The global body of mobile operators, GSM Association (GSMA), has described the fintech ecosystem in Nigeria as the most active in Africa. The body in its 2020 Mobile Economy Report said that beyond basic remittances and bill payments solutions, mobile technology has been facilitating the rise of fintech start-ups looking to plug the gaps in financial services in Africa. “Nigeria has one of the most active fintech markets across the entire region of sub-Saharan Africa. Fintech opportunities in the country are significant and could potentially redefine the financial services landscape in the coming years,” GSMA declared in the report.
Highlighting some of the factors contributing to fintech growth in Nigeria, the body stated that in addition to a large, youthful population and increasing connectivity, the country has a huge financial inclusion gap, with access to complex financial products still limited to only a small proportion of the population.
“For example, only one per cent of the population holds any form of insurance, according to the Nigerian Insurers Association. Other countries in West Africa, notably Ghana and Senegal, are seeing similar trends in the fintech landscape.
For these countries, a more established mobile money market, with advanced features such as interoperability and international remittances, provides an even firmer foundation for fintech start-ups to build upon,” it added. GSMA added noted that in more developed markets, fintech start-ups tend to disrupt existing financial services, such as credit, mortgages, and insurance, to provide more efficient services and lower the cost for end-users.
However, in Africa and other developing regions, it observed that large swathes of the population are currently excluded from these services, providing a blank canvass for fintech start-ups to create new systems and value chains from scratch. “Fintech has the potential to be a key enabler of e-commerce services in the region. One of the limitations of e-commerce services so far has been the relatively low penetration of online payment cards, leading many ecommerce businesses to rely on cash on delivery and the attendant risks.
A number of emerging fintech start-ups is addressing this challenge by providing solutions for merchant payments and other online transactions through mobile phones,” it stated. Meanwhile, the body of GSM operators has said that wide connectivity and fast networks will play critical roles in cushioning the economic and industrial shock of COVID-19. Head of Asia-Pacific (APAC) at GSMA, Julian Gorman, said: “It is critical governments recognise the significant contribution mobile operators have made to help respond to Covid-19 and seek to encourage additional investment and innovation for an even more resilient digital future.” As 5G becomes a reality, Gorman said: “We call on governments and regulators to actively support a favourable business environment to encourage investment and allow operators to extend next-generation digital services to all citizens and speed financial recovery.” Mobile connectivity provides a positive impact on productivity and boosts GDP, he said, noting that across the region, there is a need for a “whole of government” approach with clear digital strategies to transform economies. He added that emerging economies needed to do more to stimulate and evolve the digital ecosystem, including accelerated smartphone penetration and mobile broadband adoption to prepare the foundations for an inclusive 5G future.