This week, the East Africa Venture Capital Association (EAVCA) with Intellecap Advisory Services released the Fintrek – which explores fintech opportunities in East Africa, new frontiers in fintech (defined as firms using technology to deliver financial products/services or capabilities to customers or others firms) and fintech investments in East Africa.

Asia Pacific and Africa have been harbingers of mobile payments and that is transitioning into fintech now. The Fintrek report notes three underlying factors driving fintech uptake as:

(i) the use of alternative data to generate credit takings of the unbanked (and deliver services to them cheaply e.g no need for bank branches),
(ii) peer to peer networks (decentralized collaboration, payments across borders, unregulated) and
(iii) the emergence of nontraditional players (telcos, wallets like Google Pay & Apple Pay, e-retailers like Amazon)
Regionally, Kenya is seen as a leader in the region owing to its levels of deposit penetration, deep financial sector penetration, and smartphone ownership (at 44% compared to less than 10% for Tanzania Uganda Rwanda and Ethiopia). Kenya is where most fintechs are setting up, and Kenya-based fintechs have raised $204 million between 2000 and 2017 which is 98% of the funding to the region.

Funding: In terms of funding, fintechs are still in early stages as seen in the small deal sizes: seed funding provided 47 deals (averaging $447,000) and 60% of all funding was to impact areas renewable energy/off grid lighting and health care (microinsurance). Five companies M-KOPA, Off-Grid Electric, SunFunder, Angaza, Azuri) have raised $345 million (through debt and equity) accounting for 55% of the funding between 2010 and 2017. Another finding was that while 53% of all funding between 2010 and 2017 was from venture capital funds, their average deal size ($6 million – e.g. from Apis, Madison Dearborn) is lower than those of corporates ($15 million – e.g. from Stanbic, Commercial Bank of Africa) and foundations ($10 million – e.g. from Calvert, Emerson, Omidyar Network) deals.

Fintechs needs a balance of debt and equity investments to grow, but they are struggling to get debt financing (mainly bank loans). Fintechs in East Africa had debt-equity ratios of 1:1 compared to 3:1 globally, indicating they have capacity to absorb more debt but are not doing it. The EAVCA report cites one of the funding challenges as investors want proof of traction while fintechs need working capital to demonstrate proof of concept, lack of funder knowledge about local markets, East Africa fintechs don’t look like what foreign investors expect, currency fluctuations make it had to raise debt and there is a lack of fundraising skill among local fintechs who can’t afford the teams that will enable them to raise money.

The Fintrek report identified 11 fintech opportunities models and 47 sub-models and identified 4 sub-models that have flourished in East Africa:

– Payments and Savings: digital wallets (M-Pesa, Alipay, Tigo pesa – which pays 7-9% interest and now attract high-end users), payment intermediaries (Cellulant, Direct Pay, Jambopay) and digital currencies (Bitpesa, Coinbase, Belfrics – a crypto-currency platform).

– Lending: direct lending (Branch, Tala – with 1.8M customers in Kenya, Kreditech, Umati capital), P2P lending (Lendable, Pezesha – has 6,000 borrowers & 200 lenders), and lending aggregators (lakompare). Also, there is telco-based nano lending (M-Shwari, KCB-M-Pesa, Equitel – which issued $57 billion worth of loans – and telco-bank lenders in Kenya account for over 76% of total loan accounts, but only 4% of the loan values)

– Financial Management: Insuretech (Bimaspace, BimaAfya, Microensure), Investech (Abacus, Xeno) and personal finance management – (Chamasoft, Caytree).

– FS Enablers: (Jumo – credit underwriting for 5 million customers and 20 million loans), Arifu, FirstAccess, NetGuardian – fraud identifier), FarmDrive, Sasa solutions, Lendddo).

Some recent fintech deals in East Africa include Farmdrive (from the Safaricom Spark Fund), Pezesha (DFS lab), Pula (DFS lab, CGAP), M-Kopa ($80M – Stanbic, CDC, FMO, Norfund), Tala ($30M – IVP), Jumo ($24M – Finnfund), Mobisol ($12M – FinnFund), Angaza ($10.5M – Emerson), Flutterwave ($10M – Greycroft), Netguardian ($8.5M – Freemont), Trine ($8M – Gullspang), Lendable ($6M – Kawisafi, Omidyar, Fenway), Direct Pay ($5M – Apis), Azuri ($5M – Standard Chartered), Bitpesa ($4.25M – Greycroft), Branch ($2M – from high-networth Kenyans and funds – arranged by Nabo Capital)

Production of the Fintrek report was supported by Financial Sector Deepening (FSD) Africa and Netherlands Development Finance Company (FMO).

