The market for digital financial services in Africa is undergoing a significant expansion, presenting opportunities and challenges for the continent's economic development.

A new whitepaper, released on Thursday by Global Voice Group (GVG), a global provider of ICT and RegTech solutions for governments and regulatory bodies, underscores the critical role that mobile money (MM) and remittances will continue to play in Africa's financial landscape.

The report highlights the need for data-driven transparency and compliance to sustain this growth.

The whitepaper reveals that the growth rate of digital financial services is substantial, although precise quantification remains challenging.

This trend is particularly evident in mobile money, a vital tool for promoting financial inclusion across many African nations.

Data technologies are identified as the driving force behind this expansion, with the potential to revolutionize policymaking through evidence-based decision-making.

Policymakers can harness these technologies to efficiently collect and analyze large datasets, providing actionable insights to address challenges within the digital financial ecosystem.

Edouard Docteur, Chief Delivery Officer of GVG, responded to the whitepaper's findings by calling for increased investment in digitization to combat illicit financing.

He emphasized the importance of effective monitoring solutions in the mobile money and remittance sectors.

"With the massive increase in digitization, African governments must ensure the implementation of effective monitoring solutions in the mobile money and remittance sectors," Docteur stated.

The whitepaper underscores the need for African governments to invest in regulatory frameworks and leverage technology to ensure compliance, streamline taxation processes, protect end-users' data, improve Know-Your-Customer (KYC) procedures, and mitigate risks related to money laundering, financial terrorism, and scams.

In Kenya, remittances play a vital role in the nation's GDP.

Data from the Central Bank of Kenya (CBK) reveals that the value of mobile money transactions accounted for 56.8 per cent of GDP by the end of 2021, marking an increase from 48.7 per cent in 2020.

Projections anticipated this figure to reach 68 per cent by the end of the 2022–2023 fiscal year.

According to the report, remittance inflows in May 2023 amounted to $352.1 million, representing a 9.9 per cent increase compared to April 2023.

Cumulatively, the inflows for the 12 months ending in May 2023 totalled $3,997 million, showing a 0.1 per cent increase compared to the corresponding period in 2022.

As Africa continues to embrace digital financial services, the whitepaper's insights serve as a clarion call for governments and regulatory bodies to prioritize data-driven transparency and compliance measures to ensure the sustained growth and security of mobile money and remittances.