With the high influx of fintech companies in Africa, the region has become a global leader when it comes to mobile/online payments. According to GSMA, more than 45% of global mobile accounts belong to sub-Saharan Africa, taking the continent’s total to 481 million registered accounts. This was a region that traditionally suffered from limited access to formal financial services. The digital industry in Africa has experienced consistent growth since 2016 in terms of both the number of transactions and financing volume.
The African region now has more people who are using their mobile phones to make payments. One beautiful thing about these fintechs companies is that the boom has helped solve the issue that people in Africa often face when it comes to international payments. Mobile money now drives instant and secure payments in international remittance, healthcare, and salaries inclusive.
Years ago some countries in the African region could not receive money through PayPal, with Nigeria inclusive. This indeed posed a serious challenge in receiving funds internationally because Paypal was often the preferred choice of payment by those in Europe.
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Traditionally, Africa’s e-commerce ecosystem has lacked suitable payment solutions to meet the demand for seamless transactions worldwide, which constrained the regions’ contributions to the global digital economy. Not too long, in 2021 one of Nigeria’s and Africa’s biggest Fintech companies, Flutterwave helped in solving this issue.
Flutterwave collaborated with global payment leader Paypal to enable Paypal customers globally to pay African merchants in the continent through the Flutterwave platform. This collaboration was indeed a huge sigh of relief for African merchants most especially freelancers as they could easily receive funds for their services rendered.
I am not surprised that Flutterwave has surpassed $3 billion in valuation and continued to take in billions because their collaboration with Paypal eliminated significant barriers that had previously hindered African consumers and businesses from the untapped potential of cross-border commerce.
Also, start-ups in the remittance space such as Paga, Sure remit, warn, etc have made it possible for African residents to receive money from overseas with ease. Today in Africa, digital transactions now make up the majority of money flows. They are gradually opting out of cash as the primary mode of payment.
The continent has indeed become a hotbed of financial technology and innovation. According to a report, the African continent now has over 473 active Fintechs. The fintechs raised about $350 million during the first quarter of 2020. The funding is majorly generated for projects like online banking, consumer credit checks, and innovative financial products and services. There are a whole lot of Fintechs doing exceptionally well, but I will just mention a few of them;
- Opay; which is valued at $2billion.
- Flutterwave; with the valuation of the company now standing at $3billion.
- Chipper Cash; which is valued at over $2billion.
- Timebank; A South African fintech that currently holds R2.8 billion in deposit balances.
- Fawry; An Egyptian fintech that is currently worth $2billion.
Indeed there are many more Fintechs in Africa doing remarkably well and still, many more are emerging. This fintech boom has indeed helped reshape payments and international money transfers in the region. It might interest you to know that Africa is regarded as the world’s second-fastest-growing and profitable payments and banking market after Latin America, according to McKinsey’s study, and this means that the Fintech sector in the continent will continue to attract investors tapping into the increasing growth opportunities.
