FinTech is Growing Fast in Africa, Thanks to China


China is dominating the online payment services scene in Africa. PRC sets model for Africa e-commerce. Now Chinese hi-tech firms are investing in African fintech too.



How can Africa harness the benefits of the digital revolution? China is leading Africans investors on the right path. Chinese tech firms are present across the African continent and in the last decade, African countries have largely turned to China to help them build and expand their digital infrastructure, as e-commerce. In fact, the continent of Africa is experiencing a considerable increase in mobile penetration in the recent years thanks to Chinese brands such as Xiaomi, Oppo and Infinix that produce quality and affordable phones for the area.


Jumia - e-commerce - africa - cifnews

©Jumia. Many international tech giants, especially Chinese, have entered the African market fostering the local digital scene


Given the opportunities brought forward by this new commodity, Africa is bound to follow the global craze for fintech and online payment services. There is great potential for the industry in the continent, especially in Sub-Saharan Africa where financial infrastructure are less-developed and about a 60% of the population does not have a bank account. In fact, as the EY report “FinTechs in Sub-Saharan Africa: An overview of market developments and investment opportunities” reveals, the industry has been growing an annual rate of approximately 24% over the last 10 years with more than 260 active companies to date.

The three main hubs in the continent are the countries of South Africa, Kenya and Nigeria where most of the companies are locally based, but many international players are making their contribution among which China positions itself quite high up on the list.



The Fintech industry in Africa has been growing an annual rate of approximately 24% over the last 10 years with more than 260 active companies to date



Africa and China have been growing closer during the past decade, Africa is a central destination of many Chinese investments and many African students have made China their country of choice. While, the Middle Kingdom is becoming one of the most important trading partners for the continent and many Chinese tourists are attracted to the wild beauty of Africa. This state of affairs has moved the interest of Chinese companies and private entrepreneurs to make cross-border transactions as well as day-to-day financial services easier.

In 2018, MFS Africa became the first African FinTech to receive funding from a China-based global investment management group. In fact, the LUN Partners Group invested a total of $4.5m of Series B funding, together with the Dutch Goodwell Investments, an investment firm focused on financial inclusion and fintech.


China investment in Africa - Belt and Road forum - cifnews

© Xinhua. 5 Africa’s heads of State attended the last Belt and Road Forum in Beijing, which is a significant improvement compared to the 2017 event when just 2 African leaders attended the forum.


The investment fits within the framework of the “Belt and Road Initiative” and it aims to boost financial inclusion in the region. MFS Africa is the leading Pan-African FinTech company. In fact, the African continent does not have a single network and according to Peilung Li, Founder and Chairman of LUN Partners Group .

“MFS Africa has spent years connecting these mobile money services to create one Pan-African network which can substantially boost cross border trade and open up new opportunities for Chinese as well as global firms.” The company connects over 170m mobile wallets through 100+ partners, including Airtel, Ecobank, MTN, Orange and Vodafone across 55 markets. What LUN Partners Group hopes to achieve is to connect the company with financial services players in Asia while also open new opportunities for Chinese firms to connect to the African continent, becoming the “conduit” between the two regions for the Fintech industry.


Jumia - lagos - nigeria - africa - cifnews

© Unsplash. Nigeria. Being Africa’s most populous country, Nigeria is home to 40% of African e-commerce companies and represents Jumia’s first market.


Chinese investors have also kickstarted the e-commerce industry in Kenya with Kilimall, the online shopping platform based in Changsha, China and Nairobi, Kenya. The platform wasfunded by Yang Tao, a Chinese player that is now investing in Lipapay, the platform’s own online payment gateway which focus on payment collections and remittance.

Lipapay was designed to be a competitor of the already established M-Pesa which also has strong ties with the Chinese technology world. In fact, Tencent and Safaricom, M-Pesa owner, have agreed to allow money transfers from M-Pesa to WeChat Pay. The function is expected to be used mostly by Kenyan traders buying Chinese goods, tourists and African students in China. E-commerce giant Alibaba also secured a deal with the payment service, allowing payments via M-Pesa on the shopping platform. The deal will now allow Ant Financial to offer M-Pesa as one of the payment options with transactions denominated in Kenyan shillings, providing more than 21-million Kenyan people with a range of payment services, loans and savings without the need of a bank account.


The Partnerships will allow money transfers from the online platforms to WeChat Pay



The high demand for money transfer services made Kenya develop another two online payment platforms, Simbapay and Bitpesa. The first one launched an instant money transfer service from the east African nation to China that uses QR codes that enable funds delivery into WeChat’s billion subscribers. In contrast, uses blockchain technology to help businesses in China and Africa to send instant and low-cost payments in local currency directly from African bank accounts to Chinese bank accounts. In fact, the service offered by this online start-up is available in multiple countries such as Kenya, Uganda, Tanzania, Nigeria and the Democratic Republic of Congo.


©BitPesa, headquartered in Nairobi, Kenia, is a digital foreign exchange and payment platform.


The company reports that Chinese exporters have recommended the platform to African purchasers because of the built-in settlement automation and the possibility of avoiding using cash or the US dollar as a middle currency making payments from local currencies directly into Chinese Yuan.

Given the high potential for fostering financial inclusion, Africa is extremely interested in learning from Chinese practices. The president of the Chinese Academy of Financial Inclusion, Bei Duoguang, says that “Africa wants to skip the step of establishing a mature bank system but directly use digital finance to boost inclusive, sustainable growth”, leapfrogging over the typical route of developing a financial system. China is using its expertise to fill the gaps in Africa’s financial system and going forward it hopes to make Fintech another industry where China and Africa can cooperate.



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