African Fintech and Financial Inclusion in 2016

By Madhvi Mavadiya | 17 August 2016

Financial exclusion is still a problem in 2016. Worldwide, there are two million people currently living without a bank account because they have low or unstable incomes or have experienced a change in circumstances. Many financial institutions and fintech startups are attempting to decrease the number of people who are unbanked and the African continent has undergone a number of fintech milestones this week, which in the long term, should alleviate the issue.

At this year’s Innovate Finance Global Summit, Kosta Peric from The Bill and Melinda Gates Foundation spoke about how fintechs actively serving the developing countries could be a tipping point for traditional players. “We are seeing frictionless, super-scalable tech that will tip this iceberg and making a payment will be as easy as sending a text message,” Peric said. The perfect example would be M-Pesa’s success in Kenya as six years after the platform entered the marketplace, more than 40% of the country’s GDP was being transacted over the application.


Traditional banks saw M-Pesa as a legitimate competitor and have tried to stop citizens banking digitally by campaigning for increased regulation, but the mobile money market continues to be opened up to more and more people. According to Tim Nuy, executive director of African fintech MyBucks, the increased use of mobile phones is evidence for the fintech industry being an enabler, rather than a disruptor. He uses M-Pesa as an example of a mobile money service that has been useful in the plight of the unbanked.

It is these players that continue to play a significant role in getting mobile money to the poorest of the poor in the most remote regions. However, in my view, in Africa it is not as much about increased convenience but rather increased ‘access’ to mainstream financial services such as credit and insurance, that presents the most opportunity,” IT News Africa reported. Nuy continued to explore how having physical banks on the ground is expensive and would be unsustainable in a continent like Africa.

So in effect, this means that, while in developed countries, fintechs challenges credit and financial processes where turnaround times are about increased convenience. In Africa however, fintechs challenge credit and financial processes where turnaround times are about increased convenience. In Africa however, fintechs can be regarded as game changers, as they fill a longstanding void by promoting financial inclusion,” Nuy said in IT News Africa.


This week, it was announced that MoneyGram would now be recognised as a trusted money transfer provider in Nigeria and this is following the Central Bank of Nigeria having changed the policies that regulate how remittance companies provide their services. Money transfer has a significant role in the Nigerian economy and over $21 billion was sent to Nigeria from Nigerians living abroad in 2015, Grant Lines, chief revenue officer, AMEAP, Russia and CIS explained.

MoneyGram recognises and support the Central Bank of Nigeria in its efforts to ensure these inflows are brought into Nigeria for the benefit of consumers as well as the economy at large. Being recognised by the CBN as a legitimate money transmitter is a testimony to our commitment to compliance and willingness to continue working with the CBN in the best interests of the economy,” Lines said.

Kemi Okusanya, head of MoneyGram Anglophone Africa, highlighted that Nigeria has a strong relationship with MoneyGram and has invested millions of dollars in order to improve products and services in the country. “We know the needs of our customers vary and we are always striving to provide them with a solution that is most convenient for them. For example, our cash-to-account service allows Nigerians to receive funds directly to the customer’s personal bank account,” Okusanya said.

Alongside this, Visa announced that it would be bringing its mobile payments solution mVisa to Nigeria and after discussions with Nigerian banks, expects to be available to all 150 million active mobile phones in the country before the end of the year. This solution allows customers who use different mobile phones and services to communicate as the payment goes straight from a Visa account to the merchant’s account and provides a real time notification.

In 2015, Visa vowed World Bank that it would bring electronic payments to 500 million more people by the end of 2020 and in turn, accelerate financial inclusion. Head of retail banking for Diamond Bank, Robert Giles, said that this is a big milestone for Nigeria. “The service enables people to engage in secure, digital commerce, and access funds more easily in their bank accounts to make everyday purchases. mVisa increases the opportunity to include more Nigerians into the formal financial system, which will help the economy, and society grow,” Giles said.


Only 14% of Egyptians have a bank account, according to data from financial inclusion data from World Bank and in addition to this, 94% rely on cash transactions. The 2015 International Monetary Fund Financial Access Survey reported that “there were about five commercial bank branches per 100,000 adults in Egypt and about 13 ATMs per 100,000 adults in Egypt as of 2014.”

However, progress is being made in the fintech industry as Wamda reports, startups are supported by incubators like 1864 Accelerator that was founded in May of this year, but legalities continue to be an issue. An example would be lender DCB Egypt that is working with mobile companies but has partnered with a bank in order to use gain particular permissions.

MasterCard’s report “The Road to Inclusion” highlighted how 16% of Egyptians do not have a bank account because they do not have enough money, while 24% said that they didn’t see the point as most transactions were completed in cash. Egyptian fintech Feloosy’s founder Karim Beltaji believes that tech could be easily used to manage personal savings as last year, mobile connection penetration reached 113%.

Tech-enabled Egyptians are younger by default and still haven’t figured out the concept of ‘saving for a rainy day’. They will, however, save for a new gadget or a car,” Beltaji said. Another problem arises when it comes to banking licenses as the Central Bank of Egypt hasn’t issued a new licence since 1979, which is why fintechs have to partner with existing banks in order to operate. Examples include the Dopay and Barclays partnership and Payme with the National Bank of Egypt.

If you can get a major bank of board, it might seem like an extra layer of work but it does seem to iron out all the kinks. They are not evil, but banking information and access are sort of a taboo here and it is quite hard to explain that fintech is truly the solution for financial inclusion, financial illiteracy and informal banking,” Beltaji explained. 

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