Your Curated Weekly Tech News Across Africa, May 16, 2024

This week, I'm writing from Accra, Ghana, where I attended the 3i Africa Summit

Tanzania's Central Bank has taken a decisive step by banning unlicensed digital lenders from operating within the country. This move comes as a response to growing concerns over predatory lending practices that have become prevalent among these unregistered platforms. Many of these digital lenders have been criticized for using debt-shaming tactics and imposing exorbitant interest rates on borrowers. Such practices have raised alarms about these lenders' ethical standards and regulatory compliance, prompting the central bank to act to protect consumers.

The ban impacts over 100 unregistered digital lending apps that have become popular among Tanzanians, particularly those who lack regular income or access to traditional financial institutions. These apps have provided instant loans to about 30% of adult mobile phone users, filling a significant gap in the financial market. However, the lack of regulation and oversight has allowed abusive practices to flourish, undermining many borrowers' financial stability and personal dignity.

The central bank now mandates that all licensed digital lending platforms must provide clear and signed loan agreements to address these issues. These agreements must comprehensively detail the terms and conditions of the loans, including the total fees, interest rates, and any rollover fees applicable for late payments. This measure aims to ensure transparency and fairness in lending, thereby safeguarding borrowers from hidden costs and unscrupulous practices.

Tanzania's actions mirror those of neighboring Kenya, which recently banned over 100 unlicensed digital credit providers. This regional trend underscores a broader effort to bring digital lending under regulatory frameworks, ensuring that financial innovation does not come at the cost of consumer protection. By enforcing these regulations, Tanzania's Central Bank hopes to foster a more ethical and transparent digital lending environment, ultimately contributing to the stability and integrity of the country's financial system.

More on this story: Tanzania Central Bank moves to curb Digital Lenders

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Ghana is actively leveraging financial technology to enhance the growth of its small and medium-sized enterprises (SMEs), which are pivotal to the nation's economic development, contributing a substantial 70% to its GDP. The fintech industry in Ghana has seen significant expansion since MTN Group Ltd. introduced mobile money transfers 14 years ago. This innovation has revolutionized financial access by allowing mobile users to secure bank loans, insurance policies, and government bonds without needing traditional bank accounts. Currently, the Ministry of Finance is in the process of finalizing a comprehensive financing strategy. This plan includes direct lending to SMEs, providing guarantees for financial institutions, reducing borrowing costs, and fostering skills and innovation within the SME ecosystem by integrating fintech solutions.

Ghana has secured a $200 million loan from the Ecowas Bank for Investment and Development to further support small businesses. This substantial funding is expected to significantly boost the growth of SMEs. The impact of mobile money transactions in Ghana has been profound, with a remarkable 79% increase in 2023, bringing the total transactions to 1.9 trillion cedis ($135.2 billion). Fintech holds immense potential in Africa, particularly by enhancing financial inclusion. By focusing on this aspect, fintech can transform the economic landscape and drive sustainable growth in Ghana and across the continent.

More on this story: Ghana moves to spur growth in SMEs using FinTech

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FinTech Egypt, an ambitious initiative spearheaded by the Central Bank of Egypt (CBE), has taken a significant step towards integrating financial technology into higher education. This effort involves incorporating the "Fundamentals of FinTech" course into the curricula of various universities. This educational enhancement is a part of the broader "FinYology" project, aligned with the CBE's comprehensive fintech and innovation strategy. The initiative has garnered impressive engagement, involving participation from 18 banks and over 25 public and private universities nationwide. Remarkably, nearly 7,000 students have submitted more than 500 fintech-related university projects, reflecting a vibrant interest and a robust pipeline of innovative ideas from the academic community.

The program aims to equip students and recent graduates with the essential skills required for the modern workforce, fostering the development of projects that can significantly contribute to the economy. The curriculum for the "Fundamentals of FinTech" course was developed in collaboration with The London Institute of Banking & Finance (LIBF), ensuring that the educational content is highly quality and relevant to current industry standards. Through these efforts, FinTech Egypt is enhancing educational offerings and laying the groundwork for a more innovative and economically resilient future for Egypt and Africa.?

