Fintech revolution: A window for Africa to leap through

From Seychelles to Somalia, smaller African nations are rapidly expanding financial inclusion and making huge strides in cashless payment technologies and in the process helping to build Africa as a global centre of fintech excellence, a new report reveals.

More and more African countries are joining the top 100 global league of fintech hubs, as a wave of innovation washes over the continent. The latest global rankings show Africa topped the list of new entrants, with seven out of 18 new fintech hubs found in Africa.

Seychelles is among the new entrants, shooting to position 59, followed by Rwanda (61), in the Findexable Global Fintech Rankings Report 2021 titled, Bridging the Gap.

Tunisia and Zimbabwe are ranked position 68 and 76 respectively, while Somalia (79), currently experiencing a business re-awakening, is seeing its citizens transact more and more via payment apps linked to mobile network providers.

Cameroon (80), ranked as a lower-middle-income country and Ethiopia (83), have also officially joined the league of global fintech hubs, with more than 10 privately-owned fintech companies each.

“So-called emerging markets are natural sources of fintech innovation given the hunger for financial services among young, digitally savvy but underbanked populations,” said the report, which covered over 11,000 fintech companies across 264 cities globally.

From the report, it appeared that smaller nations and those reeling from the impact of civil wars are leveraging technology to speed the recovery of their economies by opening financial avenues connected to global payment platforms like World Remit.

The unprecedented growth of fintech across the continent has also been fuelled by restrictions limiting physical contact to help curb the spread of the COVID-19 virus.

Health and safety measures have resulted in the expansion of mobile technologies, a surge in mobile payments, the rise of e-commerce and the general growth of Africa’s internet economy to support virtual interactions.

“The pandemic has been a significant accelerator of both the speed and scale of fintech growth in many of these less developed countries,” said the report.

Africa’s three largest fintech nations, with developed ecosystems and over 450 fintech companies between them, are South Africa, Nigeria and Kenya.

Findexable report ranks Nairobi as the top city in Africa and 37th globally.

East Africa’s largest economy, which gained worldwide notoriety for its rollout of the mobile payment service, M-Pesa, has improved by 11 positions on the back of reduced mobile money transaction charges and an increase in limits per transaction to the equivalent of 3,000 US dollars a day, during the COVID-19 pandemic.

Over the last five years, Kenya has seen a significant rise in the number of digital lenders extending short term credit, from as little as five US dollars and upwards, to support small businesses and households during emergencies.

South Africa, an early mover in fintech regulations, is ranked second on the continent and 44th globally while Nigeria, Africa’s most dynamic fintech ecosystem, was ranked 57th globally.

This growth shows Africa is recognising the potential benefit of leapfrogging technologies and and capitalising on the opportunities represented by the 4th industrial revolution (4IR) after missing out on the first three.

“The other clear standout is the number of African countries to debut in the Index, particularly those in the sub-Saharan region. Nowhere is the transformative potential of fintech more evident,” says the Findexable report.

Out of 18 nations that have recently joined the list of the top-100 nations, seven are from Africa, four are from Europe, one is from Asia-Pacific, three are from Latin America and three are from the Middle-East. - Bird