by AKANI CHAUKE
JOHANNESBURG – AN executive in the financial technology (fintech) sector has urged African countries to put in place the right conditions to reap the full benefits of digital payments.
Joel Bronkowski, Country Lead, South Africa at Paystack, said part of that means ensuring that the regulatory environments favouring secure digital payments were in position.
He noted that was something which a growing number of African governments were doing but “that’s not all there is to it.”
“Governments can, for example, work with the private sector to drive the growth of digital payments,” Bronkowski said.
“That means working together to provide support, funding, and regulatory sandboxes to encourage the growth of fintech startups that offer innovative digital payment solutions.”
The South African Reserve Bank (SARB), for example, has established a fintech unit to regulate and support fintech innovation.
The unit developed the central bank’s initial position on innovation facilitation structures, such as regulatory guidance units and sandboxes.
It has also taken on initiatives such as the hosting the Southern African leg of the Global Fintech Hackcelerator, Project Khokha.
Bronkowski said that kind of assistance, coupled with the country’s pre-existing financial knowledge and resources had helped create an environment where some of the country’s fintech startups are ranked among the world’s best and where the country accounts for 40 percent of all fintech revenue in Africa.
“From a cross-continental perspective, meanwhile, things like the African Continental Free Trade Area (AfCFTA) have prompted countries to improve cross-border digital payment infrastructure to make intra-African trade simpler.”
This includes efforts to harmonise payment systems and reduce cross-border transaction costs.
The Pan-African Payment and Settlement System (PAPSS) is lauded as perhaps the most high-profile of these efforts.
First mentioned in 2019 and launched in 2022, the system is designed to ensure that payment facilitators, whether banks or fintechs, can plug into it and make instant, secure payments on behalf of their customers.
“It is, in other words, a great example of a rising tide lifting all of the proverbial boats,” Bronkowski said.
He believes while cash will likely continue playing an important role in the African payments landscape, it should be clear that digital payments will only increase in use and importance in the coming years.
As some of that growth will be organic, the benefits of high levels of digital payments to individual countries and the continent are significant.
According to McKinsey, cash still accounts for approximately 90 percent of payments across the continent but things are changing with more businesses and consumers adopting digital payments.
Research released in 2022, for example, shows that 41 percent of Africans made a digital payment in 2021, compared with 27 percent in 2017.
“It’s therefore critical that public and private players alike do everything possible to encourage their adoption,” Bronkowski concluded.
– CAJ News