Can Africa lead finTech innovation?

At the 3i Africa Summit in Accra, Dr Mahamudu Bawumia, the vice-president, urged African leaders, Fintechs, particularly those on the continent, and financial institutions to seize the unique opportunities available in Africa to collaborate, innovate, and explore ways to positively influence the continent’s inhabitants

Addressing the theme “Digitising Economies In Africa: A Future Imperative” on, 14 May, 2024, Dr Bawumia highlighted the continent’s young and swiftly growing population, increasing internet and smartphone penetration amid decreasing internet costs, and the significant expansion of the financial services sector as key factors that enhance the role of fintechs in daily life, particularly in achieving financial inclusion.

“As fintech reaches a new level of maturity, African financial services are poised at a pivotal inflection point. With the momentum gained in recent years, several African nations stand on the brink of unlocking unprecedented opportunities, positioning themselves at the forefront of the next wave of fintech innovation and growth," stated Dr Bawumia.

“In this rapidly evolving landscape, agile fintech players are strategically positioning themselves to capture a slice of this flourishing market. As the fastest-growing startup industry in Africa, the success of fintech companies can be attributed to a confluence of favourable trends.

“These trends signify the immense market potential and further establish the transformative impact that fintech can have on financial inclusion and economic growth in Africa. As fintech continues to thrive amidst these favourable conditions, it is evident that the sector is well-positioned to reshape the future of finance in Africa, driving both innovation and inclusive growth.”

However, Dr Bawumia cautioned that this growth would not be easily achieved. He advised fintech startups in Africa to adopt a comprehensive strategy that focuses on innovation, demonstrates the vast market potential, and emphasises the importance of regulatory compliance and transparency to attract and secure significant investment.

He advised, “Startups should continuously strive to develop groundbreaking solutions that address unique challenges faced by African consumers and businesses. They should articulate a clear vision of how their solutions cater to the needs of our growing market, backed by data-driven insights and market research.

“Crucially, building trust is paramount for attracting long-term investment. Compliance with regulatory requirements and maintaining transparency in operations are non-negotiables.

“Startups should proactively engage with regulatory authorities, participate in regulatory sandboxes where available, and establish robust governance and compliance frameworks. By doing so, they can instill confidence among investors and fostering a conducive investment environment for sustainable growth.

Referencing a UN report that forecasts Africa will make up 25% of the global population by 2050, Dr Bawumia emphasised that this demographic shift represents not just a theoretical market but also a growing technology market that can be addressed.

He noted, “Key trajectories such as digital payments, financial literacy initiatives, and AI-driven solutions are expected to shape the FinTech landscape in Africa. By focusing on these areas and investing in research and development, we can unlock new opportunities and drive sustainable growth.

Looking to the future, Dr Bawumia remarked, “Ultimately, we stand at a pivotal juncture in the evolution of the FinTech and tech sectors in Africa, where the choices we make today will profoundly influence our trajectory for years, if not decades, to come. It is imperative that we embrace responsible innovation, creating a balance between pushing technological boundaries and ensuring ethical considerations and regulatory compliance.

Dr Bawumia stressed the importance of collaboration among governments, financial institutions, tech startups, and investors to create synergies and promote collective growth.

“Equally important is our investment in nurturing talent and advancing technology. It is imperative we prioritise education, training and development, invest in cutting-edge technologies and infrastructure to empower our workforce lead and adapt to the rapid pace of change. In doing so, we can build a resilient and inclusive FinTech ecosystem that not only drives economic growth but also fosters financial inclusion and improves the lives of people across the globe,” concluded Dr Bawumia.