Africa’s foreign exchange (FX) market may be fragmented, but it is also unencumbered by legacy trading infrastructure. It comes as no surprise, therefore, that the continent has become a hive of fintech activity and digital FX innovation. Tim Hutchinson, Head of Digital for Financial Markets, Standard Bank, explains the latest developments in this space and how corporate treasurers stand to benefit.
Just five years ago, almost 90% of South African foreign currency trades happened over the telephone. Despite challenges around liquidity and complicated political and capital control environments, 75% of the country’s FX trades are now executed digitally. This electronic trading phenomenon is supported by a rapidly expanding fintech culture – which is spreading across the continent.
There are now circa 314 active fintech hubs in Africa today, across 93 cities and 42 countries. South Africa is most prolific with 54, but Kenya has 27, Nigeria 23 and Ghana 16. Although largely driven by the desire to improve financial inclusion, this fintech expansion is a sure sign of the understanding of a wider opportunity in terms of digital transformation.