New fintechs raised $350 million in first quarter of 2020 in Africa of which $112 came from South Africa, while $74 million came from Nigeria, with $62 million in Kenya; and $51 million in Egypt.
Former deputy governor, Central Bank of Nigeria(CBN), Kingsley Moghalu, in a presentation titled, ‘Financial Technology (FinTech) Security, Digital Trust, and Compliance: An African Emerging Markets Perspective’ at the the CyberTech Global Conference 2021 held in Dubai, on Tuesday, said, as at 2020, the continent has over 400 fintech companies, of which 80 per cent are locally founded and owned.
Early 2020 figures, he said, indicated that venture capital funding for fintech startups had risen by 51 per cent for virtual banking, consumer credit checks, and finance apps.
He said, “New Fintechs raised $350 million in first quarter (Q1) of 2020; $112 in South Africa, $74 million in Nigeria; $62 million in Kenya; and $51 million in Egypt. The consultancy McKinsey reports that Fintech investments in Nigeria have grown by 200 percent in the past three years.”
He explained that Africa’s exports, driven by the AfTCA, will increase by an estimated $560 billion, mostly from the exports of manufactured goods, over the next decade, saying that this will further boost the Fintech sector.
“In Nigeria, we adopted a proactive policy and regulatory support approach to fintech for three main reasons. To promote financial inclusion; reduce operational costs for financial institution and for financial consumers; and to reduce corruption by removing the incentive offered for the crime by a hitherto largely cash-based financial ecosystem.
“These imperatives led us at the CBN to develop some world-leading innovations in fintech security, in particular to the Know Your Customer (KYC) framework. The most important of these innovations was the Bank Verification Number (BVN), which we developed in 2013 and launched in 2014 while I was the reserve bank’s deputy governor for operations and so had the responsibility of leading this task and process,” he said.
He however noted that, although ,cyber fraud remains a significant threat to fintech, the level of trust in fintech in Africa is much higher than in other parts of the world because fintech in Africa addresses basic problems such as communications, financial inclusion, and remittances and mobile payments, and solves problems that advanced economies have long outgrown.
He also stated that the new African Continental Free Trade Area (AfCFTA) will drive further growth in financial technology.
Africa, he said, is an emerging fintech market that will only continue to grow, saying, fintech will accelerate the continent’s recovery from COVID-19 and that the new African Continental Free Trade Agreement will also drive further growth in fintech.