The African Development Bank (AFDB) has recently signed a partnership agreement with the Africa Fintech Network (AFN) for the establishment of an African Fintech Hub.
AFDB provided the sum of a $525,000 grant to support the operation of the fintech hub to serve as a repository of knowledge for fintech entities globally and across the continent.
Commenting on the awarding of the grant, African Development Bank Director General Lamin G. Barrow stated that the digital hub to be delivered through a strategic partnership between the Africa Fintech Network and Cenfri will help strengthen the fintech ecosystem across Africa as well as increase the competitiveness of the industry.
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In his words, “This grant, 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. Although great strides have been made in bridging the economic 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 provides.
“Fintechs offer powerful, easily accessible and efficient digital financial solutions to bridge the financial inclusion gap. Africa’s fintech sector also has a strong potential to contribute to job creation, given the strong presence of young people in these industries.”
Mr. Borrow further revealed that with the current digital disruption in the financial sector, several fintech startups are leveraging technology to offer innovative financial services, which include savings, payment, lending, financial infrastructure services and financial literacy that bring efficiency and better service offerings. .
African fintech is emerging as a hotbed for investment, with average deal sizes growing and the share 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 driven by several trends, including increasing smartphone ownership, reduced internet costs and expanding network coverage, as well as a young, fast-growing and rapidly urbanizing population.
Fintechs have become major players in the African financial sector in some cases, 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 by 2020.
The analysis estimates that Africa’s financial services market could grow by around 10 percent per year, reaching around $230 billion in revenue by 2025 ($150 billion excluding South Africa, which is the largest and most mature market on the continent.
