Unveiling Africa's Hidden Capabilities: The Necessary Steps for Finance Solutions to Expand Deeply
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Embedded finance, a financial service that is integrated into everyday consumer activities, is set to become a substantial part of global financial services, and Africa is no exception. The continent's financial sector is witnessing a significant shift as embedded finance becomes an integral part of many Africans' financial routines, particularly via mobile phones.
The success of embedded finance in Africa is influenced by several factors. One of the most notable trends is its integration via mobile phones, a significant portion of Africa's population already conducting banking activities through these devices. This seamless integration facilitates the evolution of embedded finance, making it an essential tool for advancing financial inclusion and stimulating innovation.
However, scaling embedded finance in Africa presents several challenges. Overcoming structural disadvantages in access to global capital, establishing partnerships based on mutual incentives and accountability between the global North and South, and fostering joint ventures and blended financing mechanisms that address local priorities are among the main challenges. Supporting capacity building to ensure long-term resilience rather than short-term exploitation is also crucial.
Africa's adaptability to diverse technologies and openness to agile services further support the integration of embedded finance. This openness presents opportunities for the growth of embedded finance, unlocking new economic opportunities and transforming the payment landscape.
The strength of consumer trust in the technology is a key factor in the evolution of embedded finance. As Africans increasingly rely on mobile phones for financial transactions, building and maintaining that trust is essential. The global embedded finance market is projected to surpass $228 billion by 2028, according to Juniper Research, highlighting the potential for growth in Africa.
In conclusion, embedded finance has the potential to transform the payment landscape in Africa, advance financial inclusion, stimulate innovation, and unlock new economic opportunities. However, overcoming the challenges and leveraging the unique opportunities presented by the African market will be crucial for its successful establishment and thriving.
