Judging by the winners of the Inclusive Fintech 50 competition, Sub-Sahara Africa is the favoured region for top fintech companies aimed at improving financial inclusion to operate in.
The competition, which is run by MetLife Foundation, Visa, non-profit Accion and World Bank member IFC, was launched in February to help early-stage fintech companies attract capital and resources to benefit the world’s 3 billion financially underserved people.
Of the 50 companies selected for the list, 16, or a third, of the fintechs focused on sub-Saharan Africa.
MetLife Foundation said the initiative’s 50 firms were selected from 400 eligible applicants, adding that those selected for the list demonstrate the power of financial technology to expand access, usage, and quality of financial services in advanced and emerging markets.
Approximately 30 percent of the winners provide credit products to underserved segments including MSMEs, and approximately 25 percent offer infrastructure solutions like biometrics software that enable financial institutions to expand access to previously excluded groups. Fintechs offering insurance, payments & remittances services, and savings & personal financial management tools each made up approximately 15 percent of the winners.
MetLife pointed out that nearly 70% of those that made the final 50 are pre-Series A and already exhibit strong product-market fit and traction, as demonstrated by their combined 8 million customers.
“Existing research indicates that investment capital has largely overlooked early-stage and inclusive fintechs in several markets,” said Marianne Mwaniki, Head of Social Impact at Visa, Inc. “This group of winners makes clear that there are high-potential startups with viable products and business models – and they’re ready for investment.”
Of the 50 companies, eight operate in Kenya. They are:
Acre Africa (Kenya, insurance)
ACRE Africa links smallholder farmers in Kenya, Rwanda and Tanzania to crop, livestock and index insurance products to protect against unpredictable weather. Incubated at Syngenta Foundation for Sustainable Agriculture, ACRE Africa was eventually spun-off into a standalone company that automates weather risk modeling, SMS and USSD channel communication and disbursement of claims in the insurance process. It has acquired a large customer base by using an offline platform where piecemeal premiums collection and claims are rooted in scratch cards and mobile money. Through alternative data like GPS trails, mobile account activity and crop specialization, ACRE Africa can render more smallholder farmers eligible for coverage. As of 2018, over 1,700,000 farmers had cumulatively insured over USD $181 million worth of assets against a variety of weather risks underwritten by six different insurers.
Apollo Agriculture (Kenya, credit)
Apollo Agriculture uses machine learning, remote imaging via satellite, and mobile money to provide proven agricultural tools and financing to African farmers in a low-cost and highly-scalable way.Apollo’s innovation is twofold: first, they build credit profiles for unbanked smallholder farmers using machine learning models that process large volumes of customer data, including satellite data of customer fields. Second, they have built automated, digital processes for each step in the customer lifecycle, from customer acquisition, to training, to collecting repayment. Approved customers receive a mobile voucher to their feature phones, which they redeem at their nearby agro-dealer for a customized bundle of inputs on credit. These loans come bundled with insurance and advice, delivered digitally throughout the growing season. Apollo’s approach reduces the cost and complexity of lending to small-scale farmers, and allowed Apollo to grow their customer base 5x in 2018. Apollo’s leadership team brings together expertise in technology, data science, and ag-operations from The Climate Corporation, Uber, the One Acre Fund, and ACRE Africa.
Awamo (Germany, infrastructure)
Awamo addresses the high operational costs of microfinance institutions through awamo® 360, its software-as-a-service core banking product in Kenya and Uganda, with Tanzania being in a pilot phase. The suite of tools bundled in awamo® 360 includes automated accounting, loan portfolio reporting, eKYCs, interest calculation, permissioning, and workflow management. Its biometric authentication functionality, for example, can reduce the False Positive Ratio to 1:17,000,000 and contributes to better visibility into the borrowers’ identities, thereby empowering microfinance institutions to extend themselves into more remote regions with less infrastructure without an added risk of fraud. Additionally, end-users gain access to new services like insurance and interest earnings for deposits, which will be components of awamo® 360’s offerings (currently in piloting). awamo currently serves more than 200 microfinance institutions with more than 300,000 customers. The founding team all stem from the financial services sector.
