Back in May , when Paystack launched their South African operations , a number of outlets reported how much of that move had to do with the fact that South Africa is not just one of the most important markets in Africa , but also the second largest tech hub after Nigeria . But a crucial point was missed by many : the technicalities of that move were greatly enabled by the existence of the African Continental Free Trade Area which only came into full operation four months prior . Pre-pandemic , free movement of labor was arguably the most important factor towards the optimization of most businesses ’ operations . But then , there came lock-downs and remote working , and the dynamics of the entire global capitalist structure was altered , maybe irrevocably . Meanwhile in Africa , economic advisors had earlier managed to convince nearly all the governments of the continent to sign up to what would be the second largest trade bloc in the world after the Word Trade Organization .
With the advantage of hindsight , the AfCFTA would seem to have arrived with a pomp too out-sized for the promises it now seems to hold . Companies like Paystack exploiting the opportunities created by the agreement belies the fact that the majority of African businesses are yet unaware either of the existence of the AfCFTA or the extent of its offerings . The agreement was signed in 2017 , the operational phase launched in 2019 , and trade on the basis of the agreement officially kicked off in January 2021 . Yet , a September 2020 policy brief by the Nigerian Association of Chambers of Commerce , Industry , Mines , and Agriculture ( NACCIMA ) shows that out of 1,804 MSMEs surveyed , 67 % were oblivious of the existence of the AfCFTA , though this figure is bound to have improved by now with more sensitization among Nigeria ’ s local industry . According to the Boston Consulting Group , the number of African tech startups receiving financial backing has grown between 2015 and 2020 at a rate six times faster than the global average . Such figures suggest an industry on the cusp of maturity , but the larger reality is that the general startup ecosystem is still at a rather nascent stage at which they are most susceptible to governmental policies and regional economic politics . The AfCFTA is one such policy , and while it aims to ease cross-border trade across the continent through tariff concessions and improving border operations , the language of the agreement is framed in a way that seems to prioritize physical trading . An initial analysis of the agreement does reveal that the sectors best positioned to benefit from the agreement include the logistics and retails sectors . An applied study , however , portends broader realities .
The most important segment of every trading is the payment infrastructure , and so the fintech sub-industry might just have been served a pot of gold and is poised to be the third biggest beneficiary of the AfCFTA . Cross-border payments have poised a perennial problem for African intra-continental trade due to unstable currencies and issues clogging Forex management across African economies . To solve this problem , Elizabeth Rossiello writing for World Economic Forum suggests that alternative foreign exchange providers can provide a wider range of options for local businesses to sort cross-border payments . Paystack is a leading example of a Pan- African financial services company leveraging the terms of the AfCFTA agreement to expand their market . From its South African operation , it is now able to serve the Southern Africa subcontinent .
But South Africa ’ s territorial attitude might pose a challenge to the expansionist ambitions of nonindigenous businesses like Paystack . South Africa , along with Nigeria , Egypt and Kenya represent the hotbeds of African tech hubs , evenly distributed across the Southern , Western , Northern and Eastern regions of the continent . Establishing a presence in more than one hub is key for any tech startup with Pan-African interests . But cultural factors like xenophobia and nationalism can resist penetration and make competition with local players more
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