by Editorial Team
September 27, 2019

To travelers worldwide, Africa is known for its beautiful landscapes and its diverse cultures and languages. Less well known, however, is how diverse, dynamic and highly innovative Africa’s Fintech culture is. At Wirecard we are always exploring international trends in payment, so today let us have a deeper look into how the rapid ascent of mobile money across Africa is the foundation for the next wave of ambitious fintech innovation.

In the East African nation of Uganda, on the edge of the spectacular Lake Victoria, modern skyscrapers rise from the foothills, home to a bustling population of nearly 2 million. This is Kampala: a modern African city with diverse industries and a bright future.

In fact, the East African region was one of the earliest movers in the field of mobile money, with Kenya’s M-Pesa service becoming the undisputed poster child for African mobile innovation over the past decade.

But as we dive deeper, we find rich evidence of innovation across the entire financial services spectrum. If the past decade has been all about mobile money, the next decade expands the conversation to include everything from insurance, wealth management, business financing, property, and the exciting development of new digital ecosystems and markets.

The theme of payments is central to this next wave of innovation, as fintech players seek to make it easier to send money instantly, across borders and across currencies, always harnessing the power of cellphones – which have become the primary financial tool for consumers and entrepreneurs.

Payment Innovations Made in Africa

The successful mobile payment solution M-Pesa enables users to make cashless financial transactions, not only with smartphones but also with basic mobile devices (Source: Rachel Hinman / Rosenfeld Media)

Relentless spirit of inventiveness

In the heart of Kampala’s vibrant business district you’ll find Ensibuuko, one of the new generation of African fintech players looking to transform the way we consider credit scoring, collateralization, and lending practices.

Ensibuuko provides a cloud-hosted microfinance platform designed primarily for Ugandan cooperatives, helping them eradicate paper-based processes and digitize the management of customer finance. With this platform, farmers may be able to access finance more quickly to fund the seeding of a new crop, boosting their output and helping grow their business.

It’s one of many financial solutions built ‘by Africans, for Africans’ that leverage ultra-modern technology to bridge the gap between traditional customs and the new demands of globalized markets.

Or, we can look at the example of PesaChoice in Rwanda, which connects prominent utilities providers, companies and government departments to consumers through its innovative bill management technology – helping consumers to make bill payments conveniently and cost-effectively.

Payment Innovations Made in Africa

The African solution PesaChoice enables users not only to pay bills, but also to make payments, buy calling cards or send money instantly to friends and family (source: PesaChoice)

To the west, Nigeria’s much-lauded PiggyVest app helps create better financial literacy and discipline. While tracking their spending with highly-visual dashboards, customers can create savings targets and experience the benefits of saving.

Africa is a continent full of surprises. Accounting for 20% of the world’s total land mass, Africa’s 54 countries represent thousands of cultures and languages, home to over 1.4 billion people. It’s a young and dynamic population characterized by a relentless spirit of inventiveness. And in the field of financial services, something’s bubbling …

Blossoming fintech sector

Incredibly, there are currently over 128 million active mobile money accounts in the Sub-Saharan Africa region according to the GSMA’s ‘State of the Industry report on Mobile Money’, which are typically used for the likes of peer-to-peer payments, credit, insurance, paying utilities, cross-border remittances and more.

Statistics from the World Bank support these findings, reporting that 21% of all adults have a mobile money account. The sector has seen rapid growth, with almost twice the number of mobile money accounts than in 2014, and according to Forbes, “easily the highest of any region in the world.”

But with so many Africans now connected to formal banking and payments services, it’s surely the next wave of innovation that will prove the most exciting. In Village Capital’s recent Insight Report titled ‘Beyond payments: the next generation of fintech startups in Sub-Saharan Africa,’ researchers noted that

“M-Pesa was a pioneer in African fintech, and drove a generation of startups focused on mobile money and mobile payments. Since then, the fintech sector has blossomed to include insurance, credit scoring, data analytics and more, offering insights and lessons to fintech innovators around the world.”

Global investment

Across the continent, access to finance is certainly one of the biggest barriers to economic growth. From mobile micro-finance solutions to large-scale trading and treasury services, many fintechs aim to unlock new agri-business opportunities, grow industries and economies, and position African nations for high-tech innovation.

