By Ebrahim Moolla, November 16, 2020
Africa’s mushrooming FinTech enterprises hold the key to meaningful upliftment on the continent as they deliver far more than just improved banking services to its massive unbanked market.
5 Minute Read
Fintech’s final frontier
Some 330 million adults, or 60 percent of the adult population, in Africa lack access to the most basic financial services. The sheer size of the unserved and underserved market in Africa means that Fintech firms can make a bigger difference on the continent than anywhere else.
African startups and established companies face numerous challenges like poor or absent infrastructure, low internet penetration, funding issues, political instability, and gender stereotyping, but the Fintech environment on the continent does hold advantages not seen in other parts of the world.
A space for collaboration
African Fintechs are not disrupting the financial services sector, as in many regions, traditional financial institutions have not found it viable to serve the market in any way at all. This means there is greater scope for collaboration, rather than direct competition.
And because the financial services market has such a low base on the continent, Africa is leading the world in sector convergence, the convergence of new technologies to solve logistical challenges and the potential impact of big data.
Based on Crunchbase data, the African Fintech sector comprises over 400 active companies, 80% of which are local companies, enabling payments, funds transfer, lending, and even wealth management. Nigeria, Kenya, and South Africa are the top Fintech hubs on the continent, accounting for the larger proportion of Fintech firms and attracting the lion share of investments.
In view of these environmental factors and developments, every year for the past 3 years, no other tech sector has attracted more funding in Africa than Fintech. In 2019 alone, African Fintech startups raised a combined $678.73 million in funding.
Government support needed
Fintech is spearheading the reshaping of the financial sector, with several key sectors benefitting from the development, and African governments are under pressure to maximise potential benefits by committing to infrastructure development, education and an equitable regulatory framework.
And the coronavirus pandemic may yet prove to be the catalyst for Africa becoming a digital economy, with resulting benefits for the Fintech sector. In a bid to curb the spread of the virus, the World Health Organization has been cautioning against the use of hard currency and encouraging the use of digital payments. This move has prompted African governments and regulators to enforce measures aimed at facilitating more cashless transactions.
Now more than ever before, Fintech is poised to become a crucial stepping stone that will propel Africa into becoming a truly digital economy. The sector remains a key driver for what many hope will be an African Renaissance marked by peace, prosperity, and cultural rejuvenation.
HANGAR49, as an outreach optimization business focused on building valuable human connections with the aid of digital technologies, is committed to supporting and partnering with Fintechs in Africa and around the world in their financial inclusion mission. Speak to us today to look at your options for uncovering revenue opportunities.