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The impact of internet money transfers on Africa’s economy

Sub-Saharan Africa is an area that has historically had low access to formal financial services including banking, credit, and insurance. However, fintech is helping to change that.

Recent studies reveal promising investment trends in the African FinTech industry, showing that while the opportunities made possible by this technology have opened doors for many in the region, especially low-income households, users of fintech are utilizing the tool in increasingly sophisticated ways.

Internet money transfers offered by companies like Sikhona are examples of the ways that FinTech is helping to expand Africa’s economy.

Growing demand for financial services

The demand for money transfer services in South Africa and elsewhere will soon circumvent traditional banking institutions. This is especially true given that the continent’s population is still mostly unbanked or under-banked, despite the fact that Africa is the world’s second-fastest expanding payments and banking market.

It is important to note that the continent is already the leader in the adoption of mobile money transfer systems.

It is home to nearly half of the world’s registered mobile money customers, approximately 70 percent of global mobile money transactions, and two-thirds of the transaction volume in terms of value.

The future of financial services and internet money transfers in Africa

Evidence of the existing and future relevance of money transfer services in South Africa and across the continent is shown by the significant influx of funding raised by African fintech businesses.

Since 2016, this digital industry has seen a steady increase in growth in terms of both the number of transactions and the volume of financing.

Both in terms of finance and transactional metrics, fintech companies that specialize in digital payments dominate the landscape of fintech investment in sub-Saharan Africa. This is the case when looking at the types of services that are offered.

The widespread availability of mobile financial services is evidence that fintech has the potential to completely transform the financial inclusion landscape in sub-Saharan Africa.

To this point, demographic trends in the region, such as a sizeable population that is developing at a rapid rate, an expanding middle class, and a considerably underdeveloped financial services industry, signify the region’s growing need for digital financial technology to investors.

A climate for expansion

The rapid growth of Africa’s information and communications technology (ICT) sector, in particular

mobile phones, is sending a clear statement about the continent’s capacity for innovation.

Africa is presently recognized as the continent with the most rapid growth potential in the information and communications technology sector. Since the year 2000, the number of people using mobile phones has skyrocketed.

There are one billion people on the continent who have a mobile phone but do not have a bank account. Mobile banking is a strong approach to give savings services to these individuals.

It eliminates the geographical limitations that are imposed by traditional banking practices, which is just one of its many benefits; other benefits include the elimination of time delays, increased security, and improved efficiency.

There are opportunities for countries on the African continent to increase affordable and cost effective means of bringing on board the large numbers of population that has been excluded from formal financial services for decades due to the high growth and penetration rates of mobile telephony, which is transforming cell phones into banks in pockets in Africa.

This is providing opportunities for mobile telephony to transform cell phones into banks in pockets in Africa.

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Written by How South Africa

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