The rapid growth of the financial technology industry (FinTech) has had a positive impact across the African continent, leading to a growth of employment, development of new skills, expansion and diversification of countries’ economies and has contributed to the ease of doing business for many sectors. Its development has been a viable alternative yet complementary to the tenets of traditional banking in urban and rural areas.
Moreover, FinTech has been a catalyst for growth in financial inclusion and innovation on the Continent. Although poverty is prevalent in many countries, with a large proportion of low-income households in the region, the remarkable growth in digital financial services created by FinTech companies like Kenya’s M-Pesa, Ghana’s iPay and Nigeria’s PayStack has meant that communities previously unable to experience its benefits are now able to access reliable, affordable and sustainable financial services. Kenya’s M-Pesa is a prime example, according to a government report published in 2012 – five years after launch, the company had 19.5 millon mobile money users and transferred ~ $8 Billion per year making up a total of 24% of Kenyan’s GDP. The company also provided a plethora of employment opportunities to Kenyan citizens, boosting the local economy.
Moreover, the continuous rise of FinTech companies across the continent has led to an increased influx of Foreign Direct Investors which is evident in the $200+ million acquisition of PayStack by Stripe, a global FinTech giant looking to expand across the continent.
Just as fintech is assisting smallholder farmers in the agricultural sector, small and medium sized enterprises, and the banking sector amongst others, it needs the protection of policymakers to ensure that effective regulations are adopted to mitigate cyber fraud and effectively keep the doors open for more fintech companies, banks and other telecommunication practices.
The future of FinTech is essential to the posterity of Africa as it could quicken the integration of markets in Africa to further ensure that the additional opportunities and benefits exist within the African Continental Free Trade Area.
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