Llewellyn le Hané
Money is dangerous: it is bulky, smelly and dirty. Processing and getting the money from a shop, restaurant, café or any other place of business to the bank so it can be deposited can be a security nightmare, and it leaves business owners looking over their shoulder. In the year 2019, handling cash money really isn’t and shouldn’t be necessary. There are countless payment solutions: there are cards to swipe, there are cards that allow you to pay with credit or debit, and you probably have one or two store cards as well. These are all forms of cashless payment solutions; however, the fintech sector continues to develop and innovate. If you look at your phone, you may already have some cashless forms of payment on there like Paypal, but even your banking app or money transferring SMS solution is a form of fintech.
What we are seeing across the world and especially in Africa is the (r)evolution of microtransactions and payments, ways in which people can pay for goods and services using their phones and not handling physical money. Sometimes, these forms of transactions do not even require the person to have a bank account, thereby allowing potentially the hundreds of millions of people who are unbanked to start taking part in the economy.
Most people would be very surprised to know that when it comes to fintech, the centre of the world is not the USA or Europe – it is Africa. There several reasons why fintech is so big and is developing so quickly in Africa, and Namibia really needs to focus on being part of this development. The investment and innovation in fintech, the people who embrace it, and the companies that create it are a positive driving force behind change in Africa.
Mobile banking is here to stay
Mobile money application adoption in sub-Saharan Africa is truly spectacular, partly because of the leapfrogging phenomenon, where people in the developing world leap over obsolete technologies and straight onto the latest tech. But in the case of fintech in Africa, it is also because the cost of mobile phones has dropped rapidly over the last couple of years, creating a boom in ownership. There are more people with mobile money accounts than people with physical bank accounts. This is quite something to wrap your head around, and it has left normal bricks and mortar banks struggling to keep up.
According to estimates, ownership is set to rise exponentially, which is good news for consumers and businesses. By 2020, 634 million people in Africa will have a mobile phone subscription – that is 52 percent of Africans. Now with access to mobile money and mobile banking, it is not inconceivable that traditional banks will be left floundering, unless they embrace fintech in the same way as start-ups have.
All these mobile owners with fintech money accounts, plus the huge untapped potential inherent in Africa’s young population reaching maturity, are driving a new and exciting boom in tech start-ups.
This has led to huge investments in start-ups right here on the continent, with eye-watering amounts being pledged to develop fintech solutions that are tailor-made for the African market. Investors across the world are beginning to wake up to the potential in Africa – and not only does that mean big wins for the start-ups, but positive change for people across the continent. Fintech companies that have benefitted from these investments include: Cellulant, which raised $47.5 million last year in its Series C round, and in 2017, Lagos-based fintech Flutterwave raised $10 million in its Series A round.
We often think everything from the West is amazing and innovative, forgetting we have our own brilliant people on this continent. Africans are finding solutions to assist the unbanked. The unbanked face huge challenges in accessing utilities, services and the basics of life. But they also face the security risk of carrying around lots of cash.
Fintech empowers the disadvantaged – and in Kenya in 2007, M-Pesa was a revelation. It enabled people, including whole communities, who had never had a bank account to send and receive money; pay for essentials like heating, water and lighting, and start new businesses. Imagine if you do not have to pay cash in taxi anymore, or if you can pay in your local bar, restaurant, or even when buying kapana or fruits at the local market stall. Life would become so much safer across Namibia.
Fintech in Africa is one of the world’s greatest tech-success stories, and we must build on this success. So far in Namibia, there are some payment solutions, and tentative steps are being taken by companies, but we need to be bold as a nation, and the public and private sector, including banking, need to embrace fintech. The potential is huge; Namibia can lead by example. By 2050 it is estimated that the youth population will have increased by 50 percent, and Africa will have a largest number of young people on the planet. The youth will want, need and start developing fintech applications themselves if they are not already in place. Let us create the fintech future together now!
*Llewellyn le Hané is a Director at Green Enterprise Solution