The Rise of Fintech Innovation and Evolving Regulatory Frameworks in Africa

Welcome to your September edition of the Africa Bulletin.

This month's bulletin focuses on the rise of Fintech innovation and the evolving regulatory frameworks in Africa by looking into the growth of this sector through legislation and how the Fintech sector can be supported across Africa. Fintechs are increasingly offering new value propositions and services in previously neglected sectors. As this push occurs, fintech and aspiring founders are seeking specific legal guidance on how to navigate the various regulations (which usually have insufficient precedent for their application) that would enable their businesses to scale up.

Across Africa, artificial intelligence (AI) has become important in our day-to-day lives. We take a look at its impact on advancing innovation and improving access to healthcare across the continent as it enables optimisation of resource allocation, allowing health systems to function more effectively and efficiently.?

Over the coming weeks, we invite you to join us, together with the Employment Law Alliance, as we discuss how post-pandemic changes have made employers and employees rethink the nature of employment. We will also focus on managing issues of privacy for employees and how far employers can go to protect information about their employees. Find out more from the events section later in the bulletin.

And as ever, we have selected news stories to help you navigate today's business world, providing a global perspective on the legal issues relevant to your industry.

Top Story

The Rise of Fintech Innovation and Evolving Regulatory Frameworks in Africa

Fintechs are increasingly offering new value propositions and services in previously neglected sectors. As this push occurs, fintech companies and aspiring founders are seeking specific legal guidance on how to navigate the various regulations (which usually have insufficient precedent for their application) that would enable their businesses to scale. Particularly, fintech companies are increasingly seeking regular updates and bespoke insights on regulatory developments and the corresponding impact on their businesses. Given the government’s focus on revenues, compliance (foreign technology, tax, data protection, AML/CFT, etc.) has become a big theme as entrepreneurs look to prevent sanctions and liabilities that may stall the growth of their companies...Read more

Africa | Continent to get USD 30 Billion Over the Next 3 Years. Japanese Prime Minister, Fumio Kishida, said that his country is pledging USD 30 billion of investment in Africa over the next over the next three years. Speaking...Read more.

Africa | AfCFTA to Supervise First Trading Activity. Without any unexpected hitches, the Ghana National Coordinating Office of the African Continental Free Trade Area will from October this year pilot a guided...Read more.

East Africa | EAC Services Exports Hit USD 12.9 Billion. The East African Community exported services worth USD 12.9 billion in 2019 against USD 933.6 billion worth of imports. The outbreak of Covid-19 and its...Read more.

Algeria | Foreign Trade Surplus Expected to Exceed USD 17 Billion. Algeria expects its foreign trade surplus to exceed USD 17 billion by the end of the year and for exports of non-oil products to reach USD 7 billion. Prime Minister Ayman...Read more.

Morocco | Country Among Key African Markets for Fintech Growth. Morocco is on a list of 11 African countries with significant potential to become future fintech hubs, according to the American consultancy group Mckinsey &...Read more.

Ethiopia | 7 Trillion Cubic Feet of Gas Certified. An American-based petroleum property analysis and consulting firm, Netherland, Swell & Associates, verified the existence of of 7 trillion cubic feet of natural gas in...Read more.

Nigeria | Banks Attract USD 15.8 Billion Foreign Capital Flow in Five Years. From 2017 till the end of last year, Nigeria’s banking sector received a total of USD 15.83 billion in foreign capital, a telling reflection of the sector’s attraction to...Read more.

South Africa | African Development Bank Offers South Africa Financing Deal to Raise USD 41 Billion. AfDB has suggested a plan to South Africa that will help the nation use the USD 8.5 in climate financing pledged by some of the world’s...Read more.

Reports

Bain & Company | Technology Report 2022

In the last decade, technology companies like Airbnb, Snowflake, Stripe, and Crowdstrike led a wave of disruption that reordered established industries and invented whole new ones.

Along the way, they created astonishing value. In June, the number of private billion-dollar start-ups exceeded 1,100, according to data from CB Insights, a more than tripling in five years of these once-rare unicorns. As a group, they reached a value of roughly USD 4 trillion to USD 5 trillion before the recent market correction, according to CB Insights and Crunchbase. This explosion has been backed by a new wave of growth equity investors.

While many traditional venture capitalists narrowed their focus to early-stage companies that have not yet achieved product market fit, the funding of a new class of investors pioneering a different model of investment grew significantly. Download the report.

UNCTAD | World Investment Report

Global flows of foreign direct investment recovered to pre-pandemic levels last year, reaching USD 1.6 trillion. Cross-border deals and international project finance were particularly strong, encouraged by loose financing conditions and infrastructure stimulus. However, the recovery of greenfield investment in the industry remains fragile, especially in developing countries. This fragile growth of real productive investment is likely to persist in 2022. The fallout of the war in Ukraine with the triple food, fuel and finance crises, along with the ongoing COVID-19 pandemic and climate disruption, are adding stresses, particularly in developing countries.

Global growth estimates for the year are already down by a full percentage point. There is significant risk that the momentum for recovery in international investment will stall prematurely, hampering efforts to boost finance for sustainable development. Download the report.

UNCTAD | Economic Development in Africa Report 2022

The diversification of African economies is the most viable means by which these countries can prosper in the global economy and address vulnerabilities and economic uncertainties. For Africa to realise the promise of the African Continental Free Trade Area, though, economic diversification and structural transformation must pass through strong headwinds. Africa has the highest concentration of exports, compared with other world regions, and the second lowest number of exported products after Oceania.

At the same time, trade in services on the continent is both low and heavily dominated by traditional services, whereas high knowledge-intensive services and technology-enabling services have the potential to boost innovation and drive diversification. In the Economic Development in Africa Report 2022: Rethinking the Foundations of Export Diversification in Africa – The Catalytic Role of Business and Financial Services, policy-oriented actions are proposed to help Africa leverage trade in services to diversify economic activities into new and potentially transformative sectors. Download the report.