As JUMO’s Strategic Partnerships Lead for ecosystems Sheila Valverde Bartens focuses squarely on our work with e-money operators, such as telcos and payments providers, to open access to mobile banking for the unbanked in Africa. At a recent panel discussion hosted by Invest Africa in Cape Town, she explored the opportunities for cross border collaboration and overcoming challenges in the African digital financial services landscape.
As providers of information management services and banking technology, JUMO’s work centres on collaborating with banks and telcos to meet the need for financial inclusion in Africa. We bring together capital providers and mobile money ecosystems to reach the unbanked on the continent.
Christoff Pienaar, Commercial Practice Partner for Webber Wentzel paints the growth picture of fintech in Africa as both a challenge and an opportunity. Five years ago, the majority of fintech players in Africa were merely starting to work towards the needs for digital payments processing, but this has evolved rapidly into high-tech banking infrastructure, of which JUMO has been one of the first providers and remains a market leader.
The problem can be illustrated in numbers. In the United States we see 29 bank branches per 100 000 people versus 4.5 in Africa. This has pushed Africa towards the use of technology to fill the infrastructure gap with huge success. Mobile penetration is high and mobile network operators have the reach and platforms to step in the gap if they have the right tech tools and providers to work with.
Kitso Lemo an Associate Director for the Boston Consulting Group sketches the landscape complexity with the observation that access to credit in Africa sits at around 25% of what’s available globally. If you consider access to loans versus GDP, financial access in Africa is restrictively low in comparison to the overwhelming need. Africa is a young, entrepreneurial hive of activity with an estimated 100 million micro and small enterprises driving economies, but cash economies remain a handbrake for their growth. The practical solution is mobile banking systems.
Besides access and the free flow of funds, a further challenge of cash economies is regulation and security. Cash is dangerous and risky, as Senior Customer Success Manager for the London Stock Exchange Group Abu Baker Mehtar has pointed out. Digital currency solves and alleviates this risk, but effective controls still remain essential.
There are 54 countries in Africa and JUMO has worked hard at managing compliance and regulatory complexity in partnership with central banks and government authorities for each of our market entries. This is not just about finding the right legal frameworks, it’s also a commitment to social responsibility. Safely managing access to credit with due diligence is necessary for solving customer pain points, without causing pain. JUMO follows the highest standards of compliance set in Europe as a starting point to meet the needs of our investors and the markets we serve for safety controls. But it’s a process that’s constantly evolving.
Mark O’Sullivan, Founder & CEO at IPT Africa has noted reluctance from European and American firms in processing payments in Africa, citing examples of some companies including 10% losses in their balance sheets due to the uncertainty on the continent. In this context, compliance should be seen as a business enabler and not a stumbling block.
Working with industry bodies such as the Alliance for Financial Inclusion is important to JUMO’s technological innovations in the financial technology space and industry advocacy in general.
Beyond our commercial partnerships, a deep commitment to private public partnerships remains a top priority for us as banking technology and AI-powered credit decisioning and asset management providers.
The consensus from this panel discussion I participated in is that building high levels of engagement with the regulator and all invested stakeholders is the best solution to closing the financing gap and growing the sector. African fintech is poised for continuous growth despite the complex market dynamics, the complex politics and the complex and ever-changing regulations.
Many thanks to our gracious hosts Webber Wentzel in Cape Town, our panel moderator Tutsi Dhombo and my fellow speakers for their insights and participation in what remains a lively conversation as fintech evolves in Africa.
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