Africa has long grappled with the challenge of financial exclusion, leaving millions marginalised from accessing basic banking and insurance products.  14 million households and individuals are pushed into poverty every year due to out-of-pocket health expenditures or catastrophic health expenses from a lack of health insurance, especially during emergencies. Africans also spend over a tenth of their earnings on healthcare payments every year. These occurrences, while not directly stemming from financial exclusion, deepen the financial divide and compound the challenge.

Insurance, a safety net against risks and a tool to increase financial resiliency remain underutilised on the continent. In most African markets, insurance penetration is below the two per cent mark. Accessing insurance has been daunting for many Africans due to factors such as high premiums, complex policies, and limited accessibility, especially for the informal sector. 

From unpredictable market fluctuations and natural disasters to personal accidents and health emergencies, the absence of insurance leaves millions exposed to financial ruin at the slightest of setbacks. For those operating on razor-thin profit margins, the impact of such risks can be devastating, pushing families into poverty and stifling economic growth.

In light of this, embedded insurance has emerged as the key to addressing this vulnerability by integrating insurance seamlessly into the financial transactions and activities of the informal market.

Embedding insurance within lending products, savings schemes, and payment platforms tailored to the needs of the informal sector, enables individuals and businesses to gain access to a safety net that protects against a range of risks. 

Whether it be crop insurance for smallholder farmers, micro-health insurance for street vendors, or asset protection for artisans, embedded insurance offers tailored solutions that cater to the unique needs of the informal market. “Africa is not lacking in insurance, they are not just focused on the informal market,” said Ted Pantone, CEO of Turaco, at a recent edition of TechCabal Live in partnership with Turaco and One Acre Fund on Friday, February 23, 2024.

Another significant contribution of embedded insurance is its ability to mitigate risks for both lenders and borrowers. In Africa, economic volatility is prevalent, lenders often face uncertainty in extending credit to underserved populations. Embedded insurance offers a solution by providing lenders, microfinance institutions, and asset-based financing companies with a safety net against default risks, thereby encouraging them to offer loans to individuals and businesses who were previously deemed too risky. This not only expands access to credit but also empowers entrepreneurs and small businesses to invest in their futures, fostering economic growth and stability.

Moreover, embedded insurance enhances the resilience of borrowers by protecting them against unforeseen events that could derail their financial progress. Whether it be crop failure for farmers, illness for individuals, or accidents for entrepreneurs, these unexpected challenges can push vulnerable populations deeper into poverty. However, with embedded insurance, borrowers have a shield against such adversities, ensuring they can weather financial storms without falling into a cycle of debt or destitution. A point emphasised by Hephzibah Chepng’eno, Product Strategy Director, One Acre Fund. “Having affordable insurance is a path to building resilience, growing assets, and improving the financial ability of customers to repay loans.”

Furthermore, embedded insurance fosters financial literacy and inclusion by simplifying the insurance process and promoting greater awareness among borrowers. By embedding insurance seamlessly into lending platforms, borrowers are exposed to insurance products and their benefits, demystifying the often-complex world of insurance. This not only encourages uptake but also equips individuals with the knowledge and tools to make informed financial decisions, empowering them to protect themselves and their families against risks. Borrowers no longer have to deal with the complex process of dealing directly with insurance companies. 

“Insurance languages are mostly complicated and complex for the layman to understand. People need to understand how insurance works easily,” said Pantone on the improvement of financial services accessibility as a result of embedded insurance.

Prominent innovators have taken on the task of comprehending the financial challenges and creating resilience for the informal market as we see in the case of embedded insurance and lending solutions for farmers in East Africa. However, for embedded insurance in lending to flourish in Africa, there is a need for concerted efforts from various stakeholders to create an enabling regulatory environment that fosters innovation while safeguarding consumers’ interests.

This article is part of the TechCabal Live series brought to you by TechCabal in partnership with Turaco and One Acre Fund. Turaco seeks to provide inclusive insurance solutions for emerging markets while One Acre Fund supplies smallholder farmers with everything they need to grow their way out of poverty. 

At first glance, Africa’s B2B payments sector looks like a saturated market. Many high-profile companies have emerged over the years to process payments on behalf of global merchants. Yet, despite its rapid growth in recent years, Africa’s payments sector is barely scratching the surface. 

