This is not a function of income levels but rather a testament that informal retailing is a vital part of Africa’s economy.

Furthermore, according to Quartz, 85.5% of Africans are engaged in the informal sector, which, according to statistics provided by the International Labour Organization, produces about 55% of their overall GDP.

Despite carrying so much significance, from street hawkers to open-market kiosks, these unregistered or unlicensed retailers—as Euromonitor puts it—transact business in vulnerable conditions, with limited access to modern financial services (UNU-WIDER, 2021) and are therefore cash-reliant. Consequently, their operations are difficult to monitor, track, or tax by government authorities.

The informal sector felt no use for modern financial services until the pandemic.

The Catalyst Effect of COVID-19 on Fintech Adoption

Indeed, COVID-19 put the traditional ways of doing business in total disarray. When sudden yet crucial survival measures, including worldwide lockdowns and social distancing, were taken, it disrupted business transactions and many trades ground to a halt.

Operations became particularly daunting for informal retailers amidst worsened cashflow issues, difficulty in inventory restocking, and lack of access to loans.

However, the outbreak of the COVID-19 pandemic aided digital transformation across the continent—a blessing in disguise.

Although it brought huge challenges, it fostered an environment where fintech services have become critical in reshaping and supporting this vital sector. For instance, research conducted by UNU-WIDER in 2021 shows that the productivity of informal retailers who use digital technology is about 65%—77% higher than that of those who don’t.

Fintech emerged as a saviour, with digital platforms like e-payments and inventory management tools that sought to boost businesses’ continuous transactions regardless of time, place, or physical presence.

These innovations are alternatives to business-as-usual, which informal retailers became compelled to explore for survival.

Since recovery from the pandemic, fintech has provided several solutions that have shaped the African economic landscape as detailed below:

1. Mobile Banking:

Shifting from cash transactions to digital payments has given informal retailers the breakthrough that they had long desired.

The likes of Paga, EcoCash and MTN Mobile Money have built platforms that drastically reduce their reliance on cash payments, which not only secure their finances but further enhance the efficiency of their business operations.

A report by GSMA evidences the embrace of this fintech innovation, revealing that in 2020, mobile money transfers in Sub-Saharan Africa rose by 23%, amounting to $490 billion.

In Kenya alone, 60% of informal retailers used mobile money in 2021, according to Statista, while the same innovation accounted for 94% of Uganda’s GDP in the same year, as recorded by the IMF.

With more informal retailers subscribing to these platforms, the government can also better monitor informal transactions and levy taxes accordingly.

2. Microfinancing Platforms:

Informal retailers struggled to access loans due to their lack of proper financial records. However, with alternative data, fintech companies like M-Pesa, Branch, and Carbon can assess their creditworthiness and offer them microloans. A report by The Saturday Standard highlights that Kenya’s digital lending market grew by 13% from 2020 to 2021. The ability of informal retailers to access credit digitally has, therefore, proven invaluable, spurring all-around economic growth across the continent.

3. Inventory Management Tools:

Fintech firms have provided working solutions to informal retailers’ improper ways of managing inventory. The likes of OmniRetail, Zoho Inventory and Wasoko enable retailers to track orders, manage products and balance stock levels through software applications.

Chari’s inventory app–Karny–even allows store owners to track debts, issuing out reminders to defaulting customers. This innovation is making a remarkable impact on informal retailers.

McKinsey’s finding that digitizing supply chains could reduce inventory costs for retailers by 20%- 50% corroborates the potential of these tools to improve profitability.

4. Digital Marketplaces:

With digital marketplaces like Jumia, informal retailers can sell their products online. This ensures that the company can reach a wider customer base and diversify its income streams, which is crucial in the post-COVID era.

5. Financial Literacy Tools:

To help informal retailers understand and utilize digital financial tools, fintech companies like Pezesha and FinAccess provide training on budgeting, saving, and investing, fostering long-term financial health.

Intensifying Fintech’s Penetration of the African Informal Retail Market

Fintech solutions are undoubtedly refining the African informal retail sector; however, some challenges hinder it from reaching its full potential.

Challenges:

1. Limited Digital Infrastructure: Although access to the internet and smartphone devices across Africa is improving, it is still largely inconsistent. Statista records that smartphone penetration in Sub-Saharan Africa in 2021 stands at 48%, leaving a significant portion of the population without access to fintech tools.
2. Trust and Literacy Issues: Many informal retailers have limited financial literacy, and their fear of fraud makes them reluctant to adopt digital tools. It is, therefore, vital that fintech builds trust through education and reliable customer support.
3. Regulatory Barriers: Africa’s fintech regulatory space is still developing. The government and regulators have yet to strike a balance between ensuring compliance and fostering innovation.

