East Africa has long been celebrated as a beacon of innovation in the global fintech landscape.
The region’s ascent has been driven by the same key disruptions reshaping the financial services industry worldwide such as the use of alternative data, peer-to-peer transactions and the rise of non-traditional financial players.
But what truly sets East Africa apart is its unique combination of strong mobile and internet penetration among underserved populations and the gaps in traditional financial services. These factors have enabled fintechs to offer solutions that meet critical needs across lending, savings and payments.
East Africa is also home to some of the continent’s fastest-growing economies, with projections placing regional growth at 5.1 per cent in 2024 and 5.7 per cent in 2025. Yet, despite this progress, the financial inclusion gap persists and fintech holds the key to bridging it.
Fintech innovation, particularly mobile-based, has transformed access to financial services across the region. Mobile wallets have become a lifeline for the unbanked, allowing individuals to save money, make payments and access funds in real time.
However, this innovation has brought its own set of challenges, including technology interoperability issues, regulatory gaps and pricing constraints. The future of fintech in East Africa and its potential to continue leading the continent’s economic pulse depends on how these challenges are addressed.
As the fintech industry grows, so does the need for a regulatory environment that can keep pace with its evolution. The primary challenge facing regulators in East Africa and around the world, is how to foster innovation while mitigating systemic risks and safeguarding consumers.
Currently, fintech regulation in East Africa is fragmented with the sector falling under the jurisdiction of multiple regulatory bodies, including banking, insurance, capital markets and communications authorities. This creates uncertainty for fintech companies regarding compliance and oversight, a hurdle that could stifle innovation if not addressed.
East Africa needs to establish clear, fintech-specific regulations to provide clarity for fintech ecosystem stakeholders. A coherent regulatory framework will not only protect consumers but also attract more investment by reducing regulatory risk. This framework must be built on the pillars of adequacy, certainty, simplicity and timeliness, ensuring that regulations are both comprehensive and adaptable to new innovations.
For regulation to truly work, it must be collaborative. Stakeholders across the fintech ecosystem must engage with regulatory authorities through forums, feedback on draft regulations and other participatory channels. This collaboration will ensure that regulations reflect the realities of a fast-evolving industry and create an environment where both innovation and consumer protection can thrive.
Additionally, fintech companies must adhere to best practices, particularly when it comes to anti-money laundering, cybersecurity and data privacy regulations. These areas are critical to maintaining trust, not only with consumers but also with regulators and investors.
Governments, in turn, must prioritise the development of fintech-specific policies. Regulators should be trained to understand and manage complex fintech innovations, ensuring that oversight keeps pace with technological progress.
The future of fintech regulation in East Africa must be forward-thinking, striking a delicate balance between financial stability and the promotion of innovation. Policymakers should focus on creating an enabling environment that encourages growth while protecting consumers from the risks associated with rapid technological change.
This will require coordinated efforts across East African countries, with regulatory agencies working together to prevent duplicative regulations and facilitate cross-border fintech growth.
East Africa’s fintech revolution has already positioned the region as a leader in financial inclusion. But to remain at the forefront of this transformative industry, regulatory frameworks must evolve in step with innovation.
The writer is head of public affairs at Tala Kenya
