Browsing: Financial Inclusion in Africa

Fintech has the potential to revolutionize the African financial services landscape. Already mobile payments and microloan technologies are taking root rapidly across the continent.

The success of mobile money provider M-Pesa in many countries such as Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania, and Tanzania among others is an example of the potential of fintech on the continent. 

Read Also: Mobile money making Africa bankable

Financial Inclusion

In Africa access to traditional financial services is limited. Transaction costs with banks are usually very restrictive. This coupled with poor infrastructure, lack of employment and rural environments has created room for fintech innovators in financial services provision.  

62% of the African population remains un/underbanked. Mobile phones are relatively more accessible which has increased the reach of mobile money services. In sub-Saharan Africa mobile money transactions account for 10% of the region's GDP against an average of 2% in other economies; this

None of us particularly like money-lenders and few of us would want the stress and unpleasantness of being the type of money-lender that proliferates in cities like Kampala – leeching returns of 10% a month against assets pledged by desperate borrowers.  The reason that these bloodsuckers can exist is that access to credit on reasonable terms, or at all, from banks is still so difficult to get for most businesses.  

Also Read: Mobile money loans affecting banks’ lending – report

The fact is that there are some great businesses that cannot grow and often struggle to survive because cash-flow is such a huge problem. In Europe many businesses use “factoring” to improve their business cash-flow and reduce the time they spend trying to collect money. But the truth is that the banks that provide this service are so selective about the businesses they deal with and the invoices they process