Opportunities

While challenges abound, the opportunities for fintech in Africa are expansive. As McKinsey projects, the African fintech market will grow at a compound annual rate (CAGR) of 10%, reaching $230 billion by 2025.

This growth opportunity shows that fintech solutions that are even more tailored to informal retailers’ unique needs will likely emerge. Technology such as AI, machine learning, blockchain, and Buy Now, Pay Later (BNPL) models have the potential to expand credit access and enhance supply chain visibility to previously underserved retailers.

In conclusion, the post-COVID era underscores the importance of resilience and adaptability, and by addressing their critical pain points, fintech has offered Africa’s informal retail sector a path to survive and thrive. With the government’s recognition of the transformative power of fintech and adequate investment in it, Africa can build a resilient economy on a global stage.

About the Author:

Nelly Nneli is a digital sales leader with a focus on making financial inclusion innovations accessible and actionable. With expertise in payment technologies and a passion for fostering inclusive finance, Nelly regularly shares her insights on the intersection of technology and financial services, offering clear, practical strategies for driving digital innovation and expanding access to financial solutions.

The post Emerging Fintech Solutions for the Informal Retail Sector in Africa | By Nelly Nneli appeared first on Tech | Business | Economy.

The evolution of artificial intelligence (AI) in the financial sector has completely changed the way businesses deliver services. 

During the Techeconomy Business Series session titled “Major Lessons for Techies in Building Resilient, Customer-Centric Financial Solutions in an AI-Driven World”, experts shared their experiences and insights on how to innovate and maintain resilience while meeting customer needs.

Watch on YouTube:

Defining Resilience in Financial Solutions

Peter Kwakpovwe, founder of Draco Intelligence Ltd UK, broke down the concept of resilience in financial solutions. He stated, “Resiliency in financial solutions is the ability of the system to recover from shock, attack, or disruption, ensuring delivery and usage by customers.” 

He noted that resilience goes beyond simply fixing problems; it requires proactively creating systems that withstand disruptions.

Kwakpovwe shared a real-world example from his career: “We developed an AI-powered digital lending platform aimed at ease of banking, lending, and credit rating for customers. However, we faced challenges like political unrest and economic instability. To overcome these, we built an advanced anomaly detection algorithm to flag fraudulent transactions, an automated failover system, and a robust recovery and backup system.”

These measures ensured the platform could withstand disruptions and continue serving customers efficiently. According to him, “This reaffirmed my belief in AI-driven initiatives within the financial landscape.”

Ethical AI and Balancing Customer Needs

Ayodeji Ogunmola, director of Product Management at Northsnow Ltd UK, spoke on balancing rapid AI innovation with customer expectations. He noted, “The first thing customers want from financial institutions is to have their problems solved. AI brings simplicity to this process, but ethical considerations and transparency are important.”

Ogunmola highlighted two major issues:

1. “How ethical can the AI go?”
2. “Are customers trusting enough to allow AI integration into financial institutions?”

He explained the importance of defining what aspects of financial transactions are handled by AI versus humans. “We’ve seen human errors in resolving issues, but AI can bridge this gap, especially in interactions like chatbots that offer faster service.”

However, he also stressed the need for transparency: “Businesses must inform customers about what AI can and cannot do to build trust.”

Building Trust in AI: Transparency, Ethics, and Customer-Centricity are Key

On building trust in AI-driven financial systems, Moniade Adeniyi, product innovation and business growth strategist at Northsnow Limited, stressed the importance of transparency, fairness, and customer-centricity in AI solutions. 

He stated, “When you’re building an AI solution, it should be clearly explained how the AI system works. Customers need to feel safe and more confident about using the solution.”

Adeniyi also highlighted the need for ethical considerations, urging financial institutions to ensure that AI systems are unbiased. He said, “A financial institution must make sure that AI systems are fair and they don’t favour or harm any group of people.”

Personalised Financial Services

Ogunleye Oluwatobiloba, a data analyst with a fintech background, delved into how AI enhances customer experiences. “AI plays a huge role in delivering personalised financial services by leveraging data-driven insights,” he said.

