An Insider’s View: African Payments and Fintech

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Following the release of the 2017 Global Payments Innovation Jury report, which explores global trends in fintech innovation, earlier this summer, Missive teamed up with John Chaplin and Interswitch to produce an African supplement.

A Jury of 25 industry leaders was drawn from 14 African markets covering all corners of the continent. The Jury represented the entire spectrum of the African retail payments industry with representatives from banks, payment switches, card processors, closed loop payment networks, schemes, mobile money operators and agency networks.

The top findings of the Africa Payments Innovation Jury:

  • Africa ranks ahead of the USA. While Asia is seen as the top region for payments innovation with Europe in second place, Africa was ranked by the Global Jury as third, only slightly behind Europe and ahead of USA.
  • B2C trumps B2B investment. Although globally there is a preference for investing in a B2B business, the African Jury prefers a B2C proposition largely because of the growth potential of bringing the currently unbanked population into the electronic payment world.
  • P2P most compelling use case for unbanked. The key to payments ventures aimed at the unbanked is to find a compelling use case for the first service that will tempt the consumer into the electronic payments world. The Jury identifies P2P as the most likely such service.
  • Shortage of venture capital. African payments and fintech entrepreneurs are facing a marked shortage of venture capital – more so than in other regions of the world – which is restricting their ambitions. In turn, the Jury indicated that the main reason for failure is that business models are not scalable and the Jury attributes this to a shortage of strategic and product development skills.
  • Mobile money is faltering. Many mobile money initiatives are failing to meet business plan targets because businesses have underestimated how long it can take to change consumer behaviour. The Jury indicated that the biggest opportunity in mobile lies with the integration of payments with other mobile-centric activities such as social messaging, gaming and online commerce.
  • Intra-Africa payments a priority. The Jury viewed the current international payments capabilities between African markets as poor and holding back the development of intra-Africa commerce which is important for the development of the continent. There isn’t yet any consensus on how the issue should be tackled, however.

Not to be outdone, the African Jury also picked out the area of payments innovation that they see as most overhyped and exaggerated. Bitcoin took the top prize with equal second going to distributed ledger technology, mobile money and mobile wallets – making it a crowded rostrum.

You can read the Africa Payments Innovation Jury Report 2017 in full here:

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