Global Themes / Global

Africa fintechs’ product suite explained… from agritech to remittances

  • Fintech companies in Africa are increasingly competing with traditional financial services providers.
  • Digital payments is the most active segment, accounting for c40% of all African fintech offerings.
  • Significant untapped demand in Africa for payments, lending, savings, insurance and financial management services.

Our recent survey of 150+ fintechs across 20 African markets enabled us to find their product and customer niches, as well as identify their unique success factors.

Fintech companies are increasingly competing with traditional financial services providers, by structuring their offerings in innovative and more efficient ways. These companies often help to widen the financial inclusion net using models such as branchless distribution, mobile banking, big data credit scoring and machine-to-machine lending, often simultaneously reducing acquisition costs, servicing costs and risk costs (as well as boosting convenience and service quality). They can thereby profitably access previously unbanked/ underbanked populations at the bottom of the pyramid. 

The experience to date indicates that there is significant untapped demand in Africa for payments, lending, savings, insurance and financial management services.

African fintechs product offering mix

Source: Tellimer Research


One major change that is providing momentum to the fintech wave is that more and more Africans are connecting to the internet through smartphones, improving data availability for fintechs and enabling more sophisticated consumer-profiling models to be developed. This, in turn, allows resources to be more efficiently targeted and risks to capital to be reduced.


Mobile penetration in Africa

 

Source: GSMA, Tellimer research

Digital payments

Digital payments is the most active and arguably most developed segment in the space, accounting for c40% of all fintech products on the continent. Payments encompasses activities such as retail payments, merchant/ corporate payments and the provision of payment infrastructure through several channels: digital wallets (MTN MoMo, Ghana), USSD (EcoCash, Zimbabwe), mobile apps (SnapScan, South Africa), internet (Flutterwave, Nigeria), vouchers (Zoona, Lesotho).

Lending

Lending is second in terms of popularity of fintech products, accounting for 24% of the market. These companies offer lending/niche banking products in more efficient ways than traditional banks or credit companies, using technology to profile customers (allowing for more personalised products), disburse loans more quickly and enable repayments to be collected more efficiently. Notable examples are Branch (Nigeria), GetBucks (Mozambique), Jumo (South Africa) and Tala (Kenya).

Insurtech

Insurtech offer insurance products such as life, car, health, etc., in innovative and easy-to-understand ways that rival traditional companies’ offerings. Example include Pineapple (South Africa), which offers peer-to-peer insurance and returns all unused premiums at the end of each year, DabaDoc (Algeria), which offers health insurance by providing users access to nearby doctors, hospitals or pharmacies, and mPharma (Ghana), which provides users with access to pharmacies.

Investech

Investech companies offer financial management services such as managing customers’ finances based on pre-established investment guidelines. Their services range from providing platforms for trading securities to advisory services and portfolio management. Piggyvest (Nigeria), is a savings platform that helps users manage and grow their finances, while EasyEquities (South Africa) enables users to invest in equity market instruments such as stocks, ETFs and index funds.

Remittances

Remittances are in effect cross-border cross-currency payments that enable transfers of money by foreign workers to friends/ relatives/ businesses in their home countries. Relative to domestic payments, remittances carry a much higher burden of documentation, while the currency exchange element also adds to costs and reduces transparency. Due to the high cost of traditional remittance providers, particularly for small denominations, low-income workers will often turn to informal channels to send money home. Fintechs are helping to bridge this gap by providing almost instantaneous cross-border transfers at considerably lower cost. Examples include Thunes (Botswana) an online mobile wallet remittance service, WorldRemit (operating in several African countries), which allows users to transfer money across borders to be deposited in the local bank accounts of the receiver, and Sure Remit (Nigeria), which offers tokened non-cash remittances, allowing users to send vouchers that can be used by the receiver to pay bills.

Blockchain

Financial exchange platforms are increasingly migrating to distributed ledgers (blockchain). These ledgers provide immutable records of transactions and can help to create trust between counterparties even where there is no central intermediary. This technology has the potential to dramatically improve the efficiency of certain financial transactions, such as eliminating the need for currency exchange on cross-border transactions. Examples include Kobocoin (Nigeria), a mobile wallet that allows users to trade in cryptocurrencies, and Sun Exchange (South Africa), which enables users to earn rental income by leasing out their solar panels; they can either be paid in local currency or bitcoin.