See more of the EAVCA Fintrek report and other fintech opportunities at the 5th Sankalp Africa Summit on March 1-2, 2018 in Nairobi and see their private equity snapshot report.

The East African Region saw a 65 percent growth in a number of deals in fintech between 2010 and 2015, before a 33 percent decline in growth in 2016 and 2017.

In spite of this, total deal value increased by 300 percent to US$ 202.1 million recorded in 2017 attributable to an increase in increase in ticket sizes indicating the continued appetite for investments in the nascent sector.

These findings were presented in a report dubbed Fintrek: investment opportunities in fintech in East Africa, which was co-authored by the East Africa Venture Capital Association (EAVCA) in partnership with Intellecap, Financial Sector Deepening-Africa and FMO, the Dutch development finance institution.

Global investments in the fintech, along with the number of startups created in the sector, grew rapidly in the years 2014-2015, catapulted by the digitization of banking and insurance, payment services, and the adoption of big data to determine credit scores. As a result of the fintech revolution, mobile payment’s share of the global transaction is projected to reach 25 percent or US$3.71 trillion by 2019.

Speaking at the launch of the Fintrek report, Intellecap Head of Financial Services Consulting Himanshu Bansal stated that East Africa presents one of the mainstream fintech markets in the world.

“Our research identified a youthful demography, including a rapidly growing millennial segment, infrastructural and technology improvements, and accommodative regulation, as some of the contributing influencers of the growth of fintech in East Africa,” said Himanshu Bansal.

Across the four financial segments surveyed: lending, savings and payments, technology and financial management, Kenyan FinTechs led the region in terms of the number of transacted deals and total value invested.

Tanzania recorded a significant jump in the period 2016-2017 in terms of deal value for financial management while Ethiopia offered promising opportunities owing to approximately 40 percent of its population being within the millennial bracket.

“The region’s millennial population, aged between 18 and 35 years, a mobile penetration of 62 percent as at 2016 along with and high adoption of basic technology such as USSD, have driven mobile wallets to unprecedented success in the mass market segments resulting in a positive correlation to the industry’s performance,” added Mr.Bansal.

Lending FinTech, a segment of the FinTech sector involved in peer to peer (P2P) or business to consumer (B2C) debt facilitation, drew the largest amount of funding ($440 million) from investors between 2010 and 2017 and represented 70 percent of East Africa’s total fintech sector fundraising.

In addition, savings and payments fintech companies represented the fastest growing segment in fintech over the last seven years, with investment values recorded up 140 percent.

Other fintech segments with high investor interest include technology enablers and financial management enterprises.

Seed funding was the most preferred form of fundraising for FinTech businesses which are often in the early stage investing phase. Debt funding was also noted to be growing as a medium for fundraising as the sector continues to attract participation by institutional investors.

Moka Lantum the co-founder of MicroClinic Technologies and brains behind the iSikCure app, shows how a change of direction can open bigger opportunities for entrepreneurs

Dr Moka Lantum the co-founder of MicroClinic Technologies, a Nairobi-based company commercialising ZiDi, Africa’s first enterprise health management solution for BoP (bottom of the pyramid) clinics/hospitals has created a hardware-software utility service through partnerships.

He is also the brains behind the iSikCure app, which was developed with the support of Boehringer Ingelheim, one of the world’s leading pharmaceutical companies. iSikCure is a subscription free integrated health app that aims at improving access levels to quality care and safe medicine across Kenya as well as offer convenience and choice with a range of benefits for the patients and providers from the comfort of their mobile phones.
Through iSikCure, patients can connect and communicate with doctors, laboratories, pharmacies and wellness providers, and pay for the health services received from their mobile phones.
Having over 20 years experience in health delivery and healthcare management with multiple executive roles in a Fortune 500 health-related manufacturing company, Dr Lantum remains committed to creating youth employment opportunities in Health IT and improve last mile access to safe affordable drugs.

