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  • Writer's pictureMagdalena Gołębiewska

Kenya - lion of the African Fintech Big5!

If you will start looking at African FInTech ecosystem, you will see FINTECH BIG5. A bit different than the one which everyone knows, and includes: Nigeria, Ghana, Egypt, South Africa and Kenya!

For those who never heard about Big5 - quick recap:

The term BIG5 is attributed to the hunters of old, who used the term to describe what they determined were the most dangerous animals to hunt in Africa. They are lions, leopards, elephants, rhinos and Cape buffaloes. Since we called Nigeria a buffalo (read the post here) of African Fintech Big5, Kenya should be called a lion!

Kenya is one of the most promising country in terms of FinTech in Africa!

No wonder Kenya is called Silicon Savannah! Also, this term became associated with Konza Technology City, a planned urban development in Machakos and Makueni counties that would focus on offering services related to information technology to support tech entrepreneurs in Kenya. Additionally Nairobi is the leading Fintech ecosystem city in Africa according to the 2021 Global Fintech Rankings published on 8th July 2021 in which it jumped 26 places to the 37th position globally beating both Lagos and Accra (watch the video below).

But first things first, why Kenya actually is such a hotbed. Let's start from Mobile!

Mobile technologies The starting point of Kenya’s fintech innovation journey was the launch of M-Pesa by Safaricom. M-Pesa served the need to transfer money to families just by tapping some codes on a phone. These P2P payments were supported by a network of agents who facilitated cash in and cash out. Kenyans started using M-Pesa to save, transfer money as well as pay for goods and services. Today, it serves around 70% of Kenyan households contributing immensely towards financial inclusion. M-Pesa also became the catalyst for the fintech boom in Kenya. It has also inspired many telecom operators to launch their mobile wallets, leading to strong uptake of mobile money services. Since then, many fintechs have emerged in the country offering mobile-based financial services like lending, fundraising, peer-to-peer (P2P) lending, international remittance, and insurance to name a few. Shortly thereafter, Vision 2030, Kenya’s long-term development plan was introduced to improve the livelihood of the people. The plan identified financial services as a key enabler on the path to achieving the goals. The percentage of the people in Kenya accessing financial services tripled from 26% in 2006 to 82% in 2019.

When Safaricon created M-Pesa they didn't rest after that! Over the years, Safaricom has created more products – M-Shwari, a savings and loan facility, and Fuliza, an overdraft service that has seen Kenyans borrow a record $10m daily over the pandemic period.

Do you need more convincing? Here you have some numbers!

The value of mobile money transactions in Kenya in 2020 marked a 20% rise from $40bn the previous year. This means that an average of $140m was transacted on mobile phones by Kenyans daily between January and December 2020.

Cash handled by mobile agents in January 2021 rose by 59% compared to the corresponding month last year, indicating the increased preference for using cashless platforms to settle transactions since the Covid-19 pandemic hit the country.

CBK data shows mobile payments through the agents were recorded at $5.8bn, a 58.7% increase from the $3.6bn recorded in January 2020.

The increase is also attributed to the growing number of registered mobile money accounts and agents, at 66.59m and 287,410 respectively as at January 2021.

Ok, let's now move to something more.... innovative :)

Cryptos and digital currencies The cryptocurrency market has become a vibrant space in the fintech market. People are trading cryptos directly with each other, more than any country in the world. Chainalysis’s survey has ranked Kenya the top country in the world in terms of P2P exchange trade volume. Cryptocurrencies allow people in Kenya to send money to people in other countries instantly without incurring high remittance costs. Furthermore, several farmer communities, mostly in the informal sector, are using cryptos like Sarafu coin to buy seeds and machinery and sell their produce, without using cash.

Fintech innovators Kenya is becoming a home to a number of fintech companies aiming to offer faster and affordable financial services with the help of technology. Here are a few names of fintech companies in Kenya:

  • Pezesha – Pezesha is a leading Africa-focused digital financial marketplace.

  • Turaco – It provides insurance and credit solutions via mobile technology to fulfill healthcare financing needs.

  • Tulaa – Tulaa is an e-commerce solution for smallholder farmers

  • Abacus – Abacus helps investors make and implement decisions in the capital markets of Africa.

  • ChamaPesa – ChamaPesa helps informal financial groups in Kenya to get better returns on investments by providing data on various investment options.

List of 56 fintech companies in Kenya

Apart from startups, tech giants are also contributing to the digitalization of Kenya. Facebook has opened its new office in Nairobi, the capital and the largest city in Kenya. Microsoft announced in 2020 that it plans to collaborate with colleges and universities in Kenya to promote the use of technology amongst students. With this, Microsoft aims to encourage and prepare the young generation for technological advancements in the near future. The emergence of mobile money has paved the way for financial innovation in Kenya. The country is now witnessing companies and startups popping from everywhere to offer digital financial services. It will be interesting to see what the future hold for Kenya in shaping the finance world.

Check this interview out as well, great discussion with Eddie Ndichu about Fintech in Kenya! Maybe he didn't predict pandemic in 2020 :), but has a great long term view on the African Fintech future.

Sources: Wakandi (link), Kenyan Wall Street (link) and African Business (link).

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