Abiodun Animashaun, the Country Manager of ChipperCash, has disclosed that fintech companies need to engage in footprint partnerships to expand their operations in Africa and the rest of the world.
Speaking during a panel session at the ‘Fintech Association of Nigeria’s “Intercontinental Webinar 2024,’ which featured global fintech experts, Animashaun highlighted that strategic partnerships are crucial for fintechs aiming to penetrate new markets efficiently.
He said, “As a fintech, when you think about global or regional expansion, one of the important things to consider is the time and processes to start another entity in a new region. It might take some time to go through the full licensing process, among other regulatory hurdles.
“Why not look out for partnerships with someone with footprints in those markets? For instance, you may be in Malawi and need to expand to Nigeria. All you need is a handshake with an existing player in that market, and you come together for a synergy and partnership to make things happen,” he said.
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Ho Chee Wai, Vice President and Country Head for Nium in Singapore, also contributed to the discourse by speaking on the need for an outlet in Africa.
He pointed out the complexities of entering the African market, given the vast and varied landscape of 54 countries. “For payout with Africa, the challenge is navigating the continent. We would want to collaborate with one or two partners who can help service the entire Africa rather than dealing individually with different countries,” he said.
He explained further that collaborating within Africa would be much easier if there was a direction for entering the space. The need for seamless cross-border payments in Africa is more pressing than ever. In 2021, the remittance volume into Africa was estimated at $49 billion, with key markets like Nigeria, Ghana, Kenya, Senegal, and South Africa being the largest recipients. By 2023, this figure had grown to approximately $54 billion.
Despite these substantial figures, traditional financial institutions have struggled to build the necessary infrastructure for seamless cross-border payments.
Animashaun of ChipperCash highlighted that fintechs have stepped in to bridge this gap by developing innovative solutions that reduce bottlenecks in transferring value across borders. He noted that while banks have yet to establish full interoperability across Africa, fintech companies have been at the forefront of building the infrastructure needed for these transactions.
Reports have noted that competition among fintech companies has reduced the cost of cross-border payments. Many fintech companies now charge less than 1 percent in transaction fees, a significant reduction from the 6 -10 percent average, as reported by the World Bank.
Read also: Navigating the Complexities of Financial Inclusion in the Nigeria’s Evolving Fintech Landscape
Paul Li, President of the Hong Kong Fintech Industry, noted that this cost reduction is crucial for financial inclusion, particularly for blue-collar workers who rely on remittances.
Experts at the event agreed that as fintechs continue to take charge of developing cross-border payment solutions, collaborations with local and regional players will be essential in overcoming regulatory challenges and expanding their footprint across the continent, thereby driving economic growth and financial inclusion.
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