Specialised fintechs

Specialised fintechs offer digital financial solutions for unique or niche markets. They often operate as a distinct ecosystem with integrated payments, lending or e-market place offerings. Notable genres include:

Agritech, such as FarmDrive (Kenya), Farmcrowdy (Nigeria) and Twigga foods (Rwanda), which provide farmers with access to loans, crowdfunding or to digital trading platforms based on blockchain technology, enabling them to transact directly with buyers.

Proptech, such as VisaFront (Nigeria), which provides access to property trading, BuyRent (Kenya), which automates rent collection, and JumiaHouse (Kenya), which facilitates short-term rentals.

Fintech landscape across major African countries

Note: Many of these companies could appear in multiple cells.
Source: Tellimer Research, CB Insights, Irrational Innovations

For more detail on the fintech environment in Africa see our recently published in-depth report The Ultimate Guide to African Fintech.


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Global Themes / Global

Africa's fintech hubs: The search for tomorrow's Silicon Valley

  • The four main fintech hubs in Africa are Egypt, Kenya, Nigeria and South Africa.
  • These centres attracted 85% of total investment capital deployed across the continent in 2019.
  • South Africa has some similarities with developed market fintech hubs like Silicon Valley.
Rahul Shah @
Tellimer Research
3 May 2020

The four main fintech hubs in Africa are Egypt, Kenya, Nigeria and South Africa. These markets have distinguished themselves from the rest of Africa through their support for innovation (for example, via regulatory sandboxes) and the widespread establishment of strategic partnerships (such as Nigerian fintech, Paga's partnership with WorldRemit for international remittances). As a result, these centres have to date attracted the lion’s share of the investment capital deployed across the continent (85% of total funding in 2019). Ghana, Uganda, Cameroon, Rwanda are up-and-coming locations.

Figure 1: Distribution of African fintechs by geography


Source: Central bank publications, Irrational Innovations

 

Figure 2: Fintech product mix by geography


Source: Irrational Innovations. *ROA = Rest of Africa

 

South Africa


South Africa is arguably the heart of African fintech, housing a third of all African fintech firms, with the majority of these located in Johannesburg. As the most diversified hub, South Africa has some similarities with developed market fintech hubs like Silicon Valley, such as the integration of fintech into central payment systems and high technology adoption rates by the local population, which can make it easier for local fintechs to attract external funding. Lending fintechs account for the largest proportion of players in this market (c30%). Despite having the largest and most diverse fintech space, South Africa has recorded a decline in both the number of fintech deals and value of funding to fintech in 2019. However, given improving financial access/ inclusion in South Africa, we note that insurtechs (such as Lukmani, Simply, Pineapple, MicroRe) are on the rise, offering customised insurance products at the point of sale.

Kenya


Kenya is the second-largest hub. It hosts around one-sixth of the African fintech population and has a strong focus on the payments segment. Nairobi alone is home to more than 50 fintech companies. Following the success of M-Pesa, Kenya has seen a rise in personal and SME lending-focused fintechs such as Branch, Tala, Lendabale and Pezesha. A niche of agricultural lenders has started to develop over the past few years, such as FarmDrive, Tulaa and Appollo Agriculture, with a primary focus on small-scale farmers.

Nigeria

Nigeria is the third-largest hub, with most of its fintechs based in Lagos. The payments segment has the largest number of players. However, there has recently been a rise in lending (RenMoney, Migo) and investech companies (CowryWise, PiggyVest), as the unmet needs of the real sector shift from payments to credit availability and investment products.

Egypt

Egypt is also led by payments players, as the focus remains largely on improving woeful levels of financial inclusion. Local fintechs tend to collaborate with traditional banks to provide users with access to several financial services, including payments facilitation, electronic cash and loans. Several innovative fintechs also offer standardised versions of local financial practices such as savings circles.

Strategies by market

Kenyan and Nigerian fintechs, which were the continent’s largest recipients of funding in 2019, are more focused on expanding into new markets than fintechs in other markets. Such expansion backed by appropriate funding has the potential to expose the products/services to a broader market and increase the customer base. South African fintechs may be demonstrating less interest in geographic expansion as they are typically more established fintechs that may already have expanded their footprint (eg GetBucks has a widespred Southern Africa presence in Lesotho, Botswana, Namibia etc). Interestingly, Egyptian fintechs are the least interested in expanding into new markets which in our view is testament to the significant opportunities that exist in the domestic market.

Figure 3: Breakdown of future plans by markets


Source: Tellimer Research, company disclosures


Introducing new products is a common strategy across all markets, but the rest of Africa seem to lag behind the four major hubs. This might be due to the lower uptake of fintech offerings within those regions and/or restrictions on the activities of non-licensed financial institutions by central banks.

