Technology in Africa is growing faster than the speed of light, especially in the financial technology (FinTech) sector.

However, 57% of individuals in Africa’s Sub-Saharan area do not have a bank account. Isn’t that sad? This figure highlights the obstacle that financial inclusion in Africa continues to face.

This gap is more than just a statistic; it is a huge roadblock that prevents millions of people from being financially independent and contributing fully to the economy.

Savings accounts, loans, and insurance—all vital assets for economic mobility—are unavailable to these marginalised African people.

Although the bulk of Africans still lack access to fundamental financial services, we cannot deny that mobile money systems like M-Pesa, Orange Money, and Vodafone Cash have made financial inclusion their main goal in specific regions of Africa.

For the uninitiated, financial inclusion refers to efforts to ensure that all people and businesses, regardless of their personal net worth or company size, can access and afford financial products and services.

It is obvious that economic growth greatly depends on financial inclusion, and a country cannot develop to its full potential without it.

In essence, having easy access to financial services is imperative for reducing poverty because it allows people to invest in businesses, obtain credit, save safely, and avoid financial shocks. Additionally, it promotes trade, fosters entrepreneurship, and maintains economic expansion.

However, financial inclusion is inequitable in Africa. This is so because financial progress on this continent is hindered by several issues, including restricted access to banking facilities, financial illiteracy, and a lack of regulatory frameworks.

On the flip side, while informal financial services are essential, their growth frequently carries serious hazards, including fraud and abuse, which exacerbate inequality. This is the more reason effective strategies are pertinent for FinTech companies aiming to take advantage of the untapped potential of the African economy.

Other than being a social problem, financial inclusion is a market that is expanding quickly and offers special chances for innovation.

To reach the underserved population, mobile technologies, digital wallets, blockchain, and data analytics are all disrupting the status quo.

However, simply incorporating technology is not enough to achieve prominent success in this field.

This calls for an in-depth understanding of regional settings, customer behaviour, and the capacity to modify products to accommodate the various demands of African communities.

Here are five key strategies that are aimed at helping businesses overcome the difficulties associated with financial inclusion in Africa:

1. Mobility
2. Partnership
3. Community
4. Localisation
5. Incentivisation

Note that these strategies capitalise on the instant integration of mobile technologies while addressing obstacles such as a lack of banking options, legal restrictions, and consumer mistrust.

Businesses that use these strategies will not only drive financial inclusion but also open new channels for expansion in Africa’s market. Let’s examine each of these strategies.

1. Mobility

In Africa, where a lot of people lack access to banking services, mobility becomes key to improving financial inclusion. Financial services now have new potential because of the rapid adoption of mobile phones.

Mobile money services, like Kenya’s M-Pesa, have previously shown how effective mobile technology is in getting around structural problems.

Without the need for physical branches, companies that use mobile phones can provide services, including loans, savings accounts, and payments to individuals. Additionally, mobile money makes it possible to conduct safe transactions in remote locations with limited access to traditional banking services.

Nonetheless, for businesses to fully benefit from this, they must make sure their services work well even in places with poor internet connectivity and are interoperable with different mobile platforms.

They must constantly be innovative as mobile technology advances to satisfy the rising needs of Africa.

2. Partnership

For Africa’s financial inclusion sector to succeed, there is a need for strategic partnerships. Due to the variety of the continent’s problems, including logistics and complicated regulations, companies must work with regional partners who understand the requirements of various areas.

Financial services can be accessed more easily with the support of strategic alliances with telecom providers, regional financial institutions, and fintech businesses. For example, Safaricom’s partnership with Commercial Bank of Africa has increased financial inclusion by enabling M-Pesa customers to access savings plans and microloans straight from their phones.

Partnerships with government and non-governmental organisations also offer the community trust and regulatory backing required for broader incorporation.

Partnerships provide companies access to existing networks and guarantee that the financial solutions they provide are sustainable and scalable. Along with providing insights into cultural quirks, these partnerships ensure that items are made to appeal to local consumers.

3. The community

Creating a strong community around financial inclusion products is essential for building trust and encouraging usage. For financial transactions like lending and saving inside family or community contexts, social networks are heavily relied upon in many regions of Africa.

The adoption rates of financial solutions can be raised by utilising this trust and by incorporating community-based models. Peer-to-peer lending models and community-driven savings clubs, for instance, have been informally operating for centuries but are now being digitised in nations like Ghana and Nigeria to provide a more structured and secure method of managing these assets.

Businesses can also modify their services to match the unique needs of users by using community-driven information.

4. Localisation

This is another key strategy for thriving in Africa’s diverse financial environment. Generally, every country has its own regulatory framework, consumer preferences, and financial culture. So, there is no way a generic strategy would work.

This is why businesses must localise their financial products to accommodate local languages, customs, and needs. For example, to serve a diverse demographic, digital wallet providers need to handle several regional languages and currencies.

Understanding the various challenges individuals encounter—such as low literacy rates or restricted access to technology—and creating user-friendly, accessible solutions are other aspects of localisation.

Considering this, companies can guarantee increased integration and engagement by customising goods and services to fit the unique requirements of diverse groups.

5. Incentivisation

Incentives can accelerate the adoption of financial inclusion products in Africa. In addition to providing access to financial services, businesses must encourage people to utilise and interact with these services regularly.

Increasing client acquisition and retention can be greatly aided by providing incentives for registering, completing transactions, or recommending others.

To entice new users, mobile money firms frequently offer microloans, airtime top-ups, or bonuses. Users may find these services more interesting and less daunting if such financial behaviours as investing or saving are gamified.

It is also possible to customise incentives to meet the requirements of a particular group, like providing microloans for small enterprises or savings bonuses to low-income families.

However, companies need to make sure these incentives are long-lasting and in line with long-term objectives. Overall, an ecosystem of trust and loyalty is produced by well-crafted incentives, which promote growth and beneficial societal effects.

Conclusion

As you have already seen, providing products and services is only one aspect of financial inclusion in Africa. Its goals are to empower communities for global development as well as change and improve the lives of Africans.

Companies may produce goods that appeal to Africa’s varied markets by concentrating on strategies that include utilising mobility, establishing meaningful partnerships, interacting at the community level, customising solutions to meet local demands, and providing incentives for adoption.

These strategies not only guarantee market success but also help to improve economic growth, reduce the gap in financial access, and create a more equitable future.

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.

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.