The Role of African Fintechs in Facilitating Telemigration.

Africa has experienced substantial growth in digitally delivered services exports driven by telemigration. However, cross-border payment frictions remain a significant barrier to expansion. This study examines how African financial technology entrepreneurs facilitate telemigration by addressing payment frictions, creating economic and social value. We combine case study evidence on a Nigerian fintech startup, a telemigration model incorporating payment costs, and empirical analysis of bilateral trade flows from 2011 to 2023. We find that a 10% increase in transaction costs lowers bilateral service exports by approximately 4.7%. Financial sector innovation moderates these effects, with the most developed fintech markets offsetting nearly all the negative impact of transaction costs. We estimate that a 50 percent reduction in payment frictions alone could generate between 900,000 and 1.1 million telemigrant employment opportunities across Africa. These results suggest that fintech innovation enables African participation in global digital service markets and progress towards Africa’s achievement of the Sustainable Development Goals related to poverty reduction, decent work, and reduced inequalities.