Africa and digital finance

Africa design. map shape icon, vector graphic

Digital finance is the development of financial services using electronic transaction means, including mobile financial services, enabling transactions via mobile phones (digital finance in Africa).

In Africa, the rate of banking varies widely from country to country, but in most cases, many people do not have access to banking services. Indeed, on average one family in five has a current account in a banking institution.

On the other hand, the telephony sector is more buoyant, with strong growth. According to a recent study, there are more than 600 million subscribers in this sector, suggesting strong potential for mobile money. This contributes to the evolution of digital finance in Africa. In addition, more than half of the world’s mobile payment accounts are located in Africa.

The digital financial revolution thus has a strong role to play in the growth of the African continent.

Financial digitisation as an opportunity:

digital finance in Africa

The financial digitisation operation focuses primarily on traditional banking services that make it possible to carry out the various day-to-day operations such as opening a bank account, transferring money by text message or checking the account balance.

Secondly, these financial transactions may lead from a mobile account to a mini-credit being obtained in a shorter period of time compared to a mini-credit obtained in a traditional bank, usually within several weeks.

The development of digital finance in Africa can then be seen as an opportunity, a perspective, to acquire other more sophisticated financial services such as the use of portfolios. This opens the way for the development of the insurance sector or also for the development of savings that were previously inaccessible to certain populations and therefore aimed at financial inclusion.

Financial digitisation as an attractiveness (digital finance in Africa):
This “mobile banking”, which is an integral part of the FinTech movement on the African continent, can be defined as a banking innovation that is a key factor for Africa’s growth. Indeed, on a cost basis, it is much cheaper to provide financial services by mobile than to have a physical network of bank branches, of the order of 80% to 90% savings according to a McKinsey study.

Moreover, today this attractiveness of digital finance has already begun, brought by many groups such as Kenya with the creation of the successful M-Pesa product of Safaricom, a subsidiary of Vodafone, which is a mobile financing and money transfer system used by 35% of the country’s population.

But also, marked by the emergence of many projects such as the African Development Bank’s (AfDB) ambition to create an African Digital Finance Fund supported by the Gates Foundation.

Digital finance is thus expanding rapidly in Africa and one may wonder how far, given the vast possibilities.

However, this digitisation may be limited today by the means available in Africa because many problems remain and the risk of failure remains, for example due to infrastructure problems, equipment or bandwidth costs.

Sources :

http://www.jeuneafrique.com/mag/421063/economie/mobile-banking-success-story-nommee-m-pesa/

https://www.lesechos.fr/idees-debats/cercle/cercle-166881-finance-digitale-en-afrique-le-chainon-manquant-2068486.php

http://www.latribune.fr/entreprises-finance/banques-finance/l-afrique-l-epicentre-de-la-mobile-money-616660.html

L’Afrique, épicentre de la bancarisation numérique

Samy Tsimoult

Samy TSIMOULT


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