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Tag: Fintech

  • Africa will become the epicenter of Fintech evolution and technology solutions – Bawumia

    Africa will become the epicenter of Fintech evolution and technology solutions – Bawumia

    Vice President Dr. Mahamudu Bawumia has highlighted Africa’s significant growth in mobile phone connectivity and internet penetration, positioning the continent as a fertile ground for the expansion of Fintech startups.

    He emphasized that Africa’s population of 1.2 billion and a three trillion-dollar economy indicate that the continent is on track to become the hub of Fintech evolution and technological solutions.

    Dr. Bawumia urged Fintech startups and investors to create innovative financial solutions that address the unique challenges faced by African consumers and businesses. He encouraged them to pioneer new financial products and services to drive economic growth and development across the continent.

    The Vice President made these remarks at the inaugural 3iAfrica Summit in Accra, held from the 13th to the 15th of May, 2024. The summit, themed “Unleashing the Fintech and Digital Economic Potential of Africa,” attracted innovators, investors, policymakers, and key stakeholders from the fintech and technology industries globally.

    Organized under the auspices of the Bank of Ghana (BoG) and the Development Bank Ghana (DBG), in partnership with the Monetary Authority of Singapore through its subsidiary, Elevandi, the summit aimed to foster collaboration and innovation in the fintech sector.

    Dr. Bawumia also emphasized the need for fintech startups to showcase their market potential, ensure strict regulatory compliance, and maintain transparency to attract substantial investment into Africa.

    “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 said.

    The Vice President highlighted that over the past three decades, African nations have implemented significant reforms in the formal sector, leading to remarkable strides in macroeconomic management. These efforts have resulted in increased economic stability and predictable growth rates in several countries. Additionally, national economies have become more open, fostering greater trade openness across the continent.

    The Vice President emphasized the growing importance of the fintech sector as a pivotal driver accelerating the continent’s growth trajectory.

    He noted that while African consumers and businesses were initially hesitant to embrace e-commerce, which represented only 1% of Africa’s $1 trillion economy in 2009, the landscape has since transformed significantly.

  • BoG Governor preaches fintech investment at 3i Africa Summit 

    BoG Governor preaches fintech investment at 3i Africa Summit 

    Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has emphasized the need for increased investment in Africa’s fintech sector.

    He believes that such investments are crucial for accelerating development and fostering innovation within the industry.

    Dr. Addison highlighted the importance of start-ups being able to access capital, as this plays a significant role in unlocking the sector’s potential.

    “…The lack of requisite investment in African fintechs could slow the pace of innovation and scalability of solutions in achieving the desired impact of a digitized Africa,” he said.

    Dr. Ernest Addison delivered these remarks during the 3i Africa Summit at the Accra International Conference Centre. The summit aimed to drive momentum for Africa’s digital finance agenda by bringing together finance, policy, and technology sectors.

    Dr. Addison emphasized the importance of directing adequate capital towards startups. This, he believes, will enable them to develop credible prototypes of home-grown solutions that address inefficiencies across the African continent.

    “Without sufficient capital, brilliant ideas and the prototypes of fintech startup solutions with the potential to address diverse financial service needs fail to progress to production,” Dr Addision said.

    Also present at the event was Finance Minster, Dr Mohammed Amin Adam.

    In his view, “for Africa to realise our development ambitions, we must all collate around an African agenda that delivers capital by leveraging public-private partnerships, venture capital, impact investing, and donor funding.

    “An agenda that delivers investments in digital infrastructure, extended mobile network coverage and established broadband networks for widespread fintech adoption and financial inclusion in underserved areas,” he added on Monday, May 13.

    Over the next three days, participants will engage in a multifaceted forum covering policy discussions, international intellectual resource alignment, entrepreneurial pursuits, and investment networking.

    The aim is to facilitate crucial conversations and strategic alliances that will nurture the growing African digital economy and fintech sector.

