Economy Uncensored with Tapiwanashe Mangwiro
We often talk about how financial technology (FinTech) has transformed lives in our countries, but rarely do we talk about what it has done for the region as a whole.
As the world increasingly embraces digital financial services, the Southern African Development Community (SADC) region finds itself in need of collaborative FinTech infrastructure to drive economic growth and financial inclusion.
This past week opened my eyes on the role that FinTech is playing in the region as I interacted with my peers in West, East and Southern Africa at the Sanlam Summer School for Financial Journalism in South Africa.
During the discussions I had with my peers from Namibia, South Africa and Zambia, I noticed that as a region we can achieve a lot collectively. This article explores the importance of such infrastructure and the potential benefits it could bring to the region.
The Current State of FinTech in SADC region
Having the privilege to talk to journalists Angie Scholtz from Namibia’s Future Media, Katlego from the SABC, Shem Malinda of Zambia’s Diamond TV and Sanlam country marketing manager for Namibia Wendy Naruses, I found out that the region really needs to entertain the idea of integration in this space.
While FinTech has made significant inroads across the globe, the adoption in the SADC region has been relatively slow.
Limited access to financial services, regulatory hurdles and fragmented digital payment systems have hampered the development of a robust FinTech ecosystem in the region.
However, there is a growing recognition that FinTech can play a pivotal role in addressing these challenges.
“Namibia is forcing digital innovations: thus, FNB has introduced convenient hubs and zones with access to multipurpose ATMs and free Wi-Fi. In summer 2023, the Namibian president signed a bill laying out a local path forward for the crypto and digital assets,” the Finextra said.
The Africa Report on South Africa’s FinTech industry said, “South Africa is not much into mobile money technology but the country has huge products it is pushing through FinTech including insuretech and payment services as they were the first to push contactless payment services in Sub Saharan Africa.”
The 2021 UNCDF report said there are over 57 fintechs operating in Zambia and the typologies of fintechs in the country were enabling technologies (12 percent); money transfer (25 percent); digital lending (31 percent); payment gateways (20 percent); saving/asset management (9 percent); insurance (3 percent).
“B2B remains the leading category of fintech in Zambia. Cost of last mile delivery poses a challenge in achieving B2C scale and the majority of Zambian fintechs are headquartered locally,” the report read.
The report also highlighted that the ability to scale fintech businesses is hampered by the limited spread of infrastructure and digital skills.
With nothing pretty different to tell, the Zimbabwean FinTech space is now 12 years older as it was begun by a network provider called Netone as they launched their mobile money platform.
Zimbabwe has witnessed a fair share of Fintech growth in several areas, especially in insurance, payments and trading, including the revolution in digital currencies.
Some of the notable innovative services and products include mobile money, electronic platforms (such as Zimswitch, Payserv, Paynow money), switching services, and digital currencies in the Zimbabwe Gold.
Benefits of collaborative FinTech infrastructure:
A unified FinTech infrastructure can help bring the unbanked population into the formal financial system by providing access to banking services through digital channels, including mobile money and digital wallets.
The SADC region consists of multiple countries, each with its own currency and payment systems. A collaborative FinTech infrastructure can streamline cross-border transactions and reduce associated costs.
The development of a robust FinTech ecosystem can attract local and foreign investment, spurring innovation and job creation in the region.
A shared FinTech infrastructure can generate valuable data on financial transactions, consumer behaviour, and economic trends, which can be leveraged for informed policy decisions.
Collaborative efforts in FinTech infrastructure can also strengthen cybersecurity measures and fraud prevention, protecting consumers and businesses from digital threats.
What needs to be done
SADC member states should work together to harmonize regulatory frameworks to create a conducive environment for FinTech companies to operate seamlessly across borders, and they should be flexible as we have seen that in technology, regulations follow innovation.
Collaboration between governments, financial institutions, and FinTech startups can help fund and develop the necessary infrastructure and innovations. Promoting awareness about the benefits of FinTech and providing digital literacy training to underserved communities is essential for successful implementation.
The SADC region is at a critical juncture where embracing collaborative FinTech infrastructure can pave the way for economic growth, financial inclusion, and increased cross-border trade.
By addressing the current challenges and working together to create a supportive environment, SADC member states can unlock the potential of FinTech and improve the lives of millions of people in the region.
Tapiwanashe Mangwiro is a resident economist with the Business Weekly and writes this in his own capacity. @willoe_tee on twitter, Tapiwanashe Willoe Mangwiro on LinkedIn and [email protected]