The Governor of the Bank of Ghana, Dr. Ernest Addison has said that lack of invest and access to funding is stifling the growth of FinTech innovation in Africa, and that is counterproductive to the digital finance agenda of continent.
“The lack of requisite Investment in African fintechs could slow the pace of innovation and scalability of solutions in achieving the desired impact of a digitized Africa,” he said.
Dr. Addison was speaking at the opening ceremony of three-day 3i Africa Summit which commenced in Accra on Monday, May 13 and will end May 15, 2024.
The event seeks to generate greater momentum and traction for Africa’s digital finance agenda by causing finance, policy and technology to meet at the crossroads
Indeed, thousands of fintech and other tech startups on the continent have not been able to scale due to lack of access to funding. Part of the problem is that the few startup founders who got funding squandered the money and enriched themselves instead of applying the funds for the purpose investors gave it.
Recent industry statistics show that startup funding in Africa has been dropping since 2023 and has reached at least 47% this year. This clearly posses a threat to Africa’s strategy to g build a digital economy on the back of fintech innovation.
Addressing conference participants, Dr Addison said it is crucial that sufficient capital is directed towards startups to enable them to develop credible prototypes of home-grown solutions that address inefficiencies on the African continent.
“Without sufficient capital, brilliant ideas and the prototypes of fintech startup solutions with the potential to address diverse financial service needs fail to progress to production,” Dr Addision said.
Indeed, in line with the purpose of the conference to create a meeting point for policy, finance and technology, Dr. Addison mentioned that specialize forums like the deal room and pitchfest were deliberately included in the event to create a platform for investors to meet innovators in the presence of policymakers and regulators to ensure trust.
Hitherto, some investors had given millions of dollars away to startup founders without involving regulators and policy makers, and a lot of that has ended in the abuse of investor funds.
Dr. Addison also touched on the issue of affordability of cross border transactions, if African states are to drive the massive use of digital finance platforms for trade, adding that it is also critical for digital public infrastructure across the continent to be interoperable at both the regulatory and technical levels to enable effective trade across the continent.
Dr. Addison therefore urged participants to use the three days fashion out out concrete initiatives and partnerships to achieve tangible policy outcomes that will do the following:
• Enable affordable and safe instant cross-border payments.
• Empower FinTechs to drive Africa’s economic transformation agenda by
committing to a sound regulatory environment.
• Advance digital public infrastructure, and finally,
• Explore the role of FinTech in bridging the financing gap for SMEs, including
the creative arts industries.
Meanwhile, the Finance Minister, Dr Mohammed Amin Adam said “for Africa to realise our development ambitions, we must all collate around an African agenda that delivers capital by leveraging public-private partnerships, venture capital, impact investing, and donor funding.
An agenda that delivers investments in digital infrastructure, extended mobile network coverage and established broadband networks for widespread fintech adoption and financial inclusion in underserved areas,” he added.
The Minister stated that currently, 92 of manufacturing, 70% of production and 80% of jobs in Ghana are in the SME sector, and that is why it is critical that trade at the SME level across the content is support immense, because that is really the backbone of African economies.
For the next three days, the participants will benefit from a multimodal forum for policy discussions, international intellectual resource alignment, entrepreneurial pursuits and investment networking.
This is expected to foster important conversations and also strategic alliances to nurture the flourishing African digital economy and fintech sector.