Dr Lantum talks about what it takes to emerge as a globally decorated and recognised social entrepreneur:

Q: How did your journey as a social entrepreneur begin?
Dr LANTUM: My journey began the day I asked myself what value I wanted to add to my profession as a doctor and the desire for social change. My key motivation was to achieve social justice and equity in the society in terms of access to better health services.

Initially, I had planned to establish micro-clinics to help mothers deliver but my field research at Kasongo dispensary in Kisumu county changed my perspective considering the number of deliveries per day and the amount they paid. I felt like it would take me long to create equality since majority of women even preferred midwives for delivery.

I came up with a campaign strategy to encourage women to attend hospitals for good delivery services. I introduced after-delivery incentives where a mother would be given clothes and diapers after giving birth. With time, the number of deliveries increased.

From this point, I started looking for a way on how such patients could get drugs and even meet their doctors at affordable rates. This is how iSikCure was born.

Q: What was your motivation?
Vast knowledge and focus and pretty distinct eye for an opportunity helped me succeed. I started low, I took my time to understand the game before I made a step.

This is where most entrepreneurs fail. They are always in a hurry once they get capital. Well, all entrepreneurs need capital but having this capital earlier is very dangerous because you are likely to lose the whole amount.

To succeed, start small, learn, understand how people access value and in turn, change the value to money. Know the industry. For example, if you were to start a bar, try and get employed in a bar for sometime, know how the system runs, how police are dealt with, how purchases are done and then you can now move out and start your own bar.

Secondly, a good entrepreneur should always be focused. For example, if you are employed as a messenger at National Bank, avoid the mentality that you are there for pay. Rather, think of how long it is likely to take you to be at the helm of management of the same bank then work towards that.

READ: Wealth creation lessons from cabinet nominees
Q: What are some of the challenges you faced ?

It was never easy to come to terms with abandoning an idea I had been working on for over two years because I realised the project would not be able to build a product that would add value to the customer and create better opportunities at that time. So, I had to make a u-turn and start working on the iSikCure software.

Many startups don’t test their ideas before going to market resulting in time and money spent on building an application, service or product that customers don’t want or need.

It is important for any entrepreneur to first understand that in the course of his/her journey, you are likely to encounter challenges both from internal and external sources and come up with a proper counter-measures.

Like Mathematics, you are not likely to get it right in entrepreneurship if you jump a single step. To avoid unnecessary challenges, pick an industry, pick a product, understand how things work at the fundamental level, do thorough research and get feedback.

Once this is done, learn to gain trust, position yourself, know when the opportunity will come, grab it and offer a good value one will be willing to pay for.

Q: Was there any point when you thought it was all over?

When the 2010 Constitution was enacted, I felt like everything was over since health became a devolved function. I never saw this coming and I did not have any plan for it.

Related: e-health service unveils incentives to woo more customers
No matter how successful you are, there are times when you’ll feel like you’re back to square one. But then again, anything that is worth pursuing in life has a risk of failure and sometimes; it is okay to fail but what matters is that you don’t allow it to stop you from moving forward.

Sometimes, if you have a conflicting instinct towards something, you are likely to fail but then failure is actually a fantastic teacher; it helps you to develop the perseverance and resistance to adversity you need to keep moving forward.

Q: What is your best advice for social entrepreneurs?

Take your time, learn the game, start small, be tenacious and hit the ground running.

According to Agostine Ndungu of Sankalp Forum, the summit will aim at connecting entrepreneurs with investors, corporates and policy makers to facilitate their growth strategies for the region

Sankalp Africa is set to hold its African 5th edition summit at the Kenya School of Monetary Studies in Nairobi on March 1 and 2 this year.

According to Agostine Ndungu of Sankalp Forum, the summit will aim at connecting entrepreneurs with investors, corporates and policy makers to facilitate their growth strategies for the region.
The meeting, whose theme is Open Alliances for a Sustainable and Inclusive Africa 2030 will also seek to connect entrepreneurs with investors, corporates and policy makers to facilitate open alliances for sustainable and inclusive African 2030 Sustainable Development Goals (SDGs).
“We are committed to driving a forward-looking agenda with a focus on the challenges and opportunities that are unique to the African continent. that is why we have this year chosen to majorly focus on the African SDG 17 goals that includes among others; Poverty eradication, Zero Hunger environment, Good Health and Well-being,Quality Education, Clean Water and Sanitation and Affordable and Clean Energy,” he said,The event, which is organised by Intellecap and other partners, according to Ndungu, will bring together over 1,000 delegates from over 40 countries globally.