Identifying new market segments is most common with Egypt fintechs and the rest of Africa, which we think is due to the greater extent of financial exclusion within those regions.

Investment in technology infrastructure enables fintechs develop new products/ services, increase their reach or improve their existing service offerings, which all encourage increased usage. Egyptian fintechs seem most keen to ramp up on technology infrastructure as they hope to penetrate unbanked or excluded segments of the market.

Fintechs in Egypt and other parts of Africa (Ghana, Ethiopia, Senegal and Zambia) are keen on partnering with incumbents like banks, mobile network operators or other fintechs as this would help them increase their reach and gain new customers.

Other future plans include potential mergers (Egypt) and potential listings on the local stock exchange (Egypt and Nigeria).

Figure 4: Fintech funding in 2019 by country

Source: Partech 2019 Africa Tech Venture Capital report
*Outer circle = % of total funding. *Inner circle = number of funding deals

 

For more detail on the fintech environment in Africa see our recently published in-depth report The Ultimate Guide to African Fintech. In the report we provide the results of our survey of 150+ fintechs across 20 African markets, showing their product and customer niches, as well as identifying their unique success factors.


 
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Equity Analysis / Sub Sahara Africa

Five major themes for the future of fintech in Africa

  • African fintechs are innovating with new products, a broader footprint, cutting-edge technologies and partnerships
  • As a result, they are increasingly impinging on long-established incumbents, eroding the value of these franchises
  • Investors may be overlooking in-house fintechs; we cite listed examples in Egypt, Kenya, Ghana, Senegal, S Africa & Zim
Rahul Shah @
Tellimer Research
28 May 2020

The African fintech space has recorded impressive growth over the past decade. There are currently over 400 active fintech companies across the continent, c80% of which are home-grown. Major drivers of this growth in the fintech ecosystem include favourable demographics, high levels of mobile phone access and Africa’s generally poor levels of financial inclusion.

We surveyed 160 African fintech companies to better understand the drivers of future growth in the sector. 

Our research points to five major themes for the future:

1. Launching new products and services.

This will enable companies to claim a greater share of wallet from existing customers, and also help attract new customers to the franchise

2. Expanding into new countries.

This allows companies to scale up existing operations, and attract a whole new customer base

3. Focusing on new market segments.

By using innovative approaches (related to product features or distribution, for example) fintechs can profitably serve customers who fall out of the realm of traditional financial providers.

4. Increased investment in technology infrastructure 

This builds additional capacity for innovation, automation, efficiency and scalability.

5. Partnering with incumbents 

This can improve fintechs’ reach, especially in highly regulated markets, or can help them to better satisfy the needs of the most challenging consumers.

 

Other, less commonly cited strategies include: applying for licenses where regulatory restrictions exist; hiring experienced personnel to build in-house expertise; and buying smaller fintechs with interesting business propositions to acquire new products and skills or to reach new markets.

Strategies by product line

Expansion into other countries is most popular among fintechs active in payments (for example Paga expanding into Mexico), lending (Jumo expanding into Nigeria and Ivory Coast), and remittances (SureRemit, which is expanding across Africa).

Introducing new products/services is the most popular strategy among lending fintechs (for example, Tala plans to launch a micro insure offering in the next 12 months). Borrowers represent a captive audience for such companies. Offering additional products can also help tie-in the customer and reduce credit risk.

Targeting new market segments is most popular among insurance (Pineapple is expanding into the auto insurance segment) and investment fintechs (haloyako adding government instruments to its offerings). These companies are typically trying to bring such products to previously excluded individuals, such as those at the bottom of the pyramid.

Increased investment in technology infrastructure is a common theme across the board as this allow fintechs to innovate and improve on their operations.

Partnering with incumbents is particularly popular with payments fintechs (for example, Paga’s partnership with Visa on payments, M-Pesa partnering with Ria for remittances). One motivation is the opportunity to offer services that would ordinarily require licenses or demand stringent approval procedures.


Strategies by market 

Kenyan and Nigerian fintechs, which were the continent’s largest recipients of funding in 2019, are more focused on expanding into new markets than fintechs in other markets. 

Egyptian fintechs are the least interested in expanding into new markets, which in our view is testament to the significant opportunities that exist in the domestic market.

Introducing new products is a common strategy across all markets, but the rest of Africa seem to lag behind the four major hubs. This might be due to the lower uptake of fintech offerings within those regions and/or restrictions on the activities of nonlicensed financial institutions by central banks. 

