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Enable an inclusive fintech ecosystem
Digital financial technologies (FinTechs) accelerate financial inclusion for many Africans with limited access to traditional financial services such as loans, insurance, wealth management and investment. It is, therefore, unsurprising to see the recent exponential growth of FinTech startups, and fintech support programs by enterprise support organisations, acquisitions, and users. According to market insights firm Briter Bridges, FinTechs raised nearly $3 billion, amounting to two-thirds of the investment raised by startups across the continent in 2021. In addition, five out of the seven unicorns in Africa are FinTech. Yet despite the investment boom in FinTech, cross border financial payment and other financial services are still a challenge, mainly due to regulatory bottlenecks. Central banks across Africa face the challenge of designing balanced regulatory frameworks that promote the growth of FinTechs. Hardline regulations have the potential to stifle innovation, while on the other hand, loose policies expose consumers to many risks. Indeed, FinTech brings about many concerns around new risks related to money laundering and the financing of terrorism. This necessitates the implementation of licensing and market entry controls by governments, as well as requirements to institute preventive measures by startups — including customer due diligence, transaction monitoring, record keeping, and obligations to report suspicious transactions.
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