Tala, which operates across many developing countries – including Tanzania and Kenya – aggregates 10,000 data points to disburse loans to millions of people who previously never had a chance to build a credit record.

Tala has captured the imagination of financial services professionals around the world, having generated an eye-watering USD $105 million in venture capital funding. Just like Africa’s cellphone industry being spurred by a lack of fixed-line telephony infrastructure, new fintech solutions are taking hold in a continent where traditional banking isn’t always as available and established as in other parts of the world.

Tala is held up alongside other famous stories of African fintech success, such as Twiga Foods, which has also generated multimillion-dollar investment for its innovative trade and payments platform that connects rural farmers to urban markets – ensuring transparent pricing and formalizing agricultural marketplaces.

Ingredients for success

To truly understand the fintech and payments opportunities over the coming years, we should look at a few unique factors that have propelled mobile money to dominance across the African continent.

Perhaps the most vital ingredient of success, which could also be harnessed for a variety of other fintech innovations, is mobile money’s use of physical agents to provide essential touchpoints to the customer relationship.

By enlisting small shop owners and informal traders as ‘agents’ that provide the likes of cash-in and cash-out services, account opening, airtime recharging and other services, mobile money has been able to spread like wildfire across vast distances and into even the most remote regions.

Agents profit from the customer transactions, creating a powerful self-sustaining model which has negated the need for banks to lay down costly physical infrastructure.

We also find interesting partnerships between banks, cellular carriers, payments companies and other roleplayers – where each party has been able to leverage on their role in the ecosystem to create useful customer solutions together.

In many countries, this partnership philosophy is extending into the future, with initiatives like the Mauritius Africa Fintech Hub advocating for pan-African open banking standards and core applications that feature open APIs and microservices – to stimulate fintech collaboration and innovation.

Africa is a continent full of potential for fintechs, as the “Mauritius Africa Fintech Hub” shows on its homepage

The next wave

The big question, then, is ‘where to next’ for financial innovation across the continent?

In a Deloitte paper titled Leveraging digital to unlock the base of the pyramid market in Africa,” researchers pointed to four key success factors for African fintech innovators:

  • Partnerships – particularly between banks, fintechs, telcos, other tech players and specialists
  • Mobile – creating simple mobile access points that use apps, USSD strings and other technologies to reach people no matter what the device, and even if signal is patchy
  • Data analytics – to create a rich perspective of customers based on various data points and unstructured data, creating tailored solutions that target pressing customer needs
  • Cloud technology – to build flexible, scalable platforms that enable collaboration with others and give customers access to services

Financial inclusion and micro-finance are clearly major thrusts at the moment, as are digital identity solutions – like the Nigerian solution Youverify – that help tens of millions of Africans that don’t have official proof of identity or proof of address.


Lear more about Youverify, a Nigerian tech startup that is bringing more people into the financial system (source: VillageCapital)

However, the next waves of opportunity extend further than just those areas. Though Africa is home to 16% of the world’s population, it accounts for less than 2% of insured catastrophe losses. With assets under- or uninsured, there’s a big gap for insurtech companies to fill.

With life expectancy in Africa on the rise, wealth management companies are turning their attention to increased opportunities around the likes of savings, investments, pension funds and life insurance.

Market commentators also point to the property sector as one of the next major frontiers for Africans to better leverage title deeds to access capital, as well as the creation of property investment funds that formalize property markets, among the many opportunities for ‘proptech’ players.

Mobile payment was just the beginning

The list is limitless. From crowdfunding loans from around the world, to cross-border payments running over the blockchain, to mobile point-of-sale devices that work in the most rural areas, financial innovation in Africa continues its bold, boundless journey.

Perhaps most excitingly, these financial advances unlock new opportunities for Africans to develop radically innovative solutions that make the rest of the world sit up and take notice.

Consider this example: with increased technology investment into the rapidly-transforming mountain country of Rwanda, the government has built a high-tech drone airport. Primarily designed to transport life-saving blood to people across the country, this kind of ‘global first’ shows just what’s possible.

Mobile money may have been a great introduction – but the next chapter in Africa’s story of innovation will be a thrilling, fascinating journey of discovery.