Africa’s payment landscape is diverse and multifaceted, marked by the lack of widespread card penetration and the preference for localised payment methods over traditional credit or debit cards. The continent has the lowest credit card penetration in the world (3%). This makes the reliance on cash a persistent challenge to the growth of digital payments in Africa.

The fragmentation and diversity of Africa’s payment sector, diverse payment preferences, and varying technological infrastructures across different regions are all challenges the sector is still plagued with and act as deterrents for global merchants to accept local payment methods. 

The mix of payment methods varies from country to country. For instance, in Nigeria, account-based transfers and debit cards prevail. In Kenya and Ghana, where there’s lower bank penetration, mobile money reigns, and in South Africa, cards are more popular.  

With the low credit and debit card penetration, and the regulatory barriers of payments across the continent, alternative payment methods (APMs) are filling the financial inclusion gaps, catering to the diverse needs and preferences of its population spread across 54 countries. Many African consumers now prefer to transact through various alternative payment modes, such as mobile money, bank transfers, digital wallets, and cash-based systems because of the ease of making payments without the hurdles of traditional digital banking systems. Africa now accounts for nearly 70% of the volume and more than half of mobile money users worldwide. 

At a recent edition of TechCabal Live in partnership with EBANX on Friday, November 17 Juliana Etcheverry, Director Of Strategic Payment Partnerships & Market Expansion, EBANX noted that “The rise of the use of APMs is fueled by the instantaneousness of it. People want to be able to make instant payments and not have to jump through multiple hoops.” At the event, the untapped opportunities in Africa’s digital payment market, with a focus on the learnings from Latin America and the similarities in both regions were discussed.

The rise of APMs in Africa holds immense promise for the future of digital payments on the continent and its benefits are far-reaching. One of the most significant hurdles for international businesses entering African markets has been the challenge of adapting to local payment preferences across all countries.  These payment methods bridge the gap between global merchants and African consumers, fostering greater inclusivity and accessibility in the digital marketplace. Businesses can now effectively navigate this intricate landscape, offering consumers the flexibility to transact in ways that resonate with their habits and lifestyles.

Additionally, APMs empower small and medium-sized enterprises (SMEs) by providing them with efficient and cost-effective payment solutions, thereby fueling economic growth and entrepreneurship. 

APMs contribute significantly to financial inclusion, bringing previously unbanked populations into the formal financial ecosystem. This was reechoed by Wiza Jalakasi, Director, Africa Market Development, EBANX on TC Live. “APMs bridge the gap between the online and offline world, as people can now make digital payments through the use of vouchers, mobile money, etc,” he said.

Moreover, the evolution of alternative payment methods in Africa paves the way for innovation and adaptation. Companies that invest in understanding and integrating these payment methods position themselves at the forefront of innovation, gaining a competitive edge in an ever-evolving market. By aligning with local preferences, businesses can build trust, enhance customer loyalty, and establish sustainable, long-term relationships with African consumers.

By 2025, at least 70% of all online transactions across the continent are expected to be done with alternative payment methods, such as digital wallets, mobile money, and instant payments. The rapid rise of APMs in Africa points to one thing: these methods will power Africa’s digital economy.

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This article is part of the TechCabal Live series brought to you by TechCabal in partnership with EBANX. EBANX is a digital platform that leads in providing alternative payment methods like digital wallets, instant payments, mobile money, and vouchers. 

Whichever way we look at it, it is evident that the current economic reality is challenging with inflation soaring in emerging markets, especially Africa. In Nigeria, inflation is at 26.72%, and in Ghana, it’s at a whopping 40.1%, and even up to 63.30% in Sudan. The average annual inflation in Sub-Saharan Africa (SSA) in 2023 sits at 12.5%, making it the second highest in any other region of the world after the Middle East and North Africa region.

The escalating cost of living, caused by various factors, has left many grappling with eroded purchasing power. This has made saving for financial objectives more daunting than ever. The challenge has grown more pressing, necessitating innovative solutions to fortify the financial resilience of individuals and economies. 

In recent years, innovators have leveraged financial technology with its innovative tools, to help individuals to budget, save, and invest wisely, thereby mitigating the impact of inflation on their livelihood.

