African economies are well positioned to benefit from rapidly accelerating technological change if they can harness the current open landscape for innovation.
East Africa is already a global leader in mobile payments, while mobile money accounts in sub-Saharan Africa are on an upward charge. Apart from being able to leapfrog the limitations and costs of physical infrastructure, the continent stands to benefit from having the youngest, tech-savvy workforce in the world in the next decade.
The market potential is huge…
Africa’s working age population is expected to grow by 450 million people by 2035, according to the World Bank. The continent is projected to have the largest working population of 1.1 billion by 2034, notes the World Economic Forum on Africa.
Also, recent GSMA data shows that mobile money accounts in sub-Saharan Africa are up 18.4% between 2016 and 2017 to 33.8 million registered accounts.
However, we cannot wait 12 to 15 years before adequate job creating initiatives and policies are unlocked. The answer lies in harnessing the power of the digital economy today to create African solutions for African problems. An important part of this will require promoting and partnering with African innovators to unlock sustainable growth.
We are already witnessing the significant potential of digital innovation in the remittance and mobile wallet space. Penetration of smartphones is expected to hit at least the 50% mark in 2020 from only 2% in 2010, according to the World Economic Forum.
This offers the continent a clean canvas for tech-based innovation. It is an opportunity we must not miss. These are exciting times and are forcing us to think differently to come up with true Pan African innovation and development.
There are several success stories unraveling across the continent
MFS Africa is a good example of how carefully harnessed and supported technological innovation can have ripple effects through the continent.
The company now operates the largest digital payments network in Africa and connects over 170 million mobile wallets through 100+ partners, including Airtel, Ecobank, MTN, Orange and Vodafone across 55 markets. It has about 15% of the African population connected to a platform.
M-Pesa, launched in Kenya in 2007, is an often-touted example of African technology making waves even outside its own borders. After capturing the local market for cash transfers it has spread to three continents and 10 countries.
Meanwhile, MicroEnsure, continues on the path of developing pioneering insurance solutions for low-income people like micro-health, crop and mobile insurance. These are solutions directly aimed at emerging customers and it is little surprise the company continues to acquire new customers by cleverly partnering with telcos.
Access.mobile is another major success story that has been testing and growing its health innovation offerings for seven years in East Africa. The company works with health systems to hone their communications with patients in lower-income areas but also in growing areas.
The startup hopped the pond in the opposite direction from most smaller startups and landed one of its first American clients. Adventist Health White Memorial Hospital, a Los Angeles facility that works largely with lower-income Hispanics, was looking for ways to use health data to achieve better outcomes within its population.
These are examples of the role models that will inspire our next generation of innovators. We need more and tech-savvy banks need to continue supporting them as they grasp future opportunities.
This is only the beginning of a very interesting future for Africa
Consider this: Findex data shows that sub-Saharan Africa is home to all eight economies where 20 percent or more of adults use only a mobile money account: Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe.
As a result of this, opportunities abound to increase account ownership: up to 95 million unbanked adults in the region receive cash payments for agricultural products, and roughly 65 million save using semiformal methods.
Standard Bank, as Africa’s largest bank by assets, hopes to support even more start-up and tech initiatives across the continent to ensure these opportunities are not lost. We are therefore innovating ourselves at a rapid pace to harness the benefits of the digital age to drive financial services inclusion.
Mobile payment solutions like Snapscan is now available at over 25,000 merchants and a vast user network across South Africa. We are setting a new standard in digital payments with the launch of Africa’s first prepaid virtual cards ecosystem, among many other digital innovations.
Africa’s future will be about solving genuine customer problems rather than putting a band aid on them.
One area in urgent need of change, for instance, is remittances, where Africa is still one of the costliest places in the world to remit payments – fees as high as 10% to 20% are still endured. We need to harness technology to genuinely solve this problem.
Sometimes, when we talk about banking in a cashless society we often look too far out into the future. But the truth is, we don’t have the luxury of time. Knowing your customer (KYC) is about understanding what they need today based on their culture and context, and then unlocking the already available data to provide the solution.
Technology, for instance, can solve the unbanked problem on the continent. However, this does not mean you can “plug and play” by taking something that works in one country and expecting it to work in another. Success will increasingly be centered on having a Pan-African view of the problem, but local implementation.
The future is certainly bright for Africa as exponential innovation continues to drive change across the continent, disrupting industries and replacing legacy technology.
It is now time to grasp this opportunity with both hands before the innovation wave passes us by.
This article was contributed by Nnamdi Oranye, a fintech author and the International Remittances Lead at Standard Bank Group.