For many, Africa represents the final frontier of untapped economic growth. Across its diverse countries, growth rates continue to outpace those achieved in long-developed economies. Collectively, growth on the continent stabilized at 3.4% in 2019, and is forecast to reach 3.9% in 2020 and 4.1% in 2021. While these numbers remain below historical highs, fundamentals continue to improve as economies shift from local consumption to external investments.

Of the 30 fastest growing cities in the world, 21 are in Africa. Jack Dorsey, the CEO of Twitter and Square, said:

“Africa will define the future (especially the Bitcoin one!)”

In step with this economic expansion, Africa’s tech industry has experienced significant growth. Companies like Facebook, Google, Microsoft and Huawei continue to invest in the region. Naturally, the competition for talent has become fierce. As this momentum builds, it’s apparent that the African tech scene is on the rise, and the secret is out.

Related: Crypto in Africa: Opportunities and Challenges, Explained

The potential for this new technology in Africa is enormous. Managing director at Cryptovecs Capital, John Lombela, notes:

“When it comes to investing in technology, Africa needs to realise that the greatest wealth is created by being an early investor in innovation. Making such investment requires believing in something before most people understand it.”

Related: Unpacking the Potential of Blockchain and Infrastructure in Africa

In a field of high performers, determining which countries are leading the fintech charge is almost too close to call. Nigeria is a clear leader with companies like payment gateway start-up Opay raising a $120 million series B round from Chinese investors including SoftBank Ventures Asia and Sequoia China. These funds will be used for expansion into Kenya and Ghana.

The new fintech frontier is in places like Kenya, Ethiopia and Ghana, where a large population base continues to buoy expectations and emerging tech initiatives. So, what does the fintech ecosystem look like in these three rapidly evolving regions? To answer this question, we can refer to each country’s unique approach to fintech development, government oversight and decentralization.

The rise of financial technology in Africa

Across the African continent, fintech companies have raised $320 million in funding since the beginning of 2015, with ecosystem growth surging 60% in the last two years. However, these figures may be conservative in light of the African Tech Startups Funding Report, which indicates that 311 African tech startups raised $491.6 million last year alone.

Regardless of the exact numbers, it’s clear that tech hubs have begun to take hold across the region. According to a report from Briter Bridges and GSMA, the number of active tech hubs in Africa almost doubled over the last three years — starting at 314 in 2016 and reaching 618 in 2019. According to the same report, this momentum is driven by multiple investment sources such as venture funds, development finance, corporate involvement and innovative communities.

These figures suggest that tech development is accelerating in Africa and tech-oriented companies are reaping the benefits of this expansion.

Kenya

The M-Pesa platform has effectively institutionalized mobile banking in Kenya, making the country a leader in mobile money. According to recent data, the value of mobile commerce transactions in the country hit $14.9 billion in Q3 of 2018, with in-person transfers totaling $7.1 billion in the same quarter. By the end of September 2019, the number of active mobile money transfer agents and subscriptions stood at 218,495 and 29.7 million, respectively.

Nairobi-based startup Sokowatch has been developing B2B e-commerce supply chains between Africa’s informal markets and multinational giants like Unilever and Proctor & Gamble, combining rickshaw delivery with SMS ordering. The business is proving successful, and has delivered more than 500,000 orders to 10,000 customers since 2016. Raising funding last year from well-known tech investors, it is being touted as Africa’s Alibaba in the same way as African unicorn and NYSE giant, Jumia, has been described as Africa’s Amazon.

Ethiopia

As Africa’s fastest-growing economy and second-most populous country, Ethiopia has been a significant stakeholder in the African fintech ecosystem. Last March, the country hosted the second Finnovation Ethiopia conference for over 200 financial tech innovators. Ethiopia also played host to over 400 stakeholders from over 30 countries for the Fourth African FinTech Summit last November.

Over the last two decades, the Ethiopian government has made significant investments in infrastructure, continues to pursue ambitious structural reform, and recently announced its intentions to privatize the telecom and finance sectors. Collectively, these events have set the stage for immense investment in fintech.

Ghana

Ghana has a long history of supporting financial technology, beginning when the Social Security Bankintroduced the “Sika Card” in 1997. As an alternative to banknotes and checks, the card facilitated cashless transactions. Today, the nation continues to display an openness to tech integrations. As of December 2018, there were 32 million mobile money accounts, a 17.32% increase from the 23.9 million registered accounts in 2017.

