How might we enable fintechs to innovate for financial inclusion
Leonard Francis Vibbi, Community Initiatives Coordinator at iDT Labs, talks about the role of West African fintechs in bridging the financial exclusion gap and what they need to thrive (co-authored by Mahrukh Murtaza)
In recent years, West Africa has seen the rise of various innovative solutions, particularly those offered by fintechs, to improve financial inclusion among the underbanked and underserved. Countries such as Kenya, Uganda, Nigeria and Ghana are currently among the main hubs of fintech activity owing to their highly developed mobile ecosystems.
In Sierra Leone too, mobile phone coverage is at 95%. Unfortunately, about 87% of the country remains excluded from financial services, especially the informally employed, women, youth, the disabled and the elderly, which puts these groups at great risk of remaining trapped in a cycle of poverty. What has been uplifting to note however, is the rise in financial services for the financially excluded by local fintechs which are taking advantage of the high mobile penetration rate and are fueled by the immense need for non-traditional and contextualised solutions. If these new initiatives are to thrive in Sierra Leone however, they don’t just require the right technical skills; they need an enabling environment, international connections, mentoring and representation. They also need to operate collaboratively with local government institutions.
This is the reason why the Sierra Leone Fintech Association(SLFintech for short)was set up this year. Started by Salton Massally of iDT Labs and Mahmoud Idris of Afcom, the SLFintech Association was envisioned to become the meeting point between fintech innovators, government regulators and other relevant stakeholders in Sierra Leone. The Association not just aims to represent local fintechs , but it also aims to connect them to global opportunities and initiatives as well as advocate on their behalf on policy making matters. As part of its main aims, the Association headed the country’s first consultation to discuss and collect feedback on the regulatory sandbox framework draft created by the Bank of Sierra Leone (BSL). The meeting was conducted with several fintechs and some mobile operators in order to make them aware of the BSL guidelines as well as to hear their concerns and collect their feedback regarding the draft.
Although sandbox frameworks are not typically designed to be about financial inclusion, they have gained popularity in the development context. The regulatory framework will allow fintech startups and other innovators to conduct live experiments in a controlled environment to promote innovations that could advance financial inclusion without incurring major risks.The bigger picture is to bring fintech companies and regulators on the same page so that maximum benefits can be achieved with minimum obstacles. If Sierra Leone wants to count itself among the top countries for financial inclusion innovation, it needs its fintech companies, policy makers and regulators to have consensus on the major goals, and organizations like the SLFintech Association have a significant part to play in ensuring that this is achieved consistently. The sandbox framework consultation is just the first step towards leveling the playing field for existing and upcoming fintechs to enable them to innovate and bring forward ideas which can revolutionise the financial services landscape for the 87% unbanked population of the country. The government as well as several notable development organisations have also begun to take note of the immense potential of fintechs to bridge the financial exclusion gap; earlier this year the Bank of Sierra Leone, FSDAfrica and UNFPA initiated the first Fintech Challenge of the country and received several commendable applications by local fintech companies. The challenge is currently in its final round, with winners set to receive significant funding to push forward their products.
It’s safe to say that Sierra Leone is on the way to having a thriving fintech ecosystem, but we have a long way to go. The good news is we’ve got the first flags flying and our sights are set high. With major local bodies and organisations such as the SLFintech Association working together, the country could soon be on the financial inclusion innovation map.
Are you promoting fintech innovation in West Africa? Share your thoughts in the comments! Or learn more about what we are doing for financial inclusion in Sierra Leone.