Financial inclusion remains a challenge across Africa. While mobile banking has helped bridge the gap, millions of people lack access to basic banking services and many still face barriers such as limited infrastructure, low financial literacy, and distrust in traditional financial institutions.
But, open banking has the potential to change this. This article explores how open banking is evolving across the continent, the current state of financial inclusion, and how open banking can help drive economic empowerment for millions of Africans.
What is open banking and why is it important?
Open banking allows trusted third parties to access financial information from banks and other financial institutions in order to provide services to customers, but only with the customers explicit consent.
This gives customers more control over their data so it can be used securely to help them move, manage and get more out of their money in a simple way.
Since open banking launched in the UK in 2017, it has gained global traction, with 95 jurisdictions adopting or developing frameworks. While regulations vary by country, strict safeguards ensure data privacy. Our Global Open Data Tracker compares these standards worldwide.
The status of open banking in Africa
Open banking adoption varies across Africa, with some countries making significant progress while others are in early stages.
Nigeria: Leading the Way
Nigeria is at the forefront of open banking in Africa. In February 2021, the Central Bank of Nigeria (CBN) released an open banking framework, followed by operational guidelines in May 2022.
The framework covers a broad range of financial services, including:
- Payments and remittances
- Credit and loan services
- Personal finance management
- Treasury management
- Credit rating and scoring
South Africa: Market-Driven Adoption
While South Africa does not yet have formal open banking regulations, the Financial Sector Conduct Authority (FSCA) supports its implementation. Many banks are voluntarily adopting open banking practices, and fintech companies like Vault 22 and Stitch are driving innovation.
South Africa is well-positioned for open banking, given its high banking penetration, advanced financial products, and growing API adoption by digital and retail banks.
Egypt: Building the Foundations
Egypt has not yet introduced a formal open banking framework but has taken key steps toward financial innovation.
- In March 2022, Egypt launched its National Instant Payment Network and InstaPay mobile application, enabling instant account-to-account transfers.
- The country’s largest banks — Banque Misr, National Bank of Egypt (NBE), and Banque du Caire — joined forces with Global Ventures to create ‘Nclude,’ an $85 million fintech investment fund.
- Advocacy groups like Fintech Underlie are actively pushing for open banking regulations.
Ethiopia: Opening Up to Foreign Banks
At the end of 2024, Ethiopia’s parliament passed legislation allowing foreign banks to operate in the country. This move is expected to introduce open banking practices, fostering competition and innovation.
Kenya: A Promising Foundation
Driven by the Central Bank of Kenya’s 2021–2025 strategy to modernize digital payments and promote secure data sharing via APIs, Kenya is making steady progress toward implementing open banking and open finance.
Collaborative efforts through initiatives like the Open Finance Initiative — spearheaded by FSD Kenya, the Kenya Bankers Association, and the Association of Fintechs in Kenya — are shaping policy, innovation, and financial inclusion.
While still in the developmental phase, Kenya’s open finance framework is expected to unlock new business models and enhance competition and access in the financial sector.
Regional Initiatives: A Collaborative Approach
In April 2024, the Open Finance African Group was launched in Central and West Africa, aiming to expand financial inclusion and stimulate economic growth through open finance.
What is financial inclusion and why does it matter?
Financial inclusion ensures that everyone, regardless of location or personal circumstances, has access to affordable and useful financial services — such as banking, credit, insurance, and savings.
In Africa, financial inclusion has the potential to drive economic growth and reduce poverty. However, multiple challenges hinder access to financial services, including a lack of infrastructure, financial literacy gaps, and distrust in financial institutions. The lack of access to technology and internet access results in big queues outside traditional banks to access services.
The state of financial inclusion in Africa
Financial inclusion in Africa has improved over the years, but disparities remain:
- In Sub-Saharan Africa, 49% of adults own a bank account — more than double the rate in 2011. However, access varies significantly, from just 6% in South Sudan to 91% in Mauritius, highlighting a divide between rural and urban areas.
- The gender gap is a major issue: 63% of women in Sub-Saharan Africa and 82% in Northern Africa do not have a bank account.
- Beyond gender and geography, other barriers include low financial literacy, limited banking infrastructure, and a lack of trust in financial institutions.
Lack of Financial Literacy
Many Africans lack essential financial knowledge, preventing them from fully utilising banking services.
A 2021 OECD survey found that only 42% of South African adults were financially literate, meaning more than half of the population struggled to understand concepts like interest rates, inflation, and savings. This issue is even more pronounced in rural areas and low-income groups. The lack of access to mobile devices, computers and internet access is a huge barrier in reducing this aspect of financial inclusion.
Limited Banking Infrastructure
While mobile banking has expanded access, traditional banking infrastructure remains limited. Many people still lack access to physical bank branches, ATMs, or reliable internet.
Distrust in Financial Institutions
Political instability and past financial crises have led to widespread distrust in banks, pushing many Africans toward informal financial systems, such as savings groups and cash-based transactions.
Even among those who borrow money, informal borrowing remains dominant. Of the 44% of adults in Africa who reported borrowing money in the past 12 months, 38% borrowed from friends or family, and for 28%, this was their only source of credit.
How open banking can drive financial inclusion in Africa
Open banking can unlock new financial opportunities for underserved populations in Africa such as:
- Improved financial literacy – AI-powered financial management tools can educate users on budgeting, saving, and investing.
- Better Payment Solutions – Open banking fosters faster, cheaper, and more secure transactions, reducing reliance on cash.
- More competition & innovation – New fintech solutions will emerge, catering to the unique needs of Africa’s diverse populations.
Despite existing barriers, Africa is experiencing rapid growth in mobile banking, even in lower-income economies like Malawi and Togo. Togo has seen mobile-money account ownership grow from 18% in 2014 to 50% in 2023.
Open banking can expand access for underserved populations, allowing them to connect to financial services without needing a physical bank branch.
By giving customers control over their financial data, open banking can help bridge the trust gap between consumers and banks.
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Open banking has the potential to transform financial inclusion in Africa, making banking services more accessible, transparent, and efficient.
As more African countries embrace open banking frameworks, financial institutions, fintech startups, and regulators must collaborate to ensure secure, innovative, and nuanced customer-centric solutions. With the right policies and infrastructure, open banking can unlock new economic opportunities and empower millions across the continent.
