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Global Payment and Compliance
This article summarizes how Tech has managed to shape the way Africans are handling their finances through the adoption financial solutions....
For many years now, countries across the African continent have been enjoying expanding fintech opportunities. The data makes clear, however, that the fintech revolution has only just begun. Earlier this year, reports forecasting the fintech market suggest extraordinary growth in the coming years. Specifically, the fintech market around Africa is expected to reach roughly USD 65 billion by the year 2030, representing “a 13-fold increase over 2021.” As of now, Africa still lags behind counterparts such as North America, Europe, APAC, and Latin America in fintech market size and activity. That 13-fold increase, however, coupled with a projected compound annual growth rate of 32%, will make Africa the fastest-growing region by a narrow margin over Latin America.
With all that said, fintech, by nature, is a wide-ranging and multi-faceted concept without a single clear meaning. Broadly speaking, it refers to the introduction of technological solutions in support of financial activities. Within this broad definition, though, it is worth considering what the fintech revolution means specifically for African nations – or, rather, how fintech practices are shaping the ways in which African consumers handle their finances. To explore these questions, it is worthwhile to break the broad concept of the “fintech revolution” down into individual financial activities.
The following are among the most significant and influential activities that have either been altered by or introduced by fintech.
In a day-to-day sense, the budding digital payment industry throughout Africa arguably represents the most significant aspect of the fintech revolution. In a look at the rise of digital payments earlier this year, we pointed out that Africa actually accounts for more than 70% of the world’s mobile money value. We also noted that digital payments are expected to account for some USD 146.4 billion by 2030.
The explosive growth in digital payments throughout Africa has come about as a result of widespread efforts to increase mobile connectivity and empower the unbanked. As mobile devices have grown more prevalent and financial services have become accessible via those mobile devices, millions have gained the ability to conduct straightforward transactions electronically. In short, the greatest impact of the fintech revolution is that it has helped enable people throughout African nations to handle everyday expenses and transactions with their devices rather than with cash or physical cards.
Along with making payments via digital means, African consumers have also gained the ability to oversee and manage their finances via the app. Digital payments tend to take centre stage when we talk about fintech, but equally impactful for many individuals is the opportunity to lay out budgets, visualise spending habits, and, in some cases, even enjoy automated recommendations. These practices have all been made possible by a range of personal budgeting and accounting apps that have been made available throughout Africa.
Reach is perhaps the most comprehensive such app in that it pairs with users’ financial accounts to track income spending. It also has an in-app chatbot named Kudi, who acts as a kind of financial advisor. 22Seven is a similarly effective app for tracking expenses and generating savings, though it is currently only available in South Africa. And Monefy offers a customisable budget-tracking system that can be broken down into categories to make things easier for users. These are only a few examples, but they reveal some of the personal accounting tools the fintech revolution has brought about.
Our main focus here is on how fintech has affected individual consumers. On a related note, however, it has also given rise to new digital tools that benefit workplaces and employees. In particular, payroll management software has become commonplace in companies throughout the African continent. It is designed to automate processes that used to be tedious (and prone to error) – such as distributing pay, integrating new employees, adjusting for taxes, and so on.
These payroll management systems benefit employees by making it less likely that they experience issues with paychecks, bonuses, tax information, and so on. They are also useful for entrepreneurs who may be starting their own businesses and who may need affordable bookkeeping options.
Private investors have also benefited greatly from the fintech revolution. This is because, in addition to payment, budgeting, and payroll management programs, this revolution has also brought about an ongoing rise in stock market investment apps. Early on, this primarily meant that traders were gaining the means to invest in their local markets through their own connected devices. More recently, however, we have also seen the introduction of more robust and far-reaching trading apps that are giving African investors fingertip access to international stock markets.
Perhaps most notable among these apps has been Bamboo. Starting off in Nigeria and ultimately spreading into Ghana, this app makes it easy for users to trade stocks in the U.S. markets and elsewhere abroad. Simply put, this kind of investment platform gives African consumers far more control over their own financial portfolios, enabling diversified trading across assets and markets.
Similar to stock market investment, there has also been a rise in apps and web-based programs that support forex trading online throughout much of Africa. With some recent estimates suggesting that there are over 1.3 million forex traders in Africa (with the highest concentrations in South Africa, Kenya, and Nigeria), this increased access to currency markets has simplified investing processes for traders around the continent.
Through forex trading apps, private consumers now have the ability to access fair market conditions, accurate price ranges, and a wealth of information concerning currency pair history. They can also use built-in analysis, as well as an assortment of tools designed to make it easier to manage an account swiftly and responsibly. Once upon a time, forex trading in Africa was an uncertain prospect, with many investors relying on less-than-reputable currency exchange outlets. With the fintech revolution having given rise to forex apps, however, the entire currency trade has been placed within reach.
A final category worth discussing is that of cryptocurrency and digital wallet usage. While it is true that some of the shine has come off of cryptocurrencies following significant and long-lasting downturns, the fact remains that digital currency represents a busy trading market. Furthermore, there are several African nations where people are particularly invested in these new-world assets. Per one recent survey on cryptocurrency awareness, Nigeria and South Africa rank among the most “crypto-savvy” countries in the world, with respondents indicating deep familiarity with the market. 65% of people involved in the same survey, meanwhile, indicated that they saw cryptocurrency as a “safeguard against financial decline and hyperinflation.”These findings indicate that many in these countries remain invested in cryptocurrency. And that is only possible courtesy of the fintech revolution. Digital wallets and crypto trading platforms have risen alongside payment processing and personal finance apps, and many have turned to them as new ways of diversifying savings and investments.Through all of these tools and practices, it is clear that the fintech revolution has drastically transformed how many Africans handle their finances. Fintech has effectively given rise to new ways to pay, manage income and savings, and invest for the future – all from the palm of your hand.
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