In a bold move aimed at revolutionizing the financial landscape of Africa, Visa Inc. has committed to investing a staggering $1 billion over the next five years. The goal? To empower and fund financial technology entrepreneurs, catalyzing the shift from cash-based transactions to digital financial services on a continent where McKinsey & Co. estimates that a whopping 90% of financial transactions still rely on cash.
Visa's commitment to this transformation was underscored at the Bloomberg New Economy Gateway Africa summit in Marrakesh, Morocco, where Andrew Torre, Visa's President for Central and Eastern Europe, the Middle East, and Africa, shared the company's ambitious plan. Visa plans to educate and support 40 startups and fintech companies over this period, with select investments made each year.
The choice to target Africa for this massive investment is strategic. While Visa faces saturated markets and heightened competition in developed nations like the United States, Africa, with its population of over 1.4 billion people and approximately one-third lacking access to financial infrastructure, presents a golden opportunity. Visa aims to leverage fintech innovations to tap into a vast, untapped market of non-digital retailers, with the ambitious goal of reaching 50 million such businesses.
Andrew Torre emphasized the importance of fintech in Visa's African expansion strategy, stating, "This is how we're going to reach" the 1.4 billion consumers in Africa. Visa intends to collaborate with fintech companies to enter these markets and integrate them into its ecosystem.
McKinsey, in a forecast made in August, predicts that Africa's financial services sector could experience a remarkable annual growth rate of 10%, reaching a total value of $230 billion by 2025. This growth potential, coupled with the continent's youthful population (with a median age of just 20), creates fertile ground for Visa and its competitors, including Mastercard Inc., to thrive.
Visa's strategy in Africa also includes expanding its physical presence, as exemplified by its intention to establish an office in Tanzania. Over the past two years, Visa has increased its African workforce by an impressive 50%, and the company currently boasts 10 continental offices.
The timing of Visa's investment in Africa couldn't be better. Africa has the youngest median age globally, and mobile phone usage is skyrocketing, with a growing number of individuals becoming first-time mobile phone users. Torre noted, "That's a really powerful set of factors. Everyone has a phone, so they're easier to reach. It works well for investing and growing."
As Africa's financial services sector continues to expand, Visa's strategic investment positions the company for significant growth and influence in the region's evolving financial ecosystem.