Silicon Savannah

Posted by Flux on 

25 August 2017

What’s trending now
The Silicon Savannah. Africa as a continent – and Kenya in particular – is emerging as a major fin-tech player and legitimate competitor to Silicon Valley.

Why it’s important
As of 2014, 66% of Sub-Saharan Africans were still unbanked, but necessity truly is the mother of invention.

Africa’s lack of formal financial infrastructure has proved to be a catalyst for a fin-tech explosion across the continent. This lack of infrastructure has given African entrepreneurs the advantage of being able to build fin-tech solutions from the ground up, without having to work within or around existing, entrenched banking and financial infrastructure. African fin-tech solutions are leading the way in terms of mobile payments, micro financing and cross-border banking solutions in particular. Today, half of the 300 million-odd registered mobile banking accounts in the world are located in sub-Saharan Africa.

The emerging African Fin-tech industry has the potential to drive real and lasting economic growth across the African continent. The game-changing mobile payments service, M-Pesa, alone has been credited with raising 2% of Kenya’s population out of poverty through financial inclusion. If one service can change the lives and fortunes of so many people, just imagine what the fin-tech industry can do for the rest of Africa.

The butterfly effect
International investors are waking up to the economic potential of the African fin-tech scene. In 2015, African fin-tech companies received $55 million, representing 30% of the total capital invested in new African companies. Investment in African fin-tech is projected to almost double to a billion dollars in 2018. Watch this space.

The pioneers
Solving the problem of costly and insecure cross-border business transactions: Bit-Pesa is a Pan-African service designed to make doing business across and with Africa easier. The service facilities secure cross border and Forex payments

Solving the problem of financial inclusion for substance farmers: Farm Drive is a Kenyan ground funding and micro-lending platform that bridges the financing gap between small-hold farmers formal banking institutions.

Solving the problem of non-existent credit histories: Tala, although based in California, is an app targeted at African entrepreneurs that makes start-up loans assessable to people with no credit history. The app looks at SIM card data, such as how many contacts a person has saved to their address book and how long their average phone calls are, to analyse a user’s’ loan risk profile The services is available across Eastern and Southern Africa.

Solving the problem of informal trade: Nomanini is a digital point of sale system designed especially for informal sellers. Developed in Cape Town, the Nomanini hardware connects to the seller’s mobile network and allows informal merchants to offer payment and banking services to their customers. Nomanini has processed over 16 million transactions across Africa and raised a million dollars in funding.

Solving the problem of banking the unbanked: Paga is a Lagos-based mobile money and banking service and competitor to M-Pesa. However, unlike M-Pesa, Paga is one of the few mobile money services not owned by or associated with a mobile network provider. Paga has processed over a billion dollars worth of transactions, making it one of the most successful home-grown African fin-tech start ups.

The global hot-spots
Kenya and Nigeria’s tech scene, known as the Silicon Savannah is home to some of the most innovative fin-tech start ups on the continent. In particular, the iHub innovation centre on Ngong Road in the centre of Nairobi’s IT district, known as the heart of the Silicon Savannah, has incubated more than 170 start-ups since 2010.

South Africa’s own Silicon Cape attracted the most international funding of any African region ($46 million) last year.

By: Bronwyn Williams

About Bronwyn

Image credit: Dezeen

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