  • Nigeria records surge in access to financial products and services

    Nigeria records surge in access to financial products and services


    Nigeria has witnessed remarkable strides in financial inclusion, largely driven by enhanced accessibility and equity in accessing financial products and services.

    Recent data indicates promising progress towards the nation’s financial inclusion objectives.

    At the Citi-CEEMA conference in London, Muhammad Sani Abdullahi, Deputy Governor of the Economic Policy Directorate at the Central Bank of Nigeria (CBN), disclosed that as of 2023, three out of every five Nigerians were financially included, as per data sourced from Enhancing Financial Innovation and Access (EFIna), a leading financial sector development organization.

    EFIna’s latest survey highlights a notable increase in the proportion of financially included individuals, rising from 68% in 2020 to 74% by December 2023.

    This surge is attributed to the rapid advancements in financial technology (fintech) solutions and the proliferation of digital assets, which have expedited the growth of financial inclusion.

    Formal financial inclusion has experienced significant growth, escalating from 56% in 2020 to 64% in 2023, driven by modest increases in banked populations and substantial gains in the adoption of non-bank formal services.

    Despite these strides, approximately one-quarter of Nigerian adults still remain financially excluded. However, the reliance solely on banking services is diminishing, indicating a shift in the financial ecosystem towards diversified service providers, with technology playing a pivotal role in enhancing accessibility.

    Although there have been substantial improvements, disparities persist, particularly in the North-East and North-West regions, where exclusion levels exceed the national average. Efforts to bridge these gaps should focus on leveraging the successes observed in other regions to ensure comprehensive inclusion across all states.

    The report also underscores the significance of addressing income-related challenges, which have emerged as a notable barrier to financial inclusion, alongside emphasizing the growing importance of mobile phones in facilitating access to financial services.

    From 2016 to 2023, Nigeria has witnessed a significant transformation in its financial inclusion landscape, with formal financial service usage nearly doubling. The utilization of financial service agents has surged dramatically, and there has been a notable rise in the adoption of informal financial service providers, particularly in the South East.

    Moreover, there has been an uptick in the usage of various financial services, including transaction accounts, savings, remittances, credit, and insurance, indicating a deepening of financial inclusion. However, challenges such as fraud, high banking costs, and inadequate financial literacy persist, hindering broader impact.

    With Nigeria nearing its NFIS targets for 2024, there is a pressing need to intensify efforts to enhance the quality and efficacy of financial inclusion initiatives. While innovation has propelled growth in the payment ecosystem, translating this growth into more comprehensive financial services remains a critical challenge requiring urgent attention.

    The NFIS aims to ensure access to and usage of financial products and services by 95% of adults by 2024, with a recommended financial exclusion target of 25% by the same year. However, achieving these targets necessitates concerted efforts, considering population growth and the current status of enabling factors.

    “Nigerians continue to rely on physical financial coping mechanisms to meet their goals, address liquidity distress and cope with shocks. Both active physical mechanisms, such as taking on additional work and cutting back on expenses, and passive physical mechanisms, like doing nothing, remain prevalent choices.

    “With over one-third of adults reporting low financial capability and relatively low access to formal, efficient mechanisms to meet financial needs, Nigeria reports a 12% point drop in the proportion of financially healthy adults.

    “Nigeria is just 1% point away from achieving the 2022 NFIS recommended targets for 2024 and must now pay equal attention to deepening the quality and impact of inclusion.

    “While innovation has catalysed growth in the payment ecosystem, translating the growth in payment services into broader, impactful financial services remains a significant challenge that urgently requires attention,”

  • ‘Buy now, Pay Later’ to reshape domestic Fintech dynamics

    ‘Buy now, Pay Later’ to reshape domestic Fintech dynamics

    An expected boost of ‘Buy Now, Pay Later’ solutions is set to propel a major shift in the domestic Fintech landscape, legal experts at Sustineri Attorneys PRUC have said.

    In its Q4 2023 Ghana Fintech report, the latest findings project Buy Now, Pay Later (BNPL) to emerge as the prevailing trend, mirroring the global surge in adoption of this flexible payment model. 

