How fintechs are making Africa a leading global Innovation Hub

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JumiaPay also provides Jumia Lending, a service that gives quick and affordable short-term working capital financing for Jumia sellers seeking to expand and grow their online businesses. In a recent interview with Reuters in Lagos Nigeria, co-founder/co-CEO Jeremy Hodara noted that “as a key part of the company’s growth plan in 2020, Jumia is interested in making its Pay platform and its logistics network available to third-parties, even those not selling on its e-commerce platform”. He further told Reuters that “Jumia is an e-commerce ecosystem, with a strong marketplace and very strong logistics and payment platforms, that complement each other.” 

This, being a single pick from among tens of other fintech players in the continent, all contributing to the growth and development of the African economy. 

On this basis, it is coherent that startups in the fintech sector have raised significant capital in the last few years, as compared to other sectors. In 2019 for instance, fintech topped African tech sub-sectors with most VC (Venture Capital) investments, with a record of $285 Million. 

The Global Fintech Index 2020, published by a fintech research firm, Findexable, shows that 60% of the global GDP will be digitized by 2022, with growth in every industry driven by digitally-enhanced offerings, operations, and relationships. The report further notes that progressive, digital-first financial services are the key to “offer the best chance to drive global trade in 2020, improve access to financial services, and open opportunities – for marginalized citizens, poorer communities and small businesses and entrepreneurs alike”. 

South Africa, Kenya & Nigeria are fueling fintech in Africa

The number of fintechs in Sub-Saharan Africa has recorded a 24% Compound Annual Growth Rate (CAGR) over the past decade, with local fintech companies taking up the larger share of the sector at 80%, while international players at account for 20% according to Ernst & Young. 

South Africa, Kenya, and Nigeria are fueling fintech in the continent, and 2020 is no exception. The countries are ranked 37th, 42nd, and 52nd respectively in the Global Fintech Ranking by Findexable, followed by Ghana, Egypt and Uganda in positions 58, 60, and 64 respectively. Digital banks, Cryptocurrency, SME financing, payments, enabling processes & technology, banking & lending, remittances, personal finance, and equity funding have been identified as some of the fintech strengths in these countries. 

There is a significantly impressive push to grow the fintech industry in Africa in 2020 and beyond, both from the private sector and governments. For instance, the Africa Fintech Network (AFN) is expected to greatly contribute to making Africa a leading global Innovation Hub in 2020 and beyond, among others by promoting the region as a preferred investment destination. 

 

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