Fintech can help African countries transform their economies. (Alistair Berg, Getty Images)
The African continent has embraced the mobile fintech revolution. Not only is it home to some 300 million users, the largest number of accounts in the world, but more than 500 African companies offer technological innovations in financial services. In addition, around 48% of active mobile money users worldwide live in sub-Saharan Africa.
But more than allowing millions of customers to connect and make digital payments, fintech is surprisingly driving Africa’s digital revolution.
Cellulant, based in Kenya, launched a mobile banking solution in 2007. A year later, it launched the first US dollar mobile banking app. In 2017, its “digital payments ecosystem” included more than 500 mobile projects connecting nearly 100 banks in 34 countries on the continent.
The company’s Growth Enhancement Scheme (GES) e-wallet has had a huge impact on Nigeria’s agricultural sector. It registered more than 14.5 million farmers, giving them access to digital vouchers on their mobile phones which were then used to purchase seeds and fertilizers. The immediate impact was to increase productivity: Cellulant’s claims on average, farmers’ incomes increased by over 157%.
For small businesses, digital solutions, especially in the B2B sector, rely on tailor-made fixed fee structures that suit individual customers. This allows for better planning (and eliminates the overhead and incidental costs associated with the paper model). The benefits of a digital platform, such as invoicing, payments, automated processing, shortened payment cycles, reduce the cost of doing business and reflect the fundamentals of the digital economy: agility and efficiency , and possibly growth.
Boost online commerce and education
The COVID-19 pandemic has exposed inefficiencies in the global financial system, including paper invoicing and delayed check payments, to name a few. On the positive side, this has allowed digital payments to take center stage.
PayU, owned by Naspers, operates in South Africa and 17 other high growth markets around the world. It empowers communities that would not traditionally have access to financial services, online payments and credit while removing risk for merchants. In South Africa, PayU Credit is partnering with some of the country’s leading credit providers, including Lulalend, which uses “technology and data science to finance SMEs with working capital loans in a way that traditional lenders don’t ”.
South Africa’s conversion to online payment solutions, mainly due to the pandemic lockdown measures, has been huge. According to PayU South Africa CEO Karen Nadasen in 2020 it saw “significant growth in e-commerce, with more and more transactions being carried out on mobile devices, up 35% from 2019 levels “. Perhaps the most exciting growth offered by mobile payments like PayU is the increase in spending on education, as people upgrade and prepare to be part of a changing workforce. According to PayU South Africa, there was a 67% increase in year-over-year spending in 2020 – the average transaction was $ 404, up from $ 136 in 2019.
Foster dynamic entrepreneurial ecosystems
The FinTech sector supports the growth of the vibrant entrepreneurial tech ecosystem and can encourage the adoption of regulatory policies and financing options for economic growth. This, in turn, can further accelerate the transition to a more robust and digitally-driven economy. By developing and sharing resources, cultivating a favorable regulatory climate for fintech startup companies and providing them with support to help them grow, African countries can transform their economies, boost early-stage technology and small businesses. businesses and help drive a continental digital revolution.
This article was sponsored and provided by Naspers.