    As fears mount about the stagnation of fintech innovation, paired with a notable increase in consumer-driven demands for e-commerce solutions, enhanced identification, and credit scoring, Sustineri anticipates that Buy Now, Pay Later (BNPL) will play a pivotal role in fueling growth. Projections indicate a staggering 92 percent surge in global BNPL transactions, soaring from US$353 billion in 2019 to an anticipated US$680 billion by 2025.

    “The emergence of Buy Now Pay Later payment models represents a paradigm-shift in consumer finance, providing individuals with more options to manage their money effectively,” a portion of the report reads.

    Up and away

    Juniper Research forecasts that Buy Now, Pay Later (BNPL) payments will make up nearly 25 percent of global e-commerce transactions by 2026, marking a significant rise from the 9 percent reported in 2021.

    The affinity for BNPL is notably strong among younger demographics, with Insider Intelligence predicting that 59 percent of Gen Z (born mid-1990s to early 2010s) and 53 percent of millennials (early 1980s to the mid-1990s) will engage in BNPL payments during 2026 – in contrast to 41 percent of Gen X (early 1960s to the early 1980s) and 24 percent of baby boomers (the mid-1940s to mid-1960s).

    This payment method holds broad appeal, drawing interest from diverse audiences – with Gen Z and millennials being particularly inclined toward its usage.

    Despite the widespread appeal, concerns remain in Ghana – particularly regarding regulatory oversight, data protection and robust credit scoring systems. The report highlights a need for adequate safeguards to ensure responsible BNPL adoption.

    On these concerns, the report added: “This flexibility [offered by BNPL] has critics concerned about the potential for BNPL to encourage impulsive spending habits and accumulate debt. Regulatory bodies are closely examining issues related to consumer protection, data security and the fairness of lending practices”.

    Open doors

    However, the BNPL boom could unlock new funding avenues for Ghanaian startups, as analysts hope increased fintech activity will attract more investment.

    Last year, heightened funding caution led to a total funding accumulation of US$2.6billion by African startups in 2023, encompassing equity, debt and grants exceeding US$100,000 as reported by The Big Deal Africa as of November 2023. Of this, US$1.5billion was raised through equity. However, overall funding on the continent experienced a notable -39 percent year-on-year decline.

    Ghana found itself trailing the traditional ‘Big Four’ – Nigeria, South Africa, Egypt and Kenya – as these countries collectively attracted 87 percent of all startup funding in Africa, marking their largest share since 2019. Remarkably, these nations housed 71 percent (357 of 500) of startups that secured US$100,000 or more in funding on the continent last year.

  • VENTURE CAPITAL IN WEST AFRICA: The Funding Surge

    AFRICAN STARTUPS ARE RAISING UNPRECEDENTED AMOUNTS AT RECORD SPEED. FOR NOW, THE CONTINENT IS THE ONLY REGION IN THE WORLD SEEING A RISE IN VENTURE CAPITAL FLOWS. PERSPECTIVES FROM WEST AFRICA.

    AS FUNDING FOR STARTUPS FALLS ACROSS the globe, Africa seems to be undergoing a renaissance in this regard.

    “We are seeing a time where funding for African startups rose to a massive $3.14 billion in the first six months of this year alone,” says Eric Idiahi, Co-Founder and Partner at Verod Capital, a leading West African private equity investor. “That is unprecedented and it really shows the interest in the continent!”

    African entrepreneurs are raising money to solve pertinent socio-economic problems on the continent ranging from financial inclusion, providing access to healthcare for the underserved and vulnerable, and bridging the education gap.

    “Africa investment firms and angel networks have started putting money into African companies,” says Dr Akintoye Akindele, yet another West African entrepreneur, who is the Founder of investment vehicle Platform Capital in Nigeria.

