By Ayuure Kapini Atafori
Africa has a huge potential and the enablers are in place for the continent to be effectively launched into the FinTech revolution but it is not a given that it is predestined to experience the FinTech transformation due to considerable challenges that are to be overcome, avers Ravi Menon, Singapore’s Ambassador for Climate Action and Senior Adviser at the National Climate Change Secretariat (NCCS).
“First, more than 40% of people in Sub-Saharan Africa do not possess a legal proof of identity or a digital ID. Women and ethnic minorities bear the brunt of this digital exclusion. Second, cross-border payment transactions within Africa are still quite expensive, as they are routed through overseas banks and involve currency swapping. Third, much of the population remains unbanked or underbanked. Only 35% of the population in Sub-Saharan Africa has access to banking services,” Menon pointed out the challenges.
He stated these at the ongoing three-day 3i Africa Summit in Accra. The summit is being held on the theme: ‘Unleashing Africa’s Fintech and Digital economic potential.’ The high-powered summit is organized by the BoG, Development Bank Ghana (DBG) and the Monetary Authority of Singapore (MAS) through its subsidiary, Elevandi.
He was speaking on the topic: ‘Africa on the Cusp of a FinTech Revolution.’ He indicated, however, that “Africa is at the cusp of a FinTech revolution that will transform the lives of hundreds of millions of people. It was Africa which pioneered the use of mobile money with the hugely successful M-PESA. According to the World Bank, Africa leads the world with the largest number of mobile money accounts. A mobile money account allows anyone with a cell phone to transfer, store, and request money directly from their device, without a traditional bank account. This is a powerful demonstration of financial inclusion.”
He said the key enablers for leveraging digital technology are in place in Africa, and the governments are prioritising digitalisation and financial inclusion through regulatory sandboxes and innovation offices. He said according to a BCG report, Africa is likely to be the fastest growing FinTech market in the world between 2023 and 2030, adding that “FinTech revenues are expected to rise by 13 times, compared to the global average of 6 times.”
Menon said “But Africa is not sitting still. Efforts are underway to tackle each of these challenges: Digital identities as a key enabler for online transactions; payments connectivity for seamless cross-border payments; tokenisation and artificial intelligence to enhance financial inclusion.”
He said digital IDs are a crucial public good to enable financial inclusion, and efforts are underway at the country, regional, and pan-African levels to realise them. He said some African countries are implementing digital IDs. Some of these include Ghana which has begun to issue digital IDs to all newborns; Nigeria, which has launched the Digital Identity Ecosystem to integrate the National Identification Number with digital services; and Benin, which is offering 300 government services based on authentication of citizen identities through digital IDs.
“At the regional level, the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC) have been working on regional digital IDs. Building on these initiatives, the African Union has plans for an interoperable pan-African digital ID. This will be a stepping stone to building the Single Digital Market in Africa – a bold vision of a unified digital ecosystem that provides individuals and businesses across the continent with seamless access to digital services. A pan-African digital ID is a powerful enabler for a digital economy,” he noted.
