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1 Events, Trends, and Innovations in Africa Max Peddie, Jett Smith, Thomas Tecle, Soukaina Assakhiri, Youssef Bachari, Chaymae Chaabani Virtual Exchange Project Dr. De Farias, Dr. Abba March 19, 2023

2 Events, Trends, and Innovations in Africa Staying relevant is one of the toughest challenges that many of the top businesses face in a day-to-day business. As many new start-ups continually attempt to disrupt the norm that has been long established by legacy companies, in order to find their own way into a lucrative market segment. To maintain previous consumers, businesses must consider how events are impacting consumer bases, which trends are growing, and which are falling, and how innovations are revolutionizing the market’s landscape. Although there are other strategies to stay relevant, such as advertising or corporate social responsibility, finding the overall long-term trends of an industry or region, they will naturally fall into a market space due to filling a role that is in high demand by correctly predicting how the markets change and revolutionize naturally. One perfect example of how an event can cause long-term issues for large players that have a footing in an already established long-running industry is Nigeria’s move to cashless payment. Nigeria, Africa’s most populous nation declared in 2022, that it would be phasing out higher denomination bills to change society to a more cashless one with a cash redesign. While it may seem beneficial to companies like Visa, MasterCard, and Verve that a large economy is switching to a more cashless-focused economy, the announcement came with two prongs: cash replacement policy and the launch of AfriGo. For new and emerging businesses, the new cash replacement is beneficial, as the government is attacking their counterfeit market so that the naira can become more stable and trustworthy. Furthermore, due to lack-luster support of the cash replacement policy that was enacted by Central Bank of Nigeria governor Godwin Emefiele caused a strong surge in online payments for Nigeria. However, the wrench thrown in for previous players in the financial services market is the launch of AfriGo. AfriGo, owned by the Central Bank of Nigeria is aiming to reduce foreign transaction fees and become a highly accepted form of payment and promote financial inclusion for the population of one of Africa’s largest economies by being a large, government-backed, domestic card scheme. This affects the current largest players, Visa, MasterCard, and Verve by introducing a government-backed fourth player. For the foreseeable future, those big three companies will be allowed to stay in Nigeria, but there are currently no promises made by Nigeria’s government or central bank. Obviously, adding another competitor is not beneficial to any of the previously established companies, but the outcome fully depends on the support of the population. The smaller players have not been

3 left out in the introduction of AfriGo either. As AfriGo and the government pushes for digitized payments, digital supply chains, lending platforms, and credit solutions will be more needed than ever. TradeLenda is a fresh FinTech start-up that is based in Nigeria with a focus on optimizing change and increasing the efficiency of the digital supply chain. Adeshina Adewumi and Oluwatosin Ayodele, co-founders of TradeLenda, foresaw the impacts of the mass cashless shift and created a company that can slot in perfectly to ride the wave off the implementation of AfriGo. While global events can prove too lucrative for many involved, one of the most difficult challenges involved is being able to forecast them and act promptly. For companies that already exist, they need to be able to adapt and evolve accordingly or be left behind by more flexible start-ups. From 2020 to 2021, the number of technology-based start-ups boomed up to 5,200 companies, which was up over triple the previous year. And around half of those, were FinTech- based companies that were and still are attempting to disrupt and innovate upon legacy financial services. But why are so many of those firms FinTechs? A study conducted by World Bank showed that around two-thirds of the sub-Saharan African population was un- or under-banked. Especially as the population of that region was trending upward, many of the new FinTechs saw this as a great opportunity to ride the growing trend of FinTech in these underrepresented populations. As a result of this study and many others pointed to the same conclusion, FinTechs could inject themselves into many different sectors including financial services, mobile payments, and financial inclusion/literacy, among others. Sub-Saharan Africa has firmly planted itself as leaders in mobile money transfer services with large companies such as M-Pesa, the market share leader of this specific sector. M-Pesa made its grand appearance in 2007 in Kenya, being launched by Safaricom, the largest established mobile phone operator, meaning they already had the infrastructure in place to deal with this growing trend. Since its launch, it rode the wave to expand into many other countries such as Mozambique, the Democratic Republic of the Congo, and South Africa creating an immense amount of profit due to having proper research done on the trend. Other sectors such as the financial inclusion sector were also able to benefit from the FinTech trend too. Financial inclusion is defined as the broad access for individuals and businesses to get affordable, useful, financial products and services. This sector is highly important to the growth of the overall economy and works similarly to how interest rates are manipulated to create expansionary and contractionary periods. When individuals and businesses

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