The African Development Bank (AfDB) has signed a $525,000 agreement to support Africa Fintech Network’s (AFN’s) digital hub project.
Speaking at the signing ceremony in Abuja on Tuesday, Lamin Barrow, director-general of the AfDB Nigeria country department, said the project would boost the fintech industry on the continent. He says;
“This grant of 525,000 dollars will support the operationalisation of an online digital hub to serve as a repository of knowledge for fintech entities across the continent, and globally,” Barrow said.
The Digital Hub, which is to be delivered through a strategic partnership between the Africa Fintech Network and Cenfri, will help to strengthen the fintech ecosystem across Africa and boost the industry’s competitiveness.
Lamin Barrow, director-general of the AfDB Nigeria country department
“The grant is funded by the Africa Digital Financial Inclusion Facility (ADFI), inaugurated by the AfDB Group, together with its partners, the Bill and Melinda Gates Foundation. Other partners are the Ministry of Finance of Luxembourg, and Agence Française de Développement in 2019, with the Ministry of Finance and Economy of France and the Women Entrepreneurs Finance Initiative (We-Fi) joining in 2020 and 2022 respectively”. he added.
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AFN’s digital hub and AfDB’s contribution
The Digital Hub, which is to be delivered through a strategic partnership between the Africa Fintech Network and Cenfri,
A survey of 100 fintechs across 17 African countries[2] by Cenfri and AFN, under their African Fintech Radar initiative, found that African fintechs experience an array of challenges that impact access to markets, raising funding, navigating regulation, and developing products that align with the needs of financially underserved market segments, thereby undermining their contribution to creating a more inclusive digital finance ecosystem.
Many initiatives focus on providing technical assistance and acceleration support to fintechs. However, investors still focus on established fintech markets, and most venture capital investments in Africa are typically smaller than in other markets, often targeting the seed stage compared to the growth stage. Fintechs also struggle with knowledge gaps of engaging regulators and lobbying for policy and regulatory framework changes that impact their work.
Tuesday’s event represented a significant turning point in AfDB’s efforts to support financial inclusion and digital innovation in African nations. Barrow, who cited the 2021 Global Findex Study, said 49% of Africans are excluded from the formal economy or its many benefits.
He explained how crucial fintech is to bridging the continent’s financial inclusion divide by offering strong, accessible, efficient digital financial solutions. More fintech startups are emerging due to the ongoing digital disruption in the finance industry.
“These companies are leveraging technology to provide innovative financial services, including payment, lending, savings, financial literacy and financial infrastructure services. That results in greater efficiency, better service provision and lower costs”, he says.
He believes financial inclusion is essential for economic resilience and freedom, especially for underserved groups. According to him, it is now more crucial than ever to break down barriers and build up inclusive digital financial solutions to boost economic resilience throughout Africa.
He adds, citing Dr Akinwumi Adesina, President of the African Development Bank, that the barriers to achieving financial inclusion and greater economic opportunity for all would be surmounted with the proper investments in innovation and smart digital growth.
The Hub will give fintech associations across Africa the opportunity to share knowledge, fortify relationships, and highlight their innovations and impacts, including those made by fintech companies that are headed or owned by women.
“The project design is underpinned by a detailed needs assessment that informed the value proposition of the AFN Hub as a one-stop knowledge repository. It will help enhance coordination among African fintech associations, and improve linkages for market access and investment opportunities, for effective advocacy with key public and private stakeholders.”
Lamin Barrow, director-general of the AfDB Nigeria country department
In his remarks, Segun Aina, AFN’s president, thanked AfDB for the support and pledged the association’s commitment to delivering the project.
“We are indeed delighted that AfDB is playing a leading role in supporting this innovative initiative. The AFN is equally committed to the partnership with the AfDB. We look forward to building on this productive collaboration going forward, as there is still a lot to be done to unleash the potential of digital inclusion for Africa toward creating Africa that we want”, he says.
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