Mobile money is fast dissolving the economic and geographic divide that splits the continent. Fintech startups born and multiplying since 2007 have not only catapulted Africa toward the number one global spot in mobile money, but have also led to dramatic business successes for both entrepreneur borrowers and mobile money startups.
There is opportunity still to be mined. In fact, the World Bank estimates that of the 2 billion people worldwide without access to the modern financial system, one-third live in Sub-Saharan Africa. With time there is little doubt that the disruptive technologies of the Fourth Industrial Revolution will drive the entire continent of Africa forward, not just the urban enclaves.
Fueling the “Africa Rising” narrative is the fact that the motherland is the testing ground for many new financial technologies. To wit, there are over 300 fintech startups, with more than 50% having set up shop since 2015. As for mobile money, Africa’s two leading providers, M-Pesa and MTN Mobile Money, earned US$ 550 million and US$ 200 million in service revenues, respectively, in FY 2017.
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Fintech startups offering ingenious and innovative mobile-first solutions in Africa are catching on. To bring so many who have never seen, let alone owned a smartphone into the digital economy is phenomenal, pure and simple.
By deepening financial inclusion in the region, mobile money technologies are improving the lives of millions of people who have been without bank accounts, savings, loans, and access to payment services. The technology is helping democratize access to financing, enabling migrant family members to cash cross-border remittances by phone, allowing refugees to realize financial autonomy, and empowering vulnerable women through microloans.
Following in M-Pesa’s footsteps on the continent is WeCashUp, a universal payment platform built upon a combination of old and cutting-edge payment technologies. With it, e-commerce companies can receive funds from Africa’s frontier markets from people with no credit cards who can now shop online, even for plane tickets. WeCashUp’s Cameroonian founder, Cedric Atangana, who is currently earning his MBA at Stanford, saw his company named the Best Fintech in Africa in 2017.
An equally groundbreaking concept is Pezecha, the Nairobi-based startup that uses credit and analytics to assign a credit score to low-income borrowers, thus pioneering peer-to-business microloans and fostering the growth of SMEs, which are responsible for nearly 80% of Africa’s employment, according to the World Bank. More recently, Nairobi-based Twiga Foods partnered with IBM to launch blockchain-based microfinancing for food kiosk owners in Kenya, the cradle of the new development economics according to the McKinsey Global Institute.
Fintechs exemplify how technology is driving financial inclusion in Africa. In their article, Benno Ndolu (of Tanzania’s Central Bank) and Tebello Qhotsokoane (of Oxford’s Commission on Technology and Inclusive Development) report on the vast changes occurring in financial inclusion in East Africa, while offering practical tips to financial inclusion stakeholders as well as those considering the move.