Fintech  |  AlphaCode

How can SA become a global fintech leader?

Published on August 15th, 2018

Africa is seeing astounding growth in the fintech space, with more than 300 fintech start-ups active across the continent as at the end of 2017. South Africa, home to the continent’s most sophisticated and well developed financial system, is at the forefront of this growth; nearly one third of Africa’s fintech start-ups are to be found in South Africa. This is an encouraging figure and suggests that we are really ahead of the pack from an African perspective. But how do we compare globally and how can we make ourselves a more important player in the global field?

How does South Africa compare to the global leaders?

According to the Ernst & Young Fintech Adoption Index 2017, China has the highest fintech adoption rate out of surveyed markets at 69% of the digitally active population with India someway behind at 52%. The UK, Brazil and Australia follow in third, fourth and fifth place respectively.

South Africa compares well in ninth position, with a 35% adoption rate (tied with Germany and a mere 2% off fifth-seeded Australia). Importantly, South Africa comes in at over 33%, which is the global average and it falls in the “early majority” category, which indicates that somewhere between 16% and 50% of the digitally active population have embraced fintech. Astoundingly, the study forecasts that the growth of fintech adoption in South Africa will be the highest out of all surveyed markets at 71%.

South Africa is clearly en route to enjoying an even higher rate of fintech adoption than its current impressive 35%; helped in no small part by our high rate of internet penetration (54%). However, as a hub for generating fintech capabilities, we come in considerably lower. A report by Deloitte analysed 44 cities and ranked them according to their fintech development. London and Singapore came out on top, with Johannesburg right at the bottom of the list; only Jakarta performs worse than we do.

Furthermore, according to the 2017/2018 Global Entrepreneurship Monitor’s (GEM) Report 1, South Africa ranks 42 out of 54 countries for entrepreneurial spirit. Total early-stage entrepreneurial activity in South Africa comes in at 11%, which is an improvement from the 6.9% recorded in 2016 but still very low by international standards. We also score poorly on the report’s “supportive entrepreneurial framework”.

How can South Africa improve?


We believe that firms such as AlphaCode are an increasingly vital part of the ecosystem. As an incubator, accelerator and investment vehicle, AlphaCode has been enabling high potential fintech entrepreneurs since its launch in 2015. It is playing an integral role in encouraging disruption and developing fintech capabilities in South Africa through its collaborative approach to growing next generation fintech businesses. Its prestigious Incubate programme, which is currently open to submissions until 7 September 2018, rewards eight promising early-stage entrepreneurs with a R2 million package that includes grant funding, office space, business support and unfettered access to a network of experts, mentors, fellow entrepreneurs and potential clients. These kinds of initiatives are invaluable in fostering fintech innovation and advancing the country’s fintech capabilities.

Regulatory framework

That said, reliance on the private sector alone will not help us realise our full potential. More needs to be done in the public space too; government and regulators have to provide support to fintech innovation by encouraging development while at the same time ensuring customers and investors are adequately protected. It’s a fine line and one which authorities in London and Singapore are leading the charge on with their supportive and progressive regulatory bodies and initiatives.

We are making progress in the right direction; the South Africa Reserve Bank has set up the Fintech Programme to monitor fintech developments in the country and ensure a balanced regulatory response. One of the objectives of the programme is to assess whether the introduction of “innovation facilitators” (a collective term for innovation hubs, regulatory sandboxes and accelerators) would be appropriate for the country. The UK and Singapore have had regulatory sandboxes in place since 2016; it could be argued that this is a key tenet of the countries’ success at becoming a fintech hub.

Untapped potential

South Africa is clearly on the right track in terms of fostering fintech innovation. A high technology penetration rate, combined with a relatively underbanked population as well as the emergence of supportive operating frameworks (including incubators and a favourable regulatory backdrop) creates a highly conducive environment within which fintech innovation can thrive. For our success to advance beyond African borders, we need to focus on further developing these factors to ensure that we become a globally relevant player in the fintech revolution.