He outlined key applications of AI:

• Customer Segmentation: “AI analyses customer data, such as transaction history and credit behaviour, to create detailed profiles.”
• Tailored Recommendations: “AI-powered engines suggest financial products like loans or investment options based on individual goals.”
• Chatbots and Virtual Assistants: “These tools, like UBA’s ‘Leo’, offer 24/7 support, handle transactions, and reduce the workload on human staff.”
• Fraud Detection and Prevention: “AI monitors user behaviour for anomalies, flags potential fraud, and notifies users immediately.”

Mitigating Risk with AI

The speakers collectively agreed that risk mitigation is an essential component of resilient fintech solutions. Kwakpovwe mentioned, “AI helps businesses holistically understand risk landscapes and develop de-risking strategies.”

Ogunmola added that iterative feedback and customer research are essential: “AI gathers data, analyses usage patterns, and helps businesses improve their offerings.” This aligns with the overarching goal of resilience—adapting to challenges while maintaining seamless customer experiences.

AI’s prospects in the financial sector are broad but require careful integration. Ogunleye said, “AI’s strength lies in its ability to personalise, automate, and innovate while addressing individual customer needs.” However, ethical considerations, transparency, and robust systems are essential to fostering trust and ensuring resilience.

The panel emphasised the importance of cross-disciplinary collaboration, with Kwakpovwe noting, “You need a strong, high-risk-skinned team to navigate the complexities of AI-driven solutions.”

Building Customer-Centric Financial Solutions Through AI

Peter Kwakpovwe emphasised the importance of leveraging AI to enhance financial literacy and inclusion. He highlighted the Central Bank of Nigeria’s (CBN) ongoing efforts to improve financial literacy through collaborations with banks and financial institutions. 

“By implementing this innovative admin solution, financial services can be customised for people who are particularly underserved and those who are in the underbanked population. But again, AI is data, data, and more data,” he said.

However, Kwakpovwe noted that while AI offers improved efficiency, fraud detection, and personalised customer services, the technology also introduces significant risks.

Adeniyi further noted the role of customer feedback in designing effective AI solutions, stating, “Every AI solution you are building should be tailored towards the customer… When you do all these things, trust is built, and they will want to use your system.”

The Dark Side: Data Privacy and Security Risks

Kwakpovwe did not mince words about the gravity of data privacy breaches, calling it the “data apocalypse.” He cited examples of data leaks in Nigeria, including breaches from major banks and the National Identity database. “The day you plug your product to AI, it automatically has access to everything you’ve had today—your data,” he warned.

To mitigate such risks, he recommended:

1. Robust Encryption: “If you build a database system and there are no strong encryptions, it’s a problem.”
2. Compliance with Data Protection Laws: He stressed the importance of adhering to regulations like GDPR and conducting regular audits.
3. Bias and Fairness Audits: Peter shared a Silicon Valley example where AI algorithms unintentionally discriminated against certain genders in loan approvals, showcasing the need for robust datasets and transparent algorithms.

Over-Reliance on AI: A Critical Pitfall

Kwakpovwe spoke on issues about the over-reliance on AI systems, which can lead to a reduced human thinking process. “Even the most intelligent people today are relying so much on AI,” he said. To address this, he suggested:

• Ensuring human oversight for key decisions
• Using AI as a support tool, not the primary driver of actions
• Investing in education and training to empower professionals with foundational skills

Technological Failures and Systemic Risks

Reflecting on a recent major banking system outage in the UK, Kwakpovwe noted the catastrophic impact of technological failures. “A core banking software issue shut down everything. It became a social media brouhaha,” he said.

To prevent such occurrences, Peter called for:

• Redundancy and Backups: “I’m a big fan of redundancy. You must have backups that have backups.”
• Incident Reporting Plans: Establishing clear protocols for managing AI system failures.

Scaling through Regulatory and Compliance Challenges

On regulatory hurdles, particularly in Nigeria and South Africa, Kwakpovwe stressed the importance of aligning AI systems with financial regulations to avoid fines and restrictions. “You must have regulatory engagement,” he said, adding that ethical AI frameworks and continuous monitoring are essential for compliance.

Adeniyi also stressed the importance of regular audits to maintain compliance and customer confidence, noting, “Regularly review the AI system to ensure they follow the law and meet high standards… This should be transparent to the customer.”

Leveraging AI to Drive Innovation in Fintech Solutions

Speaking on the importance of a systematic approach to deploying AI in financial services, Kwakpovwe said: “First off, there has to be this continuous learning of your data. AI can make decisions for you, but that shouldn’t be the final leg,” he noted. 

