The International Monetary Fund (IMF) said on Thursday that more than half of those entering global labour market by 2035 will be in sub-Saharan Africa, including Nigeria.
Nigeria’s unemployment rate increased from 18.8 percent in the third quarter of 2017 to 23.1 percent in the third quarter of 2018, according the National Bureau of Statistics (NBS).
Consequently, IMF said policymakers in sub-Saharan Africa will need to address several trade-offs to reap the potential benefits of fintech.
“Technological innovation and infrastructure development can play key roles in allowing the continent to transform its demographic dividend into jobs, growth, and rising living standards for all,” IMF said in a report titled ‘Fintech in sub-Saharan Africa: A Potential Game Changer’.
There is much uncertainty around the ultimate impact of financial technology (fintech) and policymakers in sub-Saharan Africa as in other regions of the world. At times, the speed of adoption of technology will even be faster in the region, as in the case of the rapid growth of mobile payments.
“The question is if Nigeria is adequately prepared for the fintech revolution,” Ayodele Akinwunmi, head of research at FSDH Merchant Bank Limited, said in an emailed response to BusinessDay.
“Our educational system has to change radically and well-funded to equip the students and graduates with the required Information Communications and Technology (ICT) skills to make them relevant in the 4th industrial revolution which is the digital revolution,” Akinwunmi said.
Since 2010, more than US$50 billion has been invested in almost 2,500 companies worldwide as fintech redefines the way we store, save, borrow, invest, move, spend, and protect money (Skan, Dickerson, and Gagliardi 2016).
The report revealed that the region has become the global leader in mobile money innovation, adoption, and usage, with close to 40 out of 45 sub-Saharan African countries actively using this new financial technology.
Nigeria recorded less than 5,000 of mobile money transactions per 100,000 adults, according to the 2015 IMF Financial Access Survey, while Kenya recorded over 40,000 transactions.
However, the Nigeria Inter-Bank Settlement System (NIBSS) electronic payment factsheet for first half of 2018 indicated that the volume of transactions rose to 35.94 million in 2018 from 24.17 million recorded in H1’17, representing 53 percent increase.
Mobile money accounts have now overtaken traditional bank accounts in several sub-Saharan African economies. Based on data for 17 sub-Saharan African countries for which both mobile money and traditional bank account data are available, there were nearly twice as many traditional deposit accounts as mobile money accounts in 2012. By 2015, mobile money accounts surpassed traditional deposit accounts in these 17 economies, which include some of the largest in sub-Saharan Africa, such as South Africa, Kenya, and Tanzania.
IMF said close to 10 percent of GDP in transactions is occurring through mobile money, compared with just 7 percent of GDP in Asia and less than 2 percent of GDP in other regions. Most transactions are used to send and receive domestic remittances. Increasingly, transactions are also being used for domestic transfers such as paying utility bills, receiving wages, and payments for goods and services.
HOPE MOSES-ASHIKE