The proliferation of DeFi powered by blockchain technology offers an array of solutions to reshape the economic future of Africans. Innovations like blockchain technology offer transparency and security in financial transactions, reducing corruption and fraudulent practices that can exacerbate inflation. This not only reduces corruption and fraud but also instills confidence in financial processes, which is essential in combating inflation.

Additionally, the importance of inflation-resistant investments cannot be overstated when dealing with inflation.  DeFi solutions often feature stablecoins, which are digital currencies pegged to real-world assets or fiat currencies. These stablecoins can provide a reliable store of value through high fixed yields and are immune to inflation’s erosive effects. 

According to Seçkin Çağlın, co-founder of Cenoa, at a recent edition of TechCabal Live on October 27, “To fight inflation, you need to make sure your money grows faster than inflation so you don’t lose money,” 

The growth of peer-to-peer lending and transfer platforms enabled by DeFi also creates alternative sources of financing, and facilitates cross-border transactions with ease, reducing the risks associated with currency devaluation and fluctuations in exchange rates. This way, Africans can source for financing and also protect their wealth from the damaging effects of inflation by diversifying into other assets that can thrive even in inflationary environments. 

On lending and credit solutions provided by fintechs, Yasmine Mohamed Henna, co-founder of Sympl said, “When it comes to inflation, it is important for fintech not to overburden the people with credit that they cannot pay. The solutions must align with the reality of the country that is adversely affected by inflation.”

DeFi platforms offer the opportunity to explore a wide array of investment options, from yield farming to liquidity provision. These investments can be chosen strategically to counteract inflation’s impact.

However, despite the various solutions offered by fintech including decentralised finance and blockchain technology, there is still a knowledge and trust gap which presents a problem, leading to mistrust and resistance to change among potential and existing DeFi users. This also includes the regulatory bottlenecks that already exist. 

While there is still a lot of work to be done with regulation and education, the mistrust isn’t unfounded as the rise of cyberattacks on fintechs and the concerns about data protections are problems that need to be addressed to build reliability on fintechs.

On building trust, Emre Ertan, co-founder at Cenoa advised, “Fintechs need to be highly transparent to build trust among users. You need to give control back to the users so they are assured that they are using the right platform.”

Peter Onu, manager, remittance architecture and strategy at MTN Group Fintech, also mentioned that a good way to build trust is to provide people with what they need.

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This article is part of the TechCabal Live series brought to you by TechCabal in partnership with Cenoa. Cenoa is a borderless super wallet that improves access to dollar-based products

In Africa where physical infrastructure challenges hinder traditional retail, e-commerce has emerged as a powerful driver of economic development. Online marketplaces, from global giants to local startups, are expanding rapidly to cater to diverse consumer needs.

According to a report by the United Nations Conference on Trade and Development (UNCTAD), the e-commerce sector in Africa has witnessed exponential growth, with an annual expansion rate of 21.7% since 2000. This growth is projected to continue as recent statistics from Agusto & Co revealed that the continent’s e-commerce market could reach a value of $75 billion by 2025. 

At the heart of this transformation lies the rise of digital payment solutions, which have played a pivotal role in enabling and sustaining Africa’s e-commerce boom.

By offering mobile banking and microfinance services, online transactions have become seamless for consumers and businesses.

In spite of this growth, challenges still persist. E-commerce businesses in Africa often contend with complex and evolving regulatory environments. Regulations can vary from one country to another and may affect payment processing and cross-border transactions. 

Across different African countries, preferred payment methods vary significantly. For instance, while mobile money is widespread in East Africa, West Africa may have a stronger preference for card payments or cash-on-delivery. This variability can create challenges for e-commerce businesses looking to operate across multiple African markets. “Fragmented markets make it difficult for companies to thrive because the country-specific e-commerce landscape can make things difficult,” said Taiwo Adeeko,  global head of operations at Payaza Africa Limited at a recent TechCabal Live on Friday, October 8, 2023. 

Facilitating interoperability of digital payment systems and collaboration between fintechs, governments, and traditional banks is an important step in reconciling this challenge.

