Cambridge University student think-tank report on landscape of digital finance in Africa 

Date: Monday, 12 April 2021

The Good Data Initiative (GDI), an independent think tank on the data economy run by students at the University of Cambridge, has released a new report evaluating the current landscape of digital finance in Africa on Wednesday, April 7, 2021 (read here: “Digital Finance in Africa: At a Crossroads”). 

Over the course of nine months, GDI analysts interviewed over 25 geographic and sector experts, identified current and emerging Fintech players across the continent using Crunchbase and GSMA data, and developed a proprietary database of digital finance regulation across the continent. 

Unlike previous reports focused exclusively on digital financial inclusion, this report took a comprehensive approach to analyzing the overall digital finance ecosystem. The resulting report identified specific regulatory, commercial, and infrastructural needs that must be met if digital financial services are to be a catalyst for a better long-term social and economic future across the continent. These include: 

• Shifting the current 70% concentration of funding in payment solutions alone to also include digital financing and investment services; 

• Addressing multiple customer needs that are not yet satisfactorily addressed, suggesting high untapped potential for new businesses in the digital finance sector;        

• Greater coordination between innovators and regulators at a national level, as the majority of countries were found to be either significantly over- or under-regulating at cost to either consumers or stifling innovation; and 

• Addressing three primary roadblocks limiting growth in the digital financial landscape within Africa: strengthening talent pipelines, increasing small- and medium-sized business (SME) funding, and developing hard infrastructure.

Co-author and data scientist Nnaemeka Obodoekwe has since built on insights generated from the report to successfully found an African digital lending solutions provider, Lenkie, with international talent investor Entrepreneur First.

The research team consisted of GDI Co-founder and President Bernhard Gapp; Gates Scholar and PhD candidate Âriel de Fauconberg; GDI analyst Arthur Bessis; GDI analyst Henry Goble; and GDI analyst Nnaemeka Obodoekwe.   

Bernhard Gapp, Co-founder and President of the Good Data Initiative, said:

• “Over- and under-regulation of digital financial services remain a significant challenge. Innovators and regulators must strike a balance that allows challengers to innovate while also protecting users, or risk promoting unsustainable market behaviour like the excessive digital lending practices found in Kenya today.”

Âriel de Fauconberg, Co-founder and Chief Research Officer of the Good Data Initiative, said:

• “Despite the high concentration of funding in the digital payments solutions space, our analysis identified multiple customer pain points being unsatisfactorily addressed across the continent. These gaps suggest a high untapped potential for the emergence of new ventures meeting those needs, but will require significant further cooperation between domestic and pan-African regulators, innovators, and investors to happen.”

• “Access to reliable hard infrastructure remains a significant hurdle to strengthening the African digital finance ecosystem. Stable internet connectivity in land-locked countries, reliable electricity, and widespread access to mobile phones are all be necessary for this sector to flourish.”

• “Understanding the past, present, and future of the digital financial services sector empowers us to evaluate how digital finance can function as a catalyst for a better economic future across the African continent post-COVID-19 pandemic — and equally importantly, the mechanisms for how this might take place.” 

Nnaemeka Obodoekwe, report co-author and founder of African digital lending startup Lenkie, said: 

• “The work we did and the insights gained from this project formed the basis for what we are building at Lenkie. I’m excited to see how the digital finance ecosystem in Africa evolves in the coming years.”

ABOUT THE GOOD DATA INITIATIVE (GDI)

The Good Data Initiative (GDI) is an independent, student-run think tank for intergenerational and interdisciplinary debate on the data economy. We conduct research around some of the most pressing issues resulting from the data and artificial intelligence revolution, as well as advise & host events on the impact of the data economy on humans, organisations, and society. GDI was founded in early 2020 by students at the University of Cambridge and rapidly evolved in response to the struggles we saw bright, motivated students going through as they searched for meaningful opportunities during the COVID-19 pandemic. 

ENDS

Report authors Bernhard Gapp, Co-Founder and President of GDI, and Âriel de Fauconberg, Co-Founder and Chief Research Officer of GDI, are available for interview.

CONTACT FOR INTERVIEW AND OTHER REQUESTS

Arthur Bessis, GDI Communications Lead: [+33 6320 00967], hi@gooddatainitiative.com