He called for hiring and training skilled professionals who can create and refine data models, stating, “You need over a billion scenarios… AI can help you create those scenarios, but you need someone to fine-tune and look at it also.”

Kwakpovwe emphasised the essence of closed user group testing before AI deployment. He explained: “Bring stakeholders into the room… go back to the product requirement document, tick all the boxes one by one… ensure your AI-driven product has achieved what you set out to do. When that’s done, move on to continuous improvement.”

He likened AI development to raising a child: “When you deploy it, AI starts learning on its own. It feeds on data, so regular audits and framework adjustment sessions are critical to ensure the system delivers sustainable value.”

Security and Scalability in AI Systems

The panellists highlighted the importance of cybersecurity in AI-driven systems. Pointing out the emergence of new roles such as large language model (LLM) cybersecurity experts: “These are people building systems to safeguard AI technologies. Such jobs didn’t exist five years ago, but they’re now crucial for protecting data and ensuring system integrity.”

Opportunities for AI in Africa

Addressing the future of AI in Africa, Ayodeji Ogunmola said: “There’s a lot of money in Africa that has not been harnessed yet. Voice-over AI could revolutionise financial inclusion by enabling people, especially those who aren’t tech-savvy, to access services through phone interactions. This can include account creation, KYC processes, and transactions.”

Ogunmola noted the benefits for underserved populations, such as rural farmers: “A farmer named Musa could get access to microloans because AI analyses his farming patterns and mobile data.”

AI’s Role in Fraud Detection and Improved Customer Experience

Fraud detection is an important subject when it comes to AI. Ogunleye Oluwatobiloba expatiated this: “AI can help in fraud detection and prevention by monitoring transaction patterns and reducing fraud rates, building customer trust.”

He noted additional benefits of AI, including:

• Smart payment gateways for instant, secure cross-border transactions.
• Dynamic currency conversion providing real-time rates.
• AI-driven credit scoring systems enabling microloans for customers based on their transaction histories.

AI and Human Expertise: A Synergistic Future

Countering fears of job displacement by AI, Moniade Adeniyi reassured professionals: “AI does not have a mind of its own; it resonates based on the information you provide. Professionals must train AI to respond effectively to human needs. Instead of losing jobs, we’ll be creating scenarios and guiding AI’s learning process.”

Adeniyi noted that this approach would open opportunities across sectors, urging professionals to stay proactive in adapting to the AI era.

Organisations must embrace AI responsibly, ensuring human oversight and continuous improvement. “If you follow these guidelines, you’ll create a system that works as it should—delivering value to both the organisation and its customers in a sustainable way.” This will drive innovation, inclusion, and resilience across the financial sector.

Listen on Spotify.

The post Techeconomy Business Series #3: Major Lessons for Techies in Building Fintech Solutions appeared first on Tech | Business | Economy.

Held at Eko Hotel, the Zenith Tech Fair 4.0 brought together industry leaders, tech enthusiasts, startups, and stakeholders to explore cutting-edge technologies shaping the future of business and lifestyle.

Highlights of Zenith Bank Tech Fair 4.0

Dr. Jim Ovia, the founder and chairman of Zenith Bank, inspired thousands of people who gathered at the event, emphasizing the importance of the annual tech fair.

Dr. Ovia also spoke about future plans to properly integrate technology in Zenith Bank for better and more efficient services.

Dame (Dr.) Adaora Umeoji, the group managing director of Zenith Bank Plc, in her welcome address, appreciated the chairman, Dr. Jim Ovia, for birthing the idea that led to the establishment of the tech fair initiative five years ago.

She thanked him for his vision in utilising technology to revolutionise the world of business and banking.

Dame Umeoji also stressed the importance of innovation and embedded finance in ensuring strong and enduring institutions.

According to her,

“It is paramount that we adapt and adopt technology to stay ahead of the curve. We have seen various cases of companies that failed because of their lack of innovation. It is quite obvious that when companies fail to innovate, they can easily be displaced. So, this is not the time to be orthodox; innovation should be a top priority for us.”

The GMD said Zenith Bank remains committed to providing digital solutions that empower businesses and individuals.

In his goodwill message, Mr. Babajide Sanwo-Olu, the Governor of Lagos State, called for a global approach to doing business in the country.

“What we need to do is to be able to enhance our product and services in order to compete in the world. We can’t continue to act local, we need to think global. Anything that we’re doing now, we need to be able to know that we are not just serving a local market, we actually want to serve the global market, and I’m glad that consistently, for the past four years, I have kept up with the Zenith Tech Fair.