Complex or unreliable payment processes are a leading cause of cart abandonment in e-commerce as complicated checkout processes result in 18% of customers abandoning their carts. A seamless checkout and payment experience reduces friction in the purchase journey, increasing the likelihood of customers completing their transactions. Optimising the checkout process converts potential customers into satisfied and loyal buyers in the e-commerce industry.

Additionally, infrastructure and connectivity issues still hinder access in some regions, which in turn hamper the ability to process online payments smoothly. Slow or unreliable internet connections can result in transaction failures or lead to a frustrating user experience. In a continent with a 66% unbanked population, there should be more payment infrastructure across the continent that doesn’t require the processes of a traditional bank account as advised by Felix Manford, CEO and co-founder, Tendo.

The synergy of services like mobile money and mobile wallet services provided by Payaza and the likes has become instrumental in providing a secure and efficient way to store and transfer money. This has allowed a vast number of previously unbanked individuals to participate in e-commerce transactions.

Trust is paramount in e-commerce. Shoppers need to be confident that their payment information is secure as potential customers are often hesitant to make online payments due to concerns about the authenticity of sellers, product quality, and delivery reliability. “In terms of establishing trust, there has to be an inherent desire to understand customer points with payments,” said Evelyn Wangari, director, financial services East Africa, Copia Global. A seamless payment experience, backed by robust security measures, bolsters trust and encourages more people to shop online.

The e-commerce success story in Africa is inextricably linked to the ability to create a secure, efficient, and accessible payment ecosystem.  As Evelyn Wangari said, “Payment fuels the e-commerce engine which then leads to embedding financial services. The opportunity for convergence is now.”

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This article is part of the TechCabal Live series brought to you by TechCabal in partnership with Payaza. Payaza is a payment service provider that enables online and offline businesses/merchants to process payments and transactions across Africa.

Africa’s financial landscape is evolving with the advent of data and digitisation. The proliferation of smartphones and internet connectivity has led to a digital revolution across diverse sectors. For people and businesses, the convergence of finance and technology has deepened financial inclusion on the continent. This rise in financial transaction volume underscores the need for digital identification to help businesses conduct know-your-customer (KYC) checks and safeguard against fraud.

Additionally, fraudsters often attempt to use counterfeit or stolen national IDs to gain unauthorized access to regulated financial services. This prompted the widespread adoption of biometrics for robust identity verification as relying solely on document collection for a comprehensive KYC process is no longer sufficient.

Consolidation of national identity databases and identification cards has taken the forefront for governments across the continent as government services become digitised. 

According to the Smile Identity H1 KYC report, there has been a noteworthy enhancement in the uptime of national ID databases across Africa this year, compared to the latter half of 2022. 

Digital identity has become essential for accessing crucial government services like social welfare programs and tax payments, and they are fundamental prerequisites for obtaining functional IDs such as passports or driver’s licenses.

The significant thing about digital ID Verification in Nigeria is that you can now verify anyone’s identity across the country,” said Esigie Aguele, co-founder and CEO VerifyMe Nigeria at the 8th edition of the Inside Identity Series by QoreID, in partnership with TechCabal, on Friday, September 15. Despite this considerable improvement, it is important to acknowledge that safeguarding individual sovereignty over data and personal identities has become non-negotiable as we for digital transformation and financial inclusion. The narratives of privacy breaches and data misuse underscore the need for stringent regulations, ethical practices, and informed consent mechanisms that prioritise the rights and privacy of every individual.  

Countries like Kenya, Nigeria, and South Africa have enacted data protection laws influenced by the EU’s General Data Protection Regulation (GDPR) to protect user data, ensure transparency, and hold businesses accountable for data handling practices. There has also been the consolidation of existing laws by several other countries in Africa to strengthen their data protection legal and regulatory framework.

However, Africa’s fragmented regulatory landscape remains a problem that requires a harmonised approach that respects the sovereignty of each nation while promoting regional collaboration. Striking this balance requires active participation and dialogue among stakeholders: governments, financial institutions, technology providers, and, most importantly, the people whose lives will be impacted by these advancements. 

According to  Saruni Maina, associate VP of Stablecoins segment at Flutterwave, “When it comes to regulations regarding compliance and data sharing, Africa needs to operate like a country to integrate data protection requirements or laws that are region-wide.” 