    “It took African entrepreneurs almost 10 months to raise $1 billion in 2019. It took the same group eight months to raise $1 billion in 2020. It took them four months to raise $1 billion in 2021 and it has taken them less than six weeks to raise $1 billion in 2022. That means capital is coming in faster into deals and last year for the first time in our history, African investors invested more than European investors. This is a major milestone.”

    Akindele is himself focused on inviting investors “to see Africa the right way”.

    “This is because we know the narrative that exists about Africa and the negative questions we get asked.”

    The thesis of Platform Capital is that it deploys long-term capital to startups whose center of gravity is Africa.

    “Africans need long-term, nurturing and patient capital. Four to five years is too short in Nigeria for a business to turn capital around and grow and deliver profit to capital providers. I believe from my experience that five to six years does not create enough alignment,” says Akindele.

    Based on their extensive research and experience investing in over 100 portfolio companies with a valuation north of $1.5 billion, Platform Capital invests in businesses that will become top in their sectors in 15 years. Akindele also believes his investments should be sector-agnostic.

    “I believe in Africa, we should not be choosing what we cannot invest in… whether it’s energy, telecom, agriculture, infrastructure or value-added services like gaming, I believe consumers need their basic needs met and then on the back of that we can evolve.”

    Akindele’s primary focus is those sectors fundamental to the development of Africa.

    “We invest in key areas that Africa needs to catch up on…so things like technology infrastructure, agriculture or food value chains. They form our anchor sectors and represent about 60% of our portfolio. Then, when you have people who have electricity, food and water, they then go into the next sector like finance as well as education or healthcare…Then our final sector is robotics, artificial intelligence, such as one of our companies that do smell cyborgs,” says Akindele.

    The company he is referring to is Koniku, a synthetic biotech company that creates ‘smell cyborgs’ that can detect a range of compounds in the air in real-time, and which recently partnered with Airbus to launch biotech solutions for aviation.

    The company has so far reportedly raised $49.2 million in four rounds and is part of a long line of African startups bucking the trend of venture capital (VC) investment worldwide.

    According to Yaa Agyare-Dwomoh, a consultant with growth strategy consulting and research firm Frost & Sullivan, African VCs reached $1.8 billion, up 150% compared to $730 million in the same period in 2021 and was subsequently, also the only region in the world to record three-digit growth in the first quarter of 2022.

    As the biggest catch-up market, Africa’s advantage lies in its need for innovative solutions to leapfrog years of underdevelopment. For some pioneers like Oshiorenoya Agabi, the Nigerian-born scientist based in Silicon Valley and Founder and CEO of Koniku, that need for innovation has brought the continent to the age of biotech solutions.

    The company, which was founded in 2017, is using technology to combine traditional computer cells with living biological neurons.

    “We are creating a device capable of thinking in the biological sense like a human by creating neurons that are sensitive to particles and are able detect smell. By this method, the solution can be used for particle detection for aviation, military or agricultural application,”says Agabi.

    Apart from biotech, the figures show that it is a fintech that attracted the largest funding by sector by far, mostly spurred by the need to extend banking and financial services to millions of unbanked and underbanked Africans across the continent. “Fintech is now the most popular sector for investments in Africa. In 2021, fintech funding broke the $1 billion funding barrier and continued to receive the largest amount of funding on the continent, representing 54% of all venture funding deals. In 2022, the fintech sector was responsible for the biggest deals securing two-thirds of the total funding for Africa’s technology firms,” says Dwomoh.

    And this trend looks set to continue.

    “Despite the global trend of tech companies struggling to raise money, African VCs are still raising money at record speed,” adds Akindele.

    An unexpected side effect of the coronavirus pandemic has been the need for inclusive development in areas that fundamentally impacts society. This new trend known as impact investment has also consequently been on the rise in the African VC space.

    Impact investing is based on the notion that when money is managed effectively, it has the added benefit of positively impacting the lives of people as well as creating a return on investment.

    Africa is home to the youngest population in the world, with a median age of fewer than 20 years, and 70% of the population under the age of 30. According to the Global Impact Investing Network 2020 survey, almost half of global impact investment capital goes to the African continent.

