Frontier and emerging markets across Africa have a unique opportunity to leapfrog many of the stages of financial services digitalisation that Western markets progressed through over decades. By adopting modern fintech solutions from the outset, African firms are already outpacing their Western counterparts in innovation and adoption. In this article, GreySpark argues that there are significant opportunities for Western fintechs and financial institutions to support the continued development of Africa’s banking and capital markets to their mutual benefit.
By GreySpark’s Declan Sharp, Research Analyst and Rachel Lindstrom, Head of Capital Markets Intelligence practice
The current growing ecosystems of mobile banking, cross-border payments and remittances provide a key launchpad for a banking revolution in Africa. Capital markets, however, are still underdeveloped on the continent when compared to frontier markets on other continents, but the rapidly evolving local digital banking space could provide a launch pad for modernised and expanding African capital markets.
In this article, the terminology and classifications of MSCI will be used as opposed to the IMF, due to latter not distinguishing between ‘emerging’ and ‘developing’ in its taxonomy.
Solving the Under-banking Conundrum with Mobile Banking
The widespread adoption of simple, user-friendly mobile money services has been a major catalyst for digital and financial development of the frontier markets. Yet, significant gaps in financial services remain. The World Bank estimates that, as of 2025, approximately 1.3 billion adults in low- and middle-income economies still lack access to either a formal financial institution or mobile money account.
The contrast with advanced economies is stark. By 2024, only 49% of adults in Africa had a bank account,2 compared with 97% of adults in the US and 99% in the UK.
Despite this disparity, the trend toward greater financial formalisation is encouraging. In 2024, 40% of adults in low- and middle-income economies reported saving formally through an account3, representing a 16% increase since 2021. This rapid expansion of formal savings and account ownership suggests that mobile money and related digital financial services are helping to bring millions of previously unbanked individuals into the formal financial system.
In countries that have a relatively lower proportion of adults with formal bank accounts, mobile money has sparked a financial revolution. In Africa, specifically, the mobile banking ecosystem has developed around telecommunication companies or ‘telcos’, which in many of the larger countries were the first and, in some cases, are still the only companies able to offer mobile banking platforms.
Unlike digital banking, which consumers in the developed world may be accustomed to using on their smartphones, mobile banking refers to the holding of extra funds on sim cards and using it as payment between mobile accounts. Customers pre-pay the telco to show cash on the sim card. This deposit that can then be used in payment for non-telco-related e-commerce transactions.
This type of telco service was first created by M-Pesa in Kenya in 2007. M-Pesa’s mobile banking service is now used by around 96% of Kenyan households. Since the introduction of mobile banking in Kenya, there has been an increase in per capita consumption and it has been suggested that as many as 194,000 households have been lifted out of poverty.
Figure 1: Average Retail Fees Paid (on a USD 200 remittance) by Receiving Region, Q3 2025
Source: World Bank and GreySpark analysis
Although there are different mobile money models used by telcos in Africa, the models converge on the idea that the amount of cash a telco is providing access to through their mobile money accounts must be matched by a bank deposit from the telco representing the amount of pre-paid cash from consumers.
Mobile money has expanded well beyond Kenya and East Africa, becoming a continent-wide phenomenon. In Sub-Saharan Africa, 40% of adults have a mobile money account and 20% only have this type of account. A mobile money account is often the first point of entry into the formal financial system, rather than simply a substitute for bank accounts. That said, the success of mobile banking in Africa compared to other regions is astonishing. In 2025, Africa accounted for 74% of global mobile financial transaction volume and 66% of global transaction value. Sub-Saharan Africa contributed 1.1 billion registered accounts and USD 92 billion in transaction value. The Indian conglomerate, Airtel, has come to dominate mobile money in Africa, with Airtel Africa, and is now pursuing an IPO in London, hoping to secure further funding.
Remittances
The rapid growth of fintech providers in foreign exchange reflects the historically high costs and operational inefficiencies of cross-border payments. The global remittance market is significant, reaching USD 856 billion in 2024, climbing down to 805 billion in 2025. International payments via legacy correspondent banking networks were often slow to settle and included significant foreign exchange mark ups.
