Written by Abax Focus
Fintech is probably the most overused word in the world of finance right now covering everything for crypto currencies to companies looking to reinvent themselves and adding fintech to their profile without understanding what it means. There are some similarities to the dotcom boom of the early 2000’s with many fintech companies chasing what seems like unlimited pools of investment and no doubt a vast amount of companies will fail but many will indeed disrupt and change many financial products and offerings.
Africa has a thriving but young fintech sector and the first index of the top 100 fintech companies in Africa has just been published. It is by no means a complete list of fintech companies operating in Africa; it does however for the first time show the countries and the sectors that the next generation of potentially African unicorns may come from.
Kenya and South Africa just by their size and connectivity provide the bulk of the entrants. However, Rwanda and Uganda are now emerging as hotbeds for fintech activity. Due to the constant movement of migrant workers and the large number of unbanked Africans, many fintech solutions are aimed at this market, allowing utility bills to be paid or even micro loans to allow new single owner businesses to flourish all using fintech solutions to educate and reach the end user. The key point to understand is that this segment of the market was largely ignored by traditional banking products as just unserviceable or unprofitable but the growth of fintech in Africa has tapped into and will continue to improve the lives of many African for years to come. For me the real challenge is the scalability of solutions. So can a micro lender in Kenya scale up by expanding into Uganda or Ghana or do the fintech solutions remain only country specific?