With more than half of the world’s registered mobile money accounts in Africa, the market for financial technology startups is steadily increasing on the continent. By streamlining, simplifying and speeding up trade and transfers, digital payment platforms are helping expand access to financial services and avoid high transaction costs typically charged by banks. As smartphone penetration grows in Africa, tech startups are gaining more customers and receiving more funding, enough to reach “unicorn status” — a title that describes a company valued at more than $1 billion, according to venture capitalists and private equity firms. As of 2019, smartphone penetration in South Africa stands at 91%. Due to the rise in smartphone users and broadband, mobile banking in Africa is quickly becoming more prevalent, increasing financial inclusivity in Africa.
3 Tech Startup Unicorns Promoting Mobile Money
- Interswitch. Founded in 2002 by Mitchell Elegbe, “Interswitch is a digital payment platform in Nigeria” that reached unicorn status in 2019. The company owns Verve, Nigeria’s most used payment card, and accounts for 18 million out of the 25 million cards in circulation in the country. The tech startup also owns Quickteller, an online payment platform. In October 2020, Quickteller launched the search for a “QTrybe community,” a group of 50 students from tertiary institutions to represent the company on campuses around Nigeria.
- Flutterwave. African payment company Flutterwave received its unicorn status in March 2021 after raising $170 million in funding. Established in 2016 “as a Nigerian and U.S.-based payments company,” Flutterwave “helps businesses build customizable payments applications” through application programming interfaces, a software intermediary that allows two applications to “talk” to each other. Despite the pandemic negatively affecting many growing businesses, Flutterwave’s CEO, Olugbenga Agboola, reports that the “company grew more than 100% in revenue within the past year” due to “an increase in activity in COVID-beneficiary sectors.” These are business sectors that have been thriving due to the pandemic, such as “streaming, gaming, e-commerce and remittance.” Flutterwave is present in 20 African countries and has processed more than 140 million transactions valued at more than $9 billion.
- Chipper Cash. Founded in 2018 by Ham Serunjogi and Maijid Moujaled, Chipper Cash is a money transfer startup that facilitates cross-border payments across Africa. In 2021, just three years after it was established, the company confirmed that it raised $100 million, taking its valuation to more than $1 billion, therefore, reaching unicorn status. The company “offers mobile-based, no fee,” peer-to-peer payments. Aside from operating in seven African countries, Chipper Cash has now expanded to the United Kingdom, its very first international market outside of the continent.
Financial Inclusivity and Poverty Reduction
Overall, the emergence and success of these tech startups redefine mobile money and increase financial inclusivity in Africa. By digitizing the process, expanding services and reach as well as lowering costs, financial inclusivity is achieved. Even the most impoverished and marginalized populations are able to participate in the economy through mobile money platforms. According to a report by Boston Consulting Group, “the potential market for banks in sub-Saharan Africa is $500 billion.” For impoverished people who cannot acquire bank accounts, mobile money solutions break down barriers to financial inclusivity in Africa, empowering people to rise out of poverty.
– Annarosa Zampaglione