The Potential of Fintech Across Africa

With a particular focus on hubs in each region: South Africa, Kenya, Nigeria and Egypt

From an intro to fintech startups in Africa published by Dipolelo Moime via VC4A in 2016
From Marcello’s article published Oct 2019 titled Small business and financial inclusion in South Africa

South Africa

  • Dominance by a few large, institutionalized banks (FNB, Standard Bank, Capitec, Absa and Nedbank) (who themselves are trying to participate in the fintech space, e.g., with Standard Bank partnering with Founders Factory Africa and Alphacode launched by Rand Merchant Investments, which itself launched some of the largest insurance providers in the country)
  • High credit card penetration (~80%) with low mobile money penetration (MTN recently tried to relaunch mobile money with MoMo earlier in 2020 prior to COVID) — because of safety, those who can prefer to carry cards rather than cash
  • Low overall economic growth (hasn’t reached 5% annual run rate in a quarter from 2010–2020)
  • Low overall penetration of ecommerce as a % of retail (it’s seen steady growth, but the country’s measures during lockdown didn’t allow acceleration of ecommerce like the US experienced)
LEFT Source: Deloitte African Powers of Retailing 2015; more recent data have shown this trend continued about on track RIGHT Source: via this 2pm post, originally from ShawSpring Research Investor Letter (proprietary)
  • Expand horizontally to other markets where mPOS solutions?
  • Expand vertically, by partnering with other financial institutions to use the data to facilitate other financial service offerings to merchants?
  • How can they support small businesses and survive the impact of COVID and lockdown?
  • 3 operate in the crypto space
  • 2 are in insurance
  • 2 are trying to support informal traders and spaza shops, one enabling them to add money services to their offerings and the other providing them with logistical supply chain and financial services
  • 4 offer online-first business lending and capital solutions (working capital, invoice financing, etc) to small and medium businesses
  • 1 created a platform for unlocking capital from individuals and institutions who want to invest and get a return from agricultural businesses (I’m keeping an eye on this one; it seems interesting and one that has potential outside of South Africa where it started)
  • 1 has created a digital / kiosk based bank without bank branches (if you live here, you know it as you’ve probably seen their kiosks in Pick N Pay possibly without actually registering or realizing it)
  • 1 has created a market place for (university) student accommodation

Kenya

Nigeria

Egypt

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davidfu.co | Ever-evolving, global ed & innovation entrepreneur | CEO Streetlight Schools | expansion lead 4.0 Schools | ex-i-banker | Joburg Global Shaper @WEF

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David Fu

davidfu.co | Ever-evolving, global ed & innovation entrepreneur | CEO Streetlight Schools | expansion lead 4.0 Schools | ex-i-banker | Joburg Global Shaper @WEF