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March 26, 2021

Africa is often described as the “next best opportunity” with unfortunate stress on the word ‘next’. However, the news from Africa is promising and there are some real steps being taken in advancing the continent’s infrastructure. Just last month $200 million of new funding was made available to two African Fintech companies: Cowriewise and Flutterwave, with the latter being declared a unicorn having amassed over $1 billion in valuation, a few months before that news broke out about Paystack acquisition by Stripe. Investors are making big bets in Africa’s fintech industry, and the industry is growing.

African Fintech innovation goes beyond just having a bank account.
Here, we look at some of the different areas this sector is addressing, in what has been a landmark period for the Fintech sector across Africa.



 The payments ecosystem in Africa is evolving and we’re seeing a shift where African consumers are turning to make online transactions as opposed to traditional cash. As a result, merchants are turning to digital payments service providers. This has not gone unnoticed by investors, who’ve dug deep this year to ensure they are powering the players who’ve amassed sizeable client bases, such as Cellulant, Flutterwave, Ecobank Mobile App and Paystack (now part of the Stripe payment group) to help them meet this growing demand from consumers. In South Africa, where credit card penetration is extremely high compared to the rest of the continent, POS payments provider, Yoco simplifies commerce for SMBs by providing access to affordable card readers. Additionally, there are new players who are distinguishing themselves from pre-existing payment providers; Tanzania’s NALA with their offline functionalities and South Africa’s WhatsApp Chat Banking Clickatell, both of whom are award-winning startups in Africa.




One solution that has taken the Fintech sector by storm across Africa is access to credit. Without a form of credit score or repayment history, banks and lenders lower their risk by holding assets as collateral in the case of default payments, cutting off potential low and middle income borrowers. Over the past two years, a growing number of micro-lending platforms have emerged with the aim of determining the creditworthiness of consumers. By collecting data about phone owners, startups such as JUMO ($52m recently raised), Carbon, Fairmoney, Branch ( who raised about $70 million during their Series B), and Mines ($13 million Series A) are serving those who lack access to bank accounts and assets by finding other tangible means of building a financial profile of customers. By doing so, credit as a service is offering a lifeline to potentially hundreds of thousands of people who may be in need of some money before payday.



Savings across Africa have generally taken the more traditional route such as storing cash in a hidden place, or through an informal savings club, popularly known as ‘Esusu’. The rise of mobile has also seen a growing number of fintech players, who are bridging the gap between informal and formal savings. Some examples are Piggyvest, who back when they were just one year out of Google’s Launchpad Accelerator closed on a $1.1m seed round, and have moved to create a savings culture among Nigerian millennials by automating the process of saving and restricting withdrawals until a date set by the user. Another similar digital savings app is Kolopay, which allows users to save from multiple accounts and have integrated an e-commerce feature. As well as providing credit to lenders, JUMO also helps individuals and small businesses access savings.



 The popularity and affordability of smartphone devices is driving the digitization of cash and growing digital payment options in Africa. As mobile money grows, we’ve seen money transfer services such as MFS Africa ($4.5m Series B) and M-Pesa drive financial inclusion across the continent by connecting African mobile wallets to each other. Recently, two of Africa’s mobile operators and mobile money providers, Orange Group and MTN Group, joined forces to launch Mowali, a mobile wallet interoperability system, which allows users to send money between mobile money accounts across any mobile money provider. As more companies make mobile money interoperability a reality, digital payments across Africa will become easier and more common.


The Sub-Saharan Digital Payment Heart

The African Fintech cradle is Nigeria: Flutterwave, Paystack, and Interswitch are all based there. Nigeria is a large market, able to nurture the first stages of a start-up: it has a population of 190 million, and more than 60 million adults are still unbanked.

 In the past few years, Nigeria’s central bank has opened the flood gates for mobile money, making it attractive from a regulatory perspective. There are now many Mobile Payments start-ups in Nigeria and Sub-Sahara Africa, all looking at pan-African coverage. The market is hotly contested – and it is likely to go through some consolidation.

 Pan Sub-Saharan Africa coverage is a goal that has been difficult to reach given the intricate foreign exchange controls, ineffective cross-border trade, and the complicated and immature regulatory regimes across the region.


Investors all over the world are looking at Africa as the “next big thing”, African Fintech still remains at the forefront for investment…for now. As Fintech startups continue to underpin consumers’ daily transactions, not only have they attracted a high caliber of global investors (i.e. TPG Growth & Partech Ventures), but local investors and high net worth individuals are also participating and leading in investment funds (i.e. Leadpath Nigeria & CRE Venture Capital), debunking the belief that the local tech ecosystem is not financing African ventures.

Source: Mobile Ecosystem Forum
Image Source: Getty Images