Regulators and fintech innovators in Africa need to talk more

Africa’s fintech industry is on track to generate approximately $230 billion in financial sector revenue by 2025, despite political and economic challenges, according to a report by McKinsey. However, the continent’s success hinges on reaching its 1.4 billion population with essential services to support businesses across the region.

One major hurdle is the fragmented regulatory landscape, which increases the cost of compliance for fintech firms, sometimes as high as 5-10% of their revenue. This complex environment discourages foreign investment and stifles growth, particularly for smaller startups with limited resources. Regulatory harmonization is needed to streamline operations across Africa’s 54 countries.

Collaborations between fintech companies and regulators are essential to fostering growth. Successful initiatives, such as Nigeria’s Fintech Adoption Roadmap Policy and the Pan-African Payment and Settlement System (PAPSS), show the benefits of cooperation. Africa’s fintech market has immense potential, but balancing innovation with regulatory oversight is key to ensuring financial stability and inclusion.