Given the catalytic potential of digital technologies in Africa, experts have emphasized the need to galvanize investments and set regulations tailored for fintech growth on the continent.
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According to a study by a consulting firm Boston Consulting Group and QED Investors, the value of Africa’s fintech industry is projected to reach $65 billion by 2030, but lack of investment and rigid regulatory policies are holding back indigenous fintechs from reaching their full potential.
While innovators decry lack of funding, policy makers claim that to not comprehend the ecosystem, hence, make blanket regulations rather than considering the specificity that each holds.
In light of this, African Heads of State, policymakers, innovators, commercial providers, and investors will convene at the 3i Africa Summit to deliberate on policies, facilitate investments and curate partnerships, with the goal to catalyse investments and influencing policies for fintech growth on the continent.
Themed ‘Unleashing Africa’s FinTech and Digital Economic Potential’, the summit slated for May 13 to 15, is co-organized by the Bank of Ghana and the Development Bank of Ghana in collaboration with Elevandi, an ecosystem development entity set up by the Monetary Authority of Singapore (MAS).
Kwame Oppong, Director of FinTech and Innovation Office, Bank of Ghana, noted that Africa has made tangible progress in driving fintech solutions to not only improve access to financial services but also deepen financial inclusion for women and youth.
He pointed out that the dollars that have been pouring into this space were significantly from grant donors that mainly focus on impact, which is the kind of support one needs at the incubation and experimentation level for validation of concepts.
However, he added: “One thing we are missing, compared to the global community, is the ability to get investments from the commercial capital space into these innovations for scalability.”
Market success happens when innovations meet private capital investments, Oppong said, which yields impact from a policy standpoint, be it economic growth, financial stability and inclusion.
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When it comes to key factors hindering investors from this space, Aaron Baneseh, Head of Strategy and Innovation, Development Bank of Ghana and3i Africa Summit Project Lead, said that regulations uncertainty is a major setback.
“Investors don’t like uncertainties. They want to believe that policies are not dependent on political regimes and they need assurance.”
Addressing cross-border fintech scalability
Baneseh said that while the African Continental Free Trade Agreement (AfCFTA) has structurally shaped the single market, technology must lead the way.
According to him, there needs to be cross-border policy harmonization to allow fintech efficiencies to spur the needed economic growth, for instance, African solutions like mobile money payment could be further harnessed to allow a Ghanaian user to pay merchants directly when they reach other countries like Rwanda.
“Protectionism is not born out in isolation, it is a legitimate fear but how do you ensure that everyone’s interest is accounted for, how to have tax regimes that allow foreign players into your fintech market, these are key points we want to converse and have actionable solutions.”
Additionally, this would enhance fintech scalability across markets and pave path for more unicorns to sprout from various parts of the continent, other than the existing few, he said.
Ernest Kayinamura, Chairman of Rwanda Fintech Association, commended the 3i Africa Summit for providing a platform where African fintechs can come together for knowledge sharing, engage investors, and be part of policy-shaping efforts as well.
He mentioned that Rwanda joined the African Fintech Network in 2023, which seeks to foster collaboration among different fintech associations and ecosystems on the continent.
During the 3i Africa Summit, Oppong said that there will be a launch of an innovation fund that seeks to support the fintech community across Africa, as well as a regulatory sandbox for innovators to not only showcase their products but allow participants and potential investors to test them instantly.