As the fastest-growing start-up industry in Africa, African fintech raised over $1,3-billion in 2021 alone.
According to McKinsey research, the success of fintech companies is being fueled by several trends, including increasing smartphone ownership, declining Internet costs, expanded network coverage, and a young, fast-growing, and rapidly urbanising population.
African fintech has a significant impact on day-to-day life on the continent and with its current upward trend it can be perfectly poised to rapidly advance Africa’s global competitiveness with an increase in the exporting of fintech services globally.
These fertile grounds do have challenges. Regulatory uncertainties and differences between countries are a bottleneck, throttling the expansion of financial inclusion in Africa. This has led to the continent’s fintech’s calling for a pan-African regulatory body to define comprehensive regulatory policies for regions rather than countries.
Certain governments and the private business sector continuously work on providing regulatory policy frameworks for businesses, customers, and economies with the current focus on:
* Regulations – digital-only banks and fintech are influenced by but independently regulated from the traditional financial system regulations.
* Anti money laundering scrutiny – more regulatory bodies are insisting on compliance herewith, worldwide there is a clamp down on non-compliant companies. This requires the verification of information received from the client to avoid fraudulent, terrorist, or other illegal activities being facilitated, supported by other processes such as Know Your Customer.
* Consumer centrism – fintech must be vigilant in consumer education, especially the consequences of services and products that did not exist before, protecting the consumer from being exploited.
* Protection of privacy and security of data – stored personal consumer information is susceptible to cyberattacks. Fintech companies must comply and have the necessary security systems and protocols to secure sensitive data.
The Global Fintech Index of 2020 lists the top 100 fintech ecosystems and features four sub-Saharan African cities – Johannesburg, Nairobi, Lagos and Cape Town, which account for most of the continent’s fintech start-up funding.