Striking a harmonious balance involves crafting policies that acknowledge the unique identities and circumstances within Africa while fostering cross-border collaboration to enhance financial inclusivity. 

Another critical aspect of this dialogue involves fostering digital literacy and educating individuals about the value and potential risks associated with sharing their data. Informed citizens are empowered citizens, capable of making conscious decisions about their data and its usage. 

Additionally, transparency in data practices and easy-to-understand consent mechanisms are essential to build trust between all stakeholders.

Transparency plays a pivotal role in building trust and encouraging active participation from the public. People need to understand the advantages of sharing their data and engaging in robust ID verification processes. Ensuring comprehension, along with easy-to-understand consent procedures, empowers individuals to make informed decisions about their data sharing and identity verification. Data protection expert Ilamosi Ekenimoh, believes: “There needs to be more transparency by companies and regulators. People need to know what you’re using their data for, to trust you with their information.”
The importance of a secure and reliable digital identity system cannot be overstated in an increasingly digitised world. However, there is also an equal need to balance these innovations with safeguarding data and privacy. Esigie recommends that the government needs to have non-technological discussions to provide structure for innovators to build technology on.

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This article is part of the Inside Identity Series brought to you by TechCabal in partnership with QoreID. QoreID is a dedicated digital identity and analytics solution for B2B.

Across the globe, artificial intelligence (AI) has emerged as a transformative force that extends beyond the boundaries of the tech ecosystem, attracting attention and generating buzz.

In  Africa, entrepreneurs, researchers, and organizations are beginning to harness the power of AI to tackle unique challenges and drive impactful change. From healthcare to agriculture, education to finance,  the continent is witnessing the influence of AI across diverse sectors, fostering sustainable development and empowering communities.

“AI can help people flourish, and promote social cohesion and prosperity. It can also help people to suffer and stress less,” said Favour Borokokini, PhD student at Horizon CDTat the first edition of moonshot conversations by TechCabal.

However, to fully unleash the potential of AI in Africa, a comprehensive strategy is required that addresses unique challenges and ensures inclusivity at every step. A coherent long-term vision and plan for the use of the technology as well as policies that balances out the risks of these technologies is important in ensuring that these machine learning models are equitable, inclusive, and valuable.

What is a starting point for building AI infrastructure for Africa?

An important step towards developing an effective roadmap for AI in Africa is addressing the data problem on the continent. In an era where data fuels the advancement of artificial intelligence (AI) and machine learning (ML), Africa faces a unique challenge: the scarcity and quality of data. The continent’s diverse and dynamic contexts, coupled with limited data availability, pose obstacles to the development and deployment of AI-driven solutions tailored to Africa’s specific needs. Investing in data collection and tailoring ML algorithms to local contexts will lead to more accurate predictions, targeted interventions, and improved decision-making across sectors. 

As AI continues to advance, it raises important ethical questions about the use of personal data and the potential for bias in AI systems. Although we’ve seen far-reaching legislations like the AI Act by Europe and efforts of The African Union Development Agency (AUDA-NEPAD) on The African Union Artificial Intelligence Continental Strategy for Africa, It is clear that there is a growing concern for regulations on the development and use of AI to bolster the responsible development and deployment of AI in Africa.

There is also a place for legislation that ensures reskilling and retraining programmes to ensure social and economic equality. New technologies always cause disruption and can cause loss of livelihood. “How do we ensure that we are reskilling people who lose their jobs?” asked Favour Borokini.

Lastly, building AI awareness through education initiatives about AI’s capabilities, benefits, and limitations will foster a culture of AI literacy at the business and consumer levels.  AI education and training programmes must be incorporated into school curriculums and the workforce. “A normal front desk officer should be able to understand what AI is about,”  as explained by Oluwabunmi Borokinni, programmes lead at Immersive Tech Africa, said.

Like Tawanda Ewing said, “AI is more of an augmentation than a replacement for jobs.” With AI, we have an opportunity to leapfrog progress and harness technology for sustainable development to shape the future of the continent. By nurturing talent, fostering collaboration, and scaling impactful initiatives, Africa is poised to be at the forefront of AI innovation, shaping a brighter future for its people and leaving an indelible mark on the global AI landscape.
Moonshot by TechCabal will convene the most audacious players—founders, business leaders, startups, enterprise companies—building Africa’s dynamic tech scene to network, collaborate, share ideas/insights, and celebrate innovation on the continent. To join the waitlist, click here.