More on this story: Egypt moves to integrate FinTech into education through the Fintech Egypt initiative

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Safaricom PLC, Kenya's Telcom and Fintech Giant, announced robust financial results for the fiscal year 2024, attributing much of its success to the remarkable performance of its M-Pesa mobile money platform. Despite encountering setbacks in its Ethiopian operations, Safaricom achieved a notable 20.4% increase in profits, totaling Ksh 139.9 Billion. Demonstrating resilience amidst challenges, the company's earnings before interest and taxation (EBIT) also experienced a positive growth trajectory, ascending by 3.5% to Ksh 94.9 Billion. Service revenue across Safaricom's diverse portfolio witnessed a substantial uptick of 13.4%, culminating at Ksh 335.4 Billion.?

M-Pesa emerged as a significant revenue driver, contributing a substantial 42% to Safaricom's service revenue, equivalent to Ksh 139.9 Billion, marking an impressive 19.4% growth. Encouraged by these outcomes, Safaricom remains sanguine about its future prospects in the region, maintaining a strong operational presence with 2806 network sites and a robust customer base of 4.4 million active users. The board is poised to recommend a final dividend of 65 cents per ordinary share, amounting to KES 48.08 billion, underscoring its commitment to shareholder value creation.

Safaricom Plc, a telecommunications juggernaut deeply rooted in Kenya's digital landscape, has unveiled its financial performance for the entirety of the fiscal year 2024, spotlighting the pivotal role played by its revolutionary M-Pesa mobile money platform. Despite encountering turbulence in its endeavors in Ethiopia, Safaricom showcased commendable resilience, notching up a remarkable 20.4% surge in profits, translating to an impressive Ksh 139.9 Billion. Bolstering this achievement, the company's earnings before interest and taxation (EBIT) witnessed a steady ascent, registering a 3.5% growth to reach Ksh 94.9 Billion. The company's overall service revenue displayed robust growth, escalating by 13.4% to stand at Ksh 335.4 Billion, with M-Pesa emerging as the standout performer, contributing a substantial 42% to Safaricom's service revenue, amounting to Ksh 139.9 Billion, reflecting a noteworthy 19.4% growth.?

Maintaining a buoyant outlook for the future, Safaricom continues to exhibit strong operational resilience. It boasts a formidable network comprising 2806 sites and an expansive customer base of 4.4 million active users. In a bid to reward its stakeholders, the board is set to propose a final dividend of 65 cents per ordinary share, translating to KES 48.08 billion, underscoring its unwavering commitment to delivering value to its shareholders.

More on this story: Safaricom solidifies its leadership in Telcom and FinTech

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In Nigeria, the army of 1.9 million point-of-sale (POS) agents plays a crucial role in the country's ongoing financial inclusion initiative, bringing banking services to even the most remote areas. However, there are concerns about transparency and fraud in the sector. To address these issues, the Corporate Affairs Commission (CAC) has mandated the registration of these agents. Fintech companies such as Moniepoint Group, OPay, and PalmPay are leading the way in expanding their reach and offerings using technology. However, incidents of fraud involving POS terminals have been on the rise, accounting for 26.37% of fraud cases in 2023. This highlights the need for regulatory intervention.

As a result, regulatory bodies like the Central Bank of Nigeria(CBN) are taking proactive measures to safeguard the financial system's integrity. The CBN is collaborating closely with industry stakeholders like the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN) to strengthen the security infrastructure of POS terminals. One of the initiatives involves developing a new feature that can flag potentially fraudulent transactions in real time, providing enhanced protection for agents and consumers. By promoting greater collaboration between regulatory authorities, financial institutions, and technology providers, Nigeria aims to navigate the challenges of digital finance with resilience and integrity. The country's financial inclusion agenda will continue to advance while mitigating risks and vulnerabilities.

More on this story: Nigeria's POS army drives financial inclusion initiatives

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