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Unlocking the Potential of African FinTech: The Role of Education in Addressing Key Challenges

Joshua Omena, Snr Creative Manager, AfriLabs

The African FinTech sector has been on a steady rise, securing $1.45 billion in funding for 2022, a 39.3% increase from the previous year, according to the latest African Tech Startups Funding Report published by Disrupt Africa. This indicates that the FinTech sector is the most attractive to investors, making up 43.4 percent of all startup investments ($ 3.3 billion) into the continent. 

The increasing investment in African FinTech startups is indicative of the huge potential of the sector, which is expected to continue growing in the coming years. McKinsey analysis shows that African FinTechs have already made significant inroads into the market, with estimated revenues of around $4 billion to $6 billion in 2020 and average penetration levels of between 3 and 5 percent (excluding South Africa). These figures are in line with global market leaders.

However, to reach their full potential, FinTech startups in Africa need to overcome the challenges of a limited talent pool, weak infrastructure, and regulatory uncertainty. They need to have a deep understanding of the regulatory frameworks in which they operate and the technological advancements in the financial sector. Investors need to have specialized skills and knowledge to identify and support promising startups. Innovation hubs need to have the resources and capabilities to provide relevant training to these startups and their teams.

Despite a large, young, digitally-native African population, McKinsey reports that there is a shortage of skilled local talent in Africa to grow the market. This skill gap is also evident in the FinTech industry, where many startups face difficulties in hiring skilled workers with specialized knowledge in finance and technology. The report further notes that the lack of skilled workers is a significant obstacle to the growth of the industry, limiting its ability to innovate and compete globally.

Initiatives such as the 10x1000 Tech for Inclusion, AfriLabs Academy, and Elevandi's Global FinTech Fundamentals certificate programme aim to address this skills gap by providing quality education and training to emerging talents and tech leaders. For instance, 10x1000 Tech for Inclusion, a philanthropic initiative launched jointly by the International Finance Corporation (IFC) and Ant Group in 2018 aims to nurture and inspire 1,000 emerging talents and tech leaders each year for the next ten years. The free initiative provides learners with quality learning experiences that enable them to become drivers of digital economic growth. You can enrol using the code aflt4i.

At the Inclusive FinTech Forum in Kigali, Rwanda 20 to 22 June, a Careers Forum will be held to nurture tomorrow’s innovators and disruptors, guiding them on the pathways and opportunities in FinTech. The session will feature keynotes by digital transformation experts and technology gurus, and a dedicated panel on the Future of Work, discussing the impact of technologies such as AI, the new skills in demand, and how employers and employees alike can enhance their competitiveness. Additionally, the certificate programme at the 2023 event will allow students and young professionals an online course on Global FinTech Fundamentals. The course will provide insights from industry experts on the impact of FinTech on various domains of financial services. Upon successful completion of the program, participants will receive a certificate issued by Elevandi Education and SMU Academy, Singapore Management University.

In addition to startups, investors, accelerators and innovation hubs also need specialized skills and knowledge to support the growth of the FinTech industry in Africa. A report by Briter Bridges and AfriLabs notes that many innovation hubs in Africa lack the resources and expertise needed to support startups effectively. The AfriLabs Academy is designed to equip African hub managers and staff with the training and management skills needed to improve their ability and capacity to support the growing number of startups and MSMEs in their communities.

In conclusion, education and capacity building is crucial for improving the quality of FinTech startups in Africa. With the growing interest in the FinTech sector, there is a need for up-to-date knowledge to help startups overcome challenges and succeed. Initiatives like those mentioned above, play an essential role in equipping African startups, hub managers and staff, and young professionals with the necessary capacity to support FinTech startups and MSMEs in their communities. With the right support, African FinTech startups have the potential to drive digital economic growth, create more opportunities, and achieve the Sustainable Development Goals (SDGs) around human capital.