The Africa Digital Finance Summit recently took place in Nairobi in a two-day event that sought to expound on the growing digital financial services. The Summit, themed Decentralized finance; our pathway to financial freedom, brought together stakeholders in digital and financial spaces. This is in a deliberate move to discuss the future of finance in Africa.

During the summit, Africans have been urged to embrace the use of digital currencies to accelerate economic recovery in the continent occasioned by the COVID-19 pandemic.

“In order to positively chart the trajectory of the social economic growth in Africa, we need to leverage on the convergence of various transformational technologies,” said Hanu Fejiro Agbodje, founder and CEO, Patricia Technologies Limited, a fintech solutions provider company based Nigeria.

The summit participants also noted that there was an impressive growth in financial inclusion in Africa over the last few years. This growth has been driven primarily by adaptation of technologies such as mobile money. The growing digital financial services sector in Africa has been attributed to the increase in the number of people enjoying access to formal financial services. However, it was noted that there is more that the continent can do to increase access to information and education related to blockchain and cryptocurrencies.

“We have made tremendous progress over the years. However, there is room to continue making more progress in Digitization of Finance in Africa.” Dr. Olufunso Somorin, Regional Principal Officer at the African Development Bank.

Many countries in the continent are working towards developing and enhancing digital versions of their currencies. With a largely youthful population, there is a very high probability that cash money will pave way for digital in the near future.

Digital interactions should be privacy-enhancing, secure, intelligent, and efficient. To facilitate this, Digital Financial Service Providers need to maintain trust by finding a way to protect consumers from the constant threat of fraud and theft.

Speaking at the event, Nairobi Senator, Johnson Sakaja, said that African governments should not punish digital innovations. They  should instead view them as key enablers to post COVID-19 economic recovery.

The Senator vowed to rally legislators to review the law, which he says limits innovations at a time when joblessness is on the rise in the country.

“The digital innovations especially in the financial sector provide much-needed transaction solutions while creating jobs. Introducing taxes in that area is futile,” Sakaja said.

The Finance Act 2020 introduced a Digital Service Tax (DST) on income from services provided through the digital marketplace in Kenya. The DST is applied at 1.5% on the gross transaction value (exclusive of VAT) and took effect on January 1.