenges the game and political structures at all levels in society.

Fintech advances entrepreneurial solutions globally

As Africa’s population is expected to grow to 1.7 billion by 2030, the consumer market prediction is $6.66 trillion the same year. This makes for a flourishing entrepreneurial market, not to mention the probability of more tech-savvy Africans long-term. And being an engine of growth and a technological enabler, fintech alone will most likely contribute $150 billion to Africa´s GDP by 2022. These numbers explain how and why 40 out of 45 Sub-Saharan African countries already benefit from fintech—Nigeria, South Africa, and Kenya being the main hubs. And similar examples as payment providers leveraging blockchain are found in other sectors and industries where artificial intelligence is enhanced. Agriculture, health, mobility, energy, and e-commerce are amongst the most significant ones. Growth in outputs, employment, and the economy constitute the three greatest outcomes of investing in fintech.

We have seen that fintech and associated innovations can lead to macroeconomic gains, making financial growth more inclusive by providing technology-based banking services to consumers and users. Mobile banking seems to be the clearest example, but these are prosperous times and not only for Sub-Saharan Africa, where any business is at scale by new technologies. In a globalized world with ever-present constraints and regulations, there is no way around proper safety measures in applications or for banks to find a way to coexist with new actors such as payment providers and cross-border digital services.

Sub-Saharan Africa and African countries are building the basis for large fintech operations and can use their central banks to license and regulate mobile network operators domestically. This allows for an independent and regulatory private sector where key sectors such as oil and gas, agriculture, and energy are strengthened with the help of fintech worldwide.


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