Identifying new market segments is most common with Egypt fintechs and the rest of Africa, which we think is due to the greater extent of financial exclusion within those regions. 

Fintechs in Egypt and other parts of Africa (Ghana, Ethiopia, Senegal and Zambia) are keen on partnering with incumbents like banks, mobile network operators or other fintechs as this would help them increase their reach and gain new customers. 

Implications for investors

Investment volume in African fintech has shown a strong positive growth trajectory. Over the past five years, the number of deals has grown from 28 to 125 (35% CAGR), the total value of deals has grown from US$150mn to US$1.1bn (48% CAGR), and the average deal size has increased from US$4mn to US$8mn.

In contrast, for incumbent banks in Africa, the median PE discount to their five-year average valuation is 27%, and the median PB discount is 22%.

At the country level, banks in Uganda, Zambia and Rwanda are trading at the biggest discounts to history, while banks in Zimbabwe, Kenya and Mauritius are trading close to their 5-year historical average multiples.

We think these opposing trends reflect the increasing viability of fintech encroachers, given their potential to offer new products at lower cost with greater convenience, and the increasing vulnerability of incumbents, given the erosion of traditional entry barriers such as physical distribution networks and regulatory restrictions.

For investors in listed equities (ie the incumbents), we think this fintech threat carries the following implications:

  1. A return to historical valuation levels should not be assumed as a base case scenario.
  2. Tipping points may be reached rapidly, given fintechs’ ability to scale-up and expand.

On the other hand, we do feel that incumbents’ own fintech capabilities are being overlooked by investors. We highlight below a handful of listed African entities that provide direct exposure to fintech trends for investors in secondary equity markets.

In Egypt, we have payment platform Fawry, which came into the market via an IPO when private equity firm Helios partially exited its investment in the company.

Kenya's fintech revolution has helped the country achieve an impressive financial inclusion rate (c80%), principally due to the rapid spread of mobile money which received tremendous support from the Kenyan regulatory authorities. M-Pesa is the mobile money offering of Safaricom (East Africa’s largest telecommunications firm that contributes c5% to Kenya’s GDP). Commercial bank NCBA, in partnership with M-Pesa, offers M-Shawari for micro loans and savings. Equity Bank  offers Equitel, its mobile payment and banking service, which is operated through its subsidiary Finserve Africa Limited in partnership with Airtel.

MTN Ghana is the only listed company on the Ghanaian stock exchange with meaningful exposure to the fintech space via its mobile money subsidiary.

Senegal’s largest telecommunications provider, Sonatel, hosts Orange Money, a mobile money wallet.

In South Africa, Purple Group’s subsidiary, Easy equities, enables users to invest in shares, exchange traded funds (ETFs) and other equity-based securities.

Vodafone Tanzania offers M-Pesa, a mobile money platform for funds transfer, bill payment and remittance.

Zimbabwe can point to Cassava Smartech, a financial technology company with a subsidiary, Econet, that operates Ecocash, the largest mobile money platform in the country. Getbucks, the fintech lender that dominates the Southern Africa markets, is another listed entity.

 

For more detail on the fintech trends in Africa see our recently published in-depth report The Ultimate Guide to African Fintech.


 
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Strategy Note / Global

Africa ex-SA equity strategy: Egypt is the least bad

  • Egypt: another IMF deal, slower rate easing, higher foreign policy risk
  • Nigeria: false outperformance as the scourge of FX dysfunction returns
  • Kenya: Safaricom’s outperformance of the Banks amid high risks for all
Hasnain Malik @
Tellimer Research
30 June 2020

Covid-19 remains a significant economic challenge across the continent. While the youthful demographic should mitigate deaths, low testing casts doubt on modest infection rates, tourism, remittances, and FDI are negatively impacted, capacity is limited for fiscal stimulus (because of rising debt levels in recent years) or interest rate cuts (because of FX rate sensitivity), and changes in foreign portfolio investor risk appetite (or fund redemptions in the case of the remaining pan-Africa or global Frontier funds) can overwhelm trading activity in what remain very illiquid markets (by global standards).

This combination of factors is best demonstrated in Mauritius, the region's worst performer, where the FX rate has depreciated c10% ytd, Moody's sovereign credit outlook was downgraded to negative, and the national statistics agency forecasts a 70%, 45%, 20% and 13% drop in tourist arrivals, textile output, construction activity, and GDP, respectively, in 2020.

