FinTech could be key to African aid
Aid in Africa could get a much needed revamp from advancements in FinTech.
Organisations have poured money into Africa, some private and others public, however the system is fraught with inefficiencies and obsolete practices. It’s no surprise then that for every £1 that makes its way into Africa another pound is spent on administration.
This wasteful approach is at risk of losing the support of its donors, but the emergence of new FinTech services could revolutionise the way in which aid makes its way into Africa.
There are a huge number of benefits of using FinTech over the current system, but it mainly boils down to a massive saving in efficiency. Governments, businesses and NGOs all agree that the large uptake in mobile financial services by Africans could help pave the way to a more efficient distribution of aid.
Mobile tech is sweeping Africa
The value of the mobile money market in sub-Saharan Africa surpassed $655 million in 2014 and is predicted to almost double in value to be worth around $1.3 billion by 2019, according to data from Frost & Sullivan.
As mobile networks sweep the nation of Africa and even those in the most remote rural villages gain access to the internet through cellular data networks, the huge adoption of mobile financial services has the continent on the cusp of realising a technological revolution.
It’s this revolution that could bypass a number of complications that aid organisations currently face.
FinTech would increase transparency
Old methods of cash handouts carried a large risk of corruption, while local economies and fragile supply chains could be damaged by a flood of consumables being shipped in. Using technology to distribute the value would create fast acting benefits and alleviate stress to the system from traditional methods of distributing aid.
One good first step would be the use of electronic vouchers and another could involve cutting-edge payment mechanisms. Such technology is already being used to fund education in Kenya.
An additional benefit to using FinTech to distribute aid is that it allows organisations to see where and how users are spending the money, which makes the whole process more transparent and makes sure the money is going to the right people.