Nowadays, digitalization has been rapidly increasing due to the COVID crisis. The financial sector has got new disruptions due to increased implementation to the financial technology aka FinTech in sub-Saharan Africa. According to the International Monetary fund (IMF), worldwide investment on FinTech is valued at US$ 50 billion, over the past ten years. FinTech has an annual growth of 24% on year on year basis.
FinTech refers to the ecosystem where innovations in technology are utilized to foster financial services and increase easy access to finance in the market—in standard terms, using technology to change the traditional approaches of finance in the industry.
World Bank has encouraged African countries to invest in digital technology by introducing digital platforms and developing the digital infrastructure. According to the Oxford Study, in the next 15 months, Africa will receive an economic recovery worth US$50 billion from World Bank for the protection of region’s small and medium enterprises (SME’s).
Fintech one way helps SME’s in electronic transactions. In the current scenario of COVID 19, contactless payments are recommended because paper cash is a potential transmitter of the virus. Electronic payments enable users to keep a distance between the cashiers but also do financial transactions at a faster pace, which is an excellent benefit for SME’s. Also, even post COVID-19 scenario, there would be a great advantage of the reduced economic cost of handling Cash.
In Kenya, institutions encourage electronic transactions; for example, the Central Bank of Kenya (CBK) announced that bank fees for transfers would be waived off if transactions are done through Mobile Banking. At the same time, Kenya’s Safaricom has increased the limit of transaction amount for SME’s form KSh 70,000 to KSh 150,000.
According to the Oxford Business Group (OBG) research, “technology will underpin the recovery.” Companies nowadays invest more in technology, and innovative solutions for having the business operate efficiently and effectively. Investing in technology development could help Africa recover from its current financial downturn, said the OBG.