“We look forward to hosting over 100 guests globally. Out of the number, 10 percent will be self described investors, individuals or institutions, 30 percent will be entrepreneurs while the rest will be intermediaries,” added Ndungu.

Other than focus on the African SDGs, the forum will also discuss how to find new ideas and solutions to delivering on the ambitious opportunity to entrepreneurs, find a way of unlocking such opportunities and also deliberate on the building blocks of an integrated and innovation-led economy.

The two-day event will be marked with bee hive of activities that will see over 50 sessions guided by a three-pillar based conversation that is; Knowledge, Capital and Networks.

“Other than the delegates from West Africa, we also expect a team from japan, china, Netherlands, United Kingdom and Asia,” said Ndungu.

Feb 05 2018

The SANKALP Africa Summit is set to engage over 1,000 different stakeholders from across the impact investing ecosystem, to deliberate on strategies for building partnerships and collaborations to drive the sustainability and inclusion agenda in Africa.

This will be the 5th Edition of the Summit and will be hosted in Nairobi.

This year’s summit, scheduled to take place on March 1st and 2nd, is themed ‘Open Alliances for a Sustainable and Inclusive Africa 2030’ and will revolve around the Sustainable Development Goals and how various partners can work together to achieve these goals with the private sector.

“How can we ensure a future where quality education, affordable healthcare, and livelihoods are the new social defaults as defined in the drive towards achieving the Sustainable Development Goals? Can we commit to making choices today to ensure a sustainable and inclusive future for all?

The SANKALP Africa Summit aims to bring together carefully curated entrepreneurs, innovators, investors, corporates, academics, policymakers, and other thought-leaders from around the globe to discuss these and other complex questions under the framework of Goal 17 of the SDGs.

The Summit will help drive these exciting discussions, which have been structured in various formats like masterclasses and panel sessions, and address key topics areas like financing towards attaining the goals, building sustainable impact-based enterprises, forging collaborative partnerships, and imagining the future beyond the goals themselves.

According to Nisha Dutt, Intellecap CEO said that they were excited to bring the Summit to Nairobi and that they will continue the dialogue with their partners on how to achieve SDGs for Africa by 2030.

“The summit aims to create open and unlikely alliances of thought leaders who are committed to making a substantial contribution towards driving a sustainable and inclusive agenda for Africa,” said Nisha Dutt.

Another key part of the summit is the SANKALP Africa Awards which aims to recognize and reward high impact enterprises in the Africa region. Five finalists from key impact sectors across the region will get the opportunity to pitch their enterprises to a jury panel comprising of eminent business leaders.

The Summit is supported by key partners such as World Bank, Doen Foundation, Miller Center, Kenya Climate Innovation Center, BMW Foundation, IDRC and several others who champion innovation, entrepreneurship, and impact investing for a sustainable and inclusive Africa.

Those who would wish to participate in the Summit can visit africasummit2018.sankalpforum.com and buy delegate tickets, or an exhibition booth to come and showcase their enterprise or innovation team to a global audience at the Summit.

Jan 18, 2018

Podcast: Social impact special & state of the MBA

Jan 18, 2018

They don’t run NGOs, wear khadi or carry jholas and protest banners. The only thing that drives them is wanting to make a difference to society. Which is why they have harnessed their resources and their education to find simple solutions to everyday problems and change millions of lives. There’s Harvard graduate Gitika Srivastava, who founded Navya Network to help cancer patients access expert opinion and seek treatment accordingly. Warwick graduate Ankit Agarwal teamed up with his friend Karan Rastogi in Kanpur and found a way to process 800 kg of waste flowers into incense sticks and vermicompost, a venture they call Help Us Green.
IIM-A graduate Sucharita Mukherjee likewise teamed up with rural management graduate Puneet Gupta to set up Kaleidofin, a financial solutions firm that helps the poor manage their life goals, be it marrying off a child, completing a child’s education or building a home. ‘Impact entrepreneurs’ such as these are turning traditional business models on their heads, and leveraging technology to deliver human-centric solutions. “As a service provider, your lens needs to shift from what products you have to what the customer actually needs.
This is what these new-generation impact entrepreneurs do,” says Roopa Kudva, managing director of Omidyar Network India Advisors, a firm that invests in early-stage innovative companies.
How do these entrepreneurs do this successfully and consistently? Higher levels of mobile penetration and better internet connectivity help. So does the access to data. Every user in the digital world is leaving a footprint as she browses, and that becomes marketable data. So Prerna Mukharya’s Outline India captures qualitative data from rural India, which governments and others use to design effective social schemes. Equally perceptible, however, is the determination to do good. “You are seeing entrepreneurs as well as investors driven by a sense of purpose. That precedes the desire to make money,” says Kudva, whose firm has invested $225 million (around Rs 1,440 crore) in Indian firms so far. May their tribe increase.

