Financial Services technology in Africa’s rise as old models of growth are outdated

The online financial sector has taken off in Africa, answering a need for quality financial services and tailor made solutions to structural challenges including frequent power disruptions and poor rural infrastructure.

According to the Institute Of Chartered Accountants In England and Wales (ICAEW) Economic Insight: Africa report innovation in financial services technology – known as FinTech – has erupted as a primary global investment opportunity and has recorded rapid growth over the past five years as technological innovation allowed digitally active consumers to streamline and improve on traditional banking services.

FinTech significantly contributed to the ease of transferring money and remitting earnings, acquiring insurance and attaining credit. Mobile banking has enabled peer-to-peer lending on a larger scale, extending on a traditional saving and credit scheme known as stokvels in Southern Africa.

Regional Director, ICAEW Middle East, Africa and South Asia Michael Armstrong said: “Africa is the most commodity-dependent continent on earth. Africa’s economies increasingly need to create a hospitable environment for companies in the manufacturing and services sectors to drive growth, as the old models of growth driven by exports of raw materials are out-dated.

The world economy is shaping up to look very different in the second half of this decade than it did in the first half, and the difference will have particularly important ramifications for economic development in Africa.

Tom Rogers, Associate Director, Macro Consulting at Oxford Economics, said: “A clear plan for preventing fiscal slippage will be needed to underpin confidence in public finances and economic stability. The government’s recognition of these economic concerns will be needed to address these issues and instill some confidence in the country’s economic outlook.”