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Africa Fintech Festival Promotes “Passporting” to Boost Continental Fintech Expansion
The Africa Fintech Festival has sparked vibrant discussions about the future of fintech regulations across the continent. A key takeaway from the event was the push for smart regulation and the exploration of “passporting” fintech regulations, a model that could streamline the licensing process for fintech companies operating in multiple African countries.
The passporting model, emphasized by industry leaders at the festival, involves regulators in various African countries recognizing and trusting 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 complete re-licensing process in each new market.
Proponents of passporting argue that it represents smart regulation, fostering innovation and growth while maintaining essential oversight. The model aims to reduce redundancy and inefficiencies that currently hinder fintech companies trying to expand their services across the continent.
“Passporting could revolutionize the fintech landscape in Africa,” stated Salome Kimani, a Consultant at CGAP. “It not only lowers the cost and complexity of compliance but also accelerates the deployment of innovative financial solutions across multiple markets.”
The Africa Fintech Festival, attended by over 500 participants including regulators, industry leaders, and fintech entrepreneurs, provided an ideal platform for this critical discussion. Key speakers highlighted the potential economic benefits of passporting, such as increased investment, job creation, and enhanced financial inclusion.
Leon Kiptum, Senior Vice President for East Africa at Flutterwave, expressed his support for passporting to CIO Africa. He pointed out that fintechs often operate in several African countries and face significant challenges due to the licensing process and regulatory differences across various markets.
“Each central bank has its own set of requirements and rules. The concept of passporting, for me, is to introduce a degree of standardization regarding regulatory requirements for fintechs in Africa. The piloting should be Africa-wide, allowing, for instance, a fintech licensed in Kenya to have its licensing process recognized by the Central Bank of Gambia. This would simplify the process for fintechs already licensed elsewhere, even if there are additional country-specific requirements,” Kiptum said.
For passporting to take effect, Kiptum emphasized that central banks in Africa need to communicate and agree on standards. “If we in the industry can help shape these standards, we are willing to work with the central banks through our fintech lobby groups, like the Africa Fintech Network.”
Sebie Salim, Co-Founder of Eclectics International, a pan-African fintech company, suggested that the most effective way to advocate for continent-wide passporting is through the African Union. Alternatively, he proposed that this could be approached through regional collaborations, similar to what is currently practiced among West African countries.
Passporting is already functioning in certain jurisdictions. For Africa, there is a need for centralized rules and regulations to manage its implementation effectively. In East Africa, lobbying efforts can be channeled through the East African Community organization.
Adrian Pillay, VP Sales at Provenir, highlighted the significance of regulatory collaboration. He stated, “For fintech companies, particularly startups, navigating the regulatory landscape can be both daunting and costly. Passporting provides a practical solution, allowing these companies to concentrate more on innovation and customer service rather than regulatory compliance.”
The festival also showcased the successful implementation of similar models in other regions, such as the European Union. In the EU, passporting has facilitated the flourishing of financial services across member states. The African fintech community is optimistic that adopting a similar approach could yield comparable results.
Differences in regulatory frameworks, technological infrastructure levels, and the readiness of various countries to adopt such a model were among the concerns raised. Panelists emphasized the need for a harmonized regulatory approach and increased cooperation among African regulatory bodies.
Kagisho Dachabe, President of the Fintech Association of South Africa and Africa Fintech Network Board Member, remarked, “While the concept of passporting is appealing, it necessitates a concerted effort from all stakeholders to standardize regulations and ensure mutual trust and cooperation. This journey will require 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 on creating a more conducive regulatory environment for fintech innovation. As Africa continues to position itself as a global fintech hub, passporting could play a crucial role in unlocking the continent’s full potential.
Source: techinafrica.com
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