Did we miss this crucial 2023 African Fintech Prediction + how are CBDC Projects faring across Africa?

Jambo Fintech Fans,

Welcome to another interesting edition of your African Fintech news refill.

Africa was a bit tough this past week, with Power cuts in SA, Fuel queues in Nigeria, and dipping FX rates in Egypt. Just a reminder to be positive and breathe... we'll get through this.

And with that, let's jump into the gist. As usual, we bring you titbits from across major fintech zones, an insightful deep dive, news highlights in a beautiful infographic, and some promotional content from our learning products.

It’s officially licensing season, and some of our favorite fintechs are copping up licenses, increasing the confidence of investors and customers. Chipper Cash, Fincra, and Chams Ltd (remember them?) made the cut this week. Bravo Guys!

It is always heart-warming dealing with Fintechs who take Compliance and Risk management seriously.

The Fintech prediction season is over, but there is something we all left out!

Who would know that African Fintechs will prioritize expansion, especially internationally? We've seen TeamApt and Flutterwave announce mega moves last week. This week, Kuda scored another 1st announcing their expansion to Pakistan.

They are set to acquire a whole digital banking license on a JV with 2 indigenous firms. Recall that late last year, they announced their move to the UK as well. Power moves right?

We also have Cameroon in our sights in this edition. This darling of the BEAC has been making serious strides in remittance - In 2020, they held 64.8% of all Mobile Money accounts in CEMAC and carried out 73.1% of money transfers in the region.

C'est surprenant, hein!

World Remit revealed that the Cameroonian diaspora sent a total of £75 million home via the platform in 2022, and this is projected to increase this year.

We hardly go back to check on African Fintechs which have been acquired. Okay, maybe you do. We will be doing just that in the last part of this section.

Remember DPO? They were acquired 100%, by Network International in Q4 of 2021. According to a press release by their parent body, they recorded a strong growth of 12% YoY in 2022. They also signed key partnerships with merchants and platforms like Skidata, Amadeus, and Forever Living.

Good job!

If what you've read is your Fintech-intel dream come true, and you are yet to subscribe, please click the subscribe button below. Also, share this with your colleagues and Fintech besties. We move to the Deep dive next.

Deep Dive: CBDCs...fading fad or slowly simmering potential?

The full meaning of the term CBDC is Central Bank Digital Currencies. But what does that really mean since most of us reading this already perform digital transactions using local currency?

A CBDC is digital money issued by the Apex Bank of a country. They are obviously inspired by cryptocurrencies but backed by the value of the country’s local currency. So whilst digital payments are recorded against the ledger of commercial banks, CBDC transactions are recorded against the ledger of the central bank.

Why are they important?

They drastically reduce the cost of cash in motion. This means everything associated with printing, storing, transporting, and managing cash. The Nigerian CBN spent N58.618 billion to print 2.518 billion Naira notes valued at N1.1 trillion in 2020. So this gives you an insight into how much can be saved from reducing physical cash.

This piece does not argue for or against CBDCs, it just highlights to an extent, the state of related projects around Africa.

Do you know that there are 2 types of CBDCs?

• Wholesale CBDC: This CBDC will replace Interbank settlement flows and would be used by financial institutions to transact

• Retail CBDC: This CBDC will replace cash and be used by Individuals and businesses for small value payments. There are also account-based and token-based implementation modes.

Ok so that is CBDC 101, let’s move to some interesting stuff.

Focusing on Africa, we did some digging and collated the results in the table below. Shout out to the guys at www.atlanticcouncil.org where we got a lot of useful data.

Just before the table, these are 6 things to note about these projects :

1. 19 African Countries have attempted CBDC projects.

2. Only the Nigerian Project is Live, with Ghana and SA in pilot and set to launch this 2023.

3. Most countries are in the research stage, which means different things if you dig deeper.

4. A majority have retail use cases which isn't surprising for emerging countries.

5. 3 Countries are courageously attempting 2 kinds of use cases.

6. Recently Tanzania issued a statement concerning its implementation, noting it would proceed cautiously. It cited challenges with inefficient payment systems, high implementation costs as well as the popularity of cash transaction.

Nigeria's eNaira project has received a lot of attention from the continent and around the world. On one hand, it has been applauded for being the 1st to brace the tape. But it has also been criticized for its low uptake and apathy plus the multiple launch attempts.

The eNaira has a couple of use cases, we highlight 3 below :

1. As a payment method on popular gateways like Remita and Flutterwave.

2. As a means of Payment for University entrance exams - JAMB.

3. As a Wallet to transact on the USSD Payment string.

This week we leave you with questions as we conclude this piece :

1.CBDCs have been touted as a solution to help tackle Financial inclusion. How will this happen since Financial inclusion form factors require low tech for easy adoption?

2. Does the CBDC move pull Commercial Banks into a sandwiched position? On one side they are flanked by Fintechs and on the other Central Bank. How do they thrive?

3. Is the absence of National identity a hint that CBDC projects will fail? Which comes first - CBDC enhancing National Identity or National Identity facilitating the uptake of the CBDC rollout?

4. Are Central Banks able to handle the full-blown operational requirements for rolling out a CBDC?

The crux is this - is there really an opportunity here? Should we have more patience and allow innovation to run its course? or is this a me-too attempt to counter the decentralization efforts of cryptocurrency, and seize back control?

Time will tell.

News Highlights across the African continent.

From the sunny plains and the lush forests of beautiful Africa, we bring you the news highlights from the week ending on the 22nd of Jan 2023.

A few things are important to spotlight from our infographic. Take a look

Events, Courses and Community news.

The Fintech Open House is back for 2023. This January we speak to the very experienced Samuel Omosuyi on best practices for building Financial Applications.

Samuel has spent over 15 years in the Banking, Payments and Fintech Ecosystem in Nigeria. He has designed, built, and deployed a number of Platforms across Fintech categories like Agency banking, Core Banking Applications, Payments API Suite, CBDC integrations and more. To register for the event and learn more, see details below.

Looking for a place to network with other Fintech professionals working in the same space? We know a very good one because we curated it. :)

Why join a community? They provide knowledge, motivation, and inspiration from people of like minds.

If you work in the Fintech space, Join our community on slack! We have interesting channels, and our engagements are insightful and empowering. We are sure a few of our channels will pique your interest. See below.

Let us be part of your Fintech learning journey in 2023.

Want to catch up on the latest news in the ecosystem, this is your spot. Check out our learning materials at The PaymentLogue.

At The PaymentLogue, we are enabling a skilled Fintech ecosystem. If you'd like to make inquiries on our courses and events, reach out at [email protected].

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