The opportunities for FinTech in the African region are tremendous.
As opposed to many stereotypical views, Africa is a huge market. A market with its specific rules, of course, but those who manage to understand and take advantage of them are going to reap huge benefits.
In the African countries, there’s an enormous market for mobile payment solutions since mant of the continent’s inhabitants use internet solely on via mobile phones. In fact, the permeation of mobile phones in the region is quite high. According to numerous predictions, in 2020, there’s going to be 525 smartphones in Africa.
Nigeria, South Africa, Egypt, Ethiopia and Kenya are the most significant mobile markets in Africa right now. And, although 80 million Nigerians — 47 percent of the population — are unbanked, 142 million Nigerians so have mobile network access and 92 million are internet users – all according to the Nigerian Communications Commission (NCC).
This is precisely why FinTech in that country went a different way – it concentrated on the mobile sector.
There’s a whole number of companies that have bypassed the financial sector and work directly with their clients. Tailoring their services to their client’s needs, they focussed on the mobile payment market.
Since inflation and various social problems are often creating a rift between the city and the village, the ability to send money to anyone, anywhere, solves many of these problems. Just like being able to use Visa, MC, UnionPay and WeChat, various e-Wallets and such. Today, many companies are offering such services, and one of them is CreditPilot. Right now it’s developing an innovative B2C pay system aggregator and a widened system of distributing payments, which is going to be launched in 2019. Once operative, it would offer e-Wallets, Blockchain transport, payment method aggregation, global payment remittance system and cryptocurrency services.
So why the mobile sector? A World Bank report notes that “Nigeria, like many countries in sub-Saharan Africa, has a growing population that lacks easy access to traditional financial services” – which is exactly why fintech innovators are filling the vacuum by connecting these people.
This is different from the what’s happening in developed countries with traditional financial institutions, where fintech startups are views instead as disrupting the traditional banking industry. For example, China’s Wechat – a popular messaging app with a wallet feature that enables users to send and receive money, make payments and so on from within the Wechat app, without connecting to a bank account for many transactions.
As more and more banks and financial institutions acquire or partner up with fintech startups, the trend we’re seeing is not so much financial industry competition, but an industry reinvention – one that has improved financial services companies’ profiles, their reach, products and services; and is, most importantly, is beneficial to banks, startups and customers alike. Fintech has thus become one of the most vibrant investment options in the African tech space. And will remain so for the foreseeable future.