Fintech Landscape of Senegal 2022

Today, Richie Santosdiaz delves into the latest fintech developments and broader technological developments in the Francophone West African nation of Senegal.

As highlighted in my previous Fintech: Middle East and Africa 2021 ReportSenegal’s ambitions are represented by one vision – an emerging Senegal in 2035, with a cohesive society under the rule of law.

The Senegalese Government’s strategic guidelines, which guide the initiatives needed to translate this vision into concrete actions and results for the benefit of the people, are based on three priorities aimed at: achieving a structural transformation of the economy, promoting human capital and enabling good control set.

Senegal has become a major francophone hub on the African continent, and wants to do so with the broader technology and digital sector. By 2025, the goal is to create 35,000 new jobs in technology.

Mobile phone use in Senegal has exceeded 60 percent this year. In terms of traditional financial use, Senegal had only seven percent of the population using it.

As over large parts of MEA, the rural population is a disadvantage here. For example, with traditional financial institutions, nearly two-thirds (63 percent) of ATMs and another nearly two-thirds (64 percent) of the service points of traditional financial institutions are in the capital and largest city of Dakar.

Dakar is ranked ninth in Africa Global Fintech Index City Rankings 2020 and it is estimated that there are 24 fintechs and 47 enablers and financing partners in the country.

When it comes to their fintech sub-sectors, the majority is 42 percent in payments. In second place is the marketplace for financial services and aggregators with 29 per cent and in third place is process and technology activators with 17 per cent.

Senegal last year made headlines when the first African francophone fintech achieved unicorn status. Wave Digital Financefounded in 2018, raised $ 200 million from four major Silicon Valley venture capital firms, pushing the value to $ 1.7 billion.

Prior to this, the ecosystem – home to around 70 startups – had only raised around $ 26 million in the whole of last year. As for Wave, it shows how popular mobile money has become on the African continent and has expanded beyond just East Africa.

This year, Wave has received an e-money license from Central Bank of West African States (BCEAO)a central bank serving the eight Francophone West African countries – Benin, Guinea Bissau, Burkina Faso, Ivory Coast, Mali, Niger, Senegal and Togo – which make up West African Economic and Monetary Union (WAEMU).

Also, as highlighted in Global Mobile Communication System (GSMA) State of the Industry Report on Mobile Money 2022, mobile phone spending is high in Senegal. For example, in the case of consumers who have used mobile money to get a loan in the last 12 months, 12 percent of the people in Senegal had done so. In addition, more than 70 percent of Senegalese adults reported spending mobile money in the last 30 days, while almost half of respondents had difficulty or did not know how to read or write.

In particular, some of the most important barriers around the relevance of mobile money and their knowledge about it. For example, 56 percent of Senegalese people still prefer to use cash, while 58 percent of people also say they have friends / family with mobile money accounts that they can use – which prevents them from getting one themselves.

Despite this, Senegal, like the pioneer of mobile money in Kenya, has an almost universal consciousness in the country. Its popularity and availability have given millions of people access to financial services they would otherwise be excluded from. To note, 113.95 mobile subscriptions were registered for every 100 people in 2020.

Despite positive announcements like The Start-up Act In Senegal, there is still little progress in terms of fintech regulation and its definitions. It is not really a specific regulator for fintech companies. For the sector to develop further in the country, more must be done in space. This includes such as a regulatory sandbox and clearer guidelines for fintech as well as more varied licenses from various fintech sub-sectors.

Previous projects that did not work, such as eCFA, the digital version of CFA Franc’s national currency, are also still in focus in the country.

There were also headlines when the singer Akonwhich has roots in Senegal, outlined plans to set up a crypto-style Akon City. It is also Nourouas found Bitcoin Senegal end of last year. Like the rest of the world, cryptocurrencies have also made their way into the West African nation.

On a more serious note, back in April this year, BCEAO announced the creation of its fintech agency. Dubbed BCSF (French acronym for fintech supervision bureau), the department will promote and support the development of startups offering financial services in West Africa. BCSF will organize discussions between the central bank and fintech startups, “collect and process information or interview requests” and handle other tasks “related to technological innovation and financial sector regulation.”

Senegal presents an opportunity for not only Francophone Africa, but the African continent as a whole to showcase its innovation and talents.