Fintech Companies Face Compliance Challenges in Senegal
The emergence of fintech companies in Senegal has brought about a new wave of innovative financial products and services that could contribute significantly to the growth of digital finance in the market. However, these fintechs are facing numerous challenges in navigating the complex regulatory environment of the country.
Understanding Regulatory Bodies
According to industry experts, one of the major hurdles faced by fintechs is understanding who the relevant authorities are with whom they need to comply with existing legal, financial and tax regulations. With over a dozen regulatory bodies in Senegal, including:
- Bank of West African States (BCEAO): responsible for monetary policy and supervision of banks
- Directorate of Money and Credit (DMC): responsible for regulating the issuance of currency and credit
- Regulatory Authority for Telecommunications and Posts (ARTP): responsible for regulating telecommunications and postal services
fintechs must carefully navigate this complex landscape.
Challenges in Navigating Regulations
Another challenge is dealing with regulations that are not always aligned with commercial realities. For instance:
- Crowdfunding difficulties: fintechs engaged in crowdfunding may face difficulties due to the dominance of traditional banks in providing credit and the regulatory context around public offerings.
- Complex electronic signature framework: the regulatory framework on electronic signature, set up by the Agency for Information of the State (ADIE), can be complex for fintechs to understand, requiring a significant amount of time and patience to dematerialize contracts.
Building Partnerships and Finding Financing
Fintechs in Senegal also face difficulties:
- Weak bargaining power: big billers and incumbent financial institutions and operators have significant market power, making it difficult for fintechs to build partnerships.
- Limited financing options: banks are still reluctant to finance emerging business models, and guarantee funds exist but their processes are often too long and unsuitable for the development cycles of fintechs.
Supporting Fintech Development
To overcome these obstacles, fintechs in Senegal require assistance from regulatory bodies, investors, and other stakeholders. The MM4P program is actively working on assisting fintechs by brokering an exchange with them on their current projects, challenges, and perspectives. A framework will be formalized to support them in the market, providing a much-needed boost to the growth of digital finance in Senegal.
Conclusion
Despite the challenges faced by fintech companies in Senegal, innovation remains a key driver of digital finance, and people are eager for innovative services tailored to their needs and aspirations. With the right support and guidance, fintechs can overcome these obstacles and contribute significantly to the growth of digital finance in the market.