Fintechs in Africa
According to a new report by the Boston Consulting Group, Overcoming Africa’s Tech Startup Obstacles, on the expansion and maturation of African tech startups, Africa enjoys a fertile environment for tech entrepreneurs due to the continent’s youthful and growing population, rising internet penetration, and the application of emerging technologies that have the potential to improve access to healthcare, financial services, education, and energy. As such, the research paper focuses on the meteoric growth of tech startups throughout the continent, persistent challenges and structural barriers stymying these firms’ further growth, and policy recommendations to overcome these obstacles and develop Africa’s innovation hubs.
Securing venture capital funding, according to BCG, is an important milestone for startups and is an important step that enables them to scale and develop novel products. In the study, BCG found that the number of African tech startups accomplishing this significant step experienced exponential growth between 2015 and 2020. In fact, over that time period, growth in the volume of African tech startups receiving financial backing was nearly 6 times faster than the global average
Another report by Boston Consulting Group (BCG) found that Kenya and Ghana have the 2nd and 3rd highest mobile payment usage in the world, after China. The study, Five Strategies for Mobile-Payment Banking in Africa, found that transactions via mobile wallets and phones were the equivalent of 87% of GDP in Kenya and 82% of Ghana’s GDP. The World Bank has recognised Ghana as the fastest-growing mobile money market in Africa over the last 5 years. The report estimates that mobile payments revenue in Africa could rise from $3.5bn today to between $14bn and $20bn in 2025. With their relatively mature mobile payments sectors, Kenya and Ghana account for much of the fintech business on the continent. But both countries have had to leapfrog huge hurdles over the years to emerge as the best in the fintech sphere in Africa, bypassing a number of regulatory and network bottlenecks that threatened to kill innovations in their infancy. Already, 400m consumers in sub-Saharan Africa use mobile payment banking systems to handle $300bn worth of mobile money transactions, generating $200bn in mobile banking fee charges to customers, mainly in Kenya and Ghana.
Meanwhile, as we reported last month, SA’s plans for a Rapid Payment Process (RPP) forges ahead. PWC organized on behalf of SARB a ‘teach in’ over 2 days for the non-banks which attracted over 200 participants. EFSA has a recording of the events should readers be interested (contact [email protected]). This, plus the revised online payments system we outlined last month, will significantly increase the speed, security and effectiveness of payments for consumers and sellers. The PWC event also outlined the planned launch of a new Payments Industry Body (PIB) in early 2022.
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