Fintech in Sub-Saharan Africa: Prospects and Regulatory Issues

At a time when consumer expectations in various sub-Saharan African countries are increasing rapidly, financial technology (fintech) products and services—like virtual currencies, artificial intelligence, mobile money, online peer-to-peer lending platforms— are transforming the financial services as we know it. Many Africans, both locally and internationally, now rely on mobile payment systems to send and receive money. So many have started using mobile money to pay their bills, receive their wages, and pay for goods and services. These products are fast becoming a great force shaping the structure of the financial industry in different parts of sub-Saharan Africa.There is no better market that can benefit from the fintech industry than the emerging sub-Saharan African economies. The scale of opportunity for the capital businesses across sub-Saharan Africa is huge, and fintech companies continue to develop products and solutions that use insight and digital technology to improve customer experience across product lines.


These new competitors provide innovative ways of offering financial services to the subcontinent’s over 1 billion consumers and can help the subcontinent develop and play its full part in the global economy. Many fintech startups have been able to design products that can close the gaps in financial services in the subcontinent. As a consequence of this, they remain a major attraction to many foreign investors. Many of the startups have already gone overseas to raise capital funds they need to invest and grow, and some have gone further to ensure that some of their overseas investors make further commitments as partners of choice in their various markets. Their new networks and new technologies can create room to make consumer experiences more seamless and engaging in entirely new ways and reduce transaction costs.


There has recently been numerous conferences and events offering insights on these emerging technologies in financial services. This week in Washington DC, major fintech, blockchain, lending and digital banking companies from around the world will gather to brainstorm on “issues, entrepreneurs, and opportunities revolutionizing finance in Africa.” As with every technological advancement, fintech boom is creating new types of risks, which are entirely challenging to regulators. The most common risks associated with fintech include data privacy, remote services, money laundering and terrorist financing, regulatory reporting, data and identity fraud, data storage risk, availability and quality of services, improving the resilience and robustness of the service, understanding each environment and being able to develop and adopt technologies that meet the needs of that market.


There is a general sense that regulators across jurisdictions can design a set of regulatory regime to govern the different aspects of risks with fintech’s services and products. But due to the different markets and economic circumstances of the different countries, there can be no one- size- fits- all approach to regulate all the risks inherent in fintech. It is even complicated because there is no global regulatory regime that governs all aspects of fintech. So, each country’s market presents its own unique set of circumstances.



A major challenge that different regulators appear to be dealing with is where to assign responsibility for fintech regulation as it cuts across so many areas of regulatory supervision. For example, in Nigeria, traditional banks are regulated by the Central Bank of Nigeria (CBN) but it clarified through a January 12, 2017 circular that “cryptocurrencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecoin, Onecoin and Exchanges such as NairaEx are not licensed or regulated by the CBN.” Similarly, in Kenya when M-Pesa was launched, the Central Bank of Kenya (CBK) decided not to oppose the entry of the telecom operator into the financial sector as long as it offered sufficient guarantees.


Despite the numerous risks of fintech in sub-Saharan Africa, there are still bright prospects given the tremendous opportunities present on the subcontinent. But in order to leverage on these opportunities, regulators must provide a safe and secure environment to explore fintech solutions and manage the risks. Regulating for fintech in different parts of sub-Saharan Africa will involve coming up with new sets of regulatory rules that are different and distinct from the  rules governing traditional banking, and embody market competitive objectives and are articulated with transnational regulatory norms and regimes, and regulators must understand and keep pace with new technologies and innovations in this space.


Eric Nwaubani, Esq.
Managing Partner
Law Group International Chartered (LGIC)
Washington, DC.  

With offices in Washington, DC and Abuja, Nigeria, plus our extensive network of alliances with attorneys in major global markets, LGIC provides its clients with the knowledge they need to succeed at every stage of business – from setting up, to steady growth and global expansion