FINTREK : Exploring new frontiers in fintech investments in East Africa 2018

February, 2018

With the rapid mobile penetration in emerging economies, FinTech may easily be the buzz word or the flavor of this decade. While FinTech refers to firms leveraging technology to deliver financial products/services or capabilities to customers or other financial services firms, it has also carved out its distinct offering to create a full-fledged sector group, complete with its own service providers, accelerators and market. Once a conduit of the traditional financial service sector, today, FinTech holds its own as a mainstay service sector.

Even with the robust growth in FinTech, some questions remain unanswered - what spurred the FinTech growth? Is it scaleable? Is it sustainable? How are global economies such as India and China accommodating the FinTech disruption? This report traces back the evolution of FinTech on one of Africa’s early adopting regions, East Africa and covers the views of various voices in the ecosystem, each providing the uniqueness of the emerging sector, sub-models, their value propositions and feasibility, in an attempt to demystify this complex ecosystem.

The report’s core explores the funding options currently available for the sector: ranging from debt offering, grants and equity provision. With the increased success of FinTech players in East Africa, investors are keen to understand the opportunities available for capital deployment in East Africa’s FinTech space. Here, we have assessed the financing options currently available in the market for target investors. We have also explored the risks associated with the sector and how other investors deal with this. Finally, the report has explored returns available for FinTech investors in East Africa, to provide guidance on the region’s earnings potential.

This report would not have been a success without the generous contribution of Financial Sector Deepening Africa (FSD-A) and the Netherlands Development Finance Company (FMO), whose guidance and financial support allowed for an extensive and thorough market study. We are also grateful for the over 150 FinTech companies and investors who patiently engaged our research team.

Finally, while we have taken caution to accurately represent the investment opportunities in FinTech, this report should be used as a guidance for investors and not as the conclusive position of the industry. Partners involved in the development of this report will not be held responsible for any decisions made or action taken based on information drawn from the report.


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