A number of equity markets in the region are, to varying degrees, dysfunctional: foreign repatriation is not possible in Zimbabwe and severely impaired in Nigeria, price discovery remains compromised in Tanzania, and Mauritius was shut for two weeks at the end of March.

Among the region’s larger stocks, Telecom Egypt is the only one which is up significantly in absolute terms ytd (c30%), handsomely outperforming. This for the company-specific reason of a potential release of value in its 45% stake in Vodafone Egypt, following Saudi Telecom’s intention to purchase the majority 55% stake from Vodafone.

Egypt: another IMF deal, slower rate easing, higher foreign policy risk

Egypt rapidly secured external funding (from the IMF and the Eurobond market), offsetting prior FX reserve erosion, and it remains the only market in Africa ex-SA on valuation multiples well below historic average.

However, political risk has deteriorated. Egypt is rattling its military sabre in response to setbacks for its ally in the Libyan civil war (LNA forces led by Haftar) and in its diplomatic efforts to block or at least slow) Ethiopia’s progress in filling up the GERD (which threatens downstream fresh water supply for water-poor Egypt).

While interstate war is unlikely, higher direct spending on the military is a bigger risk (after a decade during which this has fallen by a percentage point of GDP). This would be unwelcomed for the investment case given the military’s continuing, overbearing indirect grip on the economy and the strain put on the fiscal deficit from Covid-19 disruption.

Morocco: reminder of succession risk

Morocco’s King Mohamed has undergone his second heart operation in as many years (Crown Prince Hassan is merely 17 years old). Succession matters because of the central role of the monarchy and the royal court in policy-making.

Morocco faces ongoing challenges externally to maintain good relations with the EU, as well as both sides of the GCC, and cultivate closer ones within the AU, and, internally, to manage the sense of exclusion felt by the Berber ethnic group, maintain the inclusion in formal politics of the moderate Islamists, and counter the separatist risk from Polisario in the Western Sahara.

Nigeria: false outperformance as the scourge of FX dysfunction returns

Nigeria has outperformed Africa and Frontier equity peers ytd despite the drop in oil price. Regulatory changes which have restricted access to central bank securities (open market operations), high dividend yields, and the cut in interest rate may have pushed some local wealth into equities.

But this performance is illusory: most foreign institutional funds looking to exit are being trapped by FX shortages (which are likely to persist), dampening falls in share prices.

Kenya: Safaricom’s outperformance of the Banks amid high risks for all

Kenya has outperformed despite the divorce in the leadership of the ruling party, persistent fiscal and current account deficits, an over-valued FX rate, insecurity, and the damage to remittance flows and tourism from Covid-19. The threat from locust swarms has recently receded, but only after exacting a toll on the economy (agriculture is 35% of GDP). This list of risks keeps us cautious.

Total equity market performance masks the dichotomy between mobile telecom operator, Safaricom, which dominates the index and has outperformed the rest (eg the Banks). Safaricom's exposure to the staple revenues of mobile voice and data, and Covid-19 induced penetration gains for the digital payments sector (although regulation of transaction charges is dampening the near-term revenue impact), have likely driven this. Furthermore, Safaricom shares are far more liquid (average daily traded value of US$2.5mn is 50% higher than the combination of KCB and Equity). Yet, such a large disconnect in valuation and performance is perhaps too great for two sectors ultimately exposed to the same economy.

Zimbabwe: dystopia

Zimbabwe’s equity performance should continue to be ignored because it reflects equities acting as a substitute for cash in a collapsing economy for locals and foreigners in the formal sector who are trapped within a dysfunctional FX market. There has been no progress on debt arrears to the World Bank, and poverty and food insecurity were critical prior to Covid-19.


 
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Global Themes / Sub Sahara Africa

Key factors for fintech success in Africa

  • The African fintech space has recorded impressive growth over the past decade.
  • Major drivers of growth in the fintech ecosystem include demographics, mobile phone access and poor financial inclusion
  • What makes a winner in African fintech? Our survey of 160 companies helped us find the answer
Rahul Shah @
Tellimer Research
15 April 2020

In our research into the landscape for Africa fintech we analysed a sample of 160 fintech companies across the continent and identified the most common success factors for these businesses. These were the top 10:

Figure 1: Top 10 success factors


Source: Tellimer Research, Company disclosures

 

Targeting unbanked customers

This is most common among payments, lending, insurance and remittance fintechs, which, by focusing on certain niches of underserved customer segments, can grow due to high visibility, lower competition and word-of-mouth referrals. Examples include Nigerian payment firm Paga, which targets rural populations with little access to banks, South African lender GetBucks, which focuses on bottom-of-the-pyramid borrowers, and Ugandan remittance provider Remit, which enable users to pay bills for family and friends who are unable to do so themselves.

