Tillbirth best describes the journey of most fintech start-ups in Africa. Stillbirth is avoidable. The World Health Organisation classified a baby who dies after 28 weeks of pregnancy, either before or during birth, as a stillbirth. With nearly 2 million stillbirths every year, a stillbirth occurs every 16 seconds. WHO said over 40 per cent of all stillbirths occur during labour. With improved quality and respectful care during childbirth, including routine monitoring and timely access to emergency obstetric care, stillbirth is preventable.
On The One Hand
What could we have done to prevent the stillbirths of the following fintech start-ups from Nigeria, Nigeria/British, Ghana, and Kenya? The crypto platforms: Lazerpay. Bundle Africa. Vibra. The payments interoperability platform Dash. The financial services platform Pivo. The cross-border remittance aggregation platform Zazuu. The business-to-business e-commerce platform Zumi. They all crashed in 2023.
On The Other Hand
In 2024, the stillbirth saga continues. The Nigerian wealth-tech startup Cova and fintech Thepeer have crashed. The Kenyan mobile commerce platform Copia Global laid off over 1,000 employees in May. It is in liquidation.
This is the bittersweet journey of most start-ups in Africa. The story is the same in Nigeria. Ghana. Kenya. Egypt. They face the same challenges of regulatory and policy environment. How can fintech start-ups thrive in Africa?
In The Long Term
Boston Consulting Group showed only 8 per cent of start-ups make it to the Series B funding stage in Africa. Others shut down before reaching their potential. Danielle du Toit, the chief operating officer of the Fintech Association of South Africa, said African fintech start-ups face many challenges.
On top of the challenges is getting access to funding. Funding challenges and high financing costs for entrepreneurs are the main contributors to startup failures in the region. Du Toit said this worsened on the back of a global shortage of capital in 2023. This has placed the region in a “funding winter.”
Barry Ryan, an Africa-based fintech investor, said the high borrowing costs from traditional financial institutions is a challenge. With these institutions, entrepreneurs are often required to provide higher levels of collateral and accept higher interest rates.
“In the West, the availability of and access to funds is much easier. One can borrow against an asset, such as a home equity loan. Whereas, in Africa, this is prohibitively expensive,” Ryan stated.
According to the World Economic Forum, 92 per cent of Africa’s investment in tech comes from four countries: Nigeria, Egypt, Kenya , and South Africa.
In The Short Term
We need more funds. When the funds come, as Ryan said, investors should not apply rigid approaches to their metrics for funding. Otherwise, there will be more stillbirths.
Between Depleting Workforce And Declining Productivity