Is winter coming for African fintechs?

The African FinTech sector has been a beacon of hope and innovation, with a projected value expected to reach $30 billion by 2025, a significant surge from the $3.8 billion recorded in 2020. However, as the industry faces the challenges posed by the lingering effects of the pandemic and the uncertainties surrounding the Ukrainian war, questions arise about the sustainability of this growth trajectory. In a recent interview with CNBC Africa, Aida Diarra, Senior Vice-President for Sub-Saharan Africa at Visa, shared insights on the current state of the FinTech sector in Africa. Visa has been at the forefront of partnering with FinTech companies to drive digital payments and financial inclusion across the continent. Diarra emphasized the vast opportunities that still exist in Africa's payment landscape, with approximately 90% of transactions still conducted in cash. While FinTechs have introduced innovative solutions to digitize payments and expand access to financial services, there remain obstacles to overcome. One of the critical hurdles is enabling merchants to accept digital payments seamlessly. The pandemic has accelerated the shift towards online transactions, showcasing the resilience of businesses that have embraced digital payment solutions. By leveraging technology, such as transforming mobile phones into payment acceptance devices, Visa is working to empower merchants and facilitate their transition to digital platforms. The adoption of digital payments is not limited to specific countries but spans across the continent. While countries like South Africa have made significant strides in digital penetration, markets like Kenya and Nigeria are witnessing rapid growth in digital payments. The rise of e-commerce and the focus on domestic and cross-border transactions present an opportunity to catalyze economic activities and foster regional trade. Visa plays a pivotal role as a catalyst for commerce, both locally and internationally. As a network that connects merchants and consumers, Visa enables seamless digital transactions, empowering businesses to thrive in the digital economy. The company's commitment to providing consumers with secure and convenient payment credentials, whether in-store or online, underscores its contribution to economic development in Africa. While specific data on the volume of transactions facilitated by Visa in the FinTech space was not disclosed, Diarra highlighted the millions of customers and credentials being onboarded onto digital platforms. The shift towards digital credentials on mobile devices signifies a paradigm shift in payment methods, offering convenience and accessibility to a broader segment of the population. As Africa's FinTech sector navigates through uncertain times, the role of key players like Visa in driving innovation, financial inclusion, and digital transformation becomes increasingly vital. The collaboration between FinTechs, financial institutions, and regulatory bodies will be crucial in overcoming barriers and unlocking the full potential of digital payments in Africa.