Twenty years ago, when Mitchell Elegbe founded fintech firm Interswitch in Nigeria, it transformed the company into a major fintech hub. Today, the fintech industry is expanding its horizons to include West African nations where a new generation of citizens are participating in local and global economies.
A recent GSMA mobile economy report, for instance, showed that mobile adoption in West Africa has nearly doubled from 28% at the turn of the decade to 47% in 2017, and the reach of the mobile money sector is 13 times wider than local banks.
In Ghana, telecom operator MTN launched a mobile-money based IPO which raised over $200 million. And in Nigeria, payments API company Flutterwave entered into a partnership with Chinese e-commerce company Alibaba to allow African merchants to receive payment from Alipay’s one billion users.
Thanks to fintech companies and the rise of mobile technology in West Africa, more people have access to online banking and other financial services that once were unheard of in the region.
In addition to simplifying transactions, firms in the mobile ecosystem are making a direct impact on the economy. Some profits generated by fintech are spent on other goods and services, stimulating economic activity in those sectors.
Eric Schaer, chairman of Azerbaijan-based Omni World Holdings, a private investment solutions firm, is experienced in international finance and private investment, with specific expertise in structured finance.
“The growth in West Africa’s fintech sector is impressive. There is so much untapped potential for investors here,” Eric Schaer notes. “Tech companies are using what happened in Nigeria, the biggest economy in Africa, as an example for their own growth.”
The facts are in plain writing.
According to a Techpoint Africa report, financial technology companies had the most Millionaire West African Startups (MWAS) over the last decade — with financial technology making up 35%.
“Despite the growth that the region has already seen, the opportunity for investments in West Africa’s fintech is huge and it still remains,” Eric Schaer adds.
Though fintech companies have proven to be an attractive destination for investors, that hasn’t always been the case. From 2010 to 2015, investment in African fintech was very uncommon. It wasn’t until 2017 fintech companies saw a 287% increase in funding.
“The attraction is there, but I really believe fintech companies have barely scratched the surface of financial inclusion in West Africa. With that said, I think we’ll start to see existing and future entrepreneurs take notice of the situation and start to create innovative solutions that will benefit the mass market,” Schaer says.
At Omni World Holdings, Eric Schaer and his team use their intellectual and financial resources to make diversified investment decisions, and to help their portfolio of companies make the financial decisions they need to achieve their business goals. This includes untapping investment potential in West Africa.
“With a portfolio of fintech investments that span the globe, Omni is dedicated to growing our business to include fintech opportunities in West Africa,” Schaer says.
Iyinoluwa “E” Aboyeji, co-founder of fintech startup Flutterwave, whose main business is providing B2B payments services for companies operating in Africa, agrees. More global players will be teaming up with domestic companies in the near future.
“When you consider that half of the world’s working population is going to be in Africa over the next 35 years, then you start looking at the total market opportunity differently because ultimately all those people can hopefully get jobs and make money . . . and spend money,” Aboyeji said. “You’ll be the ultimate conduit for that.”