Top New 4 FinTech Hub in Africa to Keep an Eye On
Africa is booming in terms of FinTech adoption. Last year, we saw more and bigger deals closed in Africa, as tech startups across the continent raised close to $5 billion, according to data.
Today the continent is home to a number of widely differentiated FinTech centers. Among them, countries such as Nigeria, South Africa, Kenya, Ghana, Egypt, or Uganda, have emerged as FinTech hotbeds, and are using inexpensive, accessible tech to mobilize consumers in ways never seen before.
With around 1.3 billion people, Africa is the second-most-populous continent in the world, but is also home to the largest share of the world’s unbanked and underbanked population.
The African FinTech wave is being built on mobile phones, whose adoption in the continent accelerated around the turn of the millennium and are now pervasive.
Large parts of Africa-based FinTech firms come from above-mentioned countries, however, this doesn’t mean that Africa’s smaller economies are being left behind. Here, four emerging African FinTech hubs and what you need to know about them.
Fintech in the Seychelles
Reports suggest that Seychelles is expected to have its financial system almost entirely digitized by 2023, in line with the Central Bank of Seychelles (CBS) banking strategy. The country is already a crypto transactions paradise. According to data, about 45% of BTC transfer volume originated from the G-20 countries, which include the world’s 20 biggest economies.
By contrast, Seychelles covered 31% of the global volume in the first half of 2020. The most active international trade routes are Seychelles — EU, Seychelles — US, and Seychelles — South Korea, with each connection producing volumes in excess of $2 billion. Seychelles also debuted on the Findexable’s Global Fintech Rankings Report this year, becoming one of seven new additions from Africa on the list.
The government is also working to boost its “cashless” strategy. Recently, the CBS received cabinet approval for its financial technology strategy, which aims at eliminating the use of “paper” cash, by August 2022. The three pillars of the strategy include the establishment of digital infrastructure, legal aspects, and the FinTech ecosystem, including government and private FinTech services, and funding and skills development.
In 2020 The Financial Services Authority (FSA) in Seychelles launched a regulatory Sandbox, fostering innovation across a broad range of digital assets and services, and enabling regulatory solutions for security token offerings under the current Securities Act. The agency has also put a cross-border regulatory sandbox in order to drive innovation across fintech-related financial services. The sandbox is part of the Global Financial Innovation Network.
Fintech in Rwanda
Rwanda is a classic example of how an African country could confidently drive digital and FinTech progress. According to the 2019 UNCDF report, FinTech startups in the country have almost tripled in the last five years, from 17 in 2014 to 44 in 2019.
“Fintech is a priority for Rwanda,” appointed to NewAfrican Magazine Ntoudi Mouyelo, Chief Investment Officer at Rwanda Finance Limited, the government agency that manages the Kigali International Financial Centre (KIFC), which is gradually transforming Rwanda as a vital business and financial hub, moreover, innovation communities such as the Rwanda Fintech Association (RFA) are helping to drive the community to boost the whole sector.
The government fully supports this new digital transformation. Recently, the National Bank of Rwanda (BNR), has also implemented a sandbox regulatory framework for FinTechs, while following ‘Rwanda Vision 2050’ the government aims to lift most of its 12.9m citizens out of poverty through financial inclusion and access to credit. The Rwanda Payment System Strategy 2018–2024, on its part, contains several strategic objectives, including fostering an enabling environment for innovation in the payment system through collaboration between the public and private sectors, media reported.
Fintech in Tunisia
The Fintech industry is already growing in Tunisia. The whole sector has developed thanks to innovative startups with their solutions to banking products and services. A path already settled by the Tunisia Central Bank (TCB). A supportive tech ecosystem and welcoming regulatory environment are crucial to attract investment, that’s why the institution has taken initiatives to support the whole sector and is positioning itself as a regulator and a facilitator with the Tunisian innovation ecosystem and Fintechs.
TCB has set up a Fintech committee, a regulatory sandbox, a TCB Lab, a TCB Web, and regional and international cooperation. According to Smart Capital, 43% of Tunisian start-ups get support from tech hubs. They maintain that this number needs to increase, along with an increase in financial support and technical assistance. Additionally, start-up support organizations need to know the key actors to create added value for the whole ecosystem.
Other initiatives in Tunisia provide further support to the growth of its FinTech ecosystem. The main one is without doubts the 2018 Startup Act. There are three aspects to the Start-Up Act: first, a legal framework that simplifies the start-up launching process. Second, the creation of a €200m Fund of Funds allocated to specific verticals.
The third aspect is a strategy to consolidate the ecosystem and hubs in Tunisia. The government is also actively building ties with other jurisdictions, inking FinTech cooperation agreements with France, conducting a cross-border CBDC experiment with the CBT as steps towards “a better inclusion of the Tunisian diaspora in Europe.”
Fintech in the Mauritius
The little island nation of Mauritius, better known for its natural beauty and resorts, is also an emerging fintech hub. Last year, for example, Port Louis hosted the “Africa FinTech Festival 2021”, a sign of how the country is investing in this sector. The government's last attempt to boost FinTech was the Finance (Miscellaneous Provisions) Act 2021.
Officially published in August 2021, it makes way for multiple initiatives to boost the FinTech sector in Mauritius. This includes regulatory sandbox authorisations, a FinTech innovation hub and digital lab, and provisions to prevent the counterfeiting of digital currency.
According to media, in the 2021/2022 budget, the Mauritian government also outlined new initiatives, including an Open Lab for banking and payment solutions by the Bank of Mauritius, a Mauritian central bank digital currency (CBDC), the Digital Rupee, a new legislation for virtual assets, and a dedicated QR code for mobile payments, and more.
What about crypto money? Mauritius has been so far welcoming towards cryptocurrencies and digital assets, creating a licensing regime for custodians and issuing guidance on security tokens in 2019.
The Mauritius government has also signed partnerships with France and Kenya, media said. Despite Mauritius not have yet a top player in the FinTech ecosystem,Switzerland Global Enterprise thinks that a number of successful FinTech businesses from other parts of the world have set up shop in Mauritius, using the island nation as a “channel” to other African countries including South Africa, Kenya and Nigeria.