Outlook 2023

Africa Accelerates

1. Embedded finance will explode.

We are going to see an explosion in fintech-as-a-service and embedded finance. Embedded finance is the increasingly active area of fintech that enables businesses to leverage third-party infrastructure and regulatory licenses via APIs to quickly launch and scale fintech propositions. This drastically reduces the timeline required to launch a financial service from approximately 18 months to a matter of weeks and therefore has the potential to speed up the delivery of payments-related value propositions. We have seen a lot of B2B2C players in the European scene and Africa represents a high growth market going into the new year for players in that infrastructure layer to emerge. Being able to embed financial services straight into your applications and use cases with simple-to-use APIs is going to be very exciting to see in 2023. The infrastructure layer is vital to power payments in Africa and making that accessible and open for other entrepreneurs, businesses and start-ups is going to be game changing for innovation in the world of fintech and levelling up financial inclusion.

2. Pan-African payments will speed up.

We expect to see better user experiences, faster movements, and more competitive rates in the cross-border payments space in Africa. Africa as a continent is still the most expenisve in the world when it comes to cross-border payments whether that be into, out of or within Africa itself and this is despite the fact that the modern African consumer is increasingly having a greater need to make payments out of their domestic country. The emergence of fintech start-ups like mytalu will provide new options when it comes to payments, packed into far better services by taking advantage of digital first solutions and increased smartphone penetration.

3. Trade between countries in Africa will continue to grow.

With businesses realising the potential to expand operations across multiple countries and logistic businesses facilitating shipping and material movements, it seems like there is a real possibility for trade between African countries to unlock. Especially if cooperation between governments to create strong trade agreements continues to take place.

FinTech Fundamentals

4. Central banks will make (some) progress.

Our feeling on fintech regulation is that progress will be made by the central banks to standardise the license approval process but we won’t quite see the homogoenisation required across the continent to make growth and scaling efficient. There will still be idiosyncrasies in the regulation from one African country to the next. Regulation is as vital as it always has been and as fintech matures with its constant innovation, it is important that regulation keeps pace to be in place to manage these growth areas. I do hope to see more African countries creating well defined procedures and processes for operating fintech solutions so to demystify issues pertaining to fintech.

5. FinTech investment will remain stable.

With the downturn in the global macroeconomy, it might be easy to be of the opinion that there is only doom and gloom surrounding fundraising and investment activity. Whilst it is true that the era of cheap capital is over, it would be remiss to suggest that there isn’t room for quiet optimism. Africa represents an exciting high-growth market with sound underlying numbers to suggest that we will see a plethora of exciting businesses creating much needed value propositions across the breadth of the 54 African countries. Opportunistic investment and FOMO-driven super-rounds may not be as frequent, but investors well-versed in the African market know that there is still a lot of potential and opportunity on the continent and so I expect to see a robust stream of investments across the start-up life cycle. I would suggest however that the global economic environment does mean that businesses will need to refocus on their core numbers and unit economics. The cost of acquiring a customer and the lifetime value of the customer is going to be important.

6. Mobile adoption will continue to rise.

During 2023, 3G adoption will begin to decline for the first time and Sub-saharn Africans switch to newer technologies. By the end of the year, the region will be on track for 600 million smartphone commections, according to GSMA. This allows a phone new population of people access to the benefits which FinTech has to offer and increase the services which technology providers can deliver to the continent. 400 thousand jobs will be supported by the mobile ecosystem, and this new tech-savvy generation will demand increasingly higher standards from their payment providers.

People Power

7. The global market for talent will cool a little, but remain high in key areas.

For the past 18-months, recruiters around the world have have been struggling to fill open roles as we exit the COVID era and people reevaluate how they wish to earn a living. This has led to an unprecedented jobseekers’ market, with companies trying to outbid each other for candidates spoilt for choice. Given the impending recessions in the Western economies, this trend will dampen a little overall, however demand will remain high for those with up-to-date development skills and data science expertise.

8. There’ll be shift from work/life balance to multi-priority living.

As GenZs start growing into their careers, they will have an increasingly important impact on the workplace. In addition, as stress and anxiety levels continue to rise, mental health management will come to the fore. The traditional argument as to what equates to be the perfect work vs life balance will start to become a thing of the past. We expect to see multi-priority living come into its own. People will continue to value and look to accell in their careers, however they will also make time for side-hustles, volunteering and wider caring responsibilities. Luckily, the transition to remote and flexible working practices have made this prioritisation more achievable, and easier for worn out HR teams. 

9. Demand for superior soft-skills will soar.

Quiet quitting, economic uncertainty and continually evolving technology mean that more than ever people who are able to demonstrate resilience, flexibility and highly effective communication will be in high demand. Individuals will exceptional soft-skills are better able to weather changers in their organisations and adapt with the customer base, meaning retaining these employees will create longer term value for their companies.

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