5 Reasons Fintech In Africa Is Different From The Rest Of The World
The biggest market is unserved
Unlike elsewhere in the world, in Africa, the biggest market is an unserved market. Around 330 million adult Africans, approximately 80 per cent of the continent’s population, lack access to formal financial services. The vast majority of potential customers are as yet unclaimed, though they are getting switched on very rapidly.
There is a health warning here, however. Providing financial services to the poor is something you have to do carefully. People who are here to make a quick buck and don’t really care about the end-user will grab these opportunities. We expect to see a surge in payday lenders and other consumer finance providers that operate irresponsibly, thereby creating a new credit bubble. There is an urgent need for better regulation of mobile financial services in Africa, and some form of code of conduct to ensure that the end users are protected from harmful practices and served responsibly.
This also places an obligation on funders of fintech operations, such as ourselves at Goodwell Investments. There is excitement that the gap is being closed very rapidly, but concern also about the risk that vulnerable sectors of the population are being taken advantage of. The GSMA Mobile Money Code of Conduct, the SMART Campaign and the UN Principles for Responsible Investment are already providing a useful set of guidelines, , but we all must do more to ensure the end-user of mobile financial services is protected.