Sing along, “Tsamina mina eh eh, Waka waka eh eh, Tsamina mina zangalewa, This time for Africa.”
Released back in 2010, on May 7, Waka Waka was the official 2010 FIFA World Cup song, sung and performed by the extremely talented Shakira.
Even till date, football enthusiasts and music lovers groove to the beats of this song released back then, when Africa hosted the FIFA World Cup on the homeland.
I am sure a lot of us know about this, but do we have enough information about the financial sector in Africa?
The last decade
Over the last ten years, the impact of financial technology services (also known as fintech) on Africa’s financial sector has been remarkable. Blooming as a vital aspect of growth in the African region, fintech happens to be a viable option to traditional banking in urban and rural areas.
Considering the fact that Africa still falls under the list of developing countries, fintech creates an environment that opens up the financial sector’s value chain and encourages efficiency gains.
Not just in Africa but across several countries on the African continent, fintech is enhancing financial inclusion and promoting innovation and productivity in significant sectors such as SMEs and agriculture that also make the backbone of the African economy.
2019 indeed was an amazing year for the African fintech. The sector was one of the hottest tech verticals in Africa that witnessed innovation and worked toward growth as the sector expanded to services beyond payments.
On the other hand, the Sub-Saharan Africa showed signs of slowing down. But overall, the continent has proven to be highly beneficial for fintech services and now offers access to millions of more people to financial systems enabled with cashless services using digital technology.
Why the African fintech safari?
Africa’s vital attraction is that the continent is growing while richer regions across the globe have halted/slowed down. As America, China, and Europe mature, Africa can still expect growth of workers at their best productive levels.
Technology like every other sector is a global enabler for fintech too. Mobility via technology is certainly relatable to Africa. As per an IDC report, tech multinationals have embraced a completely new and fresh approach in the past three to four years.
These companies now invest more in the local population and facilitate proper knowledge transfer and investment in country offices. This indeed helps enterprises stay in business for longer, rather than giving up after an unsuccessful quarter or two.
Igniting fintech opportunities in Africa
The financial services environment in Africa is following an out of the box trajectory, as compared to other geographies. The most significant element about this trajectory is it is powered by entrepreneurs and their home-grown innovations.
Another interesting fact about African fintech is that it is growing in a variety of sectors, getting richer while other parts of the world take a break. This is the major reason why foreign investors anticipate opportunities and are investing in the African fintech start-ups.
The hidden opportunity
It is true that locating and seizing a fintech opportunity in Africa for a fintech company looks tough, as the majority of countries on the continent are poor and battling social disturbances that come in the way of innovation. But on the other hand, countries like Kenya, Ghana, and Ethiopia are showing amazing signs of growth and also are the ones with immense potential to become economic powerhouses.
List of African fintech start-ups supported by global fintech giants
Founded by Matt Flannery and Daniel Jung, co-founders of the company develop tools to evaluate the creditworthiness of Africans.
Based out of Santa Monica, California, Tala builds services for the Kenyan market.
Introduced as a music ringtone company that supported musicians to earn money, it is now completely transformed and is all about payments.
Jumo works toward an ambitious goal of providing financial services to the 1.7 billion people in Africa who do not have access to financing to date or were the ones counted underserved by traditional banking companies.
As Africa, too, is becoming mobile-friendly, Paga happens to be one of the significant names in creating comprehensive mobile payment infrastructure.
Every dark cloud has a silver lining
Believe it or not, crisis and opportunity often co-exist. As per a report by PwC, even as the pandemic puts forth a precarious situation, there is an opportunity for fintech start-ups to thrive.
The report also mentions that the pandemic and lockdown scene has helped shift large volumes of financial transactions online. And as African fintechs are innovating new products, have a wider footprint, and cutting-edge technologies, the future of African fintech looks absolutely bright.
Liked this blog? Then check out our latest whitepapers on finance too to learn more about the finances domain.