A delegation of UK fintech specialists joined Prime Minister Theresa May on her first official trip to Africa and will visit South Africa, Nigeria and Kenya to meet with entrepreneurs to establish trading and export ties in these emerging markets.
Representatives from Azimo, the Financial Conduct Authority, Standard Chartered, Farm.ink, the London Stock Exchange Group and the Prime Minister’s Ambassador for Fintech were just some of the 29 leaders that accompanied May on the trip in order to forge connections with the African fintech community.
Prime Minister Theresa May said: “The scale of opportunity for the capital’s businesses across Africa is huge. 111 African companies have already come to London to raise the funds they need to invest and grow, and now we want to go further to ensure that the UK is the partner of choice for African nations.
“The London business representatives accompanying me on this visit are a fantastic showcase of the depth of world-class expertise and breadth of innovation which the capital is home to,” she said.
Alastair Lukies, May’s Ambassador for FinTech added that the “UK’s bilateral trade figure with the continent are only the tip of the iceberg – as African countries embrace technology, improve infrastructure, education and healthcare and combine that with a continent-wide passion to reduce poverty, improve stability and to achieve long-term growth, we will have an opportunity to build significant partnership opportunities between the United Kingdom and the countries of Africa.
“Our ability to partner with African nations, to create modern day platforms that level the playing field and enable hundreds of millions of consumers to trade their way into a better life, can never be underestimated.”
Another representative on the trip, Joshua Siaw, Partner at White & Case, said: “I feel honored to be invited to join the Prime Minister on this important and historic visit. This visit plays a fundamental role in continuing to strengthen alliances between the UK and the many countries, peoples and cultures of the diverse African continent.
“As a Ghanaian living in the UK I believe there is much more that unites us than separates us.” According to the International Monetary Fund, African economies are amongst the fastest growing in the world, making it an excellent and important trading and investment partner for the UK as well as the perfect place for fintech to blossom.
Michael Kent, CEO and Co-Founder, Azimo was also one of the delegations who traveled to Africa and will showcase the best of UK business on the trip to South Africa, Nigeria and Kenya. This news comes after the fintech announced a $20 million Series C investment round.
The funding round, which was led by Rakuten Capital, was so that Azimo could finance global expansion and focus on the European diaspora who send money back to the emerging markets.
Kent said: “We are the only established FinTech player to be joining the Prime Minister on this trade delegation to Africa – a testimony to how quickly we have established ourselves as a FinTech leader in the global money transfer sector.”
He continued to say: “UK FinTech generates billions of pounds to the economy and we are leading the world in financial innovation. It’s important we showcase the valuable contribution of this sector.”
Azimo is among the fastest growing fintechs in Europe and has expanded its $600 billion global cross-border payments market, after having built a platform that enables payments in over 80 currencies, to more than 190 countries.
Now able to reach over 5 billion potential customers with cash, bank deposits and mobile wallets, many of the recipients of the remittance payments are in Africa, specifically Nigeria and Kenya. Kent commented on this.
“Nigeria, Kenya and South Africa have been leading lights in FinTech innovation, and with their collective population and economic potential, there’s many opportunities for UK FinTech. This includes collaborating with regional partners to provide excellent services to consumers that have been historically underserved, and to build a better and more inclusive future for financial services.”
But what does the fintech landscape look like in Nigeria, Kenya and South Africa and what can the UK learn from these startups that have been successful in the emerging markets.
Writing in the Financial Times, Uzoma Dozie, CEO of Diamond Bank, said that fintech is significant to the success of Nigeria’s economy, in addition to the modernization of the traditional banking sector in the country.
Dozie said: “We are already seeing huge breakthroughs in digital banking and the adoption of fintech-based services by Nigerian consumers — be they retail or business customers. But this expansion must be encouraged by policies that will see greater inclusion of women and rural communities into mainstream banking activity.
“The adoption of wider business-friendly policies through the reform of our regulatory and fiscal approach is imperative too, if Lagos as a city, and Nigeria as a whole, is to fulfill its enormous potential.
