Fintech
The Africa Fintech Festival promotes the “Passport” to stimulate the continental expansion of Fintech
The Africa Fintech Festival has sparked dynamic discussions on the future of fintech regulations across the continent. A significant aspect of the event was support for smart regulation and the exploration of “passport” fintech regulations, a model that could simplify the licensing process for fintech companies operating in multiple African countries.
The passport model, highlighted by industry leaders at the festival, requires regulators in various African countries to recognize and trust fintech licenses issued by other African nations. This would allow fintech companies to operate across borders with minimal additional regulatory hurdles, requiring them to comply only with specific local requirements instead of undergoing a comprehensive relicensing process in each new market.
Supporters of the passport argue that it represents a form of smart regulation, promoting innovation and growth while maintaining essential oversight. The model aims to reduce the redundancy and inefficiencies that currently hinder fintech companies trying to expand their services across the continent.
“Passport could revolutionize the fintech landscape in Africa,” said Salome Kimani, consultant at CGAP. “It not only reduces the cost and complexity of compliance, but also accelerates the deployment of innovative financial solutions across multiple markets.”
The Africa Fintech Festival, which attracted over 500 participants including regulators, industry leaders and fintech entrepreneurs, provided an ideal forum for this crucial discussion. Keynote speakers highlighted the potential economic benefits of the passport, such as increased investment, job creation and greater financial inclusion.
Leon Kiptum, senior vice president for East Africa at Flutterwave, expressed his support for the move to CIO Africa. He highlighted that fintechs often operate in different African countries and encounter significant challenges due to the licensing process and regulatory differences between various markets.
“Each central bank has its own requirements and rules. The concept of the passport, for me, is to introduce a certain degree of standardization regarding regulatory requirements for fintechs in Africa. The pilot is expected to extend across Africa, allowing, for example, a fintech licensed in Kenya to have its licensing process recognized by the Central Bank of The Gambia. This would simplify the process for fintechs already licensed elsewhere, although there are additional country-specific requirements,” Kiptum said.
For the passport to take effect, Kiptum stressed that central banks in Africa must communicate and agree on standards. “If we in the industry can help define these standards, we are willing to collaborate with central banks through our fintech lobby groups, such as the Africa Fintech Network.”
Sebie Salim, co-founder of Eclectics International, a pan-African fintech company, suggested that the most effective way to support the passport at the continental level is through the African Union. Alternatively, she proposed that this issue could be addressed through regional collaborations, similar to what is currently practiced among West African countries.
The passport is already operational in some jurisdictions. Centralized rules and regulations are needed for Africa to manage their implementation effectively. In East Africa, lobbying efforts can be channeled through the East African Community organisation.
Adrian Pillay, VP Sales at Provenir, highlighted the importance of regulatory collaboration. He said: “For fintech companies, particularly startups, navigating the regulatory landscape can be both daunting and expensive. Passporting provides a practical solution, allowing these companies to focus more on innovation and customer service rather than regulatory compliance.”
The festival also highlighted the successful implementation of similar models in other regions, such as the European Union. In the EU, the passport has facilitated the flourishing of financial services between member states. The African fintech community is optimistic that adopting a similar approach could produce comparable results.
Among the concerns raised are differences in regulatory frameworks, levels of technological infrastructure and the willingness of various countries to adopt such a model. Speakers highlighted the need for a harmonized regulatory approach and greater cooperation between African regulatory bodies.
Kagisho Dachabe, President of the Fintech Association of South Africa and Africa Fintech Network Board Member, noted: “While the passport concept is attractive, it requires a concerted effort by all stakeholders to standardize regulations and ensure mutual trust and cooperation . This journey will take time, commitment and a shared vision for the future of fintech in Africa.”
The Africa Fintech Festival concluded with a call to action for regulators and industry players to collaborate in creating a regulatory environment more conducive to fintech innovation. As Africa continues to position itself as a global fintech hub, Passport could play a crucial role in unlocking the continent’s full potential.