Why Governments Are Quietly Behaving Like Digital Lenders
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By Thuita Gatero | Managing Editor, Africa Digest News
We’ve spent the last decade watching fintechs evolve.
First, it was peer-to-peer lending. Then it was credit scoring through your SIM card activity. Now, it’s embedded finance, micro-leasing, and wallet-based insurance.
But while everyone was focused on startups, something else happened: governments began behaving like digital lenders.
They’re borrowing off projected revenue flows, pricing services based on repayment cycles, and using opaque data structures to secure liquidity.
The question is no longer whether fintech is disrupting governments. The question is: Are governments becoming fintechs?
The Rise of Fiscal Tokenization
At the core of digital banking is the idea of monetizing behavior.
You spend money, and that pattern becomes data. That data becomes underwriting. That underwriting becomes a product. Repeat.
Now think about governments.
They collect taxes. That creates a revenue pattern. That pattern becomes predictable. That predictability becomes collateral.
What fintechs do with transactional data, states are starting to do with tax streams, utility charges, and regulatory fees. We’re witnessing a transformation: from fiscal management to fiscal tokenization.
In Kenya, Member of Parliament Ndindi Nyoro recently revealed that a 7-shilling fuel levy, quietly introduced in 2023 was used to secure a KSh 175 billion loan.
Nigeria’s power sector privatization created a web of securitized invoices, where government guarantees and customer payments underwrite loans for private Independent Power Producers (IPPs).
Add to that the move by the Central Bank of Nigeria (CBN) to channel cashless transaction data into policymaking, and you start to see a pattern: Government isn’t just regulating digital finance, it’s embedding itself inside the rails.
By 2022, Nigeria was paying nearly ₦600 billion annually in repayment obligations linked to revenue forecasts that were barely met.
The move mirrors how digital lenders collateralize recurring micro-repayments to raise short-term liquidity.
Liquidity Now, Accountability Later
Digital lenders prioritize instant access. Speed over bureaucracy. Fluidity over paperwork.
That same model is now being applied in public finance. The state doesn’t need to wait for funds to accumulate. It can simply project future collections and raise money against that.
This is what corporate finance calls securitization, and what some now call infrastructure-backed revenue streaming.
But the danger lies in what comes next: opacity.
In fintech, unregulated opacity means users don’t know what they’re agreeing to. In public finance, citizens don’t even know a deal was signed.
What This Means for Digital Banking Infrastructure
This shift isn’t theoretical. It’s already affecting how digital banking services operate especially in frontier markets like Kenya.
When governments lock future income flows to private financiers, they reduce their flexibility to adjust taxes, levies, or transaction costs which in turn limits how they regulate the digital space.
If, for example, a government has pre-committed excise tax from mobile transactions to repay a structured loan, then it cannot reduce transaction charges even if fintechs innovate better, cheaper models.
This creates a policy freeze in a space built on agility.
The Illusion of Innovation
Digital banking thrives on feedback loops.
You launch, iterate, reduce friction, onboard, adapt. But when a government adopts the fintech mindset without the fintech accountability, it distorts the loop.
- Revenue becomes repayment.
- Repayment becomes pricing rigidity.
- Pricing rigidity kills innovation.
When digital taxes, utility APIs, and wallet-based transactions are used as loan vehicles, the end-user becomes a guaranteed stream, not a valued customer.
We stop innovating for users and start designing around debt.
Unregulated by Design
Here’s where it gets worse.
Governments are not held to fintech compliance standards. There’s no requirement for real-time dashboards. No published APR. No opt-out. No customer support.
If a digital lender used the same tactics, borrowing against user activity, without disclosures, without permission, they’d be fined or shut down.
Yet in public finance, we call it “development strategy.”
This double standard is not just a regulatory blind spot, it’s a governance threat.
The API-ification of Government
Today’s digital banks rely on APIs: flexible, programmable, integrative.
Now governments want the same thing.
They want programmable revenue: streams that can be sold, pledged, automated. But this isn’t code, it’s real-world affordability for citizens, now hardwired to suit creditors.
It’s the API-ification of government, where every stream from electricity payments to SIM taxes to boda boda registrations is converted into a revenue model, then plugged into global finance.
This doesn’t just blur the lines between public and private. It merges them without guardrails.
What Digital Bankers Should Be Asking
If you’re a player in Africa’s digital banking space, this should alarm you. Not because governments are borrowing but because they’re borrowing like you.
And if they’re using the rails you operate on: wallets, USSD, digital payments, then:
- Will your APIs be prioritized?
- Will your models survive if public pricing becomes fixed by loan contracts?
- Will your clients stay if the state locks in platform fees for 10 years?
You’re not just competing with banks. You’re competing with government balance sheets engineered like startups, without the risk disclosures.
The Case for Fiscal-Grade Transparency
It’s time for the fintech ecosystem to demand fiscal-grade transparency from governments.
That means:
- Publishing securitized revenue contracts
- Open APIs for all public pricing models
- Citizen dashboards for loan-linked service pricing
- Independent audits of digitally-backed state borrowings
If governments are going to behave like digital banks, they must be held to digital banking standards.
This isn’t about one country or one policy.
From Kenya to Ghana to Nigeria, we’re seeing a new era of public finance: driven by projection, accelerated by fintech logic, and shielded by legal opacity.
In the short term, it looks like innovation. But in the long term, it builds a brittle system: rigid, debt-bound, and closed to change.
We’ve long said fintech will replace banks.
But we didn’t see this coming:
Fintech is replacing government thinking.
Unless we draw the line, regulate the model, and demand open logic, citizens will become the unpaid customers of state-run digital lenders.
And by then, it won’t matter whether your wallet is open because your future will already be priced in.
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