The African fintech market is projected to reach $65bn by 2030, representing a 13-fold increase over 2021, according to a new report by consulting firm Boston Consulting Group (BCG) and QED Investors.
Mark Elliott, division president, Sub Saharan Africa (SSA) at Mastercard, in this interview with BusinessDay’s David Ijaseun, discussed how the tech firm promotes financial inclusion by simplifying access to digital payments, supporting small businesses, and championing financial literacy.
How has the emergence of fintech companies influenced Mastercard’s operations and strategies within the African market?
The African fintech landscape is accelerating at an unprecedented speed to bring more people into the cashless and digital economy. At Mastercard, we are helping to fuel this acceleration by co-creating solutions and offering access to our partners, expertise, technologies, markets, and customers so fintechs can build, launch, and grow.
From our best-in-class APIs and data assets to our trusted ecosystem of partners, Mastercard provides the services and tools fintech innovators need to iterate at each stage of their journey, transform bold ideas, and achieve scale at pace to bring more people into the digital economy.
Fintechs have also presented new opportunities for Mastercard to expand its reach and partnerships in Africa. By collaborating with fintechs, Mastercard has been able to offer new payment solutions and drive financial inclusion in underserved communities. Over the past five years, 12 African fintech startups were selected for Mastercard Start Path.
These startups, spanning diverse sectors such as agritech, transport, education, and healthcare, include NowNow Digital Systems, Hello Tractor, Kasha, mfarmpay, N-Frnds, and Lipa Later. Each of these enterprises has contributed significantly to advancing financial empowerment and accessibility in their respective fields while opening up new avenues for Mastercard in Africa.
Amid the rapid digital transformation that is shaping the payment landscape in Africa, what role is Mastercard playing in empowering fintechs?
Amid the rapid digital transformation reshaping Africa’s payment landscape, Mastercard takes proactive steps to empower fintechs. Through strategic initiatives and partnerships, we collaborate closely with fintech companies, granting them access to our extensive network of partners, expertise, cutting-edge technologies, global markets, and a vast customer base. This collaborative synergy propels fintech startups forward on their journey, enabling them to build, launch, and grow.
Also, central to Mastercard’s empowerment strategy is our commitment to delivering best-in-class APIs and invaluable data assets to fintech innovators. These resources serve as the cornerstone of fintech growth, empowering them at every stage of their development journey. They provide the essential tools to transform innovative concepts into tangible, scalable solutions, thus fostering the expansion of the fintech ecosystem.
Furthermore, our dedication to Africa’s fintech landscape extends beyond partnerships and innovation. We engage proactively with regulators and governments across the continent, advocating for a regulatory environment conducive to fintech growth. Our support for initiatives like open banking frameworks and the development of digital ID systems is instrumental in streamlining payment processes and enhancing financial inclusion.
To broaden access to digital payments, Mastercard collaborates with governments, banks, and other stakeholders, extending digital payment options to underserved regions in Africa. This strategic move simplifies savings, money transfers, and access to financial services, effectively promoting financial inclusion.
Fintech has played a significant role in promoting financial inclusion. How is Mastercard contributing to financial inclusion in Africa?
Mastercard actively fosters financial inclusion in Africa through various impactful programs and initiatives designed to enhance access to financial services, bolster financial literacy, and bolster small businesses and entrepreneurs.
To broaden access to digital payments, Mastercard collaborates with governments, banks, and other stakeholders, extending digital payment options to underserved regions in Africa. This strategic move simplifies saving, money transfers, and access to financial services, effectively promoting financial inclusion.
In support of small enterprises and budding entrepreneurs, we champion initiatives like the Start Path accelerator program. This program empowers fintech startups and others, providing valuable resources and guidance. By nurturing innovation and fostering economic growth, Mastercard actively contributes to the continent’s prosperity.
Furthermore, Mastercard partners with local organizations to champion financial literacy. Through education and training, individuals gain valuable skills to manage their finances effectively. This emphasis on financial literacy strengthens communities across Africa.
Mastercard’s commitment to financial inclusion extends to technology investments. Biometrics and mobile payments are at the forefront of their efforts, making financial services more accessible and secure. These innovative technologies break down barriers, simplifying financial transactions for all.
Can you provide us with an overview of the current state of financial technology in Africa?
Africa’s fintech-driven payment industry is poised for remarkable evolution over the next five years, shaped by several pivotal trends and Mastercard’s proactive strategies:
- Mobile Payments Proliferation:
The rise of mobile technology and increased phone penetration will continue to fuel the prevalence of mobile payments. We have invested significantly in mobile payments infrastructure across Africa, forging partnerships with mobile network operators and fintech companies. These endeavors aim to provide innovative, secure, and accessible mobile payment solutions to reach more people, particularly the underbanked population.
- Collaborative Ventures:
Collaboration will remain a linchpin in driving innovation and growth within Africa’s payment sector. Payment companies will increasingly form strategic partnerships with banks, mobile network operators, and other industry players. Mastercard has identified collaboration as a catalyst for innovation in Africa’s payment industry, forging alliances with banks, fintech firms, mobile network operators, and governments. These collaborations facilitate tailored solutions that cater to the diverse needs of African consumers and businesses.
- Digital Banking Ascendancy:
The ascent of digital banking will persist, with banks offering an array of digital services, including online banking, mobile banking, and digital wallets. Mastercard recognizes digital banking services as a pivotal area of growth, aiming to provide convenient, secure, and accessible financial services to consumers and businesses. Digital banking is further propelled by the widespread adoption of smartphones and mobile internet, driving demand for accessible mobile banking services.
- E-commerce Expansion:
The burgeoning e-commerce landscape in Africa, spurred by increased internet access and mobile phone usage, presents opportunities for payment companies. E-commerce in Africa is poised to reach $29 billion by 2022, with a 21 percent annual growth rate. While cash remains dominant, digital payments are gaining traction, notably mobile money services like MTN Mobile Money. The growth of e-commerce necessitates innovative payment solutions tailored to the African market, accommodating low-end mobile devices, multiple currencies, and languages. Collaborative efforts between payment providers, e-commerce platforms, and logistics companies will be essential to ensure a seamless customer experience.
In summary, Africa’s payment industry is primed for growth and innovation in the coming years, underpinned by the expansion of mobile payments, collaborative partnerships, the rise of digital banking, and the flourishing e-commerce sector.