Included in this issue: Fintech – Disrupting Africa's Financial Services; Local Counsel's Perspective on Fintech Trends, Challenges and Developments in Kenya and South Africa and Nigeria and more...


ARTICLES

Fintech – Disrupting Africa's Financial Services

With a growing young, middle class population, and rising levels of social networking and mobile phone penetration (67% in 2015, projected to rise to 80% in sub Saharan Africa in the next five years), it is unsurprising that fintech in Africa has disrupted the continent's financial services industry, setting an example for the rest of the world. Fintech has been phenomenally successful (particularly in Kenya, Nigeria and South Africa) in overcoming the challenges faced by traditional banks (e.g. high infrastructure costs and credit scoring difficulties), and transforming financial inclusion across Africa. 12% of all Sub-Saharan African adults now have a mobile money account, and fintech has also spurred job and wealth creation (with the number of fintech start-up jobs in South Africa increasing 1,400% since the start of 2016), and access to an innovative range of products. However, the African fintech success story does not necessarily resonate in all of Africa's 54 markets, particularly those poorest countries, where mobile/internet and bank account penetration remain at their lowest. This article explores limits to the success story, and the future of fintech across the continent.

Read the article written by Leila Belcarz, Managing Associate, Addleshaw Goddard LLP

Local Counsel's Perspective on Fintech Trends, Challenges and Developments in Kenya and South Africa and Nigeria

Payments is a key fintech area in Kenya, South Africa and Nigeria, and banks are increasingly partnering with mobile payment providers to move into the space. South Africa has seen a marked rise in fintech start-ups/joint ventures, with a number of funders launching "incubators" and "accelerators". Nigeria is also seeing a rise in fully digital/online banks (e.g. Lidya) and mobile lending offerings. There has been an increase in Kenyan payments regulation (e.g. requirements for central bank licensing and ring fencing of customer funds), with a data protection regulation likely to be passed in the near future. These requirements are not especially onerous in light of the significant role played by the payments industry in Kenya, and has reinforced Kenya's role as a payments market leader and increased user confidence. South Africa's regulation of fintech is, in contrast, more reactive, having fallen behind technologies, presenting a challenge for fintech disrupters, but also increasing the opportunity for innovation. The Central Bank of Nigeria has encouraged use of mobile payments, and has introduced a cashless policy to discourage cash payments over certain limits, however, there is still a long way to go with getting Nigerian consumers comfortable with the security of mobile payments, and related data protection issues. In the near future, Kenya and South Africa are likely to see an increasing formal regulatory environment, with key mobile payments players in Kenya (e.g. M-Pesa) given a "designated firm" status, where they would have increased scrutiny and regulation. South Africa is also set to see the Financial Sector Regulation Bill enacted, which should ease the transition into adequate regulation of technological and innovative solutions in South Africa. With Nigeria's government and start-up incubators increasingly rolling out initiatives to increase the young population's technological literacy, and the rolling out of 4G mobile networks, these will drive innovation and demand for fintech products in Nigeria. Henry Omino, Kate Beretta, Yinka Edu and Tolulope Osindero give their perspectives on fintech trends, challenges and developments in Kenya, South Africa and Nigeria.

Read the interview with Henry Omino of Walker Kontos Kenya, Kate Beretta of Bowman Gilfillan South Africa, and Yinka Edu and Tolulope Osindero of Udo Udoma & Belo-Osagie Nigeria

NEWS

MFS Africa connects 120 million mobile wallets in Sub-Saharan Africa - Read more here.

Zimbabwe’s PenFin offers financial services to the unbankable - Read more here.

KPMG: FinTech Investment in Nigeria Records Over $200 Million in Two Years - Read more here.

Fintech Startups Boost Africa's Economy - Read more here.

‘The future of banking in Africa lies with banks, not fintech’ - Read more here.

South Africans trust alternative financial services - Read more here.

Ten Key Regulatory Challenges Facing the Financial Services Industry in 2016 - Read more here.

BUSINESS COUNCIL FOR AFRICA NEWS AND COUNTRY SPOTLIGHTS

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Mobile money records 420% growth over five years (Ghana) - Read more here.

Glo backs new Nigeria cashless initiative, mCash - Read more here.

GCC banks looking to Africa - Read more here.

Hot money is back: foreign investments into Nigeria up 75% QoQ - Read more here.

World Bank approves $65 million grant for Madagascar - Read more here.

Germany and EAC in partnership that sees the former extend financing - Read more here.

Little Ride to take on Uber in Nigeria and Uganda - Read more here.

$7milion to boost healthcare innovation in Africa - Read more here.

Russian Firm to build nuclear reactor in Tanzania - Read more here.

Eskom: State Capture update report one - Read more here.

Rwanda calls for more investors in energy - Read more here.

South African firm to construct Windhoek City housing project (Namibia) - Read more here.

Moroccan firm to construct mega fertilizer plant in Ethiopia - Read more here.

Established almost 60 years ago, The Business Council for Africa network supports over 400 companies and entrepreneurs operating across the continent. The Business Council for Africa works closely with its members to promote business opportunities and facilitate sustainable investment across the continent. They organise over 30 African business related meetings in London each year and have 33 In-Country Directors in West and Southern Africa and thus provide a very useful platform for networking for both new investors and those already operating on the continent.

For further information please contact Nouria Bah.

Key contacts

Andrew Rosling

Andrew Rosling

Partner, Mergers and Acquisitions
London

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