The Rise of the Digital Financial Service Sector in Africa

A digital and mobile financial service is a mechanism that many countries across the globe have embraced as it provides a sense of ease when sending money and receiving money from one destination to another. It also provides the luxury of handling your money on the go from where ever you are without having to trek to a physical bank. And with the African continent becoming a player within the global economy it would only be fitting that they begin to adopt the digital financial services that are being utilized throughout the globe by creating home grown applications and services that cater to those living on the continent.

Emerging economies such as that of Nigeria and South Africa which also boast large populations have many individuals making payments, and also sending and receiving money from business transactions that they engage in. Start-ups such as Paystack which is a Nigerian online payment service are allowing Nigerians to have a homegrown service that takes care of their digital financial needs. In the past many professionals and businesses had to use more traditional methods such as filling out extensive paperwork and even sometimes making up front payments to go through an interrogation process just to receive money. Paystack was able to solve this problem by providing a website link tool for secure online payments where companies can create a payment link and add it to their website for the customers to make payments, which also allows for the company to receive payments in less the 30 minutes. Paystack CEO Shola Akinlade stated that Paystack was started because Africa needs better payment tools to help set off its business potential. Surely with a company like Paystack business within and outside the continent can be conducted in a timelier manner.

The potential of companies such as Paystack has gained the attention of major corporations outside of Africa and has influenced them to want to partner and invest in them. Paystack was able to raise $8 Million dollars in a round of funding raised by American payment processing company Stripe. Jumo, which is a mobile financial service, provides services such as credit and savings. The company has created over $700 million in loans and manages over 25 million customer interactions per month. The success of this company has prompted world renowned financial company Goldman Sachs to help and fund this it so that it can continue its expansion in the digital financial market.

There is great potential for African start-ups to make their mark within the digital financial service sector. There are young companies who see a need for efficient digital payment procedures and they are willing to do what it takes to make sure that these procedures are carried out with ease. And with over 57 percent of the world’s mobile money accounts being located in sub-Saharan Africa alone, it is only fitting that Africans establish themselves within this industry because they will have the insight on what services Africans needs and how best to go about producing them.

Featured image| mobile phone in hand | Simon Berry | flickr

The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of The Best of Africa.

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