McKinsey & Company, a global management consulting firm has estimated that fintech revenues in Africa could grow by eight times to reach $30.3 billion by 2025 from $3.8 billion in 2020.
According to a statement by the company, the success of fintech companies is being fuelled by several trends, including increasing smartphone ownership, declining internet costs, expanded network coverage, and a young, fast-growing, and rapidly urbanizing population.
“African fintech has a significant impact on day-to-day life on the continent and with its current upward trend it can be perfectly poised to rapidly advance Africa’s global competitiveness with an increase in the exporting of fintech services globally,” it said.
It added that the COVID-19 pandemic has accelerated existing trends toward digitalization and created a fertile environment for new technology players, even as it caused significant hardship and disrupted lives and livelihoods across the continent.
“But these fertile grounds do have challenges. Regulatory uncertainties and differences between countries are a bottleneck, throttling the expansion of financial inclusion in Africa.
“This has led to the continent’s fintech’s calling for a Pan-African regulatory body to define comprehensive regulatory policies for regions rather than countries,” it further said.
Read also: Banks, fintechs face hurdles in cashless economy race
In a bid to achieve sustainable growth, analysts at McKinsey & Company say companies that have a long history of operating on the continent have built their success on rapid customer acquisition.
“Africa’s fast-growing population of more than 1.3 billion people offers a large potential market for fintechs, but actually acquiring customers can be challenging because of factors such as infrastructure constraints and low customer purchasing power,” they said.
They added that leading players have had to take steps to overcome such constraints by, for example, leveraging preexisting physical networks or by employing aggressive pricing strategies to offer cheaper fees and charges than competitors.
