How fintech services are empowering Africa’s diaspora

by Sep 19, 2023Uncategorized

Africa’s fintech industry is currently experiencing exponential growth, with a projected market value of R1.2 trillion by 2030. Global corporations are rapidly joining the race for a slice of the fintech market on a continent where just under 500 million people are unbanked and 410 million are underbanked. Fintech services are revolutionising Africa’s financial sector by leveraging digital technology to provide access to essential financial products. 

One area where fintech has made particularly significant inroads is in empowering Africa’s diaspora – those African citizens living in other African countries. It is common practice for people to work in neighbouring countries and send money back home to their families every month. This process largely relies on fintech services.

Challenges for Africans sending money home

Africans living in other African countries often face difficulties sending money back home to support their families. Traditional banking methods frequently pose challenges because of the high cost of transactions, limited access to physical banking infrastructure and lack of transparency in the transfer process. 

These challenges often mitigate the amount of money that Africans in the diaspora can send home. On top of this, banks often charge high fees and tariffs for international funds transfers. With limited income available, citizens often look to fintech services to transfer money at a lower cost.

Africa's evolving mobile money services need better security

Money transfers between family members account for most of the international remittances in Africa. “Remittances are significantly larger than foreign aid. The United States pumps US$30 billion into the continent and the diaspora sends easily three-times that,” says Rahim Diallo, the founder and CEO of a fintech start-up called Jawudi.

“But because it’s individuals sending a few hundred bucks at a time every month we don’t have as much power and as much say in the direction the continent takes. The United States controls a lot more than we as a collective, as the diaspora does,” he adds. 

Jawudi currently uses blockchain technology for money transfers and is set to introduce an end-to-end payment system from the US into Africa. According to Diallo, most of the big companies like Western Union or MoneyGram do the cross-border transfer and then users have to switch to other local wallets or telco-led mobile money services that do peer-to-peer transfers.

The popularity of fintech services

Fintech services, mobile money and money exchanges are becoming increasingly popular methods for Africans in the diaspora to transmit funds across borders. These services are more accessible, offer lower fees and are more user-friendly than traditional banking methods. 

For instance, Mukuru, a Zimbabwean fintech business, has built a customer base of over 10 million users by offering cross-border remittance and mobile airtime services. It has successively managed to penetrate the African diaspora markets in South Africa, the UK, Canada and Asia. 

Zimbabweans working in South Africa and neighbouring countries can drop off local currency at a Mukuru kiosk and then their family members can pick up the Zimbabwe dollar equivalent from a nearby kiosk at home. Alternatively, mobile funds can be transferred through the Mukuru app.

Other fintech businesses like Chipper Cash, Flutterwave, and Paga have similarly resolved the payment restrictions that Africans in the diaspora face. With the help of these services, the African diaspora now can quickly and efficiently send any amount of money to their families through mobile devices or nationwide kiosks.

Vector illustration of a man and woman standing next to giant smartphones with gold coins transferring between the two.

How 4C Group’s fintech software can help

4C Group offers several fintech services that are built around our innovative iNSight software. These services are designed to resolve the payment issues that Africans in the diaspora face. By developing custom software applications for financial service providers and fintech firms in Africa, 4C Group helps to provide secure, transparent, affordable and easy-to-use fintech solutions that cater to the needs of African fintech companies.

Using 4C Group’s fintech software can help drive deeper financial inclusion and support Africa’s growing diaspora to lead better lives. The fintech industry has been game-changing in improving Africa’s financial services sector by providing access to essential financial services. 

With the right fintech software solution, Africans in the diaspora can quickly and efficiently send funds to support their families back home. If you’re a financial service provider or fintech company that needs innovative software solutions, get in touch with 4C Group today.

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At 4C Group of Companies, we strive to effect operational changes and cost savings for customers through our iNSight product and associated services. This product’s main function is to re-purpose and deliver business-critical information to a variety of systems and stakeholders. 

We specialise in information management, business assurance, fintech solutions and a variety of cyber security services. For more insights into our products and services, check out our blog page or follow us on Facebook, LinkedIn and Twitter.

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