    Raised to appreciate poverty and wealth at the same time, Akindele is also a firm advocate of his investments positively making an impact on his portfolio companies. Platform Capital writes cheques anywhere from $10,000 to $10 million with most of the companies in the portfolio growing by 500% in terms of money raised, according to Akindele. As an African advocate, each investment the firm makes has to have an impact that

    is transformational to the continent and its people and most importantly, makes a profit.

    The new influx of money into Africa is just an attestation of everything entrepreneurs like him have consistently been working towards.

    DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author’s and do not reflect those of The Independent Ghana

    Source: forbesafrica.com

     

  • Fintech and Crypto Industry players urged to safeguard the interest of consumers

    Director of Fintech and Innovation at Bank of Ghana Mr Kwame Oppong, has called on Fintech and Crypto Industry leaders to be resolute in building safe and resilient space to safeguard the interest of consumers.

    He said the enormous opportunity for affordable digital delivery of financial services to enhance financial inclusion had emerged as a new business model product and mode of interaction, posing a significant challenge to governance regulation, consumer protection, and financial integrity.

    “For this reason, the Bank of Ghana implemented reforms to enable innovation in the financial services industry without compromising financial stability of which the Payment and Services Act of 2019 is at the care.”

    Mr Oppong made the call when he addressed about 400 Fintech and Crypto Industry leaders from across Africa at a two-day Africa Money and Decentralised Finance (DeFi) Summit – West Africa edition in Accra.

    He noted that Act 987 and other related notices issued by the Bank of Ghana had non-traditional entities such as Fintech to be licensed to provide various digital financial services under a proportionate and risk-based licensing regime.

    “The elevations of these team players are positively disrupting the financial services industry and generating competition while encouraging strategic partnerships among these banks and financial technology providers,” he stated.

    Mr Oppong said immense benefits had been reaped from using the regulatory environment provided by the Bank of Ghana, resulting in phenomenal increases in financial inclusion from 58 per cent in 2017 to 68 per cent in 2021 and that this was noteworthy.

    He said since the Fintech Innovation Office was established in 2020 at the Bank of Ghana, which was one of the few such outfits globally among central banks to regulate and supervise, a total of 47 payment service providers and mobile money operators, both Ghanaians and foreign, were approved across various licensing categories to provide payment services.

    “The interest of the investors both local and international continue to increase on the account of the favourable regulatory regime and the abundance of opportunities.  Similarly, the bank is noted for its open-door policy and constructive engagement with industry stakeholders, prospective service providers and innovators.”

    The Director said a considerable resource have been invested in studying and monitoring development in virtual assets and similar products including decentralized finance applications, non-fund road tokens, among others.

    “The Ghanaian ecosystem is still an upcoming frontier market and therefore it takes these studies and findings seriously. Our regulatory stance is in line with our mandate to ensure financial stability of which consumer protection and financial integrity are essential component,” he stated.

    Mr Oppong said: “To this end, the Bank of Ghana would continue to monitor development and implement measures to forestall any risk in the ecosystem in collaboration with other regulators and stakeholders where necessary.

    “Any regulation issued will be in line with our quest to promote safe, sustainable and inclusive innovation that kindle the confidence in the ecosystem, and I must emphasise that consumer trust is of utmost importance to any financial service industry and in this case a key ingredient to achiving our financial inclusion goals.”

    Mr Andrew Fassnidge, Founder Africa Tech Summit Kigali and London, said the purpose of the summit was to discuss and connect people to do business and was attended by key stakeholders like startup ventures, banking regulators and investors.

    The expectation was to see the growth of crypto across Africa and a new wave of DeFi to drive business and investment.

    The Africa Money and Summit West Africa is a leading African fintech, decetralised finance, mobile money and crypto event brought by curators of Africa Tech Summit series and provides insight and networking within the Pan-African Fintech, DeFi and Crypto ecosystem.

    Source: GNA