In the fast-growing world of fintech, effectively managing fraud poses a critical challenge for startups. In fact, according to a report by the World Economic Forum, the global cost of cybercrime is expected to reach $10.5 trillion by 2025. In Africa, the financial sector is the most targeted by cybercriminals, accounting for 60% of all attacks and resulting in losses estimated at $4 billion every year, per a  report by IDC.  

Per 2023 Africa Financial Industry Barometer, developed in partnership with the Africa Financial Industry Summit and Deloitte, 97% of surveyed executives at top financial institutions in Africa consider cybercrime a significant threat. While maintaining a seamless user experience is essential for growth, many fintech startups struggle to implement fraud control measures without hindering their customers’ satisfaction. Fintechs are particularly vulnerable to fraud, as they are often new and have not yet developed the robust security measures that larger financial institutions have.

Fintechs and other financial institutions need to invest in building robust security measures into their products. They need measures aimed at combating hacking and other security threats, as well as regular security updates.

“The importance of continually updating technology to effectively monitor and assess fraud is essential, as it suggests that partnering with digital KYC providers can assist fintech companies in mitigating fraud effectively,” said Daniel Ade-Ojo, a fraud intelligence specialist at Moniepoint during the latest edition of Inside Identity—a virtual event series by QoreID, in partnership with TechCabal. He emphasized the need for fintech companies to establish a robust security system by leveraging standardized and advanced programs.

In 2022 alone, there were over 100 million cases of identity theft in Africa, resulting in losses of over $10 billion. Esigie Aguele, the co-founder and CEO of VerifyMe Nigeria, shed light on the prevalence of identity fraud in Africa and the necessity of building up-to-date technologies to counter this issue. “Collaborating with KYC specialists instead of developing in-house KYC products to effectively combat identity fraud is important,” he said.

Similarly, Henry Ayisi Mensah, the district police commander in Oyibi, Eastern Region, Ghana, emphasized the significance of cross-checking for duplicate documents during customer applications. He stressed the importance of collaborating with specialized KYC service providers to effectively mitigate financial fraud.

However, there is also a place for prioritizing regulators when investigating fraud, such as compliance, transparency, and integrity. Stanley Jacobs, VP of the Fintech Association of Nigeria, emphasized effective communication and accountability for fintech companies as they grow, and as the risk of fraud and cyber-attacks increases. He highlighted the need for behavioral monitoring, blacklisting management, and comprehensive KYC and customer identification practices to identify and prevent the infiltration of new malicious applications during account opening.

Partnering with KYC providers that have the expertise can help fintech companies mitigate fraud and verify the identity of customers to help prevent fraudulent transactions. Anthony Onyangbo, the head of global credit at Lipa Later, affirms this position by proposing the outsourcing of KYC processes to specialized service providers as a viable approach for fintech companies to counter financial fraud.

The importance of a collaborative approach and robust security measures to safeguard the fintech industry cannot be overemphasized. Fintech companies and financial institutions should prioritize adopting an end-to-end fraud strategy. This strategy should be seamlessly integrated into their products to provide a smooth customer experience, while also implementing identity controls, fraud reduction measures, and customer protection.

Inside Identity aims to foster knowledge-sharing and collaboration within the fintech and KYC industries by encouraging discussions on proactive security measures, collaboration with KYC specialists, and staying abreast of technological advancements. 

2023 began with a lot of skepticism about funding in the startup ecosystem. The impact of macroeconomic factors, denominated by the political instability—foreign and domestic—in 2022 dampened the optimistic outlook for 2023. Global tech firms, some of whom are stakeholders in African tech began to lay off workers, in a bid to prune down overhead and remain in the green zone.

