What should African companies be thinking about when implementing fintech?

By Hayley Hopwood, Chief Revenue Officer, Paystack

Whether you realise it or not, there’s a good chance your company is using a financial technology (fintech) product. And even if by some slim chance it isn’t, chances are it will be in the near future. That’s as true in Africa as it is anywhere else in the world. In fact, it may be more so. 

The continent has, after all, experienced a fintech explosion in the past few years. In fact, the number of fintech startups on the continent tripled between 2020 and 2021. The sector as a whole, meanwhile, is expected to see US$30 billion-plus revenues by 2025 and US$65 billion by 2030. That’s to say nothing of the international fintech players operating on the continent or the growth in fintech offerings by traditional financial services organisations. Of course, not all of those offerings are aimed at businesses, with many fintechs focused solely on consumers. Others, however, have seen how much potential there is in building products and solutions for African businesses. The African business-to-business (B2B) payments sector, for instance, is worth north of US$1.5 trillion. It should hardly be surprising, then, that there are a growing number of fintechs looking to disrupt the space.           

Given the benefits that good fintech products and services offer in terms of enhanced efficiency, convenience, scalability, and customer experience (among other things), companies would be foolish to ignore them. But that doesn’t mean that organisations should implement fintech blindly. However, what should they be thinking about before any implementation? 

Widespread use in challenging business environments 

Before answering that question, it’s important to reiterate how widespread fintech’s impact is and will continue to be, especially in business environments as challenging as those faced by many African companies. 

From insurance to education to healthcare or retail, fintech’s use cases apply to virtually every business sector on the continent. Fintech is and will be needed by both the Instagram creatives selling bespoke wares from their home, and the established corporates looking to seamlessly collect cross-border payments from the different payment methods customers use in different countries. 

Many of these businesses operate in challenging business environments too. It’s notable, for example, that just two African countries (Mauritius and Rwanda) feature in the top 50 countries in the World Bank’s Ease of Doing Business Index. The index covers a number of factors, including the time taken to start a business, getting credit, dealing with construction permits, getting electricity, trading across borders, registering property and enforcing contracts. While fintech products can’t help with all of those things, they can provide assistance in some areas, such as getting credit.

It’s also worth noting that in many countries, large portions of the population lack access to formal financial services. In fact, figures released in 2021 showed that as many as 45% of people in sub-Saharan Africa were unbanked. Fintech products don’t just provide an important bridge for those people, they also make it easier for them to interact with businesses, particularly when it comes to digital payments.