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Are we heading to cashless societies in Sub-Saharan Africa?

8 September 2022

At the outbreak of Covid 19 the latest report on Mobile Money from GSMA revealed block-blustering developments in the fintech space with Sub-Saharan Africa leading various parts of the world. The region continued to steer the world having registered over 50 million new mobile money accounts over 2019, taking the number of accounts to 469 million accounts, about 40{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} of the global tally.

Sub-Saharan Africa was the undoubtable leader in the usage of fintech solutions. Mobile money, micro and nano loans, handset loans and other various digital financial services have found a fertile ground in Sub-Saharan Africa, as they supported the underserved and unbanked population. “Fintech solutions in the region are not a matter of convenience as it may be in the western world but one of necessity” Bassim Haidar recently noted in his opinion piece at World Economic Forum(WEF) website

 

Covid-19, the catalyst for further growth

There is no doubt that the outbreak of the pandemic froze the world. Africa could not be an exception, but very quickly the whole ecosystem was mobilized. Fintech companies, the banking system and especially several state authorities quickly realized that in these unprecedented times fintech services will prove to be a lifeline in Sub-Saharan Africa. Kenya was a illustrative example, where mobile money usage soared, thanks mostly to the Kenyan government who waived sending charges of up to 1 000 shillings (about $9.3) in a bid to encourage cashless payments and curb the spread of the disease. The need for social distancing, the need to reduce cash, has led to the reasonable conclusion that the population of the region (as in all emerging markets) is in far greater need of digital financial services.

Fintech services always have a unique capability to extend financial inclusion, improve lives in the most vulnerable homes, while giving users more control over their finances. During the health and financial crisis that cause is more important than ever. As a result, Covid-19 has contributed to a faster pace of fintech services.

At the post-pandemic era people will realise that the digital tools on which they have relied during this disruption are in fact providing important services, regardless of the conditions. Coupled with Sub-Saharan Africa’s demographics, in the long run fintech growth in the region will accelerate even further. Population growth rate, percentage of unbanked population and of course the existing success of fintech solutions are creating the perfect melting pot for fintech solutions to thrive in the foreseeable future.