“Nigeria is already Africa’s largest economy and enjoys many of the elements of success. But we cannot rest on our laurels. Lagos can be Africa’s 21st-century city but only if we recognize the opportunity and act decisively to realize that vision.”
But isn’t this message applicable to every developing country or area where there are many who are left unbanked? In my opinion, financial inclusion was a term that many of those working in the fintech space heard in relation to M-Pesa, but more about that fintech later!
What Dozie also commented on was how while the capital Lagos is a “21st-century city”, its banking sector needs to start acting like one, but it is also important to discuss how those in other, perhaps smaller cities, or even villages, manage their money.
These African countries need investment and support through collaboration to succeed and May’s visit could be the start of something great. Just recently, big players Tencent and Visa were part of those who were involved in raising $8 million for the Nigerian fintech PayStack; the round was also led by Stripe.
As reported on Tech City, Paystack will now invest the funding and will attempt to scale its engineering team, deepen its payments infrastructure and accelerate their expansion across the continent.
Shola Akinlade, CEO and co-founder of Paystack, said “As recently as 2015, it was really difficult for a developer or business owner in Nigeria to quickly start accepting online payments.
“We started Paystack because we believe that better payments tools are one of the most important things that African businesses need to unlock their explosive potential.
“We think of Paystack as an amplifier of the incredible work that African business owners are already doing. With better technology tools, African businesses can be better equipped to play a growing role in the global economy.”
Patrick Collison, CEO of Stripe, added: “We’re excited to back such people in one of the world’s fastest-growing regions” with Otto Williams, Head for Strategic Partnerships, Fintechs and Ventures for Visa in CEMEA, also commenting: “Africa is central to Visa’s long-term growth strategy, especially when you consider how cash is still a primary payment option for millions on the continent.”
“Our investment in Paystack aligns with the kind of investments we look for – those that will help extend our reach into the global commerce ecosystem as it changes and grows, and that will provide mutually beneficial business opportunities.”
Earlier this month, Nigerian startup Mines, which builds digital credit products for the underserved, also secured a $13 million Series A funding round and aims to expand into other emerging markets.
Kenya already has a reputation in the fintech industry, dominating the early conversation about mobile money and financial inclusion with startups like M-Pesa, as mentioned earlier. However, now, because the market has expanded so quickly, the African country is looking to regulate it.
As reported in Reuters, the finance ministry published a draft bill that covers digital lenders so that providers treat retail customers fairly. In addition to this, because US startups will want to collaborate, the regulations in Kenya will be scrutinized.
Despite political turmoil, fintechs in this country are aiming to help some of the billions of people who lack bank accounts, assets and formal employment climb the economic ladder. The cap introduced in 2016 will also support this initiative and prevent banks from charging high interest rates.
Reuters reported that: “Without effective regulation, fintech lending could undermine the gains of mobile payments, which a 2016 study published in the journal Science showed had lifted 200,000 Kenyans out of poverty.”
What is clear here is that Kenya is moving quickly and always a step ahead of some other African countries. Laws need to be in place, especially if services that are offered by fintechs are being adopted at a faster rate than first conceived.
According to ITWeb Africa, Jules Ngankam from African Guarantee Fund said that there is a $155 billion funding gap for SMEs in Africa and Kenya has undergone a surge in mobile digital lenders: credit is becoming incredibly attractive.
Fintechs Branch, Tala and Okash have pulled in a number of users in a short space of time, with the first two ranking as Kenya’s top two finance applications in Kenya.
Ngankam said: “The issue they are trying to solve is always the gap in supply and demand. Business needs to have access to cash. At the same time, there are people who have enough cash to invest. Traditionally, you have money to give to the bank and then they lend it out for profit. What they [digital lenders] are doing is exactly the same.”
What started off with M-Pesa has expanded across the country, across the continent and is paving the way for the rest of the world. But what about South Africa? Again, technology companies are ensuring that managing, accessing and sending money is cheap and simple.
Startups such as Yoco and Slide are helping South Africa promote equality when it comes to banking and provide sustainable solutions for the future. Nigeria and Kenya are also working towards the same and it just remains to be seen how the UK will help these emerging countries, as well as how they will help the developed world.