• Thu. Dec 1st, 2022

From mobile banking to powering fintech, growing SMEs and expanding the middle class

ByCindy J. Daddario

Jun 2, 2022

By Raymond MoodleySenior Banking Director, Middle East and Africa, Oracle Financial Services

A A decade ago, the big news from Africa was mobile banking, a term used to describe very minimalistic phone-based banking services. Today, mobile banking and services remain key initiatives to provide financial access to unbanked populations, but they have evolved to mean richer digital experiences and a host of features, all made possible by the proliferation of smartphones. At the end of 2019, almost half a billion people in sub-Saharan Africa (or 45% of the population1) subscribers to mobile services. And while the pandemic has slowed some trends, it looks like demand is getting back on track: IDC (International Data Corporation) reported that in the fourth quarter of 2021, smartphone shipments amounted to 21.5 million units2while over 27 million feature phones have been shipped.

All of this is happening in a broader context: the continent as a whole is reeling from the impacts of the pandemic, with gross domestic product (GDP) contract by 2.3% on average across Africa3 in 2020. While that may seem like a small fluctuation, the reality of these country-by-country GDP contractions has profound ramifications for the growth of the middle class and the willingness of banks to undertake riskier investments. However, the pandemic has also had another (and opposite) impact: the adoption of digital services in banking and all other sectors, fueled by branch closures to stop the spread of the COVID-19 virus. All African financial institutions now expect their customers (individuals or businesses) to carry out an increasing share of their transactions online or via mobile services.

To its credit, the mobile industry has stepped up to engage with businesses and governments across Africa. It provided jobs, waived mobile money transaction fees, discounted data rates for education and health sites, and cash or equipment donations. In some countries, the combination of mobile access and internet technology has spurred the creation of fintech (financial technology) startups that aim to provide additional services to this growing smartphone-using segment of the population.

Overall, the African banking market continues to perform well in terms of growth and profitability, despite the pandemic-related gloom and the region’s withdrawal from major European financial organisations. The rapid evolution of digital services and the adoption of smartphones have been crucial in boosting economies and opening a real path to financial inclusion across Africa.

Microfinance that Works: Helping Women and the Underbanked Get a Head Start in Nigeria

In Nigeria, the microfinance bank LAPO (Lift Above Poverty Organization) is leading the way in providing financial services to low-income households and women. The organization has focused on strengthening the empowerment of women, whether they are customers or employees; of its more than 4.5 million customers in 2020, 73% were women. Women also represent 57% of its workforce of approximately 7,500 people. LAPO’s success includes over 490 branches in 34 of Nigeria’s 36 states. LAPO is above all a story of innovation at the service of target customers, with a community approach and a range of financial products aimed at low-income customers (low entry conditions, arrangements for a free one-year insurance fire, burglary and disability to provide additional coverage for mother and child, etc.). Their annual reports4 testify to the hard work required for financial inclusion.

Fintech innovation and SME growth: a driver of financial and economic inclusion

The democratization of access to financial instruments is an essential step in economic growth, with a real and measurable impact on GDP. Ernst & Young (EY) has estimated that financial inclusion could lead to a 30% increase in GDP5 in countries like Kenya. This increase is essential in other emerging markets, where access to affordable financial products can have a significant impact on economic growth and social well-being.

2021 has seen increasingly large funding deals in Africa, as tech startups across the continent have raised nearly $5 billion. Of these, fintech dominated fundraising, accounting for nearly $3 billion, or two-thirds of all investments made by startups across the continent last year. a report6 by market analysis company Briter Bridges showed. This amount was also more than double the $1.35 billionseven investment that fintechs in Africa raised in 2020 and tripled in 2019. And there are states where fintechs have taken root in greater numbers, according to a Disrupt Africa8 study: South Africa, Nigeria, Kenya, Egypt and Ghana are among the top countries.

But fintech numbers alone don’t tell the whole story – inclusion starts with an increase in the number of SMEs (small and medium enterprises) across the continent. As an IMF report points out9, growing small businesses create about 80% of the region’s jobs, creating a new middle class and driving demand for new goods and services. Access to finance as an SME is a well-known problem and one that many financial organizations try to solve while controlling the risks. In Côte d’Ivoire, COFINA (Compagnie Financière Africaine) focuses on mesofinance, a relatively new concept that offers small loans from 1,000 euros specifically to small and medium-sized enterprises. COFINA’s strategy focuses on leveraging digital channels to serve its customers and has invested heavily in the technology that underpins next-generation digital capabilities for SMBsten.

