Africa and Payments: What’s up with that?

Fintech Fantasia: USSD, Peanut Butter Safes, and the Digital Dance of Payments in Africa!

Caption: Boy Sitting on Sack on Outdoor Market

Good morning, entrepreneurs & tech enthusiasts!

I hope you’re as caffeinated as I am. I know what you’re thinking, isn’t it too early? I assure you, it’s not.

On today’s agenda we are exploring the transformative world of payment systems in Africa, where innovation meets necessity, and the USSD technology reigns supreme. It's a wild ride through the fintech landscape, so buckle up and let's get started.

A Digital Revolution

Picture this: Between 2020 and 2021, the number of tech startups in Africa tripled to 5200, with nearly half of them taking on the financial world as fintech disruptors. McKinsey spilled the red tea, revealing that the success of these fintech marvels is fueled by skyrocketing smartphone ownership, dropping internet costs, and an expanding network coverage. Add a sprinkle of a young, urbanizing population, and voila! The perfect storm for financial innovation.

Now, you might wonder, are these numbers for real? Absolutely. Africa has a formal employment problem, with a whopping 80 to 90 percent of folks working in the informal economy. For money to work it has to exchange hands, it has to move from one person to the next and so on. Enter fintech superheroes, armed with mobile payment technologies, here to rescue the unbanked masses. Thanks to the boom in cellphone ownership, transferring money across borders is no longer a peanut butter-stuffing ordeal.

Peanut Butter Safes to Fintech Frontiers

Remember the days when sending money involved trusting bus drivers or hiding cash in peanut butter jars? Those were the dark ages. Today, fintech operators are the knights in shining armor, offering solutions for every payment woe imaginable. The pandemic might have wreaked havoc, but it also lit a fire under the digitalization trend, creating a playground for tech warriors to flourish.

Yet, it's not all smooth sailing. The success of these fintech wonders is tethered to telecoms infrastructure. No surprise that the most prominent mobile money services often emerge from telecoms companies or their dynamic partnerships with startups. Yes, I am side eyeing you Econet, Safaricom, and Vodacom.

The Unsung Hero of Africa's Fintech Revolution

Now, let's talk tech lingo. USSD, an acronym we have all heard of but probably don’t know much about – Unstructured Supplementary Service Data, not the latest sci-fi movie, that’s for sure. In Africa, it's the backbone of fintech. Why? Because it allows text-based interactions on mobile phones, offering a lifeline for those still rocking feature phones without internet capabilities. In a region where 3G rules the roost, USSD is the hero we didn't know we needed.

Take M-Pesa in Kenya, for instance. It isn't just a mobile payment service; it is a solution to the age-old problem of securely sending money from urban hubs to rural havens. USSD technology made peer-to-peer transactions a breeze, simplifying lives and transforming the financial landscape overnight.

Zimbabwe's Fintech Dynamo

Zimbabwe has its own USSD-driven hero in the form of EcoCash. Born in 2011, it didn't just disrupt – it dominated. By 2017, EcoCash controlled a mind-boggling 99.8% of Zimbabwe's mobile money market. To put things in perspective, it processed transactions surpassing the entire economic output of the country for the year. Now that's what we call fintech flexing its muscles.

Is Everyone Doing Payments in Africa?

Short answer: Yes, every fintech startup is on a mission to solve a unique puzzle in Africa's vast and diverse financial labyrinth. Whether it's payments, transfers, insurance, logistics financing, or cryprocurrency, there's a fintech wizard conjuring a solution.

So, buckle up for the fintech safari in Africa – where innovation meets necessity, and USSD is the unsung hero making it all happen. Stay caffeinated and tuned for more tales from the digital revolution!

Cheers and stay productive,

>>> Google Jr