In May of 2018, the country also launched one of the first interoperable payment systems in Africa, supporting transactions between different mobile service providers. By the end of March 2019, interoperability payments hit $57 million. And with the introduction of the E-zwich biometric card, Ghana continues to lead the charge, easing the recognition and use of payment solutions.

The regulatory ecosystem in Africa

Around the world, the response to fintech, cryptocurrency and blockchain regulation remains regional in nature — and Africa is no different. Each country remains unique in its approach to the broader ecosystem.

Source: Baker MacKenzie - Blockchain and Cryptocurrency in Africa

Kenya

Although cryptocurrency and blockchain remain unregulated in Kenya, the central bank did issue a public notice titled "Caution to the Public on Virtual Currencies such as bitcoin" in December 2015. The announcement confirms that virtual currencies are not legal tender and provide no protections given their unregulated nature.

However, despite the central banks' response, President Uhuru Kenyatta has said that the country should explore the potential utility of blockchain technology. In response to this heightened exposure, global blockchain companies like Finterra, have begun to establish a presence in the country.

Ethiopia

As mentioned, the Ethiopian government has signed a memorandum of understanding (MOU) with global blockchain company IOHK to utilise blockchain in government services. Although blockchain and cryptocurrency remain unregulated in the country, the Ethiopian government remains neutral. Further, no formal notices advise against the use of cryptocurrency or associated technologies.

Ghana

Similar to Kenya, the Bank of Ghana issued a notice in January 2018 advising against the use of “virtual currencies,” even though blockchain and cryptocurrency remain unregulated. The central bank went on to confirm that transactions conducted with cryptocurrency are not licensed under the Payment System Act.

Decentralization in Africa

Globally, the use of cryptocurrency and its blockchain architecture are on the rise. Figures suggest that around 5.5% of adult internet users worldwide own some form of digital currency. Perhaps unsurprisingly, three African nations lie above this average. This reality reinforces the notion that decentralized networks and the transactions they facilitate have become a vital resource in the region.

As Forbes mentioned:

“The African technology ecosystem can examine what works in the existing equity crowdfunding systems and build more blockchain-powered markets that encourage the participation of more local early-stage investors.”

Here’s a look at decentralization efforts in the three countries.

Kenya

Despite warnings of cryptocurrency volatility from Kenya’s central bank, many Nairobi businesses have begun to accept Bitcoin (BTC) payments. According to the Blockchain Association of Kenya, the total value of Bitcoin transactions in the country is estimated at $1.5 million a day.

The country has also begun to experiment with blockchain-built “local currencies” in poor communities as a solution to the lack of physical fiat currency. Without using Kenyan shillings, these emerging solutions leverage mobile payment networks similar to larger counterparts like M-Pesa. The system allows citizens to earn credit by providing goods and services while also facilitating purchases — all from a mobile phone.

Ethiopia

In Ethiopia, blockchain development firm Iohk (sponsor of the ADA cryptocurrency) is collaborating with the Ethiopian Ministry of Science and Technology to launch Atala. This enterprise blockchain project aims to help the governments of developing nations build systems for payments, digital ID and supply chain management. To support these projects, Iohk has set up an office in Ethiopia, training and hiring developers to implement blockchain projects. By working closely with entrepreneurs and startups in the country, Ethiopia’s ministers hope to develop blockchain applications for coffee shipments and other agricultural applications.

Ghana

The Ghana Central Bank has been exploring the use of a central bank digital currency. As a first step, the bank governor, Ernest Addison, is looking to undertake a pilot project in a sandbox environment. Despite this intention, there has been no clear indication that the currency will be blockchain-based.

However, given the current stance of the Ghanian Securities and Exchange Commission and central bank policy, many believe it is unlikely that the project will utilize blockchain technology. Coincidentally, the explosive growth of mobile payment users in the country suggests it’s an ideal testing ground for a central bank digital currency.

Leapfrogging to the future

Despite the challenges remaining ahead, fintech has allowed Africa to leapfrog over the evolutionary mishaps of developed nations. However, in a region seen as the next frontier of opportunity, many live without basic financial infrastructure. Despite this, financial innovation continues to drive a narrative of hope and potential — the journey of development has begun to accelerate. Notably, Visa acquired a 2% minority stake in African digital payments firm Interswitch for $200 million last year. With several global venture capital firms discussing location for African offices, this pace will only increase.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.