Africa & Global Payments Innovation Jury Meet in Nigeria at Interswitch Connect

The Africa Payments Innovation Jury revealed that‎ businesses on the Continent are attempting to bridge the gap between the banked and the underbanked population, driving payments innovation across the continent; despite the daunting challenge of regulation and funding.

This was popular view of speakers at the inaugural launch of payment/tech conference, tagged Interswitch Connect held in Lagos.

The Global Payments Innovation Jury is the recognised body looking into payments innovation at the global level.
 
This year, for the first time, a dedicated Africa Payments Innovation Jury, consisting of 25 industry leaders from 14 markets, was formed to contribute to a research report into African payments and fintech innovation trends.
 
They looked at 2017 global snapshot of payment innovations and Asian countries were rated as the home to most payments innovation over the next two years, a position that it has held since the inaugural 2008 Jury.
 
Europe was ranked second, followed by Africa, North America and Latin America.
 
When it came to deciding where to build a new payments business 81% of the Africa Jury voted for the continent as the ideal location.
 
“The Africa Jury demonstrated the clear view that, despite the challenges associated in creating and running a payments business on the continent, the potential for growth is high and is likely to only increase.
 
“Indeed, to be rated ahead of North America is a striking result given the African fintech and payments landscape,” said John Chaplin, Chairman of the Africa Payments Innovation Jury.
 
The Africa Jury also showed a preference for investment in consumer focused businesses, with 58% choosing (Business to Consumer) B2C businesses over (Business to Business) B2B.
 
This is in marked contrast to the global position where there is a 55% rating in favour of B2B, which in regions such as Europe rises to 75%.
 
“Despite the cost and difficulty involved in building large customer bases, the Africa Jury prefers B2C largely because of the growth potential from bringing the currently underbanked population into the electronic payment world,”
 
“B2B will become more important over time but many African businesses are still in the informal sector which limits their potential for now,” said John Chaplin.

The Africa Jury addressed the Venture capital funding shortages and reported a significant lower level of funding availability than the Global Jury reported for the rest of the world.
 
The Africa Jury felt that initial investment in a business can sometimes be obtained from angel investors, but this source of capital is less developed than in most other regions.
 
The relative scarcity of funding continues for Series A rounds when the lack of a well-structured and funded venture capital sector in many markets presents a major challenge for entrepreneurs.
 
However, for companies that can establish sustained growth and profitability there is considerable competition between private equity firms to provide investment.
 
“The lack of early stage funding can choke off many potentially promising business ventures. In order for a vibrant payments and fintech industry to develop in Africa, investors must consider the potential returns of early stage businesses that solve real problems”, said John Chaplin.
 
A sizeable majority (57%) of the Africa Jury felt that regulatory action is detrimental to payments innovation.
 
This is substantially more pessimistic than the Global Jury which had a 39% negative score.
 
However, 35% of the Africa Jury conceded that regulators were assisting innovation.
 
”There is an opportunity for payments regulators in Africa to up their game especially in relation to innovators and investors, and in licensing non-bank payments companies.
 
“This could really help to deliver the policy objectives of the regulators,” said John Chaplin.