Lord mayor flies fintech flag for UK in Africa business mission

Out-Law News | 19 Sep 2017 | 4:51 pm | 2 min. read

The lord mayor of London, Andrew Parmley, has said he sees "real possibilities for British fintech companies to collaborate with African firms" in boosting the spread of financial services across the continent.

The lord mayor, who as head of the City of London Corporation is the UK's senior ambassador for the capital's financial and business centre, led a delegation of business chiefs on a two-week tour of Mozambique, Zambia and South Africa this month.

In an article for the business journal 'City A.M' Parmley said London can "help people across the African continent access banking and financial services in a way that is not currently facilitated by physical banking infrastructure".

"One of the UK's key strengths is our leadership in the field of financial innovation, with London a key global centre for both green finance and Islamic finance," Parmley said. "I have encouraged firms that I've met to explore these two financial products as possible alternative financing routes for investing in future growth and prosperity."

"Having met with senior business and government officials, including the prime minister of Mozambique, I have enjoyed discussing how we can build closer business ties between the UK and the individual countries," Parmley said.

According to Parmley, South Africa imported £1.8 billion in services from the UK in 2015 alone, "with financial services making up a significant slice of this pie".

"Our trade in financial services has been growing at a steady rate in recent years too, rising by more than 30% between 2007 and 2015," he said.

"During my year in office visiting both established and emerging markets was a key priority for me and I sense a real opportunity for British businesses here in Africa," Parmley said.

The lord mayor said on Twitter that his tour had included talks about fostering investment in infrastructure in South Africa and "infrastructure financing and opportunities" with government leaders in Zambia.

Diane Mullenex of Pinsent Masons, the law firm behind Out-Law.com, said ‘traditional’ banking using branches and cash “does not work in most of Africa, with population density, low incomes and currency denominations being significant barriers”.

“However, with the number of sub-Saharan Africans with a mobile phone subscription being double the number with a bank account, there is a clear opportunity for fintech in Africa,” Mullenex said. “The meteoric rise of M-Pesa in Kenya (being used by more than 40 percent of Kenyans and bringing in over $250 million in annual revenue) illustrates just how big this opportunity can be."

The City of London Corporation said Zambia "is developing its position as a finance hub in Africa". Latest figures show exports from the UK to Zambia totalled £64 million in 2015, which the corporation said showed an increase of more than 45% in eight years.

Exports from the UK to Mozambique have increased by more than 70% in eight years and totalled £130m in 2015, the corporation said. "It's estimated that 80% of Mozambicans do not have a bank account, and the City of London hosts many leading fintech firms that have developed innovative solutions to make mobile banking an option for people across the developing world."

Figures from the UK Office for National Statistics (ONS) show the value of the UK's stock of foreign direct investment (FDI) in Africa in 2014 was £42.5bn.

The ONS said: "Mining and quarrying, and financial services were the main industrial groupings in receipt of UK FDI, accounting for 54.4% and 34.3% of total UK FDI into Africa in 2014, respectively."

A study published earlier this year by professional services firm EY said FDI into Africa rose 31.9% last year and "will continue to grow" as the region's economies expand. The study said investment per project in Africa averaged $139m, against $92.5m in 2015 – driven by "several large, capital intensive projects in the real estate, hospitality and construction and transport and logistics sectors".