We continue to explore the intricacies of the FinTech geographical distribution around the world. As Bitnewstoday wrote earlier, the Policy Department of the European Parliament (Econ) published a report about the leaders of FinTech. The world leadership of USA is almost indisputable, as well as the “underdog” role of the European Union. However, the time has come to see what’s going on in the developing countries’ territory.
Against the backdrop of this ambiguity, the growth of the FinTech industry in the countries of the "third world" is absolutely striking. An excellent example is the Republic of South Africa with 41 registered FinTech companies. Clearly, this country is the FinTech leader on the African continent. The SAR stands its ground in the list of FinTech-savvy countries alongside with Hong Kong, the Netherlands and Switzerland. According to Yaliwe SOKO, the founder of the Johannesburg "Women in the blockchain" and United African Blockchain Association Chairperson, South Africa is the gateway to Africa, especially when it comes to FinTech.
So, what’s the catch of the fact that Africa is successful in the field of FinTech? Yaliwe states several reasons:
"South Africa was historically fortunate to have access to technologies and thus, a good base for growth. Media corporations and business incubators also contribute to this process, distributing information, training and supporting others. But it’s much more than that. If you look at other countries, for example, Nigeria — the basis for their progress is the entrepreneurial spirit, their desire to earn money. It is a driving force that bypasses all obstacles."The economic situation in Nigeria is not the best one, and the country isn't the leader in terms of economic indicators. For example, in terms of GDP per capita in 2017, Nigeria was at the 130th place in the world, while the poverty level was 53,5%. People are looking for opportunities to save and earn as much as possible. Thus, the appearance of FinTech startups is quite understandable: every person strives for attracting finance for development. Banks extend credits to the population at high-interest rates; the situation is similar everywhere in Africa. Nevertheless, the representatives of the FinTech industry see this as an opportunity.
Kayode BABARINDE, the Associate Fellow of Cryptography Development Initiative in Nigeria (CDIN), has provided a comment for Bitnewstoday on the situation in the field of FinTech:
“It is quite impressive to observe the fast pace of FinTech growth in Nigeria. This is a result of solution-based use cases and accessibility, part of which is the collaborations and contributions from the Nigerian Blockchain community, in providing improved FinTech solutions for adoption (Author’s note: according to Econ, there are 11 FinTech companies registered in Nigeria). Being at 2nd Place in Africa is quite laudable, as FinTech in Nigeria could boost annual GDP by $3.7 trillion by 2025, thereby, adding 10% to 12% to the country’s GDP, according to the survey by PwC Nigeria.”
The ambitions of African FinTech startups cannot be underestimated: as for today, a quiet struggle is being waged with the established financial market. New financial technology startups emerge with the aim to overcome the current situation concerning credits at high-interest rates, expensive banking service, lack of trust in the existing financial institutions. One needs to remember the word that is used in Econ study to describe the ongoing events — "changes".
Yaliwe Soko is from Zambia, but she lives and works in South Africa. In her interview with Bitnewstoday, she gave an example of how the FinTech achievements could change everyday life on the continent.
The Government of Zambia is taxing the bank accounts of its citizens. Yaliwe transfers money to her father in Zambia via mobile services: people don’t use bank transfers in the country since mobile transactions are cheaper, faster and even more reliable. You can withdraw cash in any district of any city. It's a paradox, but the stricter the economic regulations — the faster FinTech startups develop in the sphere of blockchain and cryptocurrencies, p2p lending, mobile transactions, etc.
Yaliwe states that changes are usually introduced with difficulties due to the authorities of African states. Most of them oppose innovations. As a counterexample, she noted Rwanda. According to her, the country, which was recently mired in conflicts, managed to achieve economic growth over several years. And that is all thanks to the progressive president and his team, thinking about common citizens.
When it comes to the question "How should Africa increase the growth of FinTech start-ups and become more attractive for investors?" Yaliwe responds that education and the support of entrepreneurship could achieve miracles; they need more business incubators, more educational programs. "Each one teach one" — such a proverb exists and thrives among the African entrepreneurs. This approach can lead to bursting development: Africa already faces the inflow of Asian businesses.
Speaking about Asia, there is something peculiar: China is far from being among the leaders in the total startup number and the volume of their funding — India seems to be the winner. Growing in power from year to year, this country has registered 158 FinTech companies. Indian business is experiencing a fierce battle with traditional financial institutions, defending its right for the free market. The speed of startup arising is incredible, despite the resistance and attempts to regulate the industry.
It’s also surprising that the number of FinTech startups in Japan and South Korea, which are traditionally progressive countries, is not growing. The numbers are at the level of Malaysia and Indonesia. Isn’t it indicating the situation from the category "we are already doing well"? Or, perhaps, the businesses of the "Asian Tigers" know something and keep moving off to the other jurisdictions.
And what's wrong with China? Obviously, the pressure from regulators on any initiative has affected the market greatly. Chinese FinTech businesses (particularly, the crypto industry) prefer to migrate to avoid conflicts with the law in their own country. Such a strict law can probably be a huge advantage for neighbouring governments with more friendly legislation. Just remember how fast start-ups appear in Singapore and Hong Kong.
The countries mentioned above are getting too “crowded”, so Asia exports the capital and ideas to the faraway places — Africa seems lucrative from the investors’ point of view. African countries welcome Asian partners, and it’s only the beginning. Businessmen face a lot of risks, but they are manageable, and the opportunities are stunning. The growing number of African FinTech startups confirm that. The developing projects are gathering power, acting locally. The time will come, and the force will awaken. Probably, we will face a brave new FinTech world then.