FinTech startups in Africa are ballooning beyond their borders to access a wave of new investments expected to arrive with the advent of the African Continental Free Trade Area (AfCFTA).
Trading under the AfCFTA began earlier this year, with the aim of establishing the largest single market for goods and services in the world.
As Quartz reported Friday (Nov. 12), several startups have — just in the last month — either raised growth funding, hired top players from the telecom industry or purchased another regional player in their vertical.
The goal seems to be to target smaller industries and traders looking for cross-border opportunities in Africa’s new markets.
The report uses the example of Kenya’s Asante Financial Services Group, which helps support micro, small and medium-sized businesses and has raised $7.5 million to help SMBs in Kenya and Uganda access new markets.
“The investment enables Asante to scale its credit offerings to the underserved segment of MSMEs in Kenya and Uganda, and expand to Nigeria and Rwanda,” the company said in a statement.
Meanwhile, the mobile technology startup Tala, which has operations in Kenya, Nigeria and Tanzania, has launched a “Rebuild Fund Business Program” to help micro, small and medium-sized enterprises in Kenya recover from the COVID-19 pandemic.
This program comes just weeks after Tala raised $145 million in Series E funding, noting at the time that it would use the capital to expand outside of Africa, while also focusing on helping the continent’s unbanked population.
According to the World Bank, the annual SME credit gap in Sub-Saharan Africa is around $330 million, with many brick and mortar lenders avoiding smaller traders due to lack of collateral and higher costs.
“MSMEs — particularly those in the informal sector — are being held back by a lack of responsible lending from traditional financial services providers who are unable to run accurate credit checks and offer profitable loans to this segment of the market,” Bitta Wycliffe, senior investment associate at Goodwell Investments, told Quartz.