Fintech investments are pouring into Africa

by MMC
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One of the main drivers of the adoption of fintech services is of course the diffusion of smartphones across the continent. They are becoming cheaper and more widespread, allowing users to access mobile applications and tools. In a sense, this builds on the foundations laid by the highly successful M-Pesa service for money transfers, launched in Kenya on analogue phones.

The key services remain payments and transfers, with inbound and outbound foreign remittances accounting for a significant share. This is something that the pandemic has accelerated. For example, there is a large Zimbabwean diaspora in South Africa who used to physically take cash across the border. COVID made that impossible for several months – and that fueled a surge in people trying to transfer money via their cell phones instead. This habit has now become much more ingrained.

Alongside individuals, small and micro businesses are also an important market, allowing businesses without a card machine to accept payments connected to a mobile phone.

While the focus is on payment services and digital banking, credit is also an area of ​​growth. After all, there is a huge untapped market. In Nigeria, for example, credit penetration is only about 3%. As fintechs develop alternative credit scoring methods through the use of AI and machine learning techniques, they are able to accept higher-risk loans that traditional banks have largely foregone.

As the African market matures, you can expect to see more development of other areas such as wealth technology and insurance.

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