Remittances from Sub-Saharan African countries cost on average 8.46%, which is higher than the global average as shown in Figure 1, and international payments in some countries from Sub-Saharan Africa can go up to 12%. Given the continued higher payment fees for cross-border payments relative to the rest of the world and ageing or inadequate domestic infrastructure there is still continuing commercial opportunities for fintech and banking firms that provide alternative cross-border payment rails, treasury, FX and embedded banking services in Africa.
The Opportunity for Stablecoins
Central banks and other government agencies can construct narrow avenues for foreign exchange in traditional finance. The use of stablecoins has the opportunity to significantly disrupt frontier and emerging payment and remittance markets, by creating parallel markets for foreign exchange and imports. An example of the disruptive power of stablecoins in FX markets is best illustrated by the Nigerian experience in 2022-23.
Following an oil shock, the Nigerian Naira depreciated against the dollar and the country entered a period of acute inflation. Consequently, people turned to Binance to acquire US stablecoins. Rather than converting remittances through licensed providers, at the official exchange rate, large numbers of users transferred USDT and sold it through Binance’s peer-to-peer USDT/NGN marketplace. Pricing closely tracked the more favourable (for USD) parallel market exchange rate. The premium between the official and the parallel markets surged above 70% and led to government intervention in Q3 2023. Binance was shut down in Nigeria and the government also banned ‘street trading’ of foreign currencies in order to inhibit the exchange rate differences. The events also led to Nigerian Central Bank reforming the fundamental monetary policy of the country by switching to a floating exchange rate to inhibit inflation and foreign exchange distortions.
Currently, stablecoins facilitate less than 0.3% of total global cross-border payments, which amounts to roughly USD 40 trillion, but they may already represent 7.5% of total transaction volume (roughly USD 90 billion) within a USD 1.2 trillion Global Payroll and Remittance market. The adoption of stablecoins for cross-border payments is popular in the remittance market, and stablecoin disruption of traditional payment flows is more likely in Africa because of the high inflation and FX risk, as well as the lack of development of traditional banking infrastructure. Stablecoins do offer users distinct structural advantages, including near-instant 24/7 settlement. This is in stark contrast to the three-to-five-day delay for traditional SWIFT payments.
GreySpark holds that stablecoin disruption is most pronounced in payment flows between emerging markets or from developed to emerging markets. The construction of Distributed Ledger Technology (DLT) and surrounding infrastructure may provide a foundation for Africa to leapfrog the development pathways of more developed capital markets and banking markets.
Africa as a Fintech Hub
Fintech is Africa’s leading technology investment sub-sector, receiving an estimated 45% of total start-up funding in H1 2025. This is even more pronounced in the so-called ‘big four’ economies of Africa (Egypt, Kenya, Nigeria and South Africa) where an estimated 76% of African startups are domiciled and receive 76% of respective funding for startups in their countries; Nigeria alone takes 45% of the continent’s fintech investment. In Egypt, the partnership of the country’s largest fintech, Fawry, a digital payments network provider and Banque Misr, one of the country’s largest banks, that allows loan payments to be made through the Fawry e-payment network, again highlights the opportunities for fintech and bank partnerships in the region. Retail investment brokerage applications are now being developed in Africa, via companies such as Hisa and bamboo, allowing African retail investors to invest in equities both in their domestic markets and around the continent. This will further increase African financial literacy, digitalisation and hopefully deepen African capital market liquidity and buyside funds. This could have a further positive effect of improving stability of these markets, as fintech adoption has been shown to improve the robustness and stability of frontier market financial services and economies. However, the OECD asserts that technology adoption alone has not yet translated into significantly deeper capital markets. Achieving both robustness and stability encourages growth in the size of capital markets through greater fintech development. However, it will also require significant and nuanced structural reform to foster fintech adoption.
A major persisting challenge for the region is the insufficiency of banking infrastructure to facilitate cross-border payments. For institutional banking and foreign exchange, the most important recent development is the rollout of the Pan-African Payment and Settlement System (PAPSS), originally conceived by Afreximbank, which has been in development since 2022. In July 2026, the Bank of Central African States (BEAC) joined PAPSS, allowing for banks in Cameroon, Central African Republic, Republic of Congo, Gabon, Equatorial Guinea and Chad to become part of the continental payments and settlement system. The ASEAN Payment Connectivity Initiative, in which instant payments are made mostly via a QR code system, has been adopted across South East Asia with significant positive network effects for domestic and international trade within the region. PAPSS may facilitate similar benefits on the African continent.
