Fintech increases financial inclusion in DRC – Quartz Africa Member Brief – Quartz

Hi Quartz Africa members,

While fintech and mobile money services have accelerated significant economic inclusion in sub-Saharan Africa over the past decade, the Democratic Republic of Congo (DRC) is still lagging behind its neighbors.

The total economic inclusion rate in the DRC – the proportion of adults with access to a bank account or mobile money account – is estimated at 26%, compared to a regional average of 43% according to Digital Banking in sub-Saharan Africa Report (pdf). Women in the DRC are disproportionately excluded: Only 24% of women have an account, compared to 27% of men (pdf).

These figures present major challenges. Research findings in DRC’s roadmap for financial inclusion 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 health costs.

DRC’s nascent fintech scene hopes to change all that. “Fintech startups can innovate faster and offer solutions that address the needs of individuals, businesses and governments,” said Noel Tshiani, whose organization, Congo Business Network, connects startups, investors, government agencies, the media and other stakeholders.

Fixing these systemic problems will not come without challenges: Startups in this area must navigate poor infrastructure, regulatory gaps and language barriers with French as the official language of the DRC. But Tshihani is optimistic. Startups, banks and telecommunications companies [can] compete for a promising market, “he says,” where 95% of the money circulates in cash. “

Cheat sheet

💡 Opportunity: Despite a population of more than 94 million, the DRC has one of the lowest economic inclusion rates in Africa. Access to financial services promises a better quality of life for many, including vulnerable groups such as women.

🤔 The challenge: The technological 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.

🗺 Road map: Fintechs in the DRC must innovate tailor-made solutions to drive inclusion. Larger investments in startups are the key, along with collaboration with stakeholders such as government agencies.

💰 Stakeholders: Investors, startups, banks, telecommunications companies, regulators and government agencies must work together to grow and strengthen the fintech ecosystem in the DRC.

By the numbers

95 million: DRC’s calculated population

25 million: Number of adults in the DRC who are totally excluded from financial services

26%: The overall economic 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, much thanks to the strength of the mining sector

$ 9.3 billion: The estimated funding gap for micro, small and medium-sized enterprises in the DRC. Complex procedures, and the assumption that they would be rejected, are the main reasons why many companies do not apply for financing.

Case study

Name: Okapi Finans

HQ: Västerås, Sweden, but operates in the DRC, Senegal, Botswana, Guinea and Kenya

Founder: Gisele Mwepu

Valuation: Undisclosed

The seeds of Okapi Finance were sown 10 years ago, with a trip home to the DRC by Gisele Mwepu, who saw for herself how difficult daily financial transactions were for people in her country, and especially for women in the informal economy. Everyone waited in long queues to pay electricity bills, and traveled long distances to access banks and ATMs.

So Mwepu decided to use his degree in software engineering and his master’s degree in computer science to start Okapi Finance. She immediately realized that a simple peer-to-peer transfer or payment service would not cut it – the ideal solution would have to include transfers, payments, credit and insurance, as well as interoperability with government and other services.

Okapi officially started operations in 2018, after conducting research and a pilot phase in Kenya’s low-income neighborhood Kibera, and has already come close to Mwepu’s ideal. Today, fintech startup allows users to quickly send and receive money, pay fees and send invoices. It also offers credit and allows companies to disburse funds and collect payments in real time, and continues to add new features.

One such recent offering: weekly nano loans of between $ 20 and $ 50 for female entrepreneurs, allowing small traders to consistently replenish their stocks and grow their business on a regular basis. The repayment rates have also been impressive: around 95%, says Mwepu. The female traders have also become Okapi’s biggest supporters, as they encourage their customers to pay through the service to improve their credit scores.

To improve financial competence, Okapi has also been involved in organizing training programs and educational events, and collaborates with organizations such as the United Nations Development Program (UNDP) and the DRC government. The latter partnership, with a view to facilitating the disbursement of funds to pensioners, is seen as a great way to prevent older residents from having to travel long distances to gain access to the bank.

In its quest to develop a larger ecosystem, Okapi is currently focused on introducing money transfers – already one of the biggest opportunities for access to financial services for a large part of the DRC’s population. The company has secured an EU license to enable money transfers and wants to establish partnerships in other markets, including the United States.

Okapi is also expanding to other African countries through a local partner model that allows companies in these locations to license the Okapi brand and offer its services. Okapi partners have so far launched in Senegal and Guinea-Conakry.

In conversation with

👩🏿 About Okapi’s focus on women in the DRC:

“I realized that women were quite affected by economic exclusion in the DRC. This is despite the fact that they are the most important drivers for the informal sector in the country, so we chose to target women and strengthen them. “

🦠 On how covid-19 transformed expansion plans:

“Before, we tried 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 only be launched using the local partner model. “

🤝 About the benefits of the local partner model:

«The advantages of this model are many: The local partner knows the business environment, culture, and can easily establish the services in the country. Several countries are about to be launched with this model. Among them: Egypt, Ethiopia, Benin and Ivory Coast. “

Fintech offer for 👀

B2B retail and e-commerce platform Wasoko raised a $ 125 million Series B round in March, to a valuation of $ 625 million. The startup, which offers micro-retailers access to credit and free delivery of goods, was named Africa’s fastest growing company in 2022 by the Financial Times.

African mobile money provider Wave in september raised $ 200 million in a series A round that valued the company at $ 1.7 billion. The goal is to build an affordable mobile money service across Africa.

Chinese-backed Africa-focused startup of digital payments OPay August last year raised $ 400 million for a valuation of $ 2 billion, funds that will be used to facilitate expansion. The company says it processes around 80% of bank transfers among Nigerian mobile money operators, and 20% of the country’s transfers from non-retailers.

More from Quartz Africa

❔ The biggest obstacle facing Africa’s female founders

🪜 Africa’s gender gap in e-commerce costs billions of dollars

Co Not even covid-19 improved Africa’s gender gap on mobile phones

Medlems This membership letter was prepared while listening to “Genge la Bundoksi” by Boondocks Gang (Kenya).

Have a very motivated rest of the week,

—Martin Siele, Nairobi-based quartz contributor

One thing

Nine out of 10 people in the DRC are dependent on the informal economy. Therefore, they must rely on their own savings as a source of working capital and business investment.