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Game-Changers: How Africa is Transitioning into Financial Technology

The digital world is growing exponentially across the continent

The rapid urbanisation, technological and economic growth seen in Africa is exceedingly going digital, opening up a successfully secured venture into e-commerce technological investments.  Evidence of what is predicted can already be seen in Africa’s major cities, where a growing number of consumers have greater disposable income, with more than half the consumers having access to internet-capable devices, 3G, and other wireless networks. The explored continental infrastructure investment developments, such as increased access to mobile broadband, fibre-optic cable connections to households, and power-supply expansions, together with the rapid spread of low-cost smartphones and devices, millions of Africans are able to stay connected. This has devoted a growing surge of innovation in entrepreneurs and large corporations alike to launch new web-based technological ventures.


According to McKinsey, a majority of urban Africans own internet-capable devices and are regular online users. In the coming decade, with the continued infrastructure investment developments, the Internet is projected to take hold on a much larger scale, potentially adding US$300 billion a year to Africa’s GDP.  E-commerce in Africa is expected to generate annual sales of US $75billion by 2025.  The digital world is growing exponentially across the continent, transforming these key sectors – Finance, Education, Health, Retail, and Agriculture. 

Although still used in many parts of the continent, cash payments bear high costs to consumers, banks, and governments in Africa; costs associated with manual acceptance, record keeping, storage, counting, and transportation.  This is the main contributor to the shift to e-commerce.  With restrictions and limitations to infrastructural developments, comes great opportunity.  While over 80% of people in Africa do not have access to traditional banking, more than 220 million are registered mobile money users.  And, while only 63% of Africa’s population has access to piped water, 93% of the population have mobile devices.

Although Africa’s iGDP is currently at a low, McKinsey predicts that by 2025, Africa’s iGDP should grow to at least 5% to 6%, meeting that of leading economies such as Sweden at 6.3%, Taiwan and the United Kingdom tied at 5.4%, and Japan at 4.0%.  An iGDP is the measurement of the Internet’s contribution to the overall GDP.  African countries, such as Senegal and Kenya, are in the lead with Africa’s highest iGDP.  Senegal’s iGDP is at 3.3%, followed by Kenya at 2.9%, and Morocco at 2.3%, with South Africa at a low 1.4%.  If the Internet achieves a similar impact as the spread of mobile phones in Africa, iGDP is predicted to account for as much as 10%, or US$300 billion, of total GDP alongside producing a rise in economic and social development.

Africa has exceptional features that will contribute to the huge consumer spending opportunity presented by smart e-commerce innovations.  These features include Africa’s booming urbanised population, the low rate in retail outlets, and the heightened mobile capabilities, all of which are great contributors to the transformation of the key sectors.  Technological production gains in these sectors is projected to reach US$148 billion by 2025.

Financial sectors

The Internet avails a reduction in transaction costs and acts as a wireless bridge of financial services to people who live in remote areas that are further from structural banks, branches, and ATMs.

In Kenya, for example, mobile-money services, such as M-Pesa, are a response to the absence and unavailability of banks.  M-Pesa is a mobile-money service that gives millions of Africans access to digital finance.  The cost of making remittances via M-Pesa is about half of other formal domestic remittance services, as payments can be made with the use of mobile phones, which have a shorter travelling distance than branches of banks.  The service has also brought financial services to the numbers of unbanked families, who can now easily transact in their convenience.

M-Pesa makes the synergy between all other sectors more capable as many start-ups are incorporating it as part of their entrepreneurial business models.  While one business uses M-Pesa’s model to make school fees payments, another uses it to form an informal savings group. An example is Bridge International Academies, a low-cost-for-profit educational franchiser that found that M-Pesa assisted in obtaining real-time financial data, enabling it to become more trusting and reduce record-keeping.

Morocco, even though at the low 2.3% in iGDP, has boasted the Casablanca Finance City Hub, a financial service aspiring to bridge the gap between the North and the South, seeking to encourage and attract international institutions and investors to operate in North, West and Central Africa, choosing Casablanca as a gateway to access the region.

Digital technology will bring more than 60% of Africans access to banking services by 2025, and more than 90% using mobile wallets for daily transactions and remittances.

Education sectors

The schooling system has seen a number of challenges, mostly in rural African region, where learners are not accessing quality education due to a number of reasons, such as inadequate allocation of funds, misappropriation of funds, and low household incomes that contribute to the limited access to resources, such as textbooks and other learning material.  However, with the surge in technology, a number of schools can access quality educational content through e-books and the internet, producing quality teaching and learning.  

