The fintech market in Africa is expected to be worth R1.2 trillion by 2030 and is currently expanding exponentially. On a continent where 410 million people are underbanked and just under 500 million people lack access to a bank account, multinational corporations are quickly vying for a piece of the fintech market. By utilising digital technology to give access to necessary financial services, fintech services are revolutionising Africa’s financial services industry.
The empowerment of the African diaspora, or those citizens living outside of their native countries, is one area where fintech has made particularly significant progress. Working in neighbouring nations and sending money home to their families every month is a common practice. Fintech services are heavily utilised in this process.
Africans face difficulties sending money home
Africans who reside in other nations frequently struggle to send money home to support their families. Due to the high transaction costs, restricted access to physical banking infrastructure and lack of transparency in the transfer process, traditional banking methods frequently present difficulties.
The amount of money that Africans in the diaspora can send home is often limited. In addition, banks frequently impose exorbitant fees and tariffs on international funds transfers. With limited resources, people tend to turn to fintech services to send money at a more affordable rate.
Most international remittances in Africa are made up of family-to-family transfers of money. “Remittances are significantly larger than foreign aid. The United States pumps US$30 billion into the continent and the diaspora sends easily three times that,” states Rahim Diallo, founder and CEO of Jawudi, a fintech start-up.
“But because it’s individuals sending a few hundred bucks at a time every month we don’t have as much power and as much say in the direction the continent takes. The United States controls a lot more than we as a collective, as the diaspora does,” he adds.
Jawudi will soon launch an end-to-end payment system from the US into Africa using blockchain technology, which is already being used for money transfers. The majority of the major corporations, such as Western Union and MoneyGram, handle cross-border transfers and after that, Diallo claims, users must switch to other local wallets or telco-led mobile money services that handle peer-to-peer transfers.
The acceptance of fintech services
To send money across borders, fintech services, mobile money and money exchanges are becoming more and more common for Africans living in the diaspora. Compared to traditional banking methods, these services are more user-friendly, more affordable and more accessible.
For instance, the Zimbabwean fintech company Mukuru, which provides cross-border remittance and mobile airtime services, has amassed a customer base of over 10 million users. It has been successful in breaking into the markets of the African diaspora in South Africa, the UK, Canada and Asia.
Zimbabweans living abroad can deposit foreign currency at a Mukuru kiosk and their families can pick up the Zimbabwe dollar equivalent at a local kiosk or have it delivered to their homes. They can also transfer money using the Mukuru app.
Similar solutions to the payment limitations faced by Africans in the diaspora have been developed by other fintech companies like Chipper Cash, Flutterwave and Paga. The African diaspora can now quickly and easily send any amount of money to their families through mobile devices or nationwide kiosks thanks to these services.
Fintechs need a reliable software provider
Fintech companies that want to cash in on a slice of this lucrative sector need to work with a reliable software provider, like 4C Group, which offers several fintech services built around their innovative iNSight software.
These services can resolve the payment issues that Africans in the diaspora face. Your software provider should be able to develop custom applications for your needs and help drive deeper financial inclusion to support Africa’s diaspora.
The fintech industry has been revolutionary in improving Africa’s financial services sector by providing access to essential financial services. Africans in the diaspora can send money to their families quickly and effectively with the right fintech software solutions.
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