SME financing: job creation and evolution beyond the export of raw materials

Helping African SMEs access desperately needed finance is crucial not only for Africa but also for the global economy. SMEs are driving the generation of a growing middle class with disposable income across the continent, alongside market opportunities for new investors. That said, access to credit has been and remains one of the biggest challenges for SMEs in Africa, despite a series of efforts to make finance readily available. For example, the African Development Bank (AfDB) focuses on supporting micro, small and medium-sized enterprises through a program that provides $125 million in financing, combined with a $3 million technical assistance program. $.98 million from the Fund for African Private Sector Assistance (FAPA). In addition, the FSDEA (Fundo Soberano de Angola) has established a $250 million private equity fund to support entrepreneurs struggling to make their projects bankable.

However, this funding is not at all equitably distributed, as the story of chocolate start-up Bioko Treats in Ghana illustrates. Although the $100 billion cocoa industry started in Ivory Coast and Ghana, many local farmers receive only a tiny fraction of the income and never get a chance to taste the processed chocolate products. . A growing movement of entrepreneurs and governments are joining forces to change this reality and move African businesses up the value chain to chocolate production.

A recent Bloomberg Report11 brought to light the story of Bioko12, a company focused on the production of Belgian-style chocolate in Ghana. Bioko is hiring its staff in Ghana and plans to both serve the region’s growing middle class taste for chocolate and export processed products to Europe. Deemed too risky by local financial bodies, Bioko financed his business and started operations. Its ambition is to move Ghana from simply exporting the raw product to keeping more of the profits in the region. Although this is just a data point, it is an encouraging example of a future direction in which African businesses are taking center stage in the global marketplace.

Bringing it all together: A digital banking strategy for Africa’s future

When people can participate in the financial ecosystem, they can take control of their livelihoods to support their families, build businesses, invest in education, and plan for their future. This generates a more stable society because more people can look to the future with hope and dignity. With more than half of Africa’s population still unbanked, the door is wide open for fintechs and traditional banks committed to digital innovation to step in and influence meaningful social change.

Like everywhere else in the world, cloud technology is starting to fuel fintech innovation and next-generation financial experiments in Africa. With increasing competition to acquire customers and government incentives, the winner is the consumer or small business owner who can now invest in a better future.


1 GSMA (Special Group Mobile Association):”The mobile economy in sub-Saharan Africa 2020.”

2 IDC (International Data Corporation): “African smartphone market sees shipments dip amid global supply shortages, but growth set for 2022», March 23, 2022.

3 IMF (International Monetary Fund): “World Economic and Financial Surveys: World Economic Outlook Database.”

4 LAPO (Lifting Above Poverty Organization): “LAPO Annual Reports.”

5 EY (Ernst & Young): “How banks can play a bigger role in accelerating financial inclusion», Jan Bellens, April 25, 2018.

6 Briter Bridges: “Africa Investment Report 2021.”

seven Bloomberg: “Fintech Bright Spot Africa catches up in bumper year of funding», Roxanne Henderson, May 6, 2021.

8 Disrupting Africa: “Finnovating for Africa 2021: Reinventing the financial services landscape in Africa.”

9 IMF (International Monetary Fund): “Regional Economic Outlook: Sub-Saharan Africa is sailing in headwinds», April 2015.

ten The Guardian: “COFINA relies on Oracle to get loans to underserved businesses faster», African Media Agency, April 4, 2022.

11 Bloomberg: “Africa’s plan to bring chocolate profits home», Africa Plus, March 31, 2022.

12 Bioko treats: “Chocolate is our Akɔnɔdiɛ.”


Raymond Moodley is senior banking director for the Middle East and Africa at Oracle Financial Services. With over 25 years of experience in the African and international banking technology space, Ray has developed deep expertise in establishing and scaling banking operations for multinational corporations. Prior to Oracle, Ray led teams at Microsoft, ACI Worldwide, Temenos and fintech startups.