Seize fintech opportunities: Digitalisation, mobile money interoperability are launch pads - Dr Bawumia rallies African nation
Vice-President Dr Mahamadu Bawumia has urged African countries to focus on digital identities and mobile money interoperability in order to realise maximum gains from the ongoing fintech (financial technology) revolution on the continent.
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He said these were the two critical pillars that African countries must leverage to unlock new opportunities and drive sustainable growth. At the ongoing 3i Africa Summit in Accra yesterday, Dr Bawumia said Africa’s technology story was being driven by the fintech industry, adding that between 2021 and 2022, about 40 to 60 per cent venture capital funding in Africa was channelled towards fintech startups.
The 3i Africa Summit, which is being organised by the Bank of Ghana in partnership with the Development Bank Ghana (DBG) and the Monetary Authority of Singapore, is on the theme: “Unleashing the fintech and digital economic potential of Africa”.
The summit has brought together three heads of state, 10 governors of central banks within and outside Africa, and over 150 chief executives and senior executives of fintechs and financial institutions across the globe.
During the three-day summit, the participants are discussing the opportunities and challenges of employing digital technology, as well as enhancing collaboration among policymakers, investors and innovators to advance the economic prosperity of Africa.
“The fintech eruption unfolding on the continent is certainly catching the attention of both international and local investors, and research from the industry indicates that Africa is experiencing a remarkable digital connectivity, with over 90 per cent mobile (telephony) penetration and 88 per cent internet penetration in some countries,” Dr Bawumia said.
“And sub-Saharan Africa has a larger mobile user base than the combined populations of the USA and the UK,” he added. He said these statistics highlighted the continent’s digital readiness and further presented a compelling case for the immense potential that Africa held as a thriving market for technology and fintech innovation.
The Vice-President said key trajectories such as digital payments, financial literacy initiatives and artificial intelligence were expected to shape the fintech landscape in Africa.
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Dr Bawumia said the development of a fintech industry without digital identities and mobile money interoperability between bank accounts and mobile money accounts would be difficult.
He said countries with no unique identities and mobile money interoperability would ultimately be less financially inclusive. “Kenya had a head start over many countries in the fintech space, but why is it that Ghana is now the fastest growing mobile money market in Africa and the number one in Africa in terms of access to financial inclusion?” he asked.
He said that this was because the country had put in place a unique digital identity and mobile money interoperability. “We do not want to promote fintechs for the sake of it; the goal is to promote financial inclusion, and we must never lose sight of this.
“How many African countries have a functional individualised credit scoring system? This does not exist in over 90 per cent of African countries because the data required by credit referencing agencies do not exist,” he stated.
“How do you do credit scoring in the absence of unique identities; how meaningful will a credit scoring be for a country where most of our population is excluded from the financial system?” he further asked.
Credit scoring
Dr Bawumia said the role of fintech in credit scoring going forward would be key on the continent because traditional credit scoring followed bank-based models. He said with a lot of the population on the continent having mobile money accounts and not bank accounts, credit scoring based on bank accounts would exclude a significant vast majority of the population.
In Ghana, he said, the central bank had just licensed a new credit reference agency that would leverage mobile money accounts and the unique national IDs to provide credit scores to the population.
He said that should be the way forward for all other African countries.
Connectivity
Contributing to a panel discussion, the Minister of Communications and Digitalisation, Ursula Owusu-Ekuful, urged African countries to build their connectivity networks to the borders and connect them to those of neighbouring countries.
Mrs Owusu-Ekuful said that would enable seamless connectivity across the continent. “To be able to connect our systems regionally or sub-regionally or even continentally, we have to break down the silos internally as well.
She said it was necessary to find a way of building a data loop in order to utilise all data, analyse and utilise them for policymaking and decision-making in a better way to serve the country.
Mrs Owusu-Ekuful also emphasised the need for all African countries to put in place mobile money interoperability systems. “Ghana, Nigeria, Kenya, Rwanda and South Africa cannot develop in isolation; we will all develop at different paces, but we have to grow together.
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“We have to think locally but act globally, and that is the only way to lift our continent out of poverty,” she stated. She said digital technology provided the continent with the quickest way of doing so by pooling the continent’s resources and that of development partners to invest in digital technology.