Africa is the continent with more indexes of poverty. Nevertheless, in the last 15 years has been a constant economy growth not just in a few, but in most of Sub-Saharan African (SSA) countries. Internal factors such as: improvement in the quality of governance and institutions, improvement macroeconomic policies and performance and more stable political conditions, has led to increased foreign investment.
The World Bank data show the constant growth of SSA GDP in the 21st century, in contrast with Latin American that has not been constant.
Ethiopia, Senegal, Rwanda and Cote d´Ivoire are in the 2019 list of “The Ten Fastest Growing Economies in the World”. The common denominator for these countries’ development are government reforms, liberation of economy and protection of private property.
Technology is playing a very important role in the development of the continent and especially in the realm of FinTech. At least 60% of the SSA population are unbanked, these financial gaps left by traditional services are being plug through mobile financial services and payment technologies provided by FinTech.
Fintech is predicted to contribute $150 billion to Africa´s GDP by 2022. On account of this both private and public investors worldwide are showing interest to these developments, which has been evidenced by an increase in investments in the SSA FinTech market.
This access to banking services for low-income population and small business-owners, is making an important social impact in the continent. The main factors of how FinTech startups are changing the SSA economy are:
- Financial Inclusion
Paga is an example of financial inclusion for African population, through creating a comprehensive mobile payment infrastructure. The company founded in Nigeria by Tayo Oviosu enables its clients to digitally send and receive money.
This Nigerian fintech now has more than 12.8 million customers who are served by more than 20 thousand agents. The agents can earn a commission for every transaction performed by their customers.
- Access to loans
Fintech are providing microloans for lower-middle class citizens and small business owner. An example is Branch, the company created an algorithmic approach to determine credit worthiness via customers´ smartphones. While this tech-forward approach requires transparency and trust, it also enables a fair, secure and convenient path for customers to build capital and save for the future.
- Easier client verification
The creation of a single financial data application programming interface (API) that powers financial services to “onboard, verify and monitor identities remotely, by tapping into last mile data sets, offline and regular government databases.” This API allows startups to easily verification of their clients without having rigorous background checks and to expand their services, without the need to build their own infrastructure.
- Options for businesses to scale
Farmcrowndy is Nigeria´s First Digital Agriculture Platform that empowers rural farmers by providing them with improved seeds, farm inputs, training on modern farming techniques and provides a market for the sale of their farm produce. This gives the farmers the capacity to farm more acres and by extension leads to increased food production and security in Africa.
This platform is an example of how FinTech startups are expanding access to capital for small business, through investment from sponsors. Which provides increasing their outputs and the amount of people they employ.
There are just few examples but exhibits the promising sings of accelerating growth, ample investment and business opportunities for the sector and most important for SSA economy and the social impact this will lead.