International Edition 23'

International Law


Mr Ibrahim Ojoye

Fintech is simply the financial technology used to speed up, automate and otherwise improve the delivery and consumption of financial services, principally through new software and algorithms. The direction of travel now seems certain, with almost all financial institutions expecting their customers to complete an increasing proportion of their transactions online or via mobile services.

Fintech makes it easier for customers to access services, while reducing operational costs for providers. The fintech sector has grown rapidly in Africa over the past few years, as technology has helped reduce banking costs for the benefit of both service providers and customers. Africa is the second largest banking market in the world today in terms of growth and profitability, partly because of the rapid adoption of new technology.

Africa currently hosts around 500 fintech firms, most of them in South Africa, Nigeria, and Kenya. The opportunities for them are vast, as around two-thirds of Africans are still unbanked, despite 60% of the world’s mobile money passing through Africa. This unconventional past year presents a number of challenges for fintech in Africa, which are highlighted as follows:

1. African fintech industry is plagued by the shortage of funding into it, notwithstanding the fact that Finnovating for Africa report finds a total of 57 African fintech startups raised over US$92 million in funding between the beginning of 2015 and end of May 2017.

2. There is a need for an effective regulation of the fintech space to fulfill its potential in offering more Africans access to financial services. Regulations have a huge role to play in ensuring the fintech industry becomes bigger and better, as well as ensuring fraud is kept to a minimum.

3. The lack of talent available to African fintech startups, with most of the best people in the financial services industry employed by large institutions and unwilling to risk joining a startup. Africa does not have the depth of talent pool. We do not have a strong social security net, and people are reluctant to move out of corporations into startups.

4. African leaders’ stringent rules and unhealthy policies towards the fintech industry is one of its major growth hindrances. An example of this is the banning of cryptocurrency in Nigeria.

5. African fintech sector should be a key contributor to agenda, such as standardized regulations and technology platforms within the continent; streamlining trade, money transfers and payments; ensuring currency convertibility; and prioritizing the expansion of integrated regional or pan-African companies. Players like Flutterwave and Abeg are still too few and far between.