New business models, Fintech companies and customer solutions are making their entrance in the Sub-Saharan market at an increasingly high rate. Approximately 60% of the adult population in Sub- Saharan Africa are unbanked. These people, also known as the non- consumers of the formal financial services, deal mainly in cash despite governments urging them to participate in the formal economy as financial inclusion is the key enabler for poverty alleviation and economic growth. Studies state that Sub Saharan Africa has great opportunities which truly understand and enable these non- consumers and also instigates long-term prosperity where the opportunities are adopted.
Cash being known as a predominant method of value exchange, is easy to use and widely accepted. However, with 46 countries, Sub Saharan Africa is facing issues in banking such as distance to bank outlets, risks when carrying cash, lack of trust, daunting paperwork, and overwhelming identity and documentation requirements. As Africa continues to grow above the par in the digital world, the banking and financial institutions seek new investment opportunities across the continent, hence making Africa’s payment systems become an increasingly important topic.
Mobile money is the main factor driving financial inclusion. According to GSMA 2018, the market has grown rapidly, for instance, there has been an increase from 75 million accounts in 2012 to almost 340 million in 2017. A report from the International Monetary Fund (IMF) shows that mobile money has rapidly surpassed the traditional banking in 17 economies of Sub Saharan Africa. Fintech companies are not only helping to improve financial inclusion in the region, but also serves as a catalyst for the emergence of innovations in the sectors like agriculture and infrastructure, which help in promoting economic growth and development. However, pertaining to the studies, among the 17 economies, Kenya ranked 2nd; Nigeria and South Africa ranked near the bottom in mobile money transactions.
As per EY publication 2019, there are currently over 260 companies which operate in the Fintech sector. As such, the payment segment and the services enable it to dominate the space. This transformation offers digital viable alternatives to the traditional banking system and identified mobile money as the main solution which is being used in the Sub Saharan Africa. The table below shows mobile money adoption statistics for Kenya and Nigeria.
| Features | Kenya | Nigeria |
| Population | 50m | 191m |
| Informal GDP | 33% | 65 % |
| ATMs per 100,000 People | 9 | 16 |
| Household with a personal computer | 0.5% | 5.1% |
| Household with a telephone | 1.2% | 1.0% |
| SIM Penetration | 93% | 79% |
| Prepaid mobile account | 97% | 96% |
| Internet Penetration | 46% | 48% |
| Facebook Penetration | 39% | 20% |
| Technological readiness (scale 0-7) | 3.7 | 3.0 |
| Moderate Economic Freedom | Yes | Yes |
| Mobile Money business model | MNO Dominant | Third party |
| Enabling regulation | Yes | NO |
| Mobile Money Penetration | 80% | 0.5% |
| Mobile Money transactions per person | 53 | 0.5 |
According to information obtained from a consulting firm, mobile money transactions in Sub Saharan Africa exceeded $ 1.3 billion in 2019. In addition, experts predicted that the growing number of mobile subscribers will eventually lead to an increase in the mobile money market.
The Fintech sector is positioned to enable sustainable growth in the economy of Sub Saharan Africa and thus holds the potential to improve the living standards of millions of citizens.
Partnering with NanoBNK
In line with the study above, it has been observed that Fintech companies have brought a new hope and dimension to the African market. NanoBNK is a bank led model, as we believe that instead of competing with banks we can address the financial inclusion challenge. Hence the key is to form partnerships to address the unbanked segment of the population.
Source of Information:
GSMA Report 2018
EY 2019
IMF 2017
