In 2018, sub-Saharan Africa will see immense economic growth, as well as a boom in gas activity and fintech innovation. This growth comes from an economy in rebound after 2017's poor performance. Regions like Nigeria and South Africa will fulfill their reputation as heavyweights, and regain from their losses due to slumping commodity prices.
Nigeria and South Africa account for over 50% of sub-Saharan African GDP, and are both exceptionally dependent on hard minerals and oil, so their economic performance is very closely linked to those prices. While Kenya and Nigeria are consistently among the highest in remuneration packages for tech staff in all areas of expertise in Africa, South Africa is consistently in the middle and lower tiers, in spite of its more developed digital economy.
Oil prices will moderately improve by approximately $10 per barrel a year, and sectors like finance, manufacturing, logistics, construction, and infrastructure will grow alongside trade. Commodity prices will no longer be the sole drivers of economic growth, although improved weather conditions in West and East Africa will contribute an additional boost. Simultaneously, infrastructure investment will strengthen. The key economic development that Africa's forthcoming 2018 success will be a result of the increased development of its fintech innovation from a rising generation of "digital natives."
Fintech innovation has been so disruptive that even banks and insurance firms are joining in, or otherwise "pivoting their products to ensure they are not left behind in the global shift." Africa looks appealing compared to other options: the Chinese market is too closed-off, fintech in Europe is already prevalent, America is too conservative in its mainstream choices of financial engagement instruments, and the South American market is not quite ready. But in African countries like Kenya, there is over 70% smartphone penetration, and most citizens are under 30 years old. These two traits combined can provide "amazing value to financial inclusion." Nigeria, too, is catching the wave, and in many African countries, fintech strategists agree that partnerships with existing companies are the ideal way to engage the market.
In the past, Africa has been a testing ground for much innovative new fintech. Now leadership in fintech development is poised to transition away from foreigners to Africans themselves. The next wave of African startups will be nurtured in tech hubs in South Africa, Kenya, Rwanda, Nigeria, Ghana, and Cote d'Ivoire.
A large portion of innovation in sub-Saharan Africa is driven by the popularity of mobile phone usage. Mobile phone usage provides citizens with an alternative method of payment, lending, and saving. Increased financial inclusion yields a larger percentage of Africans who can be involved in the burgeoning fintech boom. Over half of the world's active mobile money accounts are in sub-Saharan Africa.
One notable fintech application is called IroFit. IroFit runs on a mobile platform to "enable real-time financial payments without the need for an Internet connection." Additional sources of innovation in Africa include using digital methods to create credit profiles for those who were previously excluded, or utilizing blockchain technology for "digital identity and KYC solutions." For Africa, blockchain is still a relatively new challenge, but governments will be the next to take it on in effort to apply it to "land title, data registries, education and health records." 77% of all fintechs expect to incorporate the blockchain into their processes within two years.
Come 2018, fintech innovation will likely drive economic development and alter how cross-border trade and business is conducted in Africa.