Inspiring Keynote presentation

Robin Speculand, an expert digital implementation specialist graced the event all the way from Singapore.

He took the audience through series of trivia and quizzes to help them understand the evolving digital transformation landscape.

Speculand stated that for business to grow and evolve its technology there has to be a digital mindset. He expatiated on digital mindset thus;

“Empowerment: every business must carry the mindset that their services must empower people

“Platforms: the digital mindset allows businesses make use of multiple platforms that can be accessible by anyone

“Experimentation: a business must be ready to try out new things and take risks.

“Asking the right questions: a digitally minded person must know the right questions to ask

“Customer centric: the business must focus on what the customers want and tailor the products or services to suit their needs.

“Stakeholders: the business must have powerful stakeholders that are also very knowledgeable and experienced in the tech space

“Agility: a digitally minded business must be active and quick

He also mentioned that, digital transformation fails sometimes because some companies want to change the entire culture of the people or because they are transforming their entire business thereby losing the policy that the customers have come to trust.

“Digital transformation is not about having a digital strategy it is about having strategies in a digital world. Also, at the heart of digital transformation always comes the customer”, he said.

Danilo McGary,  a renowned expert in digital transformation and AI, also enlightened the audience about the possibilities of artificial intelligence (AI).

“AI has been in existence for over 60 years but was not really developed until now. There are three kinds of AI; Narrow AI; Traditional AI which is the regular AI that helps in answering questions just like ChatGPT or Gemini, and Artificial Generative Intelligence (AGI) is an AI system that can do anything a human or a group of humans can do and do it even better”.

“The Generative AI has advanced so much that it can learn things on its own without any prompt or instruction”, he said.

Dr. Jania Okwechime, the partner and AI | data leader for Deloitte, Africa, added that generative AI helps to increase efficiency and transform businesses.

“Gen AI can be used for fraud detection to prevent cybercrimes. It can also be used for document search and synthesis”, she said.

Panel Discussions | Technology in Business and Governance

The Zenith Tech Fair 4.0 also featured panel session with Wole Olutoye, Ada Jabaru, Funke Opeke, Guy Kuti, Kashifu Inuwa Abdullahi, Engr. Bisoye Coker-Odusote, Dr. Anuwal Adam Sa’ad, speaking.

They unanimously agreed on the need to cautiously improve application of technology to every sector of the economy, especially the health sector to promote efficiency, accuracy and effectiveness, securing of documents to avoid impersonation and theft, amongst other discussions.

Innovative Product Launches and Exhibitions

The tech fair served as a platform for unveiling groundbreaking solutions. Leading exhibitors, including Ethnos, ZOHO, Zone, Vertiv, ZamZamPay, Dataflex, Zenith Insurance, etc, showcased products ranging from AI-powered cybersecurity solutions, data centre tools to cutting-edge fintech innovations.

Zecathon

Meanwhile, 10 contestants in the hackathon session at the fourth edition of the Zenith Tech Fair (#ZenithBankTechfair2024) received a total of N77.5m in prize money.

The winners emerged at the tech fair themed ‘Future Forward 4.0: Embedded Finance, Cybersecurity & Growth Imperatives – The Impact of AI,’ held on Thursday in Lagos.

The prize money was shared among 10 finalists who emerged from the over 1,700 contestants took part in the hackathon [READ MORE HERE].

Zenith Bank’s Digital Innovation

The bank demonstrated its pioneering digital banking services, reinforcing its role as a leader in Nigeria’s financial technology space. Attendees experienced live demonstrations of the bank’s seamless payment solutions, mobile apps, and innovative tools designed to enhance user experience.

Driving Nigeria’s Tech Ecosystem Forward

Zenith Bank Tech Fair 4.0 emphasized collaboration as the key to accelerating Nigeria’s tech ecosystem. By connecting innovators, investors, and businesses, the event underscored Zenith Bank’s leadership in promoting technology as a driver of sustainable development.

Social Media Buzz

The event trended on social media platforms, with the hashtag #ZenithBankTechFair4 gaining traction among attendees and tech enthusiasts. Users shared highlights, photos, and key takeaways, further amplifying the fair’s impact.

Looking Ahead

As Zenith Bank Tech Fair 4.0 concludes, anticipation builds for the next edition. With its dedication to championing innovation, Zenith Bank continues to pave the way for technological progress and digital transformation in Nigeria.

*For more more stories on tech initiatives, keep following Techeconomy on social media.

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