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Most African countries have positive economic prospects, due largely to the positive results of traditional sectors. This is according to the latest report from the Institute of Chartered England and Wales (ICAEW), Economic Insight: Africa Q1 2019.
The accounting body provides GDP growth forecasts for various regions, including East Africa, which is expected to grow by 6.3%, West and Central Africa by 4.4%, 4.9% franc and Southern Africa 1.5%.
The report highlights the potential of financial technologies to overcome other traditional economic drivers. East Africa's growth has been boosted by the development of the financial technology scene in Kenya (FinTech), giving fintech the opportunity to overtake other traditional drivers such as agriculture, recently affected by the delay of the rainy season in Kenya.
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Michael Armstrong, ICAEW Regional Director for the Middle East, Africa and South Asia said Kenya's economy is ripe for diversification. "Kenya's growth is currently mainly driven by traditional sectors. However, the strong financial technology scene offers an opportunity for diversification and increased growth opportunities for the economy in general, "said Mr. Armstrong. "This can promote inclusive development, but it can only happen if it is managed properly," he added.
East Africa has already established itself as the world leader in mobile money transfer services. Kenya in particular has been at the forefront of this growing sector, with the value of mobile money transactions in Kenya now accounting for 47% of GDP.
The report goes on to say that the development and proliferation of new innovations in mobile technologies has enabled Kenya to increase its financial penetration beyond what would have been traditionally possible at this stage of its development.
Kenya's information technology sector as a whole now accounts for 5% of GDP, which is further reinforced by the presence of global technology companies Google, Microsoft, IBM and Samsung. "The widespread use of mobile money has helped smooth consumption, reduce poverty and boost economic growth in Kenya," Armstrong said.
Mobile money accounts in neighboring countries have reached nearly 1,250 out of 1,000 adults in Rwanda and just over 1,000 in 1,000 adults in Uganda. Côte d 'Ivoire (1,700 accounts per 1,000 adults) and Ghana (1,350 accounts per 1,000 adults) also experienced a similar proliferation of mobile money accounts.
SEE ALSO:I like it or I hate it, the fintech revolution here to stay
Kenya's leadership in mobile money is attributed to the growth of M-Pesa, which has institutionalized mobile banking in the country; the value of mobile commercial transactions reached 1.5 trillion shillings (about 14.9 billion US dollars) in the third quarter of 2018, while person-to-person transfers amounted to 718 billion shillings (7.1 billion dollars) during the quarter.
The number of mobile money transfer agents and active subscriptions rose to 218,495 and 29.7 million respectively at the end of last September. This means that 64 out of every 100 inhabitants had access to mobile money transfer services and used them in the third quarter of 2018. According to some estimates, M-Pesa would account for more than two-thirds of the total volume of national payments.
With regard to the economic performance of East Africa, Ethiopia, Rwanda and Uganda are all expected to experience real GDP growth of 6%. Investments in infrastructure and the development of financial and telecommunication services continue to support growth in these countries.
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Related Topics
FinTechGDPM-PesaICAEWL & mobile money
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