By Akinlolu Tanimowo
Technological innovation in financial services, simply known as fintech continue to advance globally, with the most prolific, being products that offer payment and fund transfer solutions. The great potentials of fintech in transforming banking and governance are becoming more evident. Recently in Bali, Indonesia, the International Monetary Fund (IMF) and the World Bank Group launched a Fintech Agenda, to “harness the benefits and opportunities of rapid advances in financial technology that are transforming the provision of banking services, while at the same time managing the inherent risks”. Countries, especially the ones with low-income economies are being urged to leverage these disruptors to position themselves as drivers of the next economy, which will rest largely on technology.
In Africa, fintech innovation has proven very efficient in promoting financial inclusion, driving transparency, extending credit to more borrowers, and giving customers improved banking experience. According to a report featured on Bloomberg, Financial Sector Deepening Africa, Fintech is capable of contributing $150 billion to Africa’s GDP by 2020. “A primary reason fintech startups remain prominent on investors’ radar is the sheer necessity of the work they do in plugging gaps in financial services in Africa. While in more developed economies, fintech startups focus on disrupting the already existing banking industry, in Africa, they are typically building technical infrastructure and systems from scratch”, Quartz Africa explains.
The evolution of Nigeria’s fintech sector has been a great growth story as well. Several fintech firms have drawn the attention of foreign and local media, not just with news of attracting foreign investments, but also for breaking new grounds in the use of technology. Some examples of these solutions include Remita, Paga, Paystack, Flutterwave and Mines. In particular, Remita, which currently powers the Treasury Single Account, alongside other major state government treasuries and companies in the private sector has become one of the most successful home-made fintech solutions emanating from Nigeria and Africa.
Fintech has played a very significant role in the success of the implementation of Nigeria’s Treasury Single Account (TSA). This single achievement, regarded as the most remarkable for fintech in Africa, presents an opportunity for Nigeria to boast of ingenuity in Africa’s emerging fintech sector. Despite being several steps behind in terms of technological advancement, Nigeria’s big leap, as currently witnessed in the management of its cash resources using the TSA, shows the great potentials of the fintech ecosystem in the country.
The TSA is very strategic as the poster child for fintech success, considering the far-reaching impact it has made since it was fully implemented by President Muhammadu Buhari in September 2015. The TSA has put an end to government’s highly porous and fragmented banking arrangement and it has consolidated over 20,000 government-owned accounts which were breeding grounds for mismanagement of public fund.
According to the Accountant General of the Federation, Ahmed Idris, the TSA grossed in over N8.9 trillion as at March 2018. About 1,674 Ministries, Departments and Agencies (MDAs) have also been enrolled. Other benefits include savings of over N40 billion monthly in Ways & Means charges; ability to determine consolidated FG cash position; improved budget implementation due to enhanced liquidity; and better control and oversight over MDA operations.”
Though the government continues to vend these achievements, less has been said about how Nigeria made the TSA work without relying on imported software. Moreover, how this feat could position Nigeria as a global player in fintech. With the surge in big data and Artificial Intelligence, there can only be more gains for Nigeria, if indigenous fintech firms are given the right support to break into new territories.
Prime Minister Theresa May, during her last visit to Africa, came with a delegation of UK fintech specialists to meet with entrepreneurs to establish trading and export ties in emerging markets. She came to Africa, armed with an agenda for UK fintech, alongside Alastair Lukies, her Ambassador for FinTech. To this end, she said, “the scale of opportunity for the capital’s businesses across Africa is huge. 111 African companies have already come to London to raise the funds they need to invest and grow, and now we want to go further to ensure that the UK is the partner of choice for African nations”.
The Nigerian government must take a cue from this, and similarly, promote a fintech agenda for Nigeria by building significant partnerships with the international community. Nigeria’s fintech success stories should be a point of reference when leaders speak of the country on international platforms. Currently, there seems to be a major disconnect between the government and the fintech sector. Fintech may be the crude oil of the future, if the government recognises its value proposition and can properly showcase existing talents within the country.
Akinlolu Tanimowo is a post-graduate student of Economics who likes to write about investment opportunities in Nigeria