Lessons from M-Pesa for Africa’s new VC-rich fintech startups
0Reported today on TechCrunch
For the full article visit: https://techcrunch.com/2019/12/04/lessons-from-m-pesa-for-africas-new-vc-rich-fintech-startups/
Lessons from M-Pesa for Africa's new VC-rich fintech startups
In African fintech, the fourth quarter of 2019 brought big money to new entrants.
Chinese investors put $220 million into OPay and PalmPay - two fledgling startups with plans to scale in Nigeria and the broader continent. Several sources told me the big bucks had created anxiety for more than few payments ventures in Nigeria with similar strategies and smaller coffers. They may not need to fret just yet, however: lessons from Africa's most successful mobile-money case study, M-Pesa, suggest that VC alone won't buy scale in digital finance.
Startups and fintech in Africa
Over the last decade, Africa has been in the midst of a startup boom accompanied by big growth in VC and improvements in internet and mobile penetration.
Some definitive country centers for company formation, tech hubs and investment have emerged; Nigeria, South Africa and Kenya lead the continent in numbers for all those categories. Additional strong and emerging points for innovation and startups across Africa's 54 countries and 1.2 billion people include Ghana, Tanzania, Ethiopia, and Senegal.
The continent surpassed $1 billion in VC to startups in 2018 and per research done by Partech and WeeTracker, fintech is the focus of the bulk of capital and deal-flow.
By several estimates, Africa is home to the largest share of the world's unbanked and underbanked population.
This runs parallel to the region's off-the-grid SME's and economic activity - on display and in commercial motion through the street traders, roadside kiosks and open-air markets common from Nairobi to Lagos.
IMF estimates have pegged Africa's informal economy as one of the largest in the world. Thousands of fintech startups