The Future of Money in Africa

The rise of FinTech and the battle for control of Africa’s financial sector

A money changer exchanges currencies in Saly, Senegal. Photo: IMAGO / robertharding

An estimated 1.4 billion people worldwide are excluded from the traditional banking system. Roughly two thirds of them live in Africa. These people predominantly work in the informal economy, have no regular income, and consequently are hardly able to build up any meaningful savings.

Fabio De Masi is a former MEP and MP for Die Linke, where he was vice chair of the parliamentary group and its spokesperson on financial affairs. He is currently a research fellow with the Financial Innovation Hub of the University of Cape Town in South Africa.

The expansion of mobile telecommunication and internet networks across Africa has spurred the growth of financial technology (FinTech), a branch of the tech sector combining financial services and data technology. Similar to the microloan industry, FinTech corporations promise financial inclusion of what are euphemistically called “underbanked people” as well as the promotion of small-scale entrepreneurship and, as a result, poverty reduction. In practice, however, mobile money networks in Africa exploit their market power by charging high fees and push low-income households to take on private debt, often causing more harm than good.

Fabio De Masi served as an MEP and MP for Die Linke from 2014 to 2021, where he became widely known known for this investigations into the scandal around the German payment processing firm Wirecard. Currently, he is a research associate at the Financial Innovation Hub of the University of Cape Town’s School of Economics. In a series of publications and interviews conducted for the Rosa Luxemburg Foundation, he lays out an overview of the role and future of money in the economy and the perils of investor-driven FinTech in Africa, and discusses political solutions including Central Bank Digital Currency (CBDC), the public use of financial technology, and need to protect the use of cash for small-scale transactions of poorer households.

The dossier also documents contributions to the monetary debate in Africa by Ndongo Samba Sylla, development economist at the Rosa Luxemburg Foundation’s West Africa Office in Dakar, Senegal, and co-author of the book Africa’s Last Colonial Currency: The CFA France Story (Pluto, 2020) as well as Fadhel Kaboub, Under-Secretary-General for Financing for Development at the Organisation of Educational Cooperation — OEC, Associate Professor of Economics at Denison University, and organizer of the 2019 conference “The Quest for Economic and Monetary Sovereignty in 21st Century Africa”.

As FinTech companies scramble to capture the African market, it is vital that the state and civil society actors work to strengthen regulation and protect the interests of working people across the continent.