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Financial Technology (Fintech) has revolutionized the world economy in incredible ways. With AI, Fintech is itching for exponential change that will overhaul how monetary transactions are undertaken. In Africa many fintech companies have sprouted as the continent begins to fully embrace technology.
What are fintechs in Africa
Fintechs are softwares that seeks to make financial services and processes easier, faster and more secure. Africa’s fintech sector is growing very fast owing to several factors including high internet penetration and increased use on smartphones in the continent. According to European Investment Bank (EIB) the number of African companies offering financial services grew from 450 in 2020 to 1,263 in 2024. In the Africa/UAE Business Summit Webinar on Fintech, convened by Mawaitha Africa, experts across the globe share vital knowledge into the future of fintech in Africa.
Fintech growth in Africa
In Kenya the uptake of digital finance technologies is rising thanks to a young population that is tech savvy and digital natives. Boni Nyaga, the CEO and founder of Mawaitha Africa asserts that Africa is ripe for fintech technologies because technology has become part and parcel of the people’s lives.
He says with fintechs that are in Africa now, it has made transaction of money easy without a bank account. Mobile banking, cryptocurrency, AI and many other fintech solutions have eased monetary transactions.
He says with high population growth in the continent, there is a huge opportunity in fintech since many people remain unbanked. Coupled with a young and tech-savvy population, he says, such an environment is a good breeding spot for fintech companies.
“In Africa we have a population of 1.4 billion people and the population growth rate is 2.3 per cent. It’s a young population that is embracing technology and engaging with each other online. That means Africa has a huge opportunity and a lot of creative fintech ideas,” he says.
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With MSMEs fueling the continent’s economy, Nyaga says fintech solutions will find a huge and ready market as many people are not using banks yet.
“More than 70 per cent of GDP in Africa is in SME and many of these enterprises are unbanked. So fintech and any solutions you are giving in the financial sector will find a huge market that is ready for the uptake,” Nyaga observes.
Role of AI in fintechs
The combination of AI and fintech solutions has an opportunity to fasten the innovation in fintech in unpredictable ways. Saimi Tande, the CEO and founder of Mobifin Plus Limited, a Kenyan-based fintech company, says that the way money is transferred has changed so much in the last decade.
He recalls the time when people had to go to the bank to deposit or withdraw money, to the time when MPesa arrived. All of these, he says, have changed so much that people can transfer money online through banking apps and e-wallets.
According to him, 10 years ago many companies were facing the challenge of transacting miscellaneous payments without having to go to the bank. With e-wallets and MPesa this challenge was eliminated, however, AI will overhaul the fintech sector. He says fintechs is an evolving sector that requires players to adopt new technologies like AI for it to remain relevant.
“It’s imperative to keep evolving because we are dealing with a technology that is changing very fast and this is because of AI. AI has come and completely changed the game and as a fintech company you always keep up with technology and see how it can integrate into your platform so that you can always remain relevant,” Tande says.
He adds that AI is very disruptive and no one can predict with certainty how far it can lead to, but instead the best way is to stay up-to-date on AI technologies so that one can take advantage of it.
“AI is completely disruptive not only in fintech but even at the individual level. It keeps surprising us every single day because it keeps learning every day. People should keep up with this technology because it is changing fast and it’s very exciting,” he says.
Regulatory challenges affecting fintechs in Africa
While Kenya and Africa as a whole is ripe for opportunities in fintech, there are little to no regulations tailored to govern the fintech sector especially with cryptocurrency and Blockchain technologies. Aaron Munga, the founder and CEO of Swychr, a Cameroon-based fintech company leveraging Blockchain technologies in transactions, says that Africa’s business environment can be challenging. However, he shares that it’s possible to navigate the bottlenecks posed by regulations.
He says with Blockchain technology people can transact using blockchain technology because Blockchain is not limited by geography or international boundaries. By partnering with licensed players in the sector they can leverage stable coins to transfer money across the world.
“Africa is a very challenging landscape in doing business. However, thanks to Blockchain technology we’ve been able to find a mode of operation that fits such a complex environment. We tokenize funds that people have in their e-wallets and move these funds on Blockchain,” he says.
For his company, the focus is on building the technology and infrastructure that transacts with digital assets.
How fintechs can utilize Blockchain Technology
The Cameroonian entrepreneur says many people don’t understand the uses of cryptocurrency or Blockchain technologies. He says in cryptocurrency there are speculative and transactional motives. For transactional, Blockchain is used to transfer value (money) from one place to another without any geographical limitations.
Speculative motives in cryptocurrency involve the idea of telling people to buy cryptocurrency and hold it and it will grow in value and that is how they end up losing money.
“A lot of people get into cryptocurrency without understanding what cryptocurrency is or how it’s been structured and end up losing money. Cryptocurrency is money not controlled by banks. It is a digital asset that operates on Blockchain. We are using blockchain to transfer value from point A to B without geographical limitations. A lot of people have lost money because they want to get to Blockchain and they think that is a get rich quick scheme,” he says.
How fintechs in Africa can attract investments
Sourcing capital to start a company has proven hard for many entrepreneurs in Africa and fintech is not an exception. Investors are also skeptical on investing especially when the companies don’t provide adequate information about their businesses.
Ami Joy, the CEO and founder of Earnest International Business Solutions based in Dubai says that investors have many investment options to go for and therefore startups should be investor ready in order to get investments.
She says startups should be realistic and honest with the information they are sharing with investors and to have a simplified pitch whenever they meet an investor so that it can help investors to understand their business for them to make a decision to invest.
“[As a start-up] you should be ready with a pitch deck for your investment opportunity talking about numbers with regard to returns on investment (ROI). So have a realistic feasibility study, business plan and realistic market research, all of this will add value to your opportunity and make it investor friendly,” Ami says, adding that entrepreneurs should have a simplified pitch to help investors understand their business models on how to generate revenue.