African Capital Markets Infrastructure
Capital markets in SSA remain unevenly developed, with South Africa significantly outperforming other regional markets. South Africa records the highest equity market turnover and market capitalisation, while most other SSA exchanges remain below global emerging-market benchmarks. However, the Johannesburg Stock Exchange has a higher market capitalisation ratio to GDP than many Asian countries at approximately 200%. Most exchanges have introduced electronic trading, clearing and settlement systems, and, therefore, have been able to reduce the settlement cycle from T+5 to T+3, with some even achieving T+2. However, broader fintech maturity in capital markets remains inconsistent. Some smaller exchanges such as Maseru Securities Market, Lesotho’s stock exchange, continue to rely on manual processes, and transaction costs remain relatively high compared with those of developed markets. Overall, there is extensive scope for firms to help develop market infrastructure in much of the continent. Achieving both robustness and stability encourages growth in the size of capital markets through greater fintech development. However, it will also require significant and nuanced structural reform to foster fintech adoption.
The Innovation Consolidation Project
African nations are looking to solve some of the aforementioned iissues with the African Exchange Linkage Project (AELP). The project seeks to establish a centralised order routing system between participating exchanges, enabling consolidated buyside liquidity and providing a mechanism through which market makers can provide sufficient sellside liquidity. Initially launched in late 2022 with seven pilot exchanges, the project grew to nine exchanges in 2024 with the inclusion of Ghana and Botswana. It has since scaled to 11 exchanges, including recent additions, such as the Uganda Securities Exchange.
African Debt Markets
Relative to global standards, the African corporate debt market is relatively small, at 15% relative to the average GDP of SSA countries, compared to the global average of 52% relative to GDP. Most of these countries are unable to secure investment grade ratings for government-issued debt, being considered at a high risk of default. Government issued debt securities dominate SSA debt capital market issuance due to limited private-sector depth and a small pool of institutional investors. Furthermore, African bond markets have decreased as a total share of global bond markets from 2% to 0.5% between 2010 and 2024, highlighting the lack of relative credit in the Africa debt markets continues to be an issue. Funding for growth companies is heavily reliant on bank loans. Therefore, the SSA is significantly exposed to liquidity and foreign exchange risks, as foreign lending at high interest rates is often the only suitable source of capital.
Many African nations are implementing sovereign retail debt programmes to broaden retail investor participation in the market and to provide the much-needed liquidity to government bond issuances from domestic funds. The most successful strategy, to date, has utilised the mobile banking networks to make the investment in public bonds as seamless as possible for consumers. The continent’s most successful attempt at this concept, took place in Kenya. Launched in 2017, Kenya’s M-Akib, a mobile bond platform, allows mobile banking account holders to invest a minimum of USD 30 (KSH 3000) into government bonds. The result is that by June 20254 domestic households own 6% of Kenyan Treasury Bonds.
The Opportunity in African Capital Markets
While Africa’s financial sector suffers as a consequence of relying on multiple payment systems and disparate funding sources, and suffering from payment inefficiencies and FX risk, it is still highly profitable, showing a clear opportunity for disruption. Africa’s banking sector has demonstrated considerable resilience and remains one of the more profit able banking regions, globally. African banks increased their share of the local economy between 2020 and 2024 and saw an average return on equity (ROE) of approximately 9.7%, outperforming several mature banking markets. This profitability provides incumbent banks with both the incentive and financial capacity to accelerate investment in modern core banking systems, cloud infrastructure, AI, open banking and digital operating models. Fintechs and banks have an opportunity to revolutionise the payments of Africa. Interoperability across payment and capital markets infrastructure are key for such a development and examples from other emerging economies, such as Brazil’s Pix and India’s Stack, may present an already trodden path of digital development for Africa to follow. African finance has been, and continues to be, innovative and there will be many opportunities in the coming years for significant financial and technological development that benefits the sellside, buyside and financial technology providers, as well as the African states and their citizens.
