Vice President Dr. Mahamudu Bawumia highlighted Africa’s burgeoning mobile phone connectivity and internet penetration as a fertile ground for Fintech startups to flourish.
He emphasized that Africa’s 1.2 billion population and three trillion economy position the continent to lead in Fintech evolution and technological solutions.
Dr. Bawumia urged Fintech startups and investors to pioneer innovative financial products and services to tackle the unique challenges faced by African consumers and businesses.
He made these remarks at the inaugural 3iAfrica Summit in Accra on Tuesday.
The three-day summit is on the theme: “Unleasing the Fintech and Digital Economic Potential of Africa”.
Taking place from May 13th to 15th, 2024, the event drew innovators, investors, policymakers, and prominent stakeholders from the global fintech and technology sectors.
Hosted by the Bank of Ghana (BoG) and the Development Bank Ghana (DBG), in collaboration with the Monetary Authority of Singapore via its subsidiary, Elevandi, the summit aimed to foster collaboration and innovation in fintech.
The Vice President emphasized the need for fintech startups to adopt a multifaceted approach to attract significant investment in Africa.
This approach involves showcasing the expansive market potential, ensuring strict regulatory compliance, and maintaining transparency.
“Today, we delve into the dynamic world of FinTech in Africa, a landscape marked by rapid growth, innovation, and immense potential. The FinTech industry in Africa has experienced a significant surge over the past decade, driven by technological advancements, rising mobile phone penetration, and a youthful population eager to harness the transformative power of digital financial services,” Dr Bawumia observed.
According to the Vice President, over the past three decades, African nations have implemented substantial reforms in the formal sector and made notable advancements in macroeconomic management.
These efforts have led to enhanced economic stability and consistent growth rates in numerous countries. Additionally, national economies have become more open, resulting in increased trade openness across the continent.
The Vice President highlighted the growing fintech sector as a key driver in accelerating this growth trajectory.
He pointed out that initially, African consumers and businesses were hesitant to embrace e-commerce, which accounted for only 1% of Africa’s $1 trillion economy in 2009. However, the landscape has undergone significant transformation since then.
“Recent developments in fintech and mobile financial services have catalysed rapid growth in online commerce.
Recent statistics highlight this shift, projecting online sales in Africa to soar to $75 billion by 2025.
Of this amount, an estimated $56 billion is anticipated to stem from consumer spending as digital payment platforms gain traction across developing economies; a substantial leap from the $8 billion consumer spending estimate recorded in 2013.
Dr Bawumia noted that the evolving consumer purchasing habits in Africa, increasingly influenced by fintech innovations, were emblematic of the continent’s dynamic economic transformation.
“The fintech sector’s role in facilitating digital payments and e-commerce growth spotlights its significance as an impetus for economic development and financial inclusion across Africa,” he stated.
Another remarkable advancement on the continent is the rapid growth in mobile phone usage and the telecommunications sector.
The explosive growth of mobile phone usage in Africa exceeds a mere technological shift, it stands as one of the foremost catalysts driving the fintech revolution across the continent.
Currently, Africa is home to over 489 million mobile phone users, and projections suggest that this number could reach a staggering 700 million by 2030.
This proliferation of mobile connectivity has created an ecosystem ripe for fintech innovation. As telecommunications infrastructure expands, fintech services are rapidly penetrating previously under-served communities and remote regions.
This expansion is fueled by significant investments from stakeholders in both the telecommunications and fintech sectors, aimed at reinforcing infrastructure and enhancing digital capabilities, Dr Bawumia stressed.
He believed that an integration of robust telecommunications networks with fintech solutions was democratising access to financial services, fostering entrepreneurial spirit, and unlocking unprecedented economic opportunities.
“As Africa continues to embrace this digital transformation, the synergy between telecommunications and fintech will undoubtedly remain a driving force behind the continent’s growth,” he added.
Industry research indicates a remarkable surge in tech startups across Africa, with the number nearly tripling from 2020 to 2021 to reach approximately 5,200 companies.
Notably, fintechs comprise just under half of those startups, indicating a significant focus on innovation and responsibly disrupting the financial services sector.
The rapid development in FinTech in Africa spans across multiple segments, from blockchain and cryptocurrency to robo-advisors and payment platforms.
He emphasized that each segment presented unique opportunities and challenges, underscoring the continent’s need to remain agile and adaptable in its approaches.
In the domain of payments and settlements systems, innovations such as the Ghana Interbank Payment and Settlement Systems (GhIPPS) and platforms like M-Pesa in Kenya have revolutionized payment methods. Dr. Bawumia highlighted how these solutions have enhanced financial accessibility, convenience, and affordability for millions across the continent.
Regarding lending platforms, he noted the emergence of key players like Branch, Fido, and Tala. These companies have addressed the credit gap by providing quick and convenient loans to individuals and small businesses.
“In InsurTech, innovators such as Bima and Pula are leveraging mobile technology to offer micro-insurance products tailored to the unique needs of the African market. Blockchain and Cryptocurrency are also gaining traction on the continent with startups like Luno and BitPesa leading the charge.
The rise of FinTech, he said, had ushered in transformative changes in the global financial landscape, noting that as technology continued to advance at an unprecedented pace, the financial sector was undergoing a profound transformation, with Africa being no exception.
“The continent, with its growing population and increasing mobile penetration, presents a fertile ground for FinTech innovation,” Dr Bawumia stated.