East Africa has long been considered a beacon of innovation in the global fintech landscape.
The region’s rise has been fueled by the same major disruptions that are reshaping the financial services industry around the world, 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 high mobile and internet penetration among underserved populations and gaps in traditional financial services. These factors have enabled fintechs to offer solutions that address critical needs in credit, savings and payments.
East Africa is also home to some of the continent’s fastest-growing economies, with regional growth projected at 5.1% in 2024 and 5.7% in 2025. Yet despite this progress, the financial inclusion gap persists and fintech holds the key to closing it.
Fintech innovation, particularly in the field of mobile technologies, has transformed access to financial services across the region. Mobile wallets have become a lifeline for the unbanked, allowing them to save money, make payments and access funds in real time.
However, this innovation has brought its share of challenges, including technological interoperability, regulatory gaps and pricing constraints. The future of fintech in East Africa and its ability to continue to impact the continent’s economy depends on how these challenges are addressed.
As the fintech sector grows, there is a growing need for a regulatory environment that can keep pace with its evolution. The key challenge facing regulators in East Africa and around the world is how to foster innovation while mitigating systemic risks and protecting consumers.
Currently, fintech regulation in East Africa is fragmented, with the sector under the jurisdiction of multiple regulators, including banking, insurance, capital markets and communications authorities. This creates uncertainty for fintech companies in terms of compliance and oversight, a barrier that could hamper innovation if not addressed.
East Africa needs to establish clear and fintech-specific regulations to provide clarity to fintech ecosystem stakeholders. A coherent regulatory framework will not only protect consumers but also attract more investment by reducing regulatory risk. This framework should be built on the pillars of adequacy, certainty, simplicity and speed, ensuring that regulations are both comprehensive and adaptable to new innovations.
For regulation to be truly effective, it must be collaborative. Stakeholders in the fintech ecosystem must engage with regulators through forums, comments on draft regulations, and other participatory channels. This collaboration will ensure that regulation reflects the realities of a rapidly evolving industry and create an environment where innovation and consumer protection can thrive.
In addition, fintech companies must comply with best practices, including anti-money laundering, cybersecurity and data protection. These areas are essential to maintaining trust, not only with consumers, but also with regulators and investors.
Governments, for their part, must prioritize the development of fintech-specific policies. Regulators must be trained to understand and manage the complex innovations of fintech, ensuring that oversight keeps pace with technological advances.
The future of FinTech regulation in East Africa must be forward-looking, striking a delicate balance between financial stability and fostering innovation. Policymakers must strive to create an environment conducive to 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 avoid duplication of regulations and facilitate the cross-border growth of fintech.
East Africa’s fintech revolution has already positioned the region as a leader in financial inclusion. But to stay at the forefront of this transformative sector, regulatory frameworks must evolve at the pace of innovation.
The author is Head of Public Affairs at Tala Kenya