Digital Transformation in the Sub-Saharan African Financial Services Industry
According to the 2019 Finnovating for Africa report by Disrupt Africa, there has been a 60% growth in the African FinTech ecosystem, evidenced by an investment raise of $133 million among 491 African FinTech firms within the last two years.
With the major FinTech hubs being in 3 Sub-Sahara African nations (Nigeria, South Africa & Kenya), this has spotlighted the innovative disruptions within the financial services industry in Africa.
These FinTechs exist as a cluster of firms with innovative business models and technologies that enable, enhance and power financial services. Actively operating in seven (7) core FinTech segments, the SSA hubs focus on providing transaction processing technologies, payments, and improving core banking and lending services.
This emergence of SSA as one of the fastest developing FinTech regions globally is attributed to its thriving local ecosystem driven by a deep talent pool, capital inflow, and increasingly favorable government policies, in addition to, the drive of local entrepreneurs for innovative financial solutions. Defining features of this ecosystem are talent, demand, policy, and capital.
- Talent: This has been on a medium to high end, with the fastest-growing workforce in the global market located on the African continent and limited employment opportunities. Innovation seems to be the only choice for a continent predicted to account for 25% of the world’s workforce by 2050.
- Demand: This has been on the high end due to the large population of underbanked businesses and individuals and the growing needs of entrepreneurs & SMEs for better financial services.
- Policy: Though on a low end, the government is working on setting up draft regulations for FinTech companies in Nairobi and an incubation support program in South Africa.
- Capital: Growth has been substantially driven by accelerator programs, educational initiatives, and international investors.
During 2019, Afro-Asia FinTech Festival in Nairobi, participants from Singapore extended a partnership invitation to African FinTechs, to develop digital mobile payments and Blockchain technologies.
Also on the list of active ecosystem players is MasterCard, a multinational finance corporation, creating an engagement platform form for FinTech innovators in Nigeria and Kenya. This engagement aims to build partnerships and technical support in growing African payment platforms.
Learn more about these innovations within the African FinTech hubs and their incurred investments here.
