In 2016, global investment in fintech venture companies reached $23.2 billion, up 10% from 2015.
And, Africa is no stranger to the party. Today, Africa is considered a hotbed of fintech innovation and acceptance. The global fintech industry includes approximately 1,000 companies and startups, with over 300 fintech startups active in Africa alone—3 of which were recently included in the top 50 emerging fintech startup list by KPMG.
This heightened activity and penetration rate can be associated with the high level of unbanked citizens living in Africa. In Sub-Saharan Africa for instance, only 34% of the adults have a bank account. Therefore, many of the leading fintech ventures in Africa have focused on this need.
With its high proportion of young citizens who are tech savvy, it’s no surprise that Africa has had high acceptance rates of fintech solutions. Especially when it comes to mobile phone penetration rates, which are creating financial inclusion for many previously unbanked citizens.
Unemployment Rates in Africa Soar while Working Age Population Grows
Unfortunately, the same comparatively young adult population suffers from high levels of unemployment. The unemployment rate in Sub-Saharan Africa is 7.5%, while unemployment rates for youth aged 15-24 are reported to be between 12-14%. This classifies close to 70% of all workers in this region as vulnerable.
The youth population of Africa is poised to double itself, reaching 400 million by 2045. And with it, the problem of unemployment becomes one that can no longer be ignored. With 53% of African countries suffering from unemployment rates of over 10%, the continent will have to ensure employment for this growing population, in order to sustain growth.
Agriculture, the leading employment sector in Africa, is considered a key industry for providing employment to Africa’s youth.
Fintech Revolutionizes Employment in Africa
The growth of the African fintech industry however, brings much promise to Africa’s large, and educated population of young potential employees. In addition to the increasing number of African entrepreneurs who founded and lead fintech companies, as well as other technological startups, fintech ventures create jobs and promote growth. Fintech also provides novel yet accessible platforms for identifying employees, for creating employment histories, and of course, as a source of financial inclusion.
The mobile ICT sector contributes over 4 million jobs to Sub-Saharan Africa and over $100 billion to the economy. The growing fintech industry, with innovative products such as mobile wallets and novel lending platforms, is also generating jobs. In South Africa, for instance, the number of fintech jobs posted on the job site Adzuna, grew from only 5 in the beginning of 2016, to over 100 by September of that year.
Startups and small businesses are key in generating economic growth. Traditional banks cannot supply the financing SMEs require to grow and create new jobs, whether due to the limited number of branches in rural areas or to business owners’ preferences not to pay comparatively high rates on financing. Fintech, with its affordable micro-financing opportunities and peer-to-peer lending, provides an attainable financing resource to promote local business growth and create jobs.
Novel employment platforms
While not purely fintech, a number of novel employment platforms are revolutionizing the employment industry, and impacting the economy. Hellojob, for instance offers an app which serves as a job board for various intendent workers, such as plumbers, electricians, and cleaners.
The app creates an employment record which can be leveraged to obtain financial services, and additional jobs.
Talent in the Cloud is another job platform that offers a fintech-centric employment board, with access to over 90% of the African fintech talent pool.
Their online platform connects local employees with jobs from international companies.
With the projected rise in African work-aged youth, coupled by the comparatively high unemployment rates, it is imperative to create new jobs within the country. Employment boards offer solutions for reaching jobs, even abroad, as well as for creating employment records which can enable financial inclusion via credibility.
Fintech, as a growing industry, both within Africa, and globally, offers an additional industry for employment of African youths. Novel fintech banking alternatives can potentially assist SMEs in Africa in obtaining the financing needed to create jobs, and lower unemployment rates.