“As we have seen in Asia and Latin America, there will be an explosion of startups that build upon the fintech infrastructure created over the past few years in Africa,” writes oviosu. “This will help create more jobs and accelerate economic growth”
world’s second-largest and second most-populous continent, yet it remains more than a decade behind the rest of the world in financial services. Fully 57% of Africans do not have a bank account, plenty of them in the larger economies.
It is still early days for fintech in Africa, but the signs are good. The middle class is expanding, and the needs of consumers are increasing. They want alternative ways to pay conveniently, to access loans for everything from rent or home purchases to cars, and to increase their wealth. Small and medium-sized enterprises , the lifeblood of any economy, want to digitise their businesses and are looking beyond traditional banks for the finance they need to grow.
The early fintech companies in Africa focused on essential financial services and had to build their own infrastructure, as none existed. This included digital wallets that work with or without mobile data; connectivity to banks and companies to allow for seamless money transfers and bill payments; and a physical retail distribution network that relies on local shopkeepers to give people access to financial services at neighbourhood stores., Orange, Paga and Wave led the way.
Some estimates put the number of fintech companies in Africa at over 2,500, providing online payments, in-person point-of-sale payments, retail lending, wealth management, insurance, open banking and cryptocurrency services. McKinsey, a consultancy, estimates that the total revenue of fintechs in 2020 was $4bn-6bn. TheAssociation, an industry body, estimates there are 621m mobile-money accounts in Africa. Overall, the mobile economy has created more than 300,000 jobs directly, and 1.
In 2023 we will see more significant partnerships between fintechs, accelerating offerings to consumers ands. Startups will focus on smaller, more niche, opportunities that build upon the infrastructure already created. For example, a company such as Doroki or Yoco, looking to emulate Square, a small-business payments platform, does not need to reinvent the wheel on core payments infrastructure, but can instead use the digital pipes laid by other businesses.
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