To westerners, the African start-up scene is not known as a success story. While huge investments from China flood many African countries, the money goes into a much-needed infrastructure rather than innovative ideas. 95% of the start-up fundings on the African continent flow in Nigerian start-ups, mostly to Lagos (sometimes named the African Silicon Valley). The fundings in Africa are still low with less than $2b in the last 10 years for the whole of Africa and even plunged in 2020 due to Covid-19.
On the other hand, there never before have been so many interesting start-ups in Africa as now. Investors from SV are noticing and behind doors you often hear sentences like “Africa is the next big market”.
The similarity of countries like South Africa, Egypt and Namibia to the western world allows for direct applicability of ideas as a source for inspiration. Innovation happens mostly in finance, telecommunications and delivery — basically all infrastructure.
Let’s take a look at one of these spaces, with 3 examples in finance that made news in the last few months.
TymeBank — get over your “bank fears” by instant VISA cards in-store
TymeBank is the first digital-only bank in South Africa. Their concept reminds of French bank Nickel whose main distribution channel is small tobacco shops (5,700 stores). The stores of Pick n Pay and sub-brand Boxer (together 1,628 stores) give them a wide network of branches. Virtual kiosks with displays are used to create bank accounts, print VISA cards immediately and withdraw money. TymeBank got an investment of $109m in February 2021 and currently has 2.71 million customers.
Link: https://www.tymebank.co.za (currently blocked in Germany)
Paystack — smart routed payments and the easiest way to create an online shop
The Nigerian based Paystack is an API based payment processor. It is already used for over 50% of all web-based payments in Nigeria. Paystack showed up in international news when Stripe (the US-based payment processor) bought Paystack for $200m in October 2020.
Online shops can start taking payments with-in under 15-minutes. Either by using their APIs or several ready-to-use integrations. No fees for maintenance or integration. “Paystack only charges a tiny fee per successful transaction, which means we literally only make money when you do” — and that describes their main strength. Smart routed payments ensure that each payment succeeds (a huge advantage in Nigeria). They route the payments through a well-designed process: Step 1: direct bank integrations with all big Nigerian banks, Step 2: different payment processors and gateways and finally, if that does not succeed, Step 3: suggestion of alternative payment methods to the customer (like QR-code based payments in any shop).
In December 2020 “Paystack Storefront” was introduced — a tool everyone can use to easily create an online shop. With no costs (except the standard payment fees for Paystack). To advertise the new offering they created an online pop-up store. For customer service, they included a WhatsApp integration. That might be the start of a new success story — a “Shopify lite”.
kuda — “the bank of the free”
The least-known example on this list is a newcomer — the Nigerian based app-only kuda bank. Founded in 2019 it recently grew to 1m downloads, although still in beta mode. It raised $10m in November 2020 from prominent investors like Target Global and SBI — which does not sound like much but is significant for Nigeria. Great hashtag and line #thebankofthefree. By taking the “zero-cost”-scheme to the extreme they attract young customers.
Just three examples of the inspiring world of African start-ups. Business managers in western countries often treat African companies as aliens which you can’t compare to the equivalents in the west. I can’t count the times I heard “if this is an African company it is not relevant”. This article is meant to be an eye-opener that there are many fantastic start-ups on this huge continent — some might rise to the top. Take a look from time to time and get inspired.
Subscribe to my Medium account or follow me on LinkedIn (https://www.linkedin.com/in/bflader/). I’m an innovation facilitator based in Germany. With a huge interest in business design, AI and no-code tools.