Inclusivity Solutions (SA, insurance)
Inclusivity Solutions designs, builds, and operates digital insurance solutions on top of the rails of mobile network operators, banks, microfinance institutions and other distribution partners in Cotê d’Ivoire, Kenya and Rwanda.The founder, who has an extensive footprint in the microinsurance sector, previously held executive roles at Bankable Frontier Associates, FinMark Trust and Hollard Insurance Group. Its insurance products are customized from product development to distribution and administration though its cloud-based, agile technology platform. The product portfolio is most concentrated in hospitalization insurance, from Orange’s Indemnité Hospitalisation in Cotê d’Ivoire to Equitel’s Riziki Cover in Kenya. Policy holders, who are predominately vulnerable low-to-middle income workers from sectors such as agriculture or education, can purchase insurance, submit claims and receive reimbursements through their feature phone. To date, Inclusivity Solutions has over 520,000 registered customers across three countries.
Kwara (Germany, Kenya, infrastructure)
Kwara is a digital banking platform for lenders such as credit unions or savings and credit cooperatives (SACCOs) in Kenya.By digitizing member accounts, Kwara can achieve up to a 90 percent reduction in operational costs, the savings of which are funneled back to members as dividends. As part of a contract with Kenya’s leading credit reference bureau, Kwara is on-boarding 1,400 of the bureau’s existing cooperative financial institution clients, enabling 2 billion positive credit profile updates. Through an open API, Kwara encourages other innovative start-ups to serve cooperative financial institutions. Using digital touch points via mobile phones, Kwara creates a direct distribution channel to market other financial products to end-users (members).
Pezesha (Kenya, credit)
Pezesha addresses the limited coverage of credit bureaus in Kenya by offering ‘credit-decisioning-as-a-service’ for financial institutions through its marketplace platform.Through Patascore, its proprietary credit scoring model that integrates traditional and alternative data with machine learning algorithms, Pezesha calculates scores for thin-file or no-file borrowers. Of the users that seek out its SMS application and trusted third-party services in assessing their credit worthiness, 80 percent are women undertaking informal businesses (MSMEs). Pezesha embraces a hybrid approach, and includes financial literacy education within the SMS application to frame responsible credit as a wider wealth creation tool. Its competitive lending structure ensures transparent, affordable interest rates, while its positive and negative credit data has reduced portfolios’ non-performing loans by up to 20 percent. To date, Pezesha has connected 100,000+ low-income Kenyans to lenders.
Pula (Kenya, insurance)
Pula bundles affordable area-yield index insurance with tailored advice for smallholder farmers in Ethiopia, Kenya, Malawi, Nigeria, Rwanda, Uganda, and Zambia. The three founders have expertise in insurance, actuarial accounting, agriculture, and mobile technology. By integrating insurance with agricultural inputs (a “pull product” that farmers actively demand and purchase) into the operations of rural agro-dealers, Pula overcomes the challenges of distribution and client acquisition. Informed by remote-sensing and satellite images, Pula underwrites agricultural supplies like seeds and fertilizer against environmental irregularities; this is complemented by an adaptive SMS messaging advisory platform that tailors messages with a high degree of specificity and timeliness. In 2018, Pula facilitated coverage for over 800,000 smallholder farmers, with the average customer owning less than one acre.
Tulaa (Kenya, credit)
Tulaa provides smallholder farmers in Kenya with agricultural inputs on credit and brokers the sale of their crops at harvest time through a digital marketplace.The founder of Tulaa has deep experience in the sector; she led a microfinance institution in Tanzania, created the Connected Farmer initiative with Vodafone, and served as Chief Executive Officer at Esoko. Through a credit score that relies on alternative data such as satellite imagery and mobile money records, Tulaa has reduced the loan decision process to minutes. Its customers were previously invisible to financial lenders, with 71% of its borrowers reporting no access to input financing prior to Tulaa. Its role as a digital broker aims to shorten the supply chain and reduce post-harvest losses, which in 2017 amounted to 1.9 million tons of products with USD 1.5 billion. This year Tulaa expects to sell inputs on credit to 4,000 smallholder farmers in Kenya and broker produce sales for at least 2,000 farmers.