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South Africa’s fintech vision, according to the Intergovernmental FinTech Working Group (IFWG), is: to be a leading fintech hub for Africa, promoting financial inclusion while spurring competition, digital skills, and economic growth through innovation.

So, how are we doing?

SA’s fintech & innovation ecosystem and its role players are characterised as purpose-driven and collaborative, focused on reaching under-served individuals and business, and helping to drive the positive impacts of financial inclusion. If funding received is a measure, South Africa leads within Africa: between 2015 and 2021, SA received nearly a quarter (24.7%) of all fintech funding across Africa.

Features of the local landscape that invite and drive innovation include:

  • 52% of consumer transactions remain cash-based
  • 33% of deposits are immediately cashed out
  • 31% of the population do not have bank accounts
  • Just 21% of us use cell phones or the internet to access our accounts
  • SA has just 54% internet usage but 81% smartphone penetration
  • Financial literacy index score in SA is a dismal 54%

Funders, too, should be excited by the possibilities implicit in this landscape, and there is room for growth in the share of funding received by the fintech sector: of the R1.5bn of venture capital investments in South Africa, only 6,4% is allocated to fintechs.

Predictions are that the smart investment money during 2021 will go to fintech operations that give focus to solutions for financial inclusion (including the regulatory environment), and for meeting the needs of those in the gig economy. Other areas flashing red are:

  • Cryptocurrencies
  • Growth of digital platforms and digital payments
  • Behavioural science tech
  • Low-cost health insurance
  • Growth of B2B players

With thanks to the University of Stellenbosch’s Institute for Future Research for the inspiration and research.