Fintech industry

Financial technology, or the fintech industry, is one of the fastest-growing industries worldwide. Fintech is the union of financial services and information technology that has developed into one of the most widely used services all over the world. Fintech globalization has transformed financial information across several industries, starting from digital stock exchanges to e-commerce business models. Fintech has enabled efficiency and growth in all sectors.

Currently, the African fintech industry is growing strong and fast. The year 2020 brought intense challenges to every country and Africa was not an exception. After balancing all the hurdles, the African fintech industry has been on constant growth since last year. Jumia Technologies, one of the largest e-commerce startups in Africa, has been listed on the New York stock exchange recently. Instances like these on a global scale as acquired the attention of several countries to Africa. Jumia being listed in one of the top global exchanges in the world has proved what the country is capable of.

The Rise of Fintech in Africa

Several macroeconomic factors are driving the growth of the fintech industry in Sub-Saharan Africa. Increasing mobile and smartphone penetration, digital banking, and rising access to the internet are some of the chief reasons. More than two-thirds of Sub-Saharan Africa (SSA) is unbanked, which makes it the perfect landscape for the fintech industry to onboard numerous new customers.

Recently, the country witnessed rapid adoption of mobile wallet systems. Over 20% of the adults in the SSA region have mobile money accounts, which are the highest in the world. According to a survey back in 2019, several mobile money providers were planning on launching numerous related services like credit, savings, and insurance. Peer-to-peer transactions remain the most widely used service in these apps, with over 80% of the African population having access to mobile phones.

Increased investment in the funding of the African fintech companies has caused a surge in the industry’s valuation by 60% in the last two years. Global fintech giants like Visa, Paypal, Stripe, and others have heavily invested in the fintech companies in the country.

Most of the funding for the African fintech startups goes to companies in Nigeria, South Africa, and Kenya because these destinations have highly advanced ecosystems and the maximum number of fintech startups. Startups dealing with electronic payments and remittances have received the highest amount of investments. Remittances in African markets are higher than in any other region in the world and accounted for US$46 billion, back in 2018.

The Future of Fintech in Africa

Fintech is growing at a rapid rate. For Africa, one of the most positive aspects that will boost the growth of the fintech industry is the implementation of the African Continental Free Trade Agreement (AFCFTA). Despite the pandemic, national financial development strategies ensure economic development and increased job opportunities in the country. 

In the future, the industry will witness a growth in data aggregation. To maximize the potential of financial services technology, there must be access to quality data, both at an individual level and larger sets of semi-structured data for data analytics. African companies must invest to stabilize data analysis for enhanced customer services and advanced financial products and applications.