How fintech sector is driving financial inclusion and economic growth in Africa

By Quadri Adejumo

A silent revolution is afoot, literally, across the streets of Africa. From Nairobi, to Lagos, Accra, and elsewhere, the financial technology industry is leading the frontier of innovation and technology development, and it is felt across the globe. From Fingo Africa in Kenya to Moniepoint, Opay, and Palmpay in Nigeria, the fintech wave is tearing down borders, breaking barriers, and offering economic opportunities to millions.

According to a 2024 report by the World Bank, over 40% of adults in Sub-Saharan Africa are unbanked. Majority are said to be excluded from traditional banking because of infrastructure deficits and prohibitive costs.In their place come digital-only banks and fintech firms launched to fill this gap through the deployment of technology that provides available, affordable, user-friendly financial services.

“Digital banking is not an evolution, but a necessity in Africa,” Okello Muriuki, a financial technologist based in Nairobi, told SolaceBase. “With over 80% mobile penetration across the continent, fintechs are tapping into the most widely available technology to create a more inclusive financial system.”

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For instance, Fingo Africa, a digital bank for young Africans from Kenya allows users to open bank accounts within five minutes via their mobile phones and offers zero-fee transfers, savings tools, and credit products to customers.

Nigerian fintech powerhouses

In Nigeria, fintech platforms such as Moniepoint, Opay, and Palmpay turn over financial transactions at a high speed. Though Opay began as a mobile payments platform, it has since diversified into micro-loans, savings, and investment products. With over 40 million subscribers, Opay has grown to be a giant in the country’s financial ecosystem.

Similarly, Moniepoint has emerged a critical player in the Small and Medium Enterprises sector in Nigeria, offering business banking solutions, processing, and lending services to SMEs, described as the backbone of the economy in Africa.

“These fintechs are not just competing with traditional banks; they are building the financial infrastructure of the future,” Olanrewaju Adeyemo, a Lagos-based fintech consultant, told SolaceBase. “Their focus on mobile-first solutions and affordability is driving mass adoption.”

Beyond transactions

The impact of Africa’s digital banks extends far beyond financial inclusion. It allows business owners to scale operations, farmers to finance tools, families to access education and healthcare. The innovations from digital lending firms like Carbon and Branch include breakthrough credit-scoring systems dependent on data for mobile telephone and loans are made accessible even to customers without prior records of performance related to financial engagements.

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According to a report by McKinsey, Africa’s fintech sector alone could add as much as $230 billion to the continent’s GDP by 2025, as it is a key creator of jobs, attracting investments from different parts of the globe and fostering homegrown innovation.

Challenges

While very promising, the recent fintech boom also happens to still pose its share of challenges. First, regulatory uncertainty remains one of the big barriers. Most of these African countries have weak regulations concerning digital banking, meaning that fintechs are forced to operate in the murk of outdated or unclear laws and regulations.

For example, the Central Bank of Nigeria barred cryptocurrency transactions early in 2021 and forced a number of fintech operations reliant on blockchain technology into disarray.Of the very important concerns, however, are data privacy and cybersecurity issues. For instance, the more Africans move to digital banking, the higher the risks of cyberattacks and data breaches.

According to a 2023 report from Kaspersky, over 81 million cyber attacks were recorded in 32% of ICS computers in Africa, with financial services among the most targeted.“Trust is the currency of digital banking,” Sophy John, a Nigerian cybersecurity expert, told SolaceBase. “Fintechs have to be strong in security if they want to acquire users and maintain credibility.”

Financial freedom

Global investors are taking notice of the fintech space. According to a report by Partech, in 2024, the Fintech sector dominated Africa’s tech ecosystem, securing $1.4 billion, which is 60% of the total equity funding. International partnerships are also growing. For instance, Flutterwave, one of the most successful African fintech companies, has partnered with global giants like PayPal for frictionless cross-border payments.

Besides that, the development of digital currencies and blockchain further creates new avenues for financial sovereignty. Some countries like Ghana and Nigeria are already piloting the CBDCs to complement fintech solutions in their quest to cut transaction costs and improve financial stability.

Changing lives

In many ways, this trend in digital banking in Africa has more to do with the people than it has to do with either technology or economics. It has to do with a market trader in Accra being able to receive mobile phone payments, or with a student in Nairobi saving up for tuition without needing to visit a bank, or even with a farmer in Kano securing loans to invest in improved seed varieties.

“Africa is proving that financial innovation doesn’t have to start in Silicon Valley,” Okelle added. “It can start in the villages, towns, and cities of this continent, where the need for financial inclusion is greatest.”

Fingo, Opay, and Palmpay are leading digital-only banks in changing African finance and leading towards connectivity, inclusion, and prosperity. In the end, this is more than a trend for African fintech, it’s a revolution.