Grace Ashiru
Thabiso Foto, the chief financial officer of Founders Factory Africa, talks about how fintech has helped improve access to financial services in Africa over the past ten years.
Fintech solutions are made for the underserved, including low-income people, women, people living in rural areas, and small and medium-sized enterprises (SMMEs). These people have had trouble getting banking, credit, savings, and investment services from large banks and other financial institutions.
In 2011, only 23% of Africans had access to a formal bank account, which has grown to 43% in the last ten years, primarily because of fintech and mobile money solutions.
Since it began in 2018, Founders Factory Africa has helped 57 startups. Of these, 27 are fintechs.
OkHi is one of these. It is a smart-addressing and verification platform that uses a customer’s cell phone number and GPS to find out who they are. Zazuu, on the other hand, is building a marketplace for end-to-end money transfers that will make sending money to Sub-Saharan Africa cheaper.
EasyEquities is an excellent example of a platform that has made retail investments more accessible by making it easier for people who have never invested before to do so. More than 1.6 million people use the platform, which has assets worth R37 billion, sales reported at R214 million, and a profit before taxes of R80 million.
The parent company, Purple Group, reported a 92% increase in headline earnings per share in a market that was going down. A big part of this was due to EasyEquities.
Fintech startups have been successful because they fill a need in the market that hasn’t been met yet. They are not only helping people get access to money, but they are also helping businesses. Large banking institutions have teamed up with fintechs or bought them to get their financial products to markets they couldn’t reach before and increase their revenue share.
Asaak is a Ugandan fintech startup that works with mobility and e-commerce platforms to make it easier for boda-boda drivers to own their own motorcycles. Founders Factory Africa put money into the company. In 2021, Asaak gave out loans of up to $2.1 million; in 2022, they paid out $6.9 million.
But there’s still work to be done. The gender gap in who has a mobile money account is slowly closing worldwide, but some markets, especially in MENA, are still behind. The gender gap in account ownership is 12% in Sub-Saharan Africa and 13% in North Africa and the Middle East. This is twice as big as the average gap in developing economies and three times as big as the global average.
About 75% of African tech startups fail before raising a Series A round of funding because they don’t have enough money, and there is still a $330 billion funding gap in MSMEs in Africa.
Foto points out that solving some of Africa’s biggest problems makes a difference and creates new business models, markets, and industries that will be good for business. Adding more people and businesses to the financial system will improve household incomes and well-being, and a new group of consumers and producers will help the GDP growth. So, everyone gains from financial inclusion.
