In Africa, where the unbanked population is high and nearly everyone owns a mobile phone, digital banking is set to boom, but risks need to be mitigated and education needs to increase, according to a panel of experts at the Africa-Dubai Investment Business Summit.
Despite obstacles, digital banking adoption on the continent remains above the global average. Mru Patel, chairman and founder, MyTokenized Capital, said that in Africa around 7 percent of transactions are digital, compared to 4 to 5 percent globally.
“There’s a lot of people who are underbanked and a lot of people who transact via SMS,” he said.
Over the past few years, retail banking in Africa has shrunk, and “in the next five years, 50 [additional] percent of retail banking will disappear, I predict”, Patel (pictured below) said.
But to make this happen, infrastructure, specifically solutions that exist on the blockchain, must be developed and frameworks must be created.
“Blockchain is the new oil,” Arogundade Samsondeed, managing director and CEO, Fundrise Tentacles Ltd & president, CratD2C Blockchain Protocol for E-Commerce said at the panel discussion.
Transactions on the blockchain are secure, cheap, and traceable – and they only require a mobile phone. Where security concerns exist, infrastructure and education need to fill the gap.
“In terms of infrastructure, we need reporting, tracking, and taxing for all digital transactions,” said Hafou Toure-Samb (pictured below), founder at HTS Partners. “Here in West Africa, we need a change in mind set. We’re still very cash-based, but we need to convince people that [digital transactions] are safe.”
In 2018, 66 percent of the sub-Saharan population was unbanked, according to the World Bank. By the end of that year, the region had 456 million unique mobile subscribers, which is expected to grow by a further 167m by 2025, according to GSMA Intelligence analysis.
“There are 54 countries and 54 opportunities for all the sectors,” Patel said. “In Africa, there are hidden treasures there, and for every investment size there is an opportunity.”
The coronavirus pandemic has been a catalyst for digitalisation, and governments in Africa need to be more flexible and embrace fintech alongside other technology, according to the panelists.
“Covid-19 is a wake-up call, and it has expedited everything,” Patel said. “The government has to give a platform to the private sector.”
Ambassador Gilead Okolonkwo (pictured above), CEO and chairman, BeepMagnet International Group, added: “The government should open their mind. Technical know-how is one of our weaknesses, but if we look in-house it will give us a strong opportunity. We can tokenise these resources and use it to compete globally.”
Africa’s economies hold massive untapped potential for investment, with global investors waking up to the smell of money on the resource-rich continent.
The UAE is the fourth largest investor in Africa and has invested in 71 different projects worth $5.64 billion, according to research consultancy Knight Frank.
Salwa Abdulaziz Zein (pictured above), CEO, The Private Office of His Highness Sheikh Ahmed Bin Faisal Al Qassimi, said at the conference: “We are here to fashion a journey together [between Dubai and Africa] that will transform lives. If we did it with our limited, arid land, imagine what we can do in Africa.”
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