However, Q1 2023 has not been as bad as feared. Despite the downturn in funding and acquisitions, the continent saw its biggest acquisition of all time as Tunisian AI startup, Instadeep, was acquired by  German biotech firm, BioNtech, in a deal worth $682 million. African fintechs also received $590 million in VC funding from investors, which is 69% of the total amount raised by startups in Q1 2023. It is 130% higher than the total funding raised in the sector within the same period in 2022. MNT Halan’s $400m raise played a significant role in the sector, maintaining its position as investors’ most preferred. 

Additionally, we also saw the increased adoption and advancement of AI solutions to tackle numerous problems, with ChatGPT taking centre stage globally, and BioNTech going beyond partnerships to acquire Instadeep. African startups are now increasingly innovating and finding applications for AI technologies in e-commerce, media/journalism, finance/central banking, health, agriculture, data privacy/ID verification, governance, and education. These applications will shape how we work in the future, and projections are that AI could expand the African economy by $1.5 trillion by 2030.  “There is no industry that AI will not disrupt”, said Fatima Tambajang, Africa Head of Developer Relations, Startups & VC at Nvidia during a special edition of TechCabal Live held on Friday, May 5th 2023 for the launch of the Q1 2023 State of Tech in Africa report. In 2022, debt deals rose to prominence as the preferred asset class for startup founders. As of the end of March 2023, there were 11 debt deals – a 175% increase from the same quarter in 2022. With the current economic downturn across the continent, equity investments will become expensive in the long run for startups to scale sustainably while limiting dilution from equity rounds. On debt deals, Opeyemi Awoyemi, Managing Partner at Venture Studio thinks that although debt deals are not suitable for all startups, it is more sustainable than venture capital funding and they unlock a lot of opportunities for not just startups but for retail users. Lenders have stricter criteria for lending money beyond vision and traction and what this means is that startups would have to pay more attention to the value they are bringing.

On the regulatory side, we’ve witnessed a few major policy announcements from various African countries with Nigeria being the first country to adopt open banking regulations on March 7, 2023, to encourage innovation in the banking industry and provide rules for how banks and third-party financial institutions will use customer data. There was also Nigeria’s demonetization policy which led to a serious cash crunch in the first three months of 2023. Startup regulations, when done right, have the capability to attract investors who support innovation and create jobs—effectively injecting money into the economy. Good tech regulations involve continuous iteration, especially in tech’s fast-moving world, and to do this governments need to develop a better understanding of tech trends. This is why a clear line of communication between the regulated and regulators is important. There is also a role for startups to play in ensuring that all KYC and regulatory compliance processes are followed duly. According to  Mathias Léopoldie, Co-founder at Julaya, companies need to continue to learn how to navigate regulations. 

Africa is witnessing a steady increase in the adoption and use of technology, with innovative startups and established tech companies driving growth in various sectors. While there are still challenges to be addressed, experts believe that the industry still has a lot of potential and will continue to grow. “There is still more hope than despair and this year still holds a lot of promises for companies that are delivering value for their customers and community, ” said Ayoyemi.To get valuable insights into the state of tech in Africa in Q1 2023, download the report here.

Innovation in the African fintech sector has been largely centered around payment solutions, with payment-focused startups accounting for 54.5% of all fintech startups on the continent, as of 2022, according to a report by Disrupt Africa. In 2022, African fintech startups raised a record-breaking $1.5 billion in funding, with payment solutions receiving the largest share of investment. However, it is essential to innovate to solve problems in other sub-sectors that need attention and growth opportunities.

A report by the World Bank also highlights the need for fintech solutions beyond payments to provide access to credit and other financial products to the 66% of sub-Saharan Africans who do not have access to formal financial services.

During the latest edition of TechCabal Live, “Beyond Payments: What’s the next big thing in African Fintech?”, a panel of industry experts explored the potential for growth and innovation in other verticals beyond payments solutions. The panelists discussed the state of fintech in Africa and the role it plays in promoting financial inclusion across the continent. They also highlighted the challenges that innovators face in developing new fintech solutions, such as regulatory barriers and the need for a robust infrastructure.

On exploring untapped opportunities within the fintech sector in Africa,  Daniel Adereti, COO at Pezesha said, “One of the biggest challenges is accessing credit.”   “The opportunity for innovation is in finding ways to create an ecosystem where credit can be accessed easily and securely,” he said. 

