Africa has witnessed tremendous financial innovation over the past decade. Powered by the rapid adoption of mobile technologies, innovators and tech startups are building a modern infrastructure with the potential to completely change the face of payments.
With this wave of innovation, Kenya observed a rapid emergence of fintech startups and tech giants looking to build advanced payment solutions. This uptake of technology led to massive growth in fintech innovation in Kenya. Venture capitalists, financial companies, and governments, all became a part of it. Services like digital payments, online trading, and automated insurance claims are now becoming commonplace.
Kenya is booming into an IT hub of Sub-Saharan Africa, progressing towards what it is popularly called Silicon Savannah.
A look at Kenya’s fintech landscape
The starting point of Kenya’s fintech innovation journey was the launch of M-Pesa by Safaricom. M-Pesa served the need to transfer money to families just by tapping some codes on a phone. These P2P payments were supported by a network of agents who facilitated cash in and cash out.
Kenyans started using M-Pesa to save, transfer money as well as pay for goods and services. Today, it serves around 70% of Kenyan households contributing immensely towards financial inclusion. M-Pesa also became the catalyst for the fintech boom in Kenya. It has also inspired many telecom operators to launch their mobile wallets, leading to strong uptake of mobile money services.
Since then, many fintechs have emerged in the country offering mobile-based financial services like lending, fundraising, peer-to-peer (P2P) lending, international remittance, and insurance to name a few. Shortly thereafter, Vision 2030, Kenya’s long-term development plan was introduced to improve the livelihood of the people. The plan identified financial services as a
key enabler on the path to achieving the goals.
The percentage of the people in Kenya accessing financial services tripled from 26% in 2006 to 82% in 2019.
Cryptos and digital currencies
The cryptocurrency market has become a vibrant space in the fintech market. People are trading cryptos directly with each other, more than any country in the world. Chainalysis’s survey has ranked Kenya the top country in the world in terms of P2P exchange trade volume.
Cryptocurrencies allow people in Kenya to send money to people in other countries instantly without incurring high remittance costs. Furthermore, several farmer communities, mostly in the informal sector, are using cryptos like Sarafu coin to buy seeds and machinery and sell their produce, without using cash.
Kenya is becoming a home to a number of fintech companies aiming to offer faster and affordable financial services with the help of technology. Here are a few names of fintech companies in Kenya:
- Pezesha – Pezesha is a leading Africa-focused digital financial marketplace.
- Turaco – It provides insurance and credit solutions via mobile technology to fulfill healthcare financing needs.
- Tulaa – Tulaa is an e-commerce solution for smallholder farmers
- Abacus – Abacus helps investors make and implement decisions in the capital markets of Africa.
- ChamaPesa – ChamaPesa helps informal financial groups in Kenya to get better returns on investments by providing data on various investment options.
Apart from startups, tech giants are also contributing to the digitalization of Kenya. Facebook has opened its new office in Nairobi, the capital and the largest city in Kenya. Microsoft announced in 2020 that it plans to collaborate with colleges and universities in Kenya to promote the use of technology amongst students. With this, Microsoft aims to encourage and prepare the young generation for technological advancements in the near future.
The emergence of mobile money has paved the way for financial innovation in Kenya. The country is now witnessing companies and startups popping from everywhere to offer digital financial services. It will be interesting to see what the future hold for Kenya in shaping the finance world.