Fintech is a bright ray for African economies, with more than 491 fintech startups across the Continent and over $320million raised in funding. Forbes reports that there has been a growth surge in Fintech of 60% over the last 2 years. “No space has quite the potential impact of the fintech space, when it comes to impact and profits – in Africa; startups operating such platforms are able to significantly address financial exclusion on the continent and thus promote development in other areas,” comments Disrupt Africa co-founder Tom Jackson.
Although Uganda’s Fintech industry is still emerging, its has had an impact and influence at both the micro and macro-economic levels. Uganda is the first African country to adopt a code of conduct upon which players in the industry are streamlined. In addition, the industry has attracted both locals and international investors with 60% of the Fintech companies being local and 40% multinational. However, Uganda can still do better, Frank Tumwebaze the former Uganda Minister for ICT, commented that Fintech’s are crucial to aiding electronic transactions and e-commerce and will be vital in-service delivery through integration of systems.
Uganda has not attracted significant funding for fintech as compared to other African countries. According to Partech Africa; Kenya, Nigeria and South Africa received 78% of the total technology start-up funding in the year 2018, leaving the rest of 51 countries to fight for 22%. Furthermore, according to the 2018 study by Financial Sector Deepening Africa, East Africa Venture Capital Association and Intel lap; Kenya still takes a lion’s share of 98% of the total investment leaving Uganda, Rwanda and Tanzania with only 2% to divide amongst themselves. If Uganda as an economy seeks to consolidate its place and position at a continental level as a Fintech hub; then she ought to do things differently in order to become competitive and attractive to more investment and funding.
For Uganda’s Fintech sector to command respect in the region and continent as a whole, some measures must be taken up especially relating to proper regulation. The Financial Technologies Service Providers Association (FTSPA) has drafted a code of conduct for all its members to abide by. This has been well received and praised by various industry stakeholders. This is not only good for Uganda as a country but for Africa as a continent. This because Uganda shall now work as a benchmark for the rest of Africa’s economies to replicate the same or even much better as Fintech industry continues to take root on the continent. Such regulation provides a solid foundation.
“Investors are always looking out for a conducive regulatory environment that will ensure safety and good return on their investments,” said FITSPA engagement partner, Zianah Muddu on the launch of the draft code of conduct. Adding to his voice, the head of Financial services consulting at Intellap, Himanshu Basal, said the absence of a regulatory framework was inhibiting Uganda from attracting funding from potential investors. (New Vision,2020)
Regulating Uganda’s Fintech comes with many positive factors like improved credibility of the sector, increased trust and confidence amongst customers and investors. It also minimizes the risk of fraud, helps in setting precedents upon which future cases can be judged. Finally, it may facilitate the basis upon which best practices can be recognized and awarded. This is a great milestone attained by the Fintech sector in Uganda, other African economies ought to emulate this.