On Wednesday, October 6, 2021, the BBC Insider Series hosted a few players in Africa’s fintech sector during a panel discussion to discuss strides made by the sector to aid innovation and financial inclusion in Africa.
Moderated by BBC presenter, Zeinab Badawi, the panel had Olugbenga Agboola, founder and CEO of Flutterwave, Usoro Usoro, CEO, Y’ello Digital Financial Services, MTN’s fintech subsidiary, Bola Asiru, Principal/Divisional Lead, sub-Saharan Africa for Mastercard Advisors, and Yasmin Masithela, Managing Executive, Transactional Banking, Absa Corporate and Investment Banking.
The virtual event focused on fintech’s allure to investors, the benefits Africans derive from fintech start-ups, partnerships between banks and fintech startups, and the role of regulators in the industry.
Discussing fintech’s attractiveness to investors, the panelists were unanimous in their agreement that the scale of opportunity available to players in the fintech industry was a big factor in why investors are taken in by fintech.
According to the Mastercard Foundation, as of 2017, about 43% of people living in sub-Saharan Africa were financially included. This presents a huge opportunity for investors and entrepreneurs willing to look beyond the myriad of challenges that they are sure to face to build solutions.
However, for Usoro, beyond the scale, the unserved segment of the market represents a huge opportunity as well. “When we look at the market segment, you look at a lot of people that are unserved and when you look at the served segment, they’re still lots of people that have not adopted the services. So it’s both scale and the fact that a lot of people are still unserved that makes the market very attractive.”
With the speed of innovation and execution exhibited by fintech, arguments have been made regarding fintech’s potential to replace traditional banks. However, Agboola disagreed with that view, arguing that he sees a situation where fintech complement the works that banks do and vice versa, advocating for partnerships between banks and fintech.
Even with the gains recorded, there is still a long way to go for fintech to plug the gaps in financial inclusion in Africa. For this Usoro argued that fintech in addition to providing a huge opportunity for investors also do good in the communities where they operate. “It’s commercially attractive to investors but it also does some social good.’’
“With the kind of services that we offer to customers, whether it’s those micro-loans that enable SMEs to access inventory on daily basis, a lot of these services actually transform the lives of our customers.” He added that with innovations in USSD technology and the adoption of agent banking networks, fintech are able to make it easier for most users to access financial services.
Be the smartest in the room
Deepening financial inclusion is high on the agenda of Nigeria’s Central Bank and Y’ello Digital Financial Services has been playing its part in helping the apex realize this goal. With its wide network of over 150,000 MoMo agents, the organization offers financial services to customers.
Customers can pay bills, deposit and withdraw cash, as well as purchase data and airtime from agents. Through partnerships with over 40 banks and financial institutions in the country, customers can access funds in their accounts without using an Automated Teller Machine (ATM) in a secure manner.
With 54 countries in Africa, providing financial services to users comes with lots of regulatory hurdles in each country. However, startups need to build services for users regardless. Usoro stated that being able to build solutions that allow for these differences could fix these challenges.
“At the technology and fintech level, the ability for us to build an interoperable switch to allow multi-currencies, multi-wallets, to speak to each other seamlessly may be one of the things we need to do to fix that hurdle.”
Some may argue that there are too many players in Africa’s fintech sector but with the scale of the problem, there might be a need for more players to throw their hats in the ring to solve some of the problems.