The Evolution of Fintech in West Africa


Alero Echegile

Alero is a 1Y Nigerian student passionate about Entrepreneurship in Africa and Nigerian Jollof Rice.



Do you remember in late September, when you had to dress up for a costume party in Lake Geneva? Your cohort had just a few days to find outfits, so you turned to Amazon Prime. 2 days later, your package arrived. You inspected the package to make sure that your Trump face mask was not swapped for a Hillary face mask, before paying the delivery person in CASH. If this shopping experience does not sound familiar, you probably haven’t gone online shopping in West Africa.

The West African online shopper is typically an untrusting customer – willing to give this new technology a try but fearing that the product may never be delivered or his or her financial information compromised. As a result, Fintech companies focusing on providing payment solutions have sprung across West Africa.

One of the early players in the payment solution space was Interswitch. Launched in Nigeria in 2002, Interswitch became the payment processing platform that supports the majority of ATM/Debit cards in the country. Subsequently, the Central Bank of Nigeria launched a campaign to reduce the amount of cash-driven transactions nationally. This cashless policy pushed e-payment adoption into full gear, birthing a host of supporting technology. Many Nigerian entrepreneurs market their products via social media – Whatsapp, Blackberry Messenger, Facebook, etc. Since these entrepreneurs cannot afford to build websites, payment solutions like VoguePay have sprung up to enable these business owners to request payment via email.

Beyond payment solutions, the potential for FinTech in West Africa is enormous. The combination of a huge unbanked population, scarce information on credit history, and separated African economies create challenging, but profitable, problems for FinTech to solve. Opportunities include:

Financial Inclusion: According to a McKinsey report, 80% of the 326 million Sub-Saharan African adults don’t use financial services. Most of these people live on less than $5 a day, making serving their needs an unattractive investment for many financial institutions. Enter FinTech start-up Paga, which serves Nigeria’s unbanked population. Armed with a basic text-enabled phone and a phone number, you can send or receive money from anywhere in the country.

Access to Credit: Although most traditional financial services in West Africa are improving, lending is lagging behind. It is still difficult for most people to secure business or personal credit due to a lack of credit history data. Therefore, most people rely on their social reputation to secure loans from family and friends. However, Nigeria’s Sterling Bank is using social media to build credit profiles via its Social Lender app. Social Lender uses information from a customer’s social media profile to generate a Social Reputation Ranking that determines the maximum credit a person deserves.

“One African Currency”: Due to the fragmented political landscape across Africa, a single African currency is far from being a reality. Nevertheless, people are finding ways to go around currency exchange. Flutterwave, a Y-combinator backed startup[JB1] , a Nigerian entrepreneur is able to transact business with a customer that has a Visa card in South Africa, MPesa in Kenya, or a bank account in Ghana, without anyone having to physically convert currencies.