Feature/OPED
Fintech: An Access Route to Unbanked Populations in Africa
With a rapidly growing population and a younger generation of tech-savvy workers, Africa is poised to become the next global market leader.
Today, the continent’s population is over 1.4 billion. The advancement in technology, propelled by the urgent need to reconcile demand and supply has led Africa to work towards being increasingly competitive on the international scene.
Despite tremendous advancements in trade and improved financial accessibility and communication technologies, a huge part of the continent is still unbanked.
The circuit of internet accessibility and reliability is growing exponentially on the continent, but nevertheless, the majority of consumers still don’t have access to bank services. The reality is even worse when it is gender compared.
The UN Women data shows that approximately 1.3 billion women in the world are unbanked, of which ¾ of that population has never owned a bank account. There is no doubt that, to ensure traceability for microeconomic aggregates, it is important to be able to account for the population which constitutes that economic projection through their financial flows.
This has also been a huge impediment to e-commerce. Despite their willingness to operate on every corner of a given territory or continent at large, our population, especially women are still held back by this challenge.
Africa’s large unbanked population is mainly caused by poor infrastructures (transportation networks, communication networks), low literacy rate (that is the ability to understand and use certain services and technologies), government red tapes and myriads of technological barriers. Companies like Jumia, the leading e-commerce platform in Africa, however, have learned how to bypass this setback with services such as JumiaPay.
Data from penser, a specialist consulting firm focused on the payments and Fintech industry, outline that sub-Saharan Africa alone has the tremendous potential to house Fintech and e-commerce, as well as ensure their survival and continuity over time. This explains why the e-commerce leader in Africa, Jumia, founded mechanisms to overcome bottleneck challenges, as well as geographical and technological means to satisfy its ever-growing market in Africa.
With its presence in 12 African countries and the advent of the COVID -19, the market for e-commerce and Fintech was both challenged and faced significant changes. It was both a time to re-think and, re-invent the new normal of e-commerce for our unbanked population with limited resources, which is o also faced with geographical and sanitary barriers.
Generally, e-commerce greatly prospers in territories where the greater part of the consuming population has access to first; national IDs or any official document which will permit them to obtain or have access to banking systems (bank accounts, access to credits, bank cards etc); but also, most especially in areas where the population is ready to embrace new technologies and where the government has made available the necessary infrastructures and policies to welcome such companies.
The particularity with Africa at large is that e-commerce or Fintechs don’t only have to face government barriers, but internet penetration, geographical possibilities, education and also limited financial resources (of populations) to subscribe to these services.
In recent years, a more effective approach was developed by Jumia, that of mobile payments to replace payment on delivery. This did not only revolutionise the e-commerce sector but also how Fintech could better apprehend the problem of accessibility to the unbanked population.
As more people are beginning to use smartphones on the continent, it becomes easier for them to profit from online banking services without necessarily vising a bank. With JumiaPay, the main Fintech incorporated the technology of Jumia, customers can now recharge their phones, pay utility bills, make hotel reservations, book a ride, order food from their favourite restaurants and more.
Forging innovation yet challenging future ahead
This innovation comes at an important time as cash on delivery becomes more challenging and difficult to monitor. Also, it has created unprecedented access to unbanked populations in Africa, which reached its climax during the Covid-19 era as government barriers didn’t permit people to continue trading using the traditional methods (physical exchanges, supermarket purchasing just to name a few). The service gives users a high secured mode of payment, which puts them at the centre of every operation.
Once on the app, users can access it via their fingerprint or pattern lock. Also, no payment is completed on the app without sending an OTP (One Time Password) via a registered phone number or email. That way, the customer can be assured no unwanted transactions can be performed.
Furtherance, customers get an email for every transaction performed on the app, ensuring traceability, trust and accountability for all. These features have permitted more unbanked population to embrace Fintech services, but also to permit those who never wanted to let go of physical money to trust mobile money services. In this way, customers can follow their money online while reducing the stress on former banking systems.
Creating regulations that work for all
Over the past decade, Africa has gradually become the global leader in mobile financial services. This has been proven within the start-up ecosystem, which was largely driven by Fintechs, accounting for about 25% of funding attracted by start-ups in 2020[5].
Although this success is unevenly distributed on the continent with major markets in Nigeria, Egypt, South Africa and Kenya, regulators (governments and non-governmental) in emerging markets (Ivory Coast, Ghana, Senegal, Cameroon) are showing a strong commitment to the growing sector.
Fintechs have helped to boost financial inclusion on a continent where there are only five bank branches per 100.000 people, compared to 13 in other parts of the world. The Africa Financial industry summit for example has since called for an enabling environment and harmonised financial regulations to create sustainable innovation culture which will help Fintech firms expand their footprint in Africa.
Moreover, financial institutions such as commercial banks are now embracing Fintechs and partnerships with them, as the relationship is mutually beneficial: Fintechs need banks to scale and banks benefit from their innovation and service offerings as in the case of Jumia Pay.
Regulators are beginning to engage earlier with them, enabling the right environment to test their products and systems and offering support in risk management. They oversee consumer protection and protect depositors and financial stability by ensuring that they’re truly beneficial to consumers. This has been the case with countries like Morocco and Tunisia which are trying to catch up with the trend of Fintechs as an element of development.
A promising Africa for a sustainable and equitable development
Conclusively, Financial technology has never been this important and crucial during an era of sanitary challenges (that is Covid-19), as it has considerably helped in eliminating the need for cash and allowed customers to maintain physical distance from cashiers to reduce the risk of spreading the virus.
It has also helped SMEs that provide at home services to stay in operation, as their customer base could pay for goods and services remotely as in the case of Jumia pay. It is thus important that regulators (governmental and non-governmental), and the population, in general, be able to quickly embrace Fintechs.
Fintech is transforming the banking world and traditional business models and there is a clear growth potential for it in Africa, overwhelming regulatory hurdles remain a challenge which can be overcome, but it remains an essential part of all our futures, thus the need for governments, regulators, investors and entrepreneurs to work in symbiosis.
By Luke Kyohere
The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:
1. The rise of real-time payments
Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this.
2. Cashless payments will increase
In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions.
3. Digital currency will hit mainstream
In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain.
The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability.
4. Increased government oversight
As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.
5. Business leaders buy into AI technology
In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk.
6. Continued AI Adoption in Payments
In payments, the proliferation of AI will continue to improve user experience and increase security. To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent.
When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.
7. Rise of Super Apps
To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills.
8. Business strategy shift
Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble.
As the payments space evolves, businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.
Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq
In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.
In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.
“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”
The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.
Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.
The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”
The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.
As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.
In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.
“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.
By Kenechukwu Aguolu
The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.
One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.
A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.
In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.
The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.
The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.
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