Africa Fintech Hub
Online one-stop shop to strengthen fintechs across Africa.
The African Development Bank, through the Africa Digital Financial Inclusion facility (ADFI), has signed a grant agreement of $525,000 the Africa Fintech Network (AFN), to launch the Africa Fintech Hub, an online portal that will provide a one-stop shop for all fintech activities in Africa. With technical and financial support from the Africa Digital Financial Inclusion Facility (ADFI), the Africa Fintech Network will host and manage the African Fintech Hub, a digital platform that seeks to enable fintech associations across Africa to pool resources and knowledge, strengthen relationships and partnerships and showcase the works of fintechs in Africa, including female-led or owned businesses.
The Hub will be delivered via a strategic partnership between AFN and Cenfri, with Cenfri providing the technical support in innovations related to the Hub, research and associated knowledge creation and management initiatives.
Context
There are many initiatives focused on providing technical assistance and acceleration support to fintechs. For example, in 2019 alone, there were nearly 650 innovation hubs supporting Africa’s innovators. However, investors still focus on established fintech markets and most venture capital investments in Africa are typically smaller than in other markets, often targeting the seed stage compared to growth stage. Fintechs also struggle with knowledge gaps of how to engage regulators and lobby for policy and regulatory framework changes that impact their work.
- A strong fintech sector has the potential to contribute to economic growth but also to increase opportunities for job creation. A recent report from McKinsey showed that, between 2020 and 2021, the number of tech startups in Africa tripled to around 5,200 companies, with just under half of these being fintechs. The value of the fintech market in Africa has reached that of global market leaders with estimated revenues of around USD 4 billion to 6 billion in 2020 and average penetration levels of between 3 and 5 percent (excluding South Africa).
- In addition, a recent IFC study estimates that over 230 million jobs in sub-Saharan Africa will require digital skills by 2030, creating opportunities in adjacent industries too, notably training.
- Fintechs have played a critical role in extending digital financial inclusion across the continent through and beyond COVID-19 and in enabling Africa’s transition into a digital future under the African Continental Free Trade Area (AfCFTA).
- However, despite the potential of the fintech sector to contribute to digital financial inclusion, the African sector significantly lags behind those in other regions like Latin America and South-East Asia.
- A survey of 100 fintechs across 17 African countries by Cenfri and AFN, under their African Fintech Radar initiative, found that African fintechs experience an array of challenges that impact access to markets, raising funding, navigating regulation, and developing products that align with the needs of financially underserved market segments.
Objectives
To establish the Africa Fintech Hub (The Hub), a gender-friendly digital platform that will enable fintech associations across Africa to pool resources, knowledge and strengthen relationships and partnerships.
To create the Africa Fintech Hub, AFN will:
- Execute a detailed needs assessment to inform the value proposition of the Hub and the approach to technological innovations;
- Design and develop an online platform to host curated knowledge, data, toolkits, a network directory and other resources to support fintech associations in Africa;
- Facilitate a knowledge management function within the hub to work with fintech associations to collate and curate knowledge, data, and other resources; and
- Avail a community function to onboard associations, drive engagements on the online platform, provide access to the pan-African fintech community, and networking opportunities with investors and partners.
The Africa Fintech Hub will be Gender Centric and have the following overall outcomes:
- A needs assessment report (that integrates gender lens) and identifies needs and opportunities for female-led or female-owned fintechs;
- A functional digital hub that is actively used by the association members;
- Increased visibility on Africa fintechs’ profile and activities; and
- Increased number of investors and partners who engage via the portal.
Outcomes
This project addresses many of the Sustainable Development Goals (SDGs) and the African Development Bank’s High 5 priorities to contribute to greater economic growth, reduce poverty, support youth economic empowerment and gender inequality. The plan is to execute due diligence for fintechs via the hub, provide a one-stop shop for investors, partners and fintechs and gradually open multiple opportunities for fintechs in Africa.
Impact
- It is expected that by 2025, the project will reach 34 fintech associations across Africa, and execute a needs assessment with at least 100 fintechs.
- A functional digital hub aligned to the insights from the needs assessment will form a one-stop online repository of knowledge assets that are aligned to the needs of the fintech associations; this will provide useful information for fintechs and give a solid foundation for partnerships.
- It is also estimated at least 25 associations and 70% of their members will actively use the knowledge assets. At least 10 female-led or owned fintechs and 10 investors will participate in events leading to improved partnerships.