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Fintechs in Senegal Face Regulatory Hurdles

Innovation and digital finance are on the rise in Senegal, with Fintech startups entering the market to offer new products and services. However, these newcomers must navigate a complex regulatory environment that poses significant challenges.

Compliance Challenges

For Fintech start-ups, compliance with existing regulations is crucial, but identifying the relevant authorities can be a daunting task. There are over a dozen institutions in Senegal, including:

  • Bank of West African States
  • Directorate of Money and Credit
  • Regulatory Authority for Telecommunications and Posts
  • And more…

Regulatory Frameworks

Another challenge lies in regulatory frameworks that may not align with commercial realities. For example:

  • Fintechs focused on crowdfunding may struggle with banks’ dominance of credit provision and public offering regulations.
  • The regulatory framework around electronic signatures, set up by the Agency of Information of the State, can be complex for Fintechs to understand.

Building Partnerships

Building partnerships is essential for Fintechs to expand their offerings, but this can be difficult in Senegal due to:

  • Weak bargaining power with big billers and incumbent financial institutions and operators.
  • This may impose constraints on Fintechs whose business models rely heavily on aggregating services.

Finding Financing

Finding financing remains a challenge for Fintechs, as banks are reluctant to finance emerging business models. Guarantee funds exist, but their processes can be too long and unsuited to the development cycles of Fintechs.

Ecosystem Challenges

The lack of an ecosystem fostering the development of Fintechs is also a significant obstacle. There is almost no framework in Senegal for:

  • Sharing projects with research centers, large companies, public actors, and investors.
  • Developing partnerships.

Hope for Fintechs

Despite these challenges, there is hope for Fintechs in Senegal. Innovation remains a core driver of digital finance, and people are hungry for innovative services tailored to their needs and aspirations.

Overcoming Challenges

To overcome these challenges, Fintechs need assistance from regulatory bodies, funders, and partners. The MM4P program is actively working with Fintechs to provide support, hosting a meeting on September 7, 2017, to facilitate an exchange of projects, challenges, and perspectives. A framework to assist Fintechs in the market is set to be formalized.

By Bery Dieye Kandji, KM Consultant in Senegal.