Innovation in service offerings

This is a widespread success factor across all segments, as creating new products or new ways of using existing products enables fintech companies to become more relevant to existing customers and/or to reach new ones. Notable examples include WorldRemit (available in various African markets including Algeria, Kenya, Nigeria, Tanzania and South Africa) launching its business/merchant payment options and Branch (Nigerian lender) introducing longer tenor loans.

Strategic partnerships

This approach is most prevalent among payment, lending and remittance fintechs. Payment fintechs commonly partner with larger or more widely accepted payment systems to boost their usability (e.g. Tala’s partnership with PayPal). Lending fintechs often partner with banks (to use their capital base) or Mobile Money platforms (to improve convenience) when providing quick loans and payday loans, and with merchants when offering Point-Of-Sale loans (for mobile device financing etc). Remittance fintechs partner with banks to provide into-bank cash-outs (e.g. WorldRemit, Transferwise) and payment systems to enable users to make payments using remitted funds (e.g. SureRemit, Xente).

Access to funding to gain scale

This approach is most relevant to lending fintechs (to underwrite loans) and insurtechs (to increase cover or acquire licenses). Examples are Migo (a Nigerian lender), which will use its recent funding round to launch the service in Brazil, and Pineapple (a South African insurer), which will fund the expansion of its motor insurance offering.

Competitive prices

This approach is adopted quite widely. Payment aggregators like OPay offering lower transaction charges, lending fintechs such as Numida (Uganda) lower interest rates, insurtechs such as Pineapple (South Africa), which charge lower premiums, and remittance providers like Hellopaisa, which has smaller bid-ask currency exchange spreads, enabling it to take market share from incumbents. 

First-mover advantage 

This is most common among payment and remittance fintechs; these are typically scale/ network businesses and moving first can boost brand recognition and customer loyalty. Notable examples are MTN MoMo (Ghana), M-Pesa (Kenya), EcoCash (Zimbabwe) and M-BIRR (Ethiopia).

Operating efficiencies

Across the board, fintechs invest heavily in technology infrastructure, both to boost their service quality and scalability, but also to generate efficiency gains through automation. Technology means bills can be paid using QR codes, loans can be disbursed using USSD codes, insurance products can be tailored via smartphone apps, and T-Bills investments can also be executed via mobile phones. Payments (eg OPay), investech (eg Piggyvest) blockchain fintechs (eg BitPesa) most usually cite this as a key competitive advantage over peers.

Widespread network

This approach is mainly adopted by payments and remittances fintechs, as having a strong agent distribution network makes it easier for customers (especially in rural areas) to make deposits. Their basic transactions are still predominately cash-based and a wide network makes it easier for users to perform cash-in transactions, transfer funds or make payments for utility and other relevant bills. This is important for fintechs like Paga (Nigeria), M-Pesa (Kenya), EcoCash (Zimbabwe) and MTN MoMo (Ghana).

Favourable regulations/ integration in central payment systems

This approach is common among payment, remittance and blockchain fintechs, as being denied regulatory backing would be extremely detrimental to the adoption of their products. Notable examples are M-Pesa in Kenya and Tunisia’s recent announcement of a national cryptocurrency. Ghana’s adoption of mobile money interoperability, which allows for transactions between different mobile money wallets, has contributed to mobile money transactions soaring by over 100% within the first year of its adoption.

Management expertise

This approach is most common among fintechs in lending (to enable them to better identify underserved markets and/or create better customer credit profiles) and insurtech (to better identify underserved markets). Examples include Branch (Nigeria and Kenya), which creates credit score ratings by combining customers personal information (phone number, National ID and mobile money account).

Other factors

Other factors that have supported the growth of African fintechs include rising mobile phone penetration, fintechs backed by large traditional financial incumbents such as Alat by Wema (Nigeria) and Equitel by Equity Bank (Kenya), business model scalability, and integration of the fintech with other mobile-centric activities.

 

Figure 2 Split of success factors by segment

Source: Tellimer Research 

Figure 3 Split of success factors by geography

Source: Tellimer Research. Note: * ROA = Rest of Africa.

 

For more detail on the fintech environment in Africa see our recently published in-depth report The Ultimate Guide to African Fintech.


 
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