Establishing banks and financial systems in rural Africa is expensive, and consequently, financial services are elusive to a majority of the African adult population. According to Quartz Africa, 66% of the African adult population is unbanked. Fortunately, due to the rise of financial technology, fintech, this is rapidly changing.
Fintech is the use of technology to enhance or automate financial services and processes. In Africa, fintech presents an opportunity for financial inclusion – bridging the gap between digital financial services and the unbanked population. For instance, in Kenya, M-Pesa is a way for Kenyans to pay bills, transact and conduct other financial services conveniently and without a bank account. Since the advent of M-Pesa, access to digital financial services in Kenya has increased from 27% in 2007 to 83% presently.
Mobile money provided the foundation for other innovations in fintech to be established. Since then, fintech startups have been on the rise across Kenya. Currently, fintech is disrupting sectors such as public health, agriculture and insurance. Although the ideas are endless, these innovators face challenges when is comes to accessing capital, talent and support, especially in the early stages.
Building the ecosystem for entrepreneurs & innovators
Looking to fill the gap are accelerator programs such as the one offered by Catalyst Fund, which works to support innovative inclusive fintech start-ups. The 6-month accelerator program is designed to work with entrepreneurs building affordable and accessible solutions designed to reduce the financial disparity in emerging markets including Kenya, Nigeria, South Africa, Mexico and India. Through Catalyst Fund, early-stage start-ups are awarded £ 80,000 in flexible grant capital and provided venture-building support by a team of experts to conduct market research, refine value propositions, tech and data analytics support, marketing support, 1:1 connections with relevant investors and more.
Catalyst Fund delights in being a driver of inclusive fintech – financial products and services designed for the underserved and unserved population. This is evident in the beneficiaries of the program – Turaco and Sokowatch. Turaco – a former member of Ikigai, provides affordable medical cover to underserved communities. Whilst Sokowatch, an e-commerce platform, enables informal retailers to order inventory through their platform and receive same-day delivery as well as access to credit. Established in Kenya, both these start-ups are market-leaders in their respective fields and have expanded into other countries in Africa.
The success rate for early-stage start-ups is higher in markets such as Kenya. “Innovations are more likely to thrive in markets where market facilitators such as hubs and accelerators, partnership and investment opportunities, and workspaces like Ikigai are already established” mentions Thea Sokolowski (Head of Marketing and Communications at Catalyst Fund). “Catalyst Fund’s role is to continue supporting innovators in emerging markets, as well as to accelerate the wider start-up ecosystem in each of our markets as we work to promote the growth of inclusive fintech”.