Also, the importance of collaboration between fintech companies and traditional financial institutions to deepen financial inclusion cannot be overemphasised.  As  Ibukun Akinnawo, International Expansion Lead at Smile Identity said, “Collaboration is key in driving growth in the payments and other sub-sectors with shared databases and the use of AI to strengthen fraud detection systems.”

As the African fintech industry continues to grow and evolve, it is important to recognize importance of building fintech solutions that are tailored to local needs and behaviors. Sub sectors like embedded finance for instance, enables the shift from time-consuming bank transfers to the use of financial services or tools by a non-financial provider. “Embedded finance is interesting, new and productive, for reasons that make capital have impact on emerging markets. I believe this,” said Wesley Billett, co-founder and co-CEO at Happy Pay. 

By leveraging innovative technologies and alternative distribution channels, fintech companies can help to democratize access to financial services and promote financial inclusion across the continent.

Conclusively, there is potential for growth and innovation in other fintech verticals such as credit analytics, wealth management, and new payment solutions. With the right regulatory framework, access to capital, and support from governments and investors, the African fintech industry has the potential to become a global leader in innovation and entrepreneurship.

Complementing this trend is the wave of mass emigration of Africans to other parts of the world in search of better opportunities and a better quality of life. The International Monetary Fund (IMF) predicted in a 2016 report that “migrants [from sub-Saharan Africa] could increase from about 7 million in 2013 to about 34 million by 2050”, adding that “the migration of young and educated workers takes a large toll on a region whose human capital is already scarce”.

These trends have posed the need for companies to rethink the hiring and retention of top talents. Hiring top talents is crucial for organisations as these employees bring with them a wealth of experience, skills, and knowledge that can help drive the business forward. According to a study by Deloitte, organisations that excel at recruiting top talents are 3.5 times more likely to outperform their competitors. Additionally, the study found that top talents can generate up to eight times the productivity of an average employee.

Retaining top talents is equally important as losing them can have severe consequences for organisations. The cost of losing top talent can range from 90% to 200% of their annual salary, according to a study by the Centre for American Progress. Moreover, losing top talents can lead to a loss of organisational knowledge, decreased productivity, and a negative impact on team morale. 

“When it comes to hiring top talents, the first question to ask is, what do top talents want? If you can give them what they want, you’re definitely going to attract them,” said Diseye Ami Naasin, happiness engineering lead at Eden Life, during an edition of TechCabal Live on Friday, March 31, 2023. She further explained that offering competitive compensation and benefits packages are one of the sure ways to attract top talents: A study by Glassdoor found that 67% of job seekers consider salary and compensation packages the most critical factor when considering a job offer. This is because top talents want the quality of their lives to be significantly improved by virtue of where they work, and this can be achieved through the provision of various benefits that help to better their individual lives.

Another way to retain talent is through flexibility and various paid-time-off (PTO) offerings. Top talents want work arrangements that allow room for flexibility. Also, PTO offerings should not be limited to the typical leave structure set by the law. Employers should be able to provide different paid-time-off offerings that cater to different circumstances in an employee’s life, apart from maternity, marriage, etc. Companies should trust that top talents will always be at the peak of their productivity and they take as much time as they need to rest and everybody wins.

Creating a culture of employee engagement and satisfaction can be ensured by paying attention to the different needs of employees. Yewande Jinadu, head, people and culture, Traction Apps mentioned that “What the Baby Boomers want is different from what the Gen Zs want, and what the Millennials want. You just can’t assume for people. Be intentional about providing the benefits that are tailored to the different needs of people.”

Furthermore, providing opportunities for growth and development helps to create clarity in terms of career progression for employees. Top talents are often ambitious and seek opportunities for growth and development. African companies can retain top talents by providing them with opportunities for training, career development, and mentorship.

Finally, fostering a positive work culture that embraces diversity and inclusion is essential for attracting and retaining top talents. Companies must create a work environment that promotes teamwork, open communication, and employee engagement. A study by McKinsey found that companies with diverse workforces are 33% more likely to outperform their competitors. 

In conclusion, the importance of hiring and retaining top talent in the face of Africa’s talent migration and layoff trends cannot be overstated. By creating an environment that fosters growth, development, and employee engagement, organizations can retain their top performers and compete at a global level.