African countries are home to some of the world’s most unbanked populations. In these nations, fintech and digital banking are redefining what it means bank the unbanked.
Being the second largest continent in the world, it goes without saying that its pace of development are not monolithic in nature. When discussing fintech in the region, North Africa does not get the limelight as much as its neighbouring countries.
In North African countries such as Algeria, Tunisia and Morocco, fintech developments have lacked behind sub-Saharan African counterparts like Nigeria and South Africa. Nevertheless, things have been moving quickly in recent years with both governments and industry stakeholders ramping up initiatives to develop the industry.
Egypt’s Fintech Leads the Way in North Africa
In Egypt, the national e-commerce policy was introduced in 2018 to double the footprint of businesses selling products and services online in the country by 2020. The strategy was crafted in partnership with private sector partners including Mastercard as well as the United Nations Conference on Trade and Development (UNCTAD).
Fintech in Egypt is perhaps the most advanced market in North Africa with about 40 players, according to a INVYO report. Its potential and strength within the region is something that we’ve wrote about extensively in the past.
One of the brands with a growing presence in the Cairo fintech space is Dopay, a startup that allows employers to pay their employees using their mobile phone. The startup raised US$2 million in April 2015 and was part of Barclay’s accelerator program in 2014 — it was also listed in our list of top 10 fintech startups to watch in Egypt
Egypt also hosts a large number of crowdfunding platforms with the most notable ones being Shekra, a Shariah-compliant crowdfunding platform, Yomken, and Zoomaal, and a new fund called Sawari Ventures North Africa Fund I (SVNFI) by Cairo-based Sawari Ventures is looking to raise US$70 million to invest in growth-stage companies in different sectors including information and communication technology (ICT), deep technology, fintech and education technologies (ed tech) in Egypt, Tunisia and Morocco.
Tunisia’s Fintech is not Too Far Behind Egypt
In Tunisia, a significant proportion of citizens are already accessing financial services through the country’s La Poste Tunisienne (Tunisian Post) service. Though not a bank nor a microcredit firm, over six million people have postal financial accounts in Tunisia, according to a Okahr report.
Of those in the country that are part of a formal financial service, 90% of them are with the La Poste Tunisienne system, which offers a large array of fintech products from mobile financial services, domestic and international remittances, bill payments and smart card purchases.
But Tunisia also has several homegrown fintech startups, including Expensya, an expense management software developer that recently raised EUR 4 million, I-Fintech Solutions, an investment advisory firm focused on Islamic fintech solutions which signed a partnership with Saudi Arabia’s Islamic Development Bank Group (IsDB) in 2018 to develop a pipeline of products to solve liquidity management, and Kaoun, a payment and credit scoring startup using data science.
Tunisia passed the Startup Act last year, a law which sets out government’s policies for startup growth that came out after two years of deliberations with legislators engaging entrepreneurs, civil society and investors.
As part of its provisions, the law supports startups in funding, grants them exemptions from corporate taxes, allows employees up to a year off from their current jobs to run their outfits, provides a government-sanctioned salary to founders, and helps firms file for international patents.
According to Walid Hached, a former banker and the COO at Tunis-based coworking space Cogite who helped draft the act, the Tunisia Startup Act is a blueprint for how other African countries can create a supportive environment for entrepreneurs and tech startups from the “bottom-up.”
Earlier this year, Tunisian private equity firm AfricInvest partnered with San Francisco-based Cathay Innovation to launch the Cathay AfricInvest Innovation Fund. With a projected size of about US$170 million, the fund would be one of the largest venture capital funds in Africa. It will invest in technology startups all across Africa and even non-African startups looking to expand into the region.
Khaled Ben Jilani, a senior partner at AfricInvest told MENAbytes, that although the fund is sector-agnostic, they are specifically looking at opportunities in logistics and mobility, fintech, software, energy innovation, healthtech and edtech.
Morroco’s Growing Fintech Scene
In Morocco, e-commerce platform Hmizare expanded into fintech last year with the launch of HmizatePay, an all-in-one mobile commerce and payment platform. Hmizate said its new payments platform provides users with an e-wallet they can use to book, buy and pay for everyday needs. The app offers instant cashback that rewards customers for most in-app purchases.
Outlierz Ventures, an Africa-focused venture capital firm based in Casablanca, was launched in January 2017 to invest in tech-enabled companies in the sectors of fintech, insurtech, agritech, healthtech, B2B marketplaces, and logistics, among others.
Moroccan banks and incumbents are also getting into the fintech game.
The Popular Central Bank (BPC) group, one of Morocco’s leading banking institutions, launched in November 2018 the Fintech Challenge, a program aimed at identifying promising startups for partnership opportunities, and CFG Bank has been working with US-based digital banking tech specialist Kony as part of the bank’s “digital-first banking” strategy.
Algeria’s Nascent Fintech Scene
In Algeria, Sylabs, a tech hub and incubator, and Natixis Algérie, the Algerian subsidiary of Natixis bank, signed an agreement last year to boost fintech innovation in Algeria. The partnership focuses on creating synergies between the two entities to foster fintech and train young professionals and startups on the developments of the traditional banking and financial services industry.
Algeria has also welcomed a new incubator called IncubMe, which intends to partner with corporates in investing in selected startups, assist with prototyping, and provide entrepreneurs with access to their networks.