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African Fintech Targets 800% Revenue Growth by 2025—McKinsey

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African fintech

By Adedapo Adesanya

Revenues from financial technology (fintech) companies could grow by 800 per cent to reach $30 billion by 2025, consultancy firm McKinsey & Company has revealed.

As the fastest-growing start-up industry on the continent, African fintech raised over $1,3 billion in 2021 alone; the success of fintech companies is being fuelled by several trends, including increasing smartphone ownership, declining internet costs,  expanded network coverage, and a young, fast-growing, and rapidly urbanizing population.

African fintech has a significant impact on day-to-day life on the continent, and with its current upward trend, it can be perfectly poised to rapidly advance Africa’s global competitiveness with an increase in the exporting of fintech services globally.

However, it said these fertile grounds do have challenges. Regulatory uncertainties and differences between countries are a bottleneck, throttling the expansion of financial inclusion in Africa. This has led to the continent’s fintech’s calling for a Pan-African regulatory body to define comprehensive regulatory policies for regions rather than countries.

Certain governments and the private business sector continuously work on providing regulatory policy frameworks for businesses, customers, and economies with the current focus on regulations, anti-money laundering scrutiny, consumer centrism, and protection of privacy and security of data.

In terms of regulations, digital-only banks and fintech are influenced by but independently regulated from the traditional financial system regulations.

For Anti Money Laundering Scrutiny, more regulatory bodies are insisting on compliance herewith; worldwide, there is a clampdown on non-compliant companies. This requires the verification of information received from the client to avoid fraudulent, terrorist, or other illegal activities being facilitated, supported by other processes such as Know Your Customer.

Also, fintech must be vigilant in consumer education, especially the consequences of services and products that did not exist before, protecting the consumer from being exploited.

For the protection of privacy and security of data, it warned that stored personal consumer information is susceptible to cyberattacks, and as a result, fintech companies must comply and have the necessary security systems and protocols to secure sensitive data.

The Global fintech Index of 2020 lists the top 100 fintech ecosystems, and four sub-Saharan African cities features, that are leading this sector, namely Johannesburg, Nairobi, Lagos, and Cape Town, and account for most of the continent’s fintech start-up funding.

“The countries represented by the four cities above have taken significant strides towards regulatory systems designed to protect stakeholders. Each country’s approach to regulations shares similarities, while others are unique to the challenges faced in their market.

“Regardless of the size of the fintech, these changes become prohibitive to the success of fintech due to the cost and/or inconvenience caused since they impact all areas of the customer relationship lifecycle,” it said.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Technology

Starlink is Now Available in Nigeria—SpaceX Confirms

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Starlink is now available in Nigeria

By Modupe Gbadeyanka

Nigerians and tech startup owners can now heave a sigh of relief as Starlink is now available in Nigeria, according to SpaceX.

The internet service provider is owned by a billionaire businessman and owner of Twitter, Mr Elon Musk.

The federal government held meetings with the management of the company to introduce its services in Nigeria. The network was earlier expected to commence its operations in the country last month.

However, after the wait, SpaceX has confirmed the availability of the Starlink network in the country and would be expected to take a huge chunk of the broadband market with competitors like MTN, Glo, Airtel, 9mobile, Smile, Spectranet, and Swift.

Nigeria is the first African country to receive Starlink service.

“Starlink is now available in Nigeria, the first African country to receive the service,” a message posted on the Twitter handle of SpaceX on Monday night stated.

Starlink, according to its profile on Wikipedia, is a satellite internet constellation operated by SpaceX, providing satellite Internet access coverage to 47 countries. It also aims for global mobile phone service after 2023.

With Starlink, users can engage in activities that historically have not been possible with satellite internet, as its high-speed, low-latency service is made possible via the world’s largest constellation of highly advanced satellites operating in a low orbit around the Earth.

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CBN Gives Interswitch Payments Service Holding Company License

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Interswitch

By Aduragbemi Omiyale

A Payments Service Holding Company (PSHC) license has been granted to Interswitch Group by the Central Bank of Nigeria (CBN).

This followed an earlier announcement by the CBN regarding new licensing categories for participants in the Nigerian payments system.

The integrated payments solution provider is among the first to receive this authorisation from the country’s apex bank.

According to the regulator, the PSHC regulation requires companies with existing or prospective operations across multiple license categories to set up a PSHC. The activities of each of the PSHC subsidiaries operating within those respective licensing regimes are clearly delineated for clearer accountability, effective risk management and the enablement of better regulatory oversight by the CBN.

A statement from Interswitch, a leading financial technology in Africa, outlines that Interswitch’s Group Holding Company retains ownership of the PSHC in Nigeria as well as its other subsidiaries outside of Africa.

The issuance of the PSHC licence coincides with Interswitch’s 20th-anniversary commemoration, which has seen the company cement its position as a pioneering and integral enabler that has actively supported the growth and development of fintech and payments progressively across Africa over the last 20 years.

It also serves to reinforce Interswitch’s progressive outlook as a frontier-driving company which keeps pushing boundaries to facilitate the creation of new ecosystems that help businesses and individuals scale and thrive, in line with its purpose of inspiring Africa to greatness through innovation, value-creation and excellence.

“Twenty years ago, we placed a bet on the latent potential we saw in the introduction of e-payment channels at the time, particularly ATMs for the delivery of cash just-in-time, and today, we are gratified to see how far the financial technology and payment systems in Nigeria have grown.

“On the back of our receipt of this additional license, we remain strongly committed to a close partnership with the Central Bank of Nigeria to facilitate the delivery of the Payments Vision (2025) and, of course, the National Financial Inclusion Strategy,” the founder and Group CEO of Interswitch, Mr Mitchell Elegbe, remarked.

He further reiterates Interswitch’s resolute focus on its over-arching mission to continue championing technology solutions that connect and empower individuals, businesses, and communities across the continent.

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Technology

Mafab Rolls Out 5G Services in Nigeria

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Mafab 5G Network

By Aduragbemi Omiyale

Another player has joined the 5G network space in Nigeria, and it is Mafab Communications Limited, which won the licence with MTN Nigeria Plc in December 2021.

After it obtained the licence from the Nigerian Communications Commission (NCC) for $273.6 million, it delayed its rollout, while its competitor, MTN, started in August in a few cities.

Business Post reports that Mafab on Tuesday held a ceremony at the International Conference Centre (ICC), Abuja, to commence operations in the country, promising to deepen broadband penetration.

“We are fully committed to bringing the benefits of 5G services to Nigerians and deploying a network that will drive economic development with increased broadband capabilities nationwide.

“I have no doubt that the service will help deliver improvements in the fields of education, business, smart cities and entertainment,” the Chairman of Mafab, Mr Mushabu Bashir, said.

It was gathered that Mafab would largely use existing infrastructure from IHS towers and, if need be, ATC Nigeria Wireless Infrastructure Solutions as well for its operations.

Recall that last month, the NCC again auctioned the 3.5GHz spectrum, which was won by Airtel Nigeria, which intends to launch its operations very soon.

It is not certain how much the Mafab 5G network services would cost. When MTN rolled out its 5G services last year, it sold the device for N50,000 and asked interested customers to pre-order the 5G router.

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