Data-driven innovation transforming Africa's financial sector

Digital innovations and advancements in the fintech sector are playing a vital role in driving Africa's prosperity, particularly for small and medium enterprises, women, and youth entrepreneurs. Experts have said that Africa has one of the fastest-growing fintech sectors in the world, and its value is expected to reach $65 billion annually by the year 2030, making it a prime site for the digital revolution.

They were speaking on Thursday at the 12th edition of the bi-annual Africa Fintech Summit 2024 taking place from September 4-6 in Kenya's capital Nairobi. Wamkele Mene, secretary-general of the African Continental Free Trade Area Agreement, or AfCFTA, said the continent is banking on fintech as an avenue to increase the level of intra-African trade, which he said is estimated at 15 percent compared to 70 percent within the European Union and 60 percent in Asia.

Through the development by fintech companies, Mene said that Africa's financial outlook is being transformed through inclusion by enabling previously unbanked businessmen to engage in seamless cross-border trade.

In 2022, AfCFTA officially launched the Pan-African Payments and Settlement System to enable intra-African trade in local currency after a pilot phase in the West African Monetary Zone. According Mene, the system will enable Africa to reduce reliance on third currencies, and more importantly, it has the potential to significantly boost intra-Africa trade.

During panel discussions held on the sidelines of the summit, speakers agreed that while AfCFTA's new payment system presents significant opportunities for transforming intra-African trade, realizing its full potential requires overcoming existing challenges through innovation, collaboration, and effective implementation of policies and infrastructure.

Mary Queenie Adam, the CEO of Kenyan consultancy firm Trends Research, said that Africa is a hub for fintech innovation, with digital payments, mobile money, and data-driven solutions leading the charge.

"In Kenya, for instance, our fintech sector is expected to grow at an annual rate of 24 percent over the next five years, driven by high mobile penetration and a youthful, tech-savvy population. Data analytics is increasingly becoming a critical tool with mobile money, blockchain technology, cross-border money transfer and remittances becoming common practice among businesses in the region," Adam said.