Financial technology (Fintech) is used to describe new technology that pursues to develop and automatically structure the delivery and use of financial services. Fintech is assisting business owners, local market traders, companies and consumers to better manage their finances, operations and processes. The convergence of Fintech spans across a broad range of sectors such as mobile money platforms, education, retail banking, fundraising, non-profit, investment management (including trading platforms) and cryptocurrency platforms.
The interesting question is how both leading and developing economies can bridge the gap between a booming Fintech industry and a lagging regulatory and dispute resolution framework. This article which is part 1 of a series of articles seeks to discuss: The growth of Fintech in Africa.
The considerations around dispute resolution mechanisms in Fintech.
In Part 2 – we will explore briefly the regulatory issues that need to be considered by authorities in the emerging markets in Africa with regard to the Fintech industry.
Growth of fintech in Africa
From around 2008, in the Ivory Coast and Kenya, mobile phone operators such as MTN, Vodafone and Orange started to expand their operations in those countries with the view to capitalise on an untapped Fintech market. The majority of consumers in the emerging economies of Africa had limited access to traditional banking services. Telecom companies have seized certain opportunities to assist those consumers manage their money, make transfers and pay bills through their mobile phones. Most emerging markets in Africa are dominated by cash economies and as a result consumers are not just using it for making payments on their phone account but to access their bank accounts, access financial services and manage their other financial services such as cryptocurrency wallets. Companies such as Equitel, a mobile virtual network operator competing with Safaricom’s M-Pesa combines telecommunications with banking services. Equitel grew its customer base by promoting its Fintech services in remote areas in Kenya. They promoted their ability to have both telecommunications and banking services through mobile devices. As it stands, as a result of the expansion of Fintech in Kenya, over 80% of the country has access to basic financial services.
In Zimbabwe, Econet Global has developed similar models to Equitel but has extended its financial services to mobile money lending through its brand EcoCash. The Financial Sector Deepening identified that digital payments in Zimbabwe in the last 6 years have risen by more than 434%.
Earlier on this year […]
