The fintech ecosystem has rapidly evolved to become a crucial component of the global financial landscape, revolutionizing the way we transact, invest, and manage our finances.
According to the International Trade Administration, by 2025 half a billion people in Africa will be e-commerce users. UNCTAD also suggests that digital commerce could add $180 billion to the region’s GDP in the same year.
Fintech Adoption in Africa
Not only are businesses integrating fintech solutions into the their ecommerce business models, but African governments are also implementing the technology to enhance and improve their services.
The Ethiopian government leverages smartphone penetration, by digitising social protection payments through a mobile banking service called HelloCash.
Additionally, it is also increasingly accepting digital payments from public services and utilities and has mandated digital-only payments for fuel purchases.
According to the Harvard Business Review Kenya is becoming a hub for Fintech innovation. A beacon amongst African nations when it comes to payment tech, they are using inexpensive, accessible tech to mobilize consumers in ways never seen before.
The country excels in mobile penetration rates, with high rates of subscription levels. Telecommunications giant Safaricom that contributes 5% of the country’s GDP, led the transition in 2007 with M-Pesa.
M-Pesa’s competitor Equitel, a mobile virtual operator and hybrid firm born from a bank, is breaking boundaries for financial inclusion offering a full suite of banking services on mobile devices.
The parent company of Equity Bank and partner of telco Airtel, achieved their success of the capturing of a 22% mobile money market in Kenya through penetrating remote areas where other banks had not ventured into.
Potential to Alleviate Poverty
According to GSMA significant evidence that e-commerce can help micro, small and medium enterprises (MSMEs) reach wider markets through adding an online marketplace to their business.
However according to their research, online retail remains marginally lower compared to other countries, suggesting that African MSMEs are not fully taking advantage of the potential of e-commerce opportunity.
A report by GSMA, including an in-depth analysis of surveys conducted with over 1,500 MSMEs who sell goods online via social media, their own websites or on e-commerce platforms in six African markets including Egypt, Ethiopia, Ghana, Kenya, Nigeria and South Africa, may be a valuable tool in analysing the African ecommerce space.
The report presents a good case of the pain points and challenges holding Africa back from taking advantage of the opportunities that exist with the adoption of ecommerce and its associated technology.
