Regulatory Frameworks Struggle to Keep Pace with Fintech Expansion
Africa’s fintech sector is experiencing rapid growth, with companies like Flutterwave, Paystack, and Fincra already providing payment infrastructure across multiple markets. However, regulatory frameworks haven’t evolved at the same pace, creating fragmentation that hinders regional expansion.
The Passporting Solution
The Central Bank of Nigeria’s (CBN) recent Fintech Policy Insight Report highlights this challenge and explores regulatory passporting as a potential solution. Passporting would allow fintech companies licensed in one jurisdiction to operate in others with minimal additional requirements, streamlining the expansion process.
According to the CBN survey:
- 62.5% of stakeholders already operate in or plan to expand across Africa
- The same percentage supports regulatory passporting frameworks
This indicates a clear demand from the fintech community for more harmonized regulations that facilitate regional growth.
Beyond Licensing: Infrastructure Gaps Remain
Even with regulatory approval, companies face practical challenges like:
- Foreign exchange constraints
- Liquidity management issues
- Payment system interoperability
- Data sharing limitations
- Identity verification gaps
Nigeria’s domestic payment success shows what coordinated infrastructure can achieve—the NIBSS processed nearly 11 billion transactions in 2024 alone. However, extending this efficiency across borders requires new forms of collaboration.
Pilot Programs and Future Directions
The CBN report suggests a phased approach:
- Starting with bilateral agreements between Nigeria and peer regulators (Ghana, Kenya, South Africa, etc.)
- Testing interoperability between payment systems in these corridors
- Complementing continental initiatives like the Pan-African Payment and Settlement System (PAPSS)
By addressing both regulatory fragmentation and infrastructure gaps, Africa can unlock greater fintech innovation and financial inclusion across the continent.