In the past year, many people have wondered with all the developments that have occurred in the African fintech space if indeed the continent is the future of financial technology worldwide. The truth is that the potential that Africa holds is far beyond anything that has been seen so far in recent times.
African Fintech Holds Great Potential
The African Adult population holds significant potential. So much so that sources have indicated that the African adult population remains largely unbanked. Based on this, the adoption and the use of mobile technologies across the continent provides a basis for the creation of financial solutions that will solve the many banking problems that many on the continent face.
Many problems exist when it comes to the implementation of technology on the continent. From a lack of power to substandard implementation of hardware to the regulatory bureaucratic red tape that startups and entrepreneurs have to deal with, Africa seems to be the perfect mix for the next set of big things. Fintech startups will change the way her people interact financially. Kenya’s M-Pesa has proven to many that mobile banking in Africa can work given time and innovation.
Innovation has found a home as far as African fintech is concerned. With the rise of mobile money technology startups in Ghana, Nigeria, Kenya, and other places, it shows that the promise that Africa holds is far beyond what the eye can see.
The visits of technology superstars Jack Ma and Jack Dorsey have also indicated that the future of fintech in this new decade has a lot to do with Africa. Financially speaking, it has already been reported that over $320 Billion has flowed into the continent in terms of investments for fintech startups. The venture capitalists and angel investors that poured their monies into Africa must know something that everyone else doesn’t.
African Fintech has a Strong Foothold
Ghana’s premier mobile carrier MTN also had its IPO that raised about $200 million in 2018. Nigeria’s largest payments processor and fintech darling Paystack had also raised about $8 million in series A funding as well. Flutterwave, which is a fintech startup that offers one of the most robust Application Interfaces (APIs) in the Nigerian payments industry also had $20 million raised as well. Global internet payments giant Paypal has also played its part by investing in Tala which is a popular fintech lender in Kenya and Tanzania. A $170 million investment in the Nigerian lender Branch also indicated that African fintech might just be coming into its own.
2019 was a year that indicated strong gains for the African fintech space. Nigerian, e-commerce giant Jumia’s stellar IPO indicated that the possibilities are limitless as far as investments are concerned. Although the unicorn has had its share of troubles with investors, it seems that it will overcome them and takeoff to upstart the electronic commerce industry.
Nigeria’s Interswitch is also worthy of mention. The recent $1 Billion valuation of the unicorn has proven skeptics wrong about the kind of potential that the world’s largest nation of black people holds when it comes to card-based transactions. Visa has already given everyone 200 million reasons (in dollars) worth of investment already on the matter.
African Fintech also has its Internal Drive
While the focus for many is on the external inflows coming in, many haven’t seen that on the horizon, African fintech will be largely internally driven. One great example of note last year was the acquisition of Kenya’s Ihub by Nigeria’s CChub. This indicates that a trend is coming on the horizon; one where internal cashflows across the continent will prove to be as strong as the external ones too.
The Chinese are also Coming in Big Time
The Chinese haven’t been left out when it comes to fintech investments. In Nigeria, Opera-backed unicorn Opay and top Chinese phone manufacturer Transsion already has Palmpay as well. This shows that the African fintech space is one big ball of innovation-driven for profit. The Chinese will pout their monies in as well. This showed when Flutterwave last year entered into a partnership with Antfinancial so that Nigerian merchants can receive payments directly from Alipay users. Flutterwaves’ recent partnership with Binance to launch a Naira-based pair for the world’s largest cryptocurrency exchange by volume is also worthy of mention.
African Fintech Comes into its own
For so long, the “developing country” status had been given to the African continent. Many technology entrepreneurs had seen the potential in getting the African market which had been hitherto considered as sub-par due to weak governments, corruption, lack of financial inclusion and lack of technology adoption rates on board as a zero-sum game.
Now though, the very issues that were looked at as blockades to profits that can be made are now considered to be the very stepping stones that will raise a new breed of Billionaires on the African landscape. For a continent that has featured Billionaires in the previous generation with spurious means of income, this may be the first time that the new breed of technology billionaires will be featured in famous indexes such as the Blomberg’s Billionaires index and in Forbes magazine as well.
As the famous song goes in French West Africa: “Quelle Beau Soleil Celui D’Afrique” (the beautiful Sun Shines on Africa), its time that the beautiful Sun shines over her people when it comes to financial inclusion via technology as well.
What do you think? Is there a future for African Fintech?
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