The financing of start-ups in sub-Saharan Africa is still the subject of difficulties without comparison on other continents. The financing needs of African start-ups are estimated at some 140 billion dollars per year … While many of them have excess liquidity in foreign currency, traditional banks are particularly risk averse. And while private equity funds offer promising prospects, they are still in their infancy when it comes to the seed funding that African start-ups so badly need.
Yet, as in other areas, Africa could turn a constraint into an opportunity, with new technologies making it possible to deploy solutions that are simpler and at lower cost than what has been put in place for decades in developed countries. Innovations at the frontier of new technologies and finance did not wait until 2017 to mark their impact on the financing of economic activity in Africa. Africa has long been known to be a laboratory for technological innovation. Numerous trials have already been transformed in the field of fintech. But the next few years will mark a turning point in financing methods, thanks to new technologies.

New funding methods

Increasingly, corporate finance is flowing through a new segment of investors: mobile financial services companies. Several companies offer innovative financing to entrepreneurs. For example, in Kenya, banks offer online savings and lending solutions. Thus, the M-Shwary service, launched by the Commercial Bank of Africa (CBA) with Safaricom, the leading operator in Kenya, offers loans to those who do not have access to the traditional banking sector.

Kenya is so advanced in terms of uses that a Californian start-up, Branch, has embarked on the adventure by offering loans of 10 to 500 dollars over a period of six to twelve months, at the rate of declining interest from 13 to 2%. The customer obtains his credit in less than five minutes thanks to big data by analyzing his consumption patterns via his M-Pesa statements (the famous virtual currency of Safaricom). Branch already has 100,000 clients and 75% of its loans go to entrepreneurs, often to start a small business. Nanocredit is an essential initiative that allows entrepreneurs to have cash flow on a daily basis. Thus, a woman wishing to sell agricultural products in a market borrows in the morning and repays in the evening when she has sold her vegetables, for example. All thanks to a mobile electronic payment terminal. This model is often aimed primarily at women because they are more serious! The principle of a high-tech tontine in short …

But one of the most overlooked success stories in African entrepreneurship is called MODE. This Kenyan company has developed a system to provide mobile communication credits, and is already selling in India, the United Arab Emirates and Bangladesh. MODE provides access to “micro” and “nano” loans to anyone who does not have a bank card by converting their SIM cards into credit cards. MODE operates in 31 countries and has 150 million customers with a target of 250 million in the next three years. Loans are repaid on the next salary or through regular payments made on the users’ virtual wallet.

To develop, these companies often go through the Mauritian financial platform which remains a privileged place for this type of activity, in particular because the capacities of structuring, governance, or in terms of financial arrangements or of legal and legal framework are there. the best on the continent.

What is still missing for a boom in mobile financial services is regulation that is both incentive and reassuring for investors and entrepreneurs. It is no coincidence that most of these innovations have taken place in Kenya. In the area of ​​financial services, we too often observe a reluctance of regulators, who are sometimes helpless in the face of completely new issues. Finally, strict and undoubtedly uniform regulatory frameworks should be put in place in order to counter certain abuses such as money laundering. Likewise, access to broadband internet remains insufficient to deliver on the promise of a true diffusion of mobile financial services.

A necessary coordination of actors

However, with a population of less than 20% banked in most countries of sub-Saharan Africa, it is increasingly in this area that consumer savings will be captured, and through virtual financial systems that will be captured. will make the transactions of tomorrow. New technologies are opening up almost unimaginable horizons, including investments in seed vehicles via stock market apps on smartphones. To achieve this type of financial innovation, all players will have to coordinate to develop a secure system for investors … and for savers.

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