Click and you’ll miss it: the dawn of African fintech

Published on January 30th, 2017

A tech-charged dawn is breaking over Africa. Phone ownership and fibre optic connectivity are growing rapidly, bringing a world of fresh commercial opportunity. In particular, the continent’s economic potential is leading some entrepreneurs to reimagine how finance works. Fintech innovations are opportunities for both lenders and borrowers as technology gets cheaper and more accessible, reaching more people than before.

Better financing options are spreading across Africa, and so too are the conditions that support it. The Alliance for Affordable Internet has noted the falling cost of smartphones, down by 20% between 2008 and 2014. New fibre optic cables for Ghana and the whole east coast are laying the infrastructure needed for quicker internet. The One Network Area in east Africa has eliminated roaming charges to encourage communication and trade across the borders of Uganda, Kenya, Rwanda and South Sudan. The fintech revolution is riding this wave of technological progress by offering access to credit and financial services without the need for the banking infrastructure we have come to expect in western economies.

Affordable smartphones made by Xiaomi and Micromax are widespread in pockets across the continent, making the internet just a few taps away. With the internet comes new opportunities in the form of innovations like digital currencies, payment methods and sophisticated risk assessment models.

This access creates a brand new customer base, allowing companies like my own, Prodigy Finance, to make finance simpler and more available. To give one example, it challenges traditional banking structures which exclude those who can repay, but can’t access loans. Banks are restricted by national legislation, and often deny loans to those simply because a borrower is not native to the country where they wish to borrow. Prodigy Finance is using the power of the internet to lend across borders to the world’s brightest and most ambitious students, empowering borrowers by breaking down barriers.

The process of lending needs streamlining, and there is now a rush to capitalise on technology that draws investors together with borrowers. Crowdfunding apps do this by cutting out financial institutions from the lending chain, making it more direct to access loans. African startups are challenging these pillars of finance across the board, such as Aella, a Nigerian company founded in 2015 whose app assesses a borrower’s credit rating. This is one of many companies that are gradually eliminating institutionally slow, inflexible working practices.

The changes taking place mean that talent with earning potential has greater access to capital. This capital is potentially an opportunity to pay tuition fees, find a job or start a business. In the developed world a rigid system presents a barrier to growth. Whereas in Africa, entrepreneurs, perhaps without access to a bank or a reliable postal service, can use the internet to get on and get the capital they need to succeed in business.

Reducing the number of intermediaries in big finance is strengthening the foundations of African business, providing a fast moving model for future economic development. The reach of fintech stretches beyond lending too. Everything from insurance requirements to physical cash is being challenged by a tech-savvy generation on the continent, as millennial entrepreneurs embrace the Fourth Industrial Revolution.

Today, internet access is the gateway to a credit system that is fully-functioning and awaiting use, with investors eager to consider promising investment opportunities. As electricity supply grows, with a [45% rise in use since 2000](, and as internet access continues to spread, so too will access to credit.

The strength of Africa is unmatched by competitors, and the region is well positioned to embrace the current digital technology revolution.

Cameron Stevens is an AlphaCode Gold Member and the founder and CEO of Prodigy Finance, an innovative fintech company lending to top students from emerging markets.

Source: African Review Reference: 8548171