Can investment in fintech improve digital inclusion in Africa?

The fintech sector in Africa has experienced significant growth and investment opportunities despite a brief dip in funding during the COVID-19 pandemic. The momentum is expected to continue to rise in 2022, with the sector attracting record levels of foreign investments. This surge in investment has sparked conversations about the impact of fintech on digital inclusion and access in Africa. Favour Ori, the CEO of PayDay, recently shared insights on how fintech is bridging the gap and improving connectivity within the continent. Ori emphasized the role of fintech in facilitating seamless cross-border transactions, making it easier for individuals in Africa to engage in global financial activities. He highlighted the example of a Nigerian individual working for an American company and explained how fintech solutions have simplified the process of receiving payments from international sources. By offering real accounts in the US and UK, fintech companies like PayDay are eliminating barriers and enhancing financial connectivity for users across Africa. Ori expressed optimism about the transformative power of fintech in removing obstacles to global financial engagement. One of the key outcomes of increased investment in the fintech sector is the generation of more job opportunities in Africa. As foreign investors place greater trust in African fintech companies, they are willing to allocate more capital to support innovation and growth in the industry. This influx of funding contributes to the expansion of digital services and the overall ecosystem in Africa, ultimately driving economic development and empowerment. While the rise of fintech presents significant opportunities for financial inclusion, Ori acknowledged the existing challenge of low digital literacy levels in Africa compared to other regions. To address this issue, PayDay and other fintech companies are focusing on enhancing customer education and simplifying product interfaces to cater to users with varying levels of technological proficiency. By making financial services more user-friendly and accessible, fintech companies are playing a crucial role in improving digital literacy and expanding financial inclusion in Africa. Despite the progress in advancing digital services, cash remains a prevalent form of transaction in Africa, with many individuals prioritizing physical or traditional banking methods over digital alternatives. Fostering trust in digital platforms is a gradual process that requires continuous investment in building relationships with customers. Ori highlighted the importance of instilling trust through consistent performance and reliability, noting that increased trust leads to higher transaction volumes and greater investor interest. PayDay has observed a shift in user behavior, with customers exhibiting increased confidence in conducting larger transactions through the platform. This growing trust among users has also attracted more investors to the fintech sector, seeking opportunities to support promising ventures in Africa. Ori shared insights on the changing landscape of investor interest in the fintech sector, noting that the success of companies like PayDay has drawn significant funding from both local and foreign investors. While foreign capital has played a substantial role in driving the growth of fintech in Africa, Ori emphasized that domestic investors have also contributed significantly to the sector. Local venture capital firms and investors have shown interest in supporting fintech startups, indicating a promising outlook for continued growth and innovation in the industry. Looking ahead, Ori remains optimistic about the potential for further expansion and impact of fintech in Africa, highlighting the importance of continued investment and collaboration to drive digital inclusion and economic development across the continent.