Nigerian’s Fintechs Biggest Challenge

Nigerian’s Fintechs Biggest Challenge

The African Union had agreed on key aspects of AfCFTA such as tariffs, a monitoring system and a digital payment system. This means that AfCFTA is now effectively operational even though trading with the heavily reduced tariffs will begin a year from now, Fortune notes. Yes, next year! I have noted the implications on banking, and why Ecobank, UBA and Standard Bank are promising because of their geographical footprints.

AfCFTA’s digital payment system, Pan African Payment and Settlement Platform (PAPSP),  will be a great deal for Africa. Besides the “rule of origin” clause which remains largely non-conclusive, how the PAPSP works will be the game changer in this treaty.

And that will shape the new selling points for most African fintech startups. Nigerian fintech startups must look outwards over the next one year as AfCFTA evolves since geographical footprint will become a strategic advantage (I wrote few years ago in Harvard Business Review that locality is a competitive weapon). But these fintechs may not need to open new branches in new territories – they can form alliances (think of Ecobank Nedbank alliance). (Mergers and acquisitions are also options.)

The Ecobank Nedbank Alliance is the largest banking network in Africa, with more than 2,000 branches in 39 countries. As part of its commitment to offer a unique one-bank experience, the alliance provides tailored banking and LocalKnowledgeAfrica™ to Ecobank  and Nedbank  clients across the Africa continent.

Watch at this video.

Yes, PAPSP can solve the case in that video, and if it does, the most important friction in African trade and commerce will be gone. The things remaining will be marginal in value, diminishing the interests for huge investments by global investors! Do not take this construct for granted. We all know the key friction in the disparate African economies. If PAPSP does the fixing at scale, what again will be in the business plans for fintechs with continental roadmaps?


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