Financial Technologies in Africa: Driving Much More Than Financial Inclusion

By Noa Wolfson for LTP

The rapid transition towards financial inclusion that Sub-Saharan Africa has been seeing in the last decade could not have happened without the successful adoption of mobile money. However, mobile money and financial technologies have brought Africa’s Sub-Saharan population much more than just access to financial services. It has laid a foundation for new and innovative services that are instrumental to achieving some of the key goals that the UN has laid under the Sustainable Development Goals Initiative.

In September of 2015, the UN General Assembly consisting of 193 countries adopted the 2030 Development Agenda titled Transforming our world: the 2030 Agenda for Sustainable Development. These goals include: no poverty, quality education, gender equality, affordable clean energy, decent work and economic growth, reduced inequality, and 11 more world-transforming goals. When examining how many of these goals may be successfully facilitated, it becomes clear that the need for financial inclusion is a key denominator.

Africa’s story of mobile money adoption is not a new one, however, the way it is transforming other aspects of people’s lives is. In a continent where 85% of the population uses a mobile phone and yet 70% have no access to electricity or other basic utilities, the role of the mobile phone becomes much more than just a means of communication; it becomes the foundation for access to financial inclusion, education, healthcare, economic growth and more.

Irrational Innovations, a venture capital fund focused on Fintech and Financial Inclusion in SSA, has researched, explored, and mapped out how financial technologies are impacting multiple key aspects of people’s lives in Sub-Saharan Africa. They discovered over 20 companies that use mobile phones and financial technologies to serve and promote sustainable development. Some examples include: companies that supply energy through solar panels and enable payment through mobile phones; health insurance and hotlines companies facilitated through mobile-based subscriptions; financial identity and credit scoring – assessed through mobile usage and behavior, and more.

In the next few years, Africa will continue to leapfrog and adopt new technologies and products that will drive the continent towards staggering growth, opening new horizons and opportunities for the population. If the ecosystem continues to flourish, and regulation permits, the countries of Sub-Saharan Africa may be some of the first to successfully reach 2030 after attaining most of the UN’s Sustainable Development Goals.

First appeared at LTP