The African Development Bank (AFDB) has recently signed a partnership agreement with Africa Fintech Network (AFN) for the establishment of an African Fintech Hub.
The AFDB provided the sum of a $525,000 grant to support the operations of the fintech hub to serve as a repository of knowledge for fintech entities globally and across the continent.
Commenting on the provision of the grant, African Development Bank Director General Mr. Lamin G. Barrow stated that the digital hub which is to be delivered through a strategic partnership between the Africa Fintech Network and Cenfri will help to strengthen the fintech ecosystem across Africa and as well boost the industry’s competitiveness.
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In his words, “This grant, in the amount of $525,000 will support the operationalization of an online digital hub to serve as a repository of knowledge for fintech entities across the continent and globally. Whilst great progress has been made to bridge the financial inclusion gap in African countries, according to the 2021 Global Index study, 49% of Africans are excluded from the formal economy and the benefits it brings.
“Fintechs provide powerful, readily available, and effective digital financial solutions to help bridge the financial inclusion gap. Africa’s fintech sector also has a strong potential to contribute to job creation, given the strong presence of the youth in these industries.”
Mr. Borrow further disclosed that with the current digital disruption in the financial sector, more fintech startups are leveraging technology to provide innovative financial services, which include savings, payment, lending, financial infrastructure services, and financial literacy that provides efficiency and better service provision.
African fintech is emerging as a hotbed for investment, with average deal sizes growing and the proportion of fintech funding in Africa increasing over the past year, bringing jobs and growth to African economies.
As the fastest-growing start-up industry in Africa, the success of fintech companies is being fueled by several trends, including increasing smartphone ownership, reduced internet costs, and expanded network coverage, as well as a young, fast-growing, and rapidly urbanizing population.
Fintechs have become major players in the African financial services sector in some instances, rivaling traditional banks in terms of size and volume of transactions. A McKinsey analysis shows that African fintech has already made significant inroads into the market, with estimated revenues of around $4 billion to $6 billion in 2020.
The analysis estimates that Africa’s financial-services market could grow at about 10 percent per annum, reaching about $230 billion in revenues by 2025 ($150 billion excluding South Africa, which is the largest and most mature market on the continent.