Is Africa the next big hub for fintech?

One of the most intriguing emerging fintech markets since China, according to reports, is Africa.
Africa is not an exception when it comes to the pandemic’s negative economic effects. African economies are expected to shrink by 4.4% in 2021, according to predictions made by the World Economic Forum, due directly to COVID-19.

Fintech appears to be taking off in this quickly developing market despite this, and reports say the industry will be crucial to the recovery process of many African countries.

The adoption of the last-month-completed African Continental Free Trade Agreement (AfCFTA) is the most encouraging indication that fintech in Africa will experience growth.

National measures for economic development that promote economic growth and job creation have persisted notwithstanding the pandemic.

In order to improve internet and wireless services and speed up connectivity, many African nations have hastened their digital transformation. Telecom behemoths are creating new networks and streamlining current infrastructure.
According to data from the beginning of 2020, VC financing for African fintech businesses had increased by 51%, with money going toward virtual banking initiatives, consumer credit checks, and financial apps.

More growth was reported later in the year, with new fintechs raising about $350 million in the first quarter of 2020, according to reports. With $112 million in investments, South Africa took the lead, followed by Nigeria with $74 million, Kenya with $62 million, and Egypt with $51 million.

In South Africa, where 94% of people regularly access the internet, fintech has the greatest penetration rate. In South Africa, nearly 100 people out of every 100 have a cell phone, and 67% of the population has a bank account.

Branch, a Nigerian mobile lending service, raised $260 million in funding and has helped enable $350 million in loans thus far. In addition, a recent McKinsey analysis noted that over the previous three years, fintech investments in Nigeria have increased by 197%, with the majority of those investments originating from abroad.
After the nation established its first regulatory sandbox, innovation is also being tested in Angola.

Beta-i, a collaborative innovation consultancy, is leading the initiative, which aims to assist the Banco Nacional de Angola in developing an experimental regulatory framework for fintech.

Egypt is currently the country with the most advanced digital infrastructure. Egypt Vision 2030, a national agenda introduced in February 2016 by the Egyptian Government and announced by President Abdel-Fattah Al-Sisi, was put into practice. The mission to increase fintech services across the nation is one of the eight objectives.

According to a recent World Bank assessment, the 1.3 billion people living in the 55 countries that make up the African Union have the ability to produce $3.4 trillion worth of gross domestic product (GDP).

Currently, bureaucracy creates a significant backlog of processing, which hinders the ability of African governments to facilitate trade between nations. Fintech’s advent, which streamlines, simplifies, and accelerates procedures, appears to be changing that in the coming years.

The AfCFTA will also enhance exports from Africa by an estimated $560 billion, primarily from manufacturing industries. The increase in trade will keep accelerating fintech’s development.

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