Hi Quartz Africa members,
While fintech and mobile money services have significantly accelerated financial inclusion in sub-Saharan Africa over the past decade, the Democratic Republic of Congo (DRC) still lags behind its neighbors.
The overall financial inclusion rate in the DRC — the share of adults with access to a bank account or mobile-money account — stands at an estimated 26%, compared to a regional average of 43% according to the Digital Banking in sub-Saharan Africa Report (pdf). Women in the DRC are disproportionately excluded: Only 24% of women have an account, compared with 27% of men (pdf).
Those numbers present major challenges. Research findings in the DRC’s Financial Inclusion Roadmap 2016-2021 show that 60% of adults who earn less than a dollar a day — and are financially excluded — have missed a meal, could not send their children to school, or pay their healthcare costs.
The DRC’s nascent fintech scene is hoping to change all that. “Fintech startups can innovate faster and provide solutions that solve the needs of individuals, businesses, and governments,” says Noel Tshihani, whose organization, Congo Business Network connects startups, investors, government agencies, media, and other stakeholders.
Fixing those systemic issues won’t come without challenges: Startups in this space must navigate poor infrastructure, regulatory gaps, and language barriers with French as the official language in the DRC. But Tshihani is optimistic. “Startups, banks, and telecommunications companies [can] compete for a promising market, ”he says,“ in which 95% of money circulates in cash. ”
Opportunity The opportunity: Despite its population of more than 94 million, DRC has one of the lowest financial inclusion rates in Africa. Access to financial services promises a better quality of life for many, including vulnerable groups such as women.
Challenge The challenge: The tech ecosystem in the DRC is largely underdeveloped, as is the regulatory environment to support it. Poor infrastructure including roads also limits the reach of financial service operators.
🗺 The road map: Fintechs in the DRC must innovate tailor-made solutions to drive inclusion. Greater investment in startups is key, alongside collaboration with stakeholders like government agencies.
Stakeholders The stakeholders: Investors, startups, banks, telcos, regulators, and government agencies need to collaborate to grow and strengthen the fintech ecosystem in the DRC.
By the digits
95 million: The DRC’s estimated population
25 million: The number of adults in the DRC who are totally excluded from financial services
26%: The overall financial inclusion rate in the DRC. This represents the proportion of adults with a bank account, including mobile money accounts
5.7%: Economic growth in the DRC in 2021, thanks in large part to the strength of its mining sector
$ 9.3 billion: The estimated financing gap for micro, small, and medium-sized enterprises in DRC. Complex procedures, and the assumption that they would be rejected, are the main reasons why many firms do not apply for financing.
The case study
Name: Okapi Finance
HQ: Västerås, Sweden but operating in the DRC, Senegal, Botswana, Guinea, and Kenya
Founder: Gisele Mwepu
The seeds of Okapi Finance were planted 10 years ago, with a trip home to DRC by Gisele Mwepu, who saw firsthand how difficult everyday financial transactions were for people in her country, and particularly for women in the informal economy. Everyone was waiting in long queues to pay electricity bills, and traveling long distances to access banks and ATMs.
So Mwepu decided to capitalize on her degree in software engineering, and her masters in computer science, to start Okapi Finance. Right away, she realized that a simple peer-to-peer transfer or payments service wouldn’t cut it — the ideal solution would need to include transfers, payments, credit, and insurance, as well as interoperability with government and other services.
Okapi officially began operations in 2018, after undertaking research and a pilot phase in Kenya’s low-income neighborhood of Kibera, and has already gotten close to Mwepu’s ideal. Today, the fintech startup allows users to quickly send and receive money, to pay fees, and to send invoices. It also offers credit and lets companies disburse funds and collect payments in real time, and continues to add new features.
One such newer offering: weekly nano-loans of between $ 20 and $ 50 for women entrepreneurs, which allow small traders to consistently replenish their stock and steadily grow their businesses. Repayment rates have also been impressive: around 95%, says Mwepu. The women traders have also become Okapi’s biggest backers, as they encourage their customers to pay via the service to improve their credit scores.
To improve financial literacy, Okapi has also been involved in organizing training programs and educational events, and partners with organizations like the United Nations Development Program (UNDP) and the DRC government. The latter partnership, aimed at facilitating the disbursement of funds to pensioners, is seen as a great way to prevent elderly residents from having to travel long distances for bank access.
In its quest to build out a larger ecosystem, Okapi is currently focused on introducing remittances — already one of the biggest enablers of financial-services access for a big chunk of the DRC population. The company has secured an EU license to enable money transfers and is looking to set up partnerships in other markets, including the US.
Okapi is also expanding to other African countries through a local partner model that allows firms in those places to license the Okapi brand and offer its services. Okapi partners have so far launched in Senegal and Guinea-Conakry.
In conversation with
👩🏿 On Okapi’s focus on women in the DRC:
“I realized that women were quite affected by financial exclusion in the DRC. This is despite them being the major drivers of the informal sector in the country, so we chose to target women and empower them. ”
🦠 On how covid-19 transformed expansion plans:
“Before, we were trying to establish the services in different countries from scratch. But after covid this strategy has changed as we adopted the local partner model as an expansion strategy. This strategy is very successful as the expansion is fast and not heavy as before. New countries after the DRC will be launched only using the local partner model. ”
🤝 On the advantages of the local partner model:
“Advantages of this model are many: The local partner knows the business environment, the culture, and can easily establish the services in the country. Several countries are in the pipeline to be launched using this model. Among them: Egypt, Ethiopia, Benin, and Côte d’Ivoire. ”
Fintech deals to 👀
B2B retail and e-commerce platform Wasoko raised a $ 125 million Series B round in March, at a $ 625 million valuation. The startup, which offers micro-retailers access to credit and free delivery of goods, was named Africa’s fastest growing company of 2022 by the Financial Times.
African mobile money provider Wave in September raised $ 200 million in a Series A round valuing the company at $ 1.7 billion. It aims to build an affordable mobile-money service across Africa.
Chinese-backed Africa-focused digital payments startup OPay last August raised $ 400 million at a $ 2 billion valuation, funds that will be used to facilitate its expansion. The company says it processes around 80% of bank transfers among Nigerian mobile-money operators, and 20% of the country’s non-merchant point-of-sales transfers.
More from Quartz Africa
❔ The biggest obstacle faced by Africa’s female founders
🪜 Africa’s e-commerce gender gap is costing billions of dollars
📱 Not even covid-19 improved Africa’s mobile phone gender gap
🎶 This member brief was prepared while listening to “Genge la Bundoksi,” by Boondocks Gang (Kenya).
Have a highly motivated rest of your week,
—Martin Siele, Nairobi-based Quartz Contributor
One 🤑 thing
Nine out of 10 people in the DRC rely on the informal economy. Therefore, they have to rely on their own savings as a source of working capital and business investments.