The Africa Fintech Festival have been spurred by lively conversations over the future of fintech regulations throughout the continent. The discussion of “passporting” fintech regulations—a concept that might expedite the licensing process for fintech companies operating in different African countries and the call for smart regulation were two important takeaways from the event.
Leaders in the industry at the festival highlighted the passporting strategy, which entails authorities in different African countries accepting and believing in fintech licenses given by other African countries. This would eliminate the need for fintech companies to obtain new licenses in every new region, allowing them to operate internationally with the least amount of additional regulatory barriers—just local needs would need to be met.
Passporting proponents contend that it is an example of sensible legislation that encourages growth and innovation while upholding necessary control. The model’s goal is to lessen the inefficiencies and redundancies that impede fintech businesses’ attempts to spread their services over the continent.
“Passporting has the potential to completely transform the fintech industry in Africa,” CGAP Consultant Salome Kimani said. “Not only does it reduce the expenses and intricacy associated with compliance, but it also expedites the implementation of inventive financial solutions throughout various markets.”
With over 500 attendees, including regulators, business executives, and fintech innovators, the Africa Fintech Festival offered the perfect setting for this important conversation. Keynote speakers emphasized how passporting may boost the economy by attracting more capital, creating jobs, and improving financial inclusion.
Flutterwave’s Senior Vice President for East Africa, Leon Kiptum, stated that he was in favor of passporting to CIO Africa. He made the point that because of the difficulties in obtaining licenses and the variations in regulations among different markets, fintechs frequently operate in many African countries and confront formidable obstacles.
Every central bank has its own policies and guidelines. In my opinion, the idea behind passporting is to bring some standardization to the regulatory requirements for fintechs operating in Africa. The pilot program ought to encompass all of Africa, enabling a fintech company certified in Kenya, for example, to have its licensing procedure acknowledged by the Central Bank of Gambia. This would streamline the procedure for fintechs that hold licenses from other countries, even in the event that additional country-specific criteria arise, according to Kiptum.
Kiptum stressed that standardization and communication across African central banks are important for passporting to be implemented. “Through our fintech lobby groups, such as the Africa Fintech Network, we in the industry are willing to collaborate with the central banks to help shape these standards.”
Exploring AU Channels and Regional Partnerships for Fintech Expansion
The African Union, according to Sebie Salim, co-founder of the pan-African financial startup Eclectics International, is the best channel to use when pushing for passporting across the continent. As an alternative, he said that regional partnerships, like those that are now in place among West African nations, may be used to address this.
In some jurisdictions, passporting is already operational. To properly oversee its implementation, Africa need consolidated norms and regulations. The East African Community organization is a conduit for lobbying activities in East Africa.
Provenir’s vice president of sales, Adrian Pillay, emphasized the value of regulatory cooperation. “Fintech companies, especially startups, may find it difficult and expensive to navigate the regulatory environment,” he said. By offering a workable alternative, passporting enables these businesses to focus more on customer service and innovation than on legal compliance.
The event also demonstrated the effective use of comparable models in other areas, such the European Union. Passporting has allowed financial services to grow throughout EU member states. The fintech community in Africa is hopeful that using a similar strategy might produce results that are on par.
Concerns included variations in technology infrastructure, legislative frameworks, and national readiness to implement such a model. The panelists underscored the necessity of a unified regulatory strategy and heightened collaboration among African regulatory entities.
The Africa Fintech Network Board Member and President of the Fintech Association of South Africa, Kagisho Dachabe, stated: “Although passporting is an interesting idea, it requires a coordinated effort from all stakeholders to standardize regulations and ensure mutual trust and cooperation.” Time, dedication, and a common goal for the development of fintech in Africa are all necessary for this trip.
At the end of the Africa Fintech Festival, industry participants and regulators were urged to work together to improve the regulatory climate so that fintech innovation may flourish. Passporting may be essential to realizing Africa’s full potential as the continent maintains its status as a global center for fintech.
