Mapping Africa’s Latest Innovations in Digital Finance

Earlier this year, CGAP invited firms and organizations to submit proposals for digital innovations they believe have the most potential to advance financial inclusion in Africa. Our goal was to accelerate their success by covering costs of piloting and disseminating results. We were inspired by the nearly 200 proposals we received, with ideas ranging from blockchain ecosystems to new uses of satellite images and GPS functionalities. We also learned a lot from this cross-section of innovation in the region. While the range of proposals we received does not paint a full picture, it is an interesting sample that we thought worth sharing.

Who’s innovating?

FinTechs seem to be driving innovation in Sub-Saharan Africa. FinTech companies, including many early start-ups, submitted most of the proposals (56 percent), followed by financial services providers (18 percent), NGOs (13 percent) and technology services providers (9 percent). While most people are served by traditional financial services providers, FinTechs are making the biggest push in innovations. However, this is not to say that banks and microfinance institutions (MFIs) are not involved. A large portion of FinTechs have business-to-business models and are partnering with banks and MFIs to bring new services to market.

Where is innovation happening?

The highest number of proposals came from Kenya. This is not surprising since Kenya’s mature mobile money ecosystem is a big enabler of innovations that leverage digital payments platforms. Other countries with developed mobile money markets, including Uganda, Nigeria, Ghana and Tanzania, followed Kenya. Beyond these, 25 other countries were represented, showing that innovations are spreading beyond the most active start-up hubs.

Map of innovation proposals in Africa.

What are the innovations?

About half of the applicants were looking to enhance or develop a general retail financial product for low-income people, without a more specific target user. The other half focused on tailoring products for a specific sector — micro, small and medium enterprises (19 percent) and farmers (18 percent) being the most popular. A smaller number of proposals linked financial products to health, energy, education and housing (12 percent combined). As for the type of product, credit was the most popular. Access to credit to meet liquidity gaps for irregular earners, to address financial shocks like a death in the family, or to increase future income through investments are some of the main financial challenges that poor people face. Payment solutions were also popular, as they are a necessary building block for other digital financial services like savings, credit and insurance.    

Chart of innovations by product.
Chart of innovations by product.

Since all the innovations leveraged digital technology, we also looked at the main digital attributes they planned to incorporate. The majority (115) used at least one of the seven attributes shown below. Organizations showed an especially strong interest in leveraging social connections and person-to-person payments platforms as key components of their products (such as digitized group savings). Many proposals also focused on using alternative data trails for scoring. This is consistent with the increasing trend we see of providers looking to make more effective use of data.

Chart of innovations and the main attribute leveraged.

New CGAP partnerships

We were glad to see so many organizations interested in innovating for financial inclusion in Africa. And we are excited to announce several partnerships that will help innovators test digital financial services in the region:

  • With InvestED, a startup that links EdTech and FinTech in Ghana, we will offer educational videos and quizzes for microentrepreneurs. We will test the predictive power of data on courses taken and quiz results for credit scoring in MFI lending.
  • With Apollo, a FinTech company in Kenya, we will test the ability of satellite images combined with land GPS locations to assess farmers’ loan repayment capacity and cashflow timing, with the goal of making it more cost-effective to lend to smallholders.
  • With Hover, a FinTech company, we will introduce a mobile wallet app that is compatible with existing mobile money offers in Tanzania and capable of running on top of USSD without a data connection. We will evaluate how the improved interface affects customers’ behavior and use of mobile money.
  • With BioLite, a social enterprise, in partnership with MFI Juhudi Kilimo, we will test the effectiveness of credit underwriting based solely on the use of Entrepreneurial Finance Lab’s (EFL’s) psychometric scoring tool. Our focus will be on helping rural populations in Kenya who lack lending histories or formal income sources to finance biomass cook stoves and power sources.
  • With Social Lender, a FinTech company, in partnership with Sterling Bank, we will test how useful social reputation and social network guarantors can be in informing lending decisions for low-income customers in Nigeria.
  • With Tulaa, a FinTech company in Kenya, we will test a mobile wallet through which smallholder farmers can save and borrow toward the purchase of discounted agricultural inputs, such as fertilizers and seeds. We will conduct this pilot in partnership with Musoni, an MFI that will offer credit to farmers; UAP, an insurance company that will bundle a weather-indexed insurance product with Musoni’s credit offering; Syngenta, one of the largest suppliers of crop protection products globally; and iProcure, an input distributor and logistics company that serves rural markets.
  • With MaTontine, a FinTech company in Senegal, we will test a digital tontine that incorporates a credit scoring system to offer access to small loans and other financial services. The key partnerships within this pilot will be with Crédit Municipal de Guédiawaye, a regional MFI that will offer loans to the tontine members; Groupe Cofina, an MFI, that will offer a wider variety of financial services products; and Orange Money, which will handle all payments transactions.
  • With Patasente, a FinTech company in Uganda, we will test an online supply chain financing platform. Through the platform, small businesses will be able to receive financing against approved purchase orders or invoices, while investors earn good returns by guaranteeing or lending to small and growing enterprises.
  • With Peoples Pension Trust (PPT), a newly licensed pensions provider in Ghana, we will test and develop tailor-made pension products for the informal economy. Through a partnership with Cocoa Partners Foundation, the pilot with offer a flexible pension product to cocoa farmers that leverages behavioral nudges and gamification to encourage people to save more.  

Stay tuned in the months ahead about for the results of these pilots.


20 September 2017 Submitted by Jaime Amador Ambriz (not verified)

Is there any app or another kind of innovation that encourage the social capital among the microfinance clients?

09 November 2017 Submitted by Mark James (not verified)

what is the current success rate and how many clients lose their monies on a percentage basis - how secure is it against interference from the agent, digital finance company, bank, central bank, government and insurgency

21 November 2017 Submitted by RODAH MUTAVE STEPHEN (not verified)

Economic empowerment to poor people through social group saving and credit innovation it is a powerful tool to fight poverty and transform lives. When people think about economic empowerment to poor people they first think of access to financial services. Which is a good thing but in isolation does not transform poor people lives. Financial services need to include involvement in Savings, Credit and Income Generating Activities (IGAs), talents and use of local resources. which enable poor people to have a sense of economic security.

Add new comment