Mayank Patel
May 22, 2024
6 min read
Last updated May 22, 2024
Do you know that a revolution is brewing in Africa's financial sector?
Fintech, the combination of finance and technology, rapidly transforms money management. This growth also promotes Decentralized Finance (DeFi).
DeFi utilizes blockchain technology to create a peer-to-peer financial system. Moreover, it bypasses traditional intermediaries like banks, which holds immense potential for Africa.
A sizeable section of the people in Africa is still unbanked and poorly served by traditional financial institutions.
DeFi promises financial inclusion, transparency, and lower transaction fees. Moreover, it has paved the way for a fairer and more affordable financial landscape for millions of Africans.
Adding fuel to the fire of African Fintech innovation, Nigerian company Appzone (Rebranded as Zone) recently secured a significant funding round of $8.5 million.
This excellent investment is dedicated explicitly to their enterprising aggression into Decentralized Finance (DeFi). This windfall not only proves the massive potential of DeFi in Africa but also highlights Zone's ground-breaking concept.
Let's go deeper and see what we can learn from their success.
Before moving to the success story of Zone, let's look at the rise of DeFi in Africa.
Decentralized Finance (DeFi) is a game-changer in Africa's financial landscape.
Here's how it has the potential to reshape financial inclusion:
DeFi works on a peer-to-peer (P2P) model, eliminating the need for intermediaries like banks. This allows users to directly connect to access financial services like lending, borrowing, and investing. This is helpful in Africa, where traditional financial institutions often have limited reach and charge high fees.
DeFi applications work on secure and transparent blockchain technology. This technology makes financial services accessible to anyone with a smartphone and internet connection. This is a significant advantage for the African unbanked population, who can access the financial system without needing traditional bank accounts.
DeFi removes the intermediaries involved in traditional finance, significantly lowering transaction fees. This makes financial services more affordable for users in Africa, where even small fees can be a significant barrier to participation.
DeFi opens doors to innovative financial products and services not readily available through traditional institutions. This allows African Fintech startups to develop solutions tailored to the specific needs of the local market.
DeFi offers Africa a more inclusive and affordable financial system. By removing the limitations of traditional finance, DeFi entrusts individuals to participate in the financial world, manage their money more effectively, and contribute to economic growth across the continent.
Zone has built Africa’s first Layer-1 blockchain network, enabling direct transaction flow between financial service providers without intermediaries.
But what exactly drove them to this level of success?
Here's a breakdown of some key features:
Regulatory Supervision: Zone ensures that digital assets and decentralized applications fully comply with applicable local laws and regulations in each country of operation. And that regulators can have real-time visibility into all activities.
Digital Currency Issuance: Zone allows Central Banks and other entities to issue digital currencies. It will enable end-users to accept digital tokens issued to other public or CBDC chains.
Fiat Currency Settlement: Zone offers native support for real-time settlement of fiat money payments on multiple fiat currencies. It also provides the feature to convert from one currency to another as part of the settlement process.
DApp Development: Zone delivers EVM-compatible open developer tools to help a large developer community. It also supports a rich ecosystem of creative decentralized applications.
Third-Party Integration: Zone provides native interoperability with other Blockchain protocols, traditional financial networks, and legacy information systems within each country of operation.
Also Read: What is the cost to launch a Fintech App?
Here's a breakdown of African Fintech startups' challenges when venturing into Decentralized Finance (DeFi).
Issue: Many African populations need a more robust understanding of traditional financial concepts.
Impact: This low level of financial literacy can be a barrier to user adoption and responsible participation in DeFi. Users need to fully grasp the risks involved in DeFi protocols, which can lead to potential financial losses.
Also Read: What is the scope of Fintech Software Development in 2024?
Building successful DeFi applications requires a solid foundation across several key areas.
Here's a breakdown of the essential skills to develop successful DeFi applications.
DeFi applications are built on blockchain technology, a distributed ledger system that records transactions securely. A strong understanding of blockchain fundamentals is important for developing DeFi applications.
Specific programming languages are often used to develop DeFi applications:
Building a successful DeFi application goes beyond just the blockchain backend. Strong Fintech software development skills are needed to develop a user-friendly interface:
While core technical skills and development expertise are essential, successful DeFi applications require developers to delve deeper with additional specialized skills.
DeFi applications handle financial transactions, making robust security paramount. Developers need to be security experts in best practices to prevent catastrophic economic losses for users.
The DeFi ecosystem is vast, with many protocols and tools offering specific functionalities.
While a deep understanding of finance might only be expected from some developers, a basic knowledge of relevant financial concepts can be highly beneficial.
By incorporating these additional specialized skills, developers can go beyond basic functionality and build DeFi applications that are secure, feature-rich, and cater to the specific needs and risk profiles of their target audience within the DeFi ecosystem.
The Decentralized Finance (DeFi) revolution is transforming financial landscapes worldwide, and Africa is no exception. A reliable development partner becomes important as companies seek to capitalize on this exciting opportunity. Linearloop is your one-stop shop for building secure, innovative, and user-centric DeFi solutions.
At Linearloop, we understand the complexities of DeFi development. Our team of experienced professionals combines extensive blockchain expertise with a deep understanding of the financial landscape.
We provide a complete suite of services designed to certify your company to thrive in the DeFi space:
Partnering with Linearloop provides you with the expertise, security, and guidance you need to navigate this exciting frontier. Together, let's open DeFi's immense potential and shape Africa's more inclusive financial future.