Jan 18, 2018

Ever since Nawazuddin Siddiqui’s first look for Manto was out, the movie has been in the spotlight. But director Nandita Das couldn’t be happier as she gears up for her film.

Playwright Saadat Hasan Manto was renowned for his unfiltered and uncensored writing during the post-Independence period. If word is to be believed, this could lead to trouble for the movie too. While she is aware of the debate that her colleague Sanjay Leela Bhansali is caught in with Padmavati, Nandita says her courage comes from conviction.

“When you are deeply convinced about something, you don’t need to seek conviction, hence I think there is no fear. Otherwise I would have never made it,” Nandita said after she was awarded the social change pioneer at the Sankalp Global Summit 2017. “I went bald for Water, I was attacked during Fire. I was stopped from promoting my film Firaaq. I am used to it in some ways,” she added.

The biopic stars Nawazuddin in the lead role of the celebrated writer, Manto. Nandita says her films resembles our society and doesn’t point finger on anyone. “I try to become a mirror and show our society. So if you resonate with it, it is good. If not, that’s also fine. Manto is a way to respond to today,” Nandita says, adding, “There is nothing controversial in the film. In fact, the film celebrates the human spirit. There is humour and wit so I think it’s a very young people’s film.”

Jan 8 2018

In 1992 in the heartland of conservative Rajasthan, a woman fought against sexual assault openly, for the first time. This is the story of Bhanwari Devi.

The Vishaka Guidelines on sexual harassment has empowered millions of Indian women to work safely and given them the confidence to report any incident of sexual harassment in the workplace.

According to a report released by the Ministry of Women and Child Development, at least one case of sexual harassment in the workplace is reported every day in India, with a total of 1,971 cases reported since 2014.

This empowerment has been largely possible because of the struggles of one brave woman, Bhanwari Devi, who hails from a nondescript village in Rajasthan.

In 1992 she dared to speak out against some members of the upper-caste community who allegedly gang-raped her and also against her employers, who refused to take any responsibility.

Dec 11 2017

The BJP says it’s fighting the elections in Gujarat on the so-called “development” plank. It is for the electorate to decide, and half of them have already done so, whether they want to reward the incumbent state government for the “development” they have witnessed — enough water for households, electricity in every house, good roads, higher income from agricultural produce, other big ticket infrastructure — whatever the issues the electorate want to highlight upon.

Gujarat remains one of the fastest growing states, and has managed to keep its fiscal deficit in check. But despite all the development that has happened in the state, it remains sluggish when it comes to social indicators — health, welfare and access to education. According to a study by Bloomberg Quint, the state has the second lowest literacy rate, as per the 2011 census. Literacy rate is 78.03 per cent, compared to Kerala, with 94 per cent, or Maharashtra, with 82.34 per cent. Regarding access to education (measured by the prevalence of colleges per lakh people), the state fares lower than the national average.

It has only 28 colleges for every lakh people, compared to 50 for Karnataka and 43 for Kerala. Gujarat is also laggard in terms of gender parity in education, the report says. Students who enrol in higher secondary schools after completing secondary education are far less in Gujarat compared to Kerala, which also fares very well here. The state also has fewer engineering, technology, management and chartered accountancy institutes compared to other states.

Interestingly, Gujarat’s spending on the social sector is the second highest among the states compared with Maharashtra, which tops the list. That the state is still a laggard in social indicators could be because the issue is of such magnitude that even an earnest effort by successive governments there is not making any significant changes to the grassroots. Or it could be the manner in which the schemes are targeted, or the priorities given. This is not to take away any laurels from the BJP government in the state, for its continued push for investments, its thrust on infrastructure, and its efforts to ensure more social stability, which is also quite important for businesses.