Is Africa A Good Destination for Fintech?
Is Africa a good destination for fintech? Africa is an excellent place for the development and growth of fintech. The emerging economies in the continent give room for startups to use the technology to find solutions that solve problems facing business owners and customers.
In addition, Africa is making its own mark in the area through startups and established players like mobile money pioneers Mobile Money. The growth of fintech in the continent makes it a good place to invest your money and launch a startup.
We look into some of the reasons why Africa is a good place for fintech companies to grow.
Key Benefits of Fintech for Africa’s Development
Fintech solutions can help the continent move forward and catch up with other countries miles ahead. Some of these benefits include:
Regional development strategy: Financial inclusion is now a major priority in all development plans across Africa. Programs like ‘Digital Agenda for Africa’ are leading to financial inclusion for citizens and businesses. Fintech solutions can boost growth and help people achieve their full potentials by improving access to capital, payment services, and loans.
Financial support: The continent has been able to get support from international bodies and investors. The African Development Bank Group recently issued a US$500 million facility for fintech and tech support in Africa.
Financial inclusion: Fintech offers solutions that drive financial inclusion for emerging economies in Africa through digital payments, crowdfunding, p2p lending platforms, and mobile banking. There are possibilities that Africans will be able to use innovations such as biometric identification and Near Field Communication to enhance the payment experience, which will help them save time, effort, and money.
Increased economic growth: Fintech can lead Africa into an era of increased economic growth through access to marketplaces for investors, consumers, businesses, and fintech providers. This means more jobs created as well as improved productivity in existing job roles. Better entrepreneurship and business growth opportunities in Africa will lead to better living standards and prosperity for the people on the continent.
How Tranzia Has Disrupted The Payment Industry
Tranzia is a banking solution created to meet the specific needs of micro, small and medium enterprises (MSMEs) based in emerging markets such as Africa. It has been designed with simplicity, flexibility, and transparency in mind. Tranzia is a digital banking solution for small business owners to the bank and manages their finances with ease. Tranzia has its headquarters in London, England, UK.
Roy Marples and Sean Naylor founded the company in 2010 after recognizing that there were big gaps in the financial services sector available to small businesses based in emerging markets. It took them three years to design and develop the platform that was launched in 2013.
Tranzia’s services are available in Kenya, Tanzania, Uganda and South Africa. The company has collaborated with six banks from these countries to help its clients manage their finances better without having to incur huge fees and penalties. Tranzia has an active user base of 3,000 users.
The product is now called Tranzia 1.0, and it allows small business owners to manage their finances by making use of mobile phone banking, which they can access via email or SMS (short messaging service). The platform was created with a focus on simplicity, flexibility, and transparency.
The platform collects data from the integrated banks and presents it to business owners in a way that makes it easy for them to use. For instance, the platform allows companies to access their bank statements via emails or SMS alerts. This eliminates the need for manual reconciliation by small business owners, which mitigates risk exposure.
Tranzia also provides its clients with business intelligence. Business owners can track their finances by using the platform’s reporting functions. This includes analyzing key performance indicators for various functional areas within the business, such as suppliers, customers, and employees.
Tranzia 1.0 has been designed to be a scalable solution which means that it can grow. This will enable the platform to gradually add new customized features for each country to meet the unique needs of micro, small and medium businesses in Africa.
Successful Fintech Startups in Africa
Several fintech startups are doing really well in Africa. One of the reasons behind their success is that they have been able to identify a gap in the market and fill it with solutions that provide value to customers. The following are some examples of such businesses:-
Paga is a mobile payments service provider that is headquartered in Lagos, Nigeria. Jason Njoku founded the company in 2010 after he saw a huge gap in the market for mobile payments services in Africa. Paga started as M-Pesa’s competitor, and now it has grown to become the biggest mobile payments service provider on the continent, with operations spread across 22 countries. The company generates $60 million in revenue every month.
Paga works as a payment service provider for businesses. Its services are also used by individuals who send money to each other via mobile phones. It provides these organizations with an API that they can use to integrate their payment services into the Paga platform, which is available via SMS, website, and mobile app. Paga has an active user base of 9 million subscribers, and it processes transactions worth $11 billion every year.
Flutterwave is a payment service provider that Reuben Van Meir founded in 2015. It is headquartered in Lagos, Nigeria, and the company provides business processing services to organizations of all sizes in and outside the country. Flutterwave has an active user base of 12,000 businesses that use its services daily.
The core service provided by Flutterwave is B2B payments which are made possible through partnerships with leading banks such as Stanbic IBTC Bank, Standard Chartered Bank, and others. The company has also developed its own payment platform, allowing businesses to make online payments using mobile phones.
Flutterwave recently raised $10 million in Series A funding from South Africa’s Standard Bank Group for expansion into new markets. The funds will be used to launch its international remittance offerings, develop its business intelligence solutions, and scale up its engineering division.
Tala is a mobile payments solution provider that Chris Larsen founded in 2013. The company has operations spread across Kenya, Uganda, Tanzania, and Zambia, some of the most affluent markets on the continent. It also provides its services to other regions in Africa through partnerships with local mobile telecommunications companies such as Orange, Airtel, and MTN.
Tala provides its services to businesses of all sizes. It gives the organization access to working capital via a credit line which can then be used for business expansion by paying workers salaries or acquiring new inventory. Small loans from Tala can also be used to fund major purchases such as mobile phones, computers, or other hardware. Tala also offers additional services such as payroll services and online invoicing, which the organization can make available via an API that Tala provides.
The business generates revenue from interest paid to it by customers who take loans from its platform. The company has a total loan portfolio of $300 million that is spread across 60,000 customers. The platform has an active user base of 8 million users, and it processes loan payments totaling $27 million every month.
The fintech market in Africa is relatively new, and it doesn’t have a lot of competition compared to the markets in Europe and North America. This creates an opportunity for businesses to develop solutions that solve problems faced by African people while taking advantage of opportunities available on the continent.
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