In Kenya, the country with the moderate iGDP of 2.9%, there is growth in innovative education.  The Kenyan start-up, Eneza Education, creates educational content that learners in low-income rural areas can access on low-end mobile devices. Through its “virtual classroom,” learners between the ages of 11 and 18 can study subjects including mathematics, science, and English.  The technology also includes 2,000 quizzes and more than 16,000 questions, Wikipedia searches, and mini-lessons should they score below 50%.  Teachers can also use the platform and assign homework and receive reports on student performance. By the end of 2014, Eneza saw the success of more than 375,000 users across Kenya, up from 143,000 in the previous year, including in Northeastern Kenya, one of the poorest parts of the country. It hopes to reach more than 50 million in the next five years in at least 10 different African countries.  It calls its focus, “The very end of the last mile,” for learners who have dropped out of school, girls in extremely impoverished areas, and children who can’t attend school due to conflict.

In Senegal, the leading African country in iGDP, the Jijiguene Tech Hub is explored (Jijiguene meaning ‘woman’ in the Wolof language).  The technology is designed by women for women in Senegal to enter the world of IT-driven businesses in a much easier way.  The hub offers elementary training for computer literacy to advancing coding training in HTML and CSS for women.  It aims to mentor and train women to reduce the global gender gap in technology for women in Africa and the rest of the world.

The technology-related productivity gains in education are projected to reach US$30 billion to about US$70 billion, enabling governments and private sectors to achieve more with their education budgets while elevating a future of bright, young minds.

Health sectors

Healthcare is a crucial need for all citizens, but has assumed a luxury status with many who do not have access to basic and adequate healthcare services.  According to McKinsey, Africa currently has only 1.1 doctors and 2.7 nurses per 1,000 people.

Maternal healthcare in Ghana has seen improvements over the past decades through the use of technology and the internet.  Systematic challenges to pregnancy and maternal and neonatal deaths are reduced. The main cause of these challenges was the inaccessible and far-from-reach healthcare institutions, and the lack of accurate medical health information that would enable the women and practitioners to make more informed decisions.  For a long period, much of the decision-making and procedures to healthcare problems in the country were addressed through traditional beliefs and practices.  

As many other African countries, the use of mobile devices in Ghana is spreading rapidly, reaching even the far and remote areas.  This inspired the Mobile Technology for Community Health (MOTECH) using the mobile phone to provide creative and evidence-based approaches to improving maternal and infant healthcare information in their local language, aiding both the mothers and the infants.

Technology is exceedingly breaking the boundaries to healthcare services, enabling remote diagnosis, treatment, and education.  Technology-related benefits in healthcare are projected in the range of US$84 billion to US$188 billion by 2025.

Retail sectors

The world of retail is a boom for e-commerce as it presents a new element to shopping for Africa’s growing urban community.  In the Yaba District of Lagos, Nigeria, is the head office of Jumia, a company often referred to as the ‘Amazon of Africa,’ but which brands itself as ‘The largest e-commerce platform in Africa.’  Jumia tackles the issues to logistics and commercial delivery in Nigeria, becoming Africa’s highly-funded e-commerce startup.  Jumia Group, the parent company of Jumia, ventures the shopping site, which is operative in eleven countries.  

C.E.O. of the Jumia Group, and former McKinsey consultant, Sacha Poignonnec, said e-commerce in Africa is creating the shopping habits of the consumers, unlike in the US where it is slowly changing old shopping habits, “People are making their first big buys, like smartphones and first online purchases simultaneously.”  To encourage such habits, Jumia Group will be investing in “customer adoption centres,” style booths with laptops and tablets where shoppers can navigate more of what is offered for shopping online.

According to Poignonnec, Jumia is now the largest third-party logistics company in Nigeria, shipping over ten-thousand packages a day during the 2015/2016 financial year.  During that financial year, Jumia brought in US$149 million in revenue.  Poignonnec explained that the opportunity is driven by the large structural gap between supply and demand, where millions of people have growth in incomes, but there are few retail stores per capita.  The innovation is driven to overcome structural deficiencies.

According to McKinsey, by 2025, technology could account for 10% in retail sales within the largest economies on the continent, translating to US$75 billion in annual revenue.

Agriculture sectors

Agriculture has experienced great challenges in meeting up with the demands of the exceedingly fast and innovative lifestyles lived by the global community in the status quo.

Technology has made a distinct impact on the agricultural sector, particularly in the increasing subscription and connectivity through mobile devices.   These devices provide real-time market prices of crops, instant and accurate weather information, and easy-to-access microinsurance and financing services, helping small-scale farmers increase their yields alongside their skills and knowledge.

At the forefront of this kind of innovation is Kenya in its pioneering in mobile technology in Africa. M-Farm, a web platform that provides over 14,000 registered farmers the opportunity to buy and sell their crops, seeds, fertilisers, and such inputs together, has provided farmers with a more effective and efficient means to their produce.  Farmers earn more for their crops, and bulk buyers and sellers save costs in the reduced number of farms having to be visited.

Inherently linked to technological innovation is economic development, and agriculture is at the centre of this dimension, positively growing the GDP while advancing socioeconomic development.

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