The IMF opines that startups find Africa’s low financial inclusion penetration to be a sweet spot for business
The IMF opines that Africa’s low financial inclusion penetration is a sweet spot for startups doing business on the continent
Africa is witnessing a significant rise in its status as a hub for financial technology companies. There has been a sparked increase in the number of digital banking platforms and tech start-ups. The International Monetary Fund has identified this development to be as a result of the size of Africa’s informal economy.
The major hubs for Financial Technology on the continent are currently nestled in Lagos, Capetown, Nairobi, and Johannesburg. In 2018, Africa’s Venture Capital funding was more than a billion US dollars, and start-ups have been able to attract this much funding taking advantage of the potential of Africa’s large number of unbanked citizens’
The growth of Kenya’s hub continues to be fuelled by the government’s recognition and development of her fintech infrastructure. In 2019, the Central Bank of Kenya signed a memorandum of understanding to facilitate the cooperation of financial technology with the M.A.S (Monetary Authority of Singapore).
“Nairobi is Africa’s second-largest fintech hub, with an estimated 20 percent of African fintechs and an emerging ecosystem of local investors and venture capital firms complemented by a steady rise of international investors and growing interest from global technology firm,” says a report titled Findexable Global Fintech Rankings 2020.
Elsewhere in Johannesburg, financial technology hubs enjoy the presence of many established financial services companies. The likes of Absa Group, Investec, and Standard Bank group continue to play a major role in that budding hub.
Africa’s encouragement of public and private sector partnerships seems to have created an enabling environment for fintechs to thrive and the IMF believes that SMEs can also benefit from this.