The Mobile Money Market in Africa: 10 Startups to Watch

Given the recent success of several fintech startups in Africa, now seems like a pretty good time to drill down into the mobile money industry in Africa specifically and take a look at what are the existing early stage startups that may become the next Flutterwave. First, let’s take a birds’ eye view of the global mobile money industry, followed by an analysis of the next ten early-stage mobile money startups in Africa to watch for.

Mobile Money: A Globally Increasing Trend, Especially in Africa

In 2020, the global mobile money industry saw a total of 1.2 billion registered mobile money accounts processing over $2 billion in transactions daily. Of those registered accounts, roughly half (548 million) are in sub-Saharan Africa.¹ Moreover, 157 of the 310 live services (mobile money providers) are active in Africa, representing the lion’s share of mobile money services globally.² In terms of transactions, Africa still leads the charge in both value and volume, with nearly 64% and 66% of the global value and global volume respectively from mobile money transactions in 2020 taking place in sub-Saharan Africa.³

These numbers are the result of early adoption of mobile money services in sub-Saharan Africa and strong follow-through thereon. The number of registered accounts in sub-Saharan Africa grew 12% in 2020 as compared to 2019, with transaction volume and transaction value growing 15% and 23% respectively as well.⁴

Dividing sub-Saharan Africa into sub-regions tells a more nuanced story. While the Kenyan-based mPesa may have reached global fame as one of the first and most successful mobile money services in Africa, other regions in sub-Saharan Africa are catching up by leaps and bounds. For example, while mobile money transactions in east Africa outpaced the rest of the continent with $273 billion in value, that number grew just 11% from the prior year.⁵ In contrast, the value of transactions in west Africa, while it only amounted to $178 billion (35% lower than east Africa’s transaction value), that number represents a 46% growth over the prior year.⁶

The vast majority of west Africa’s growth is attributable to Nigeria, which boasts 20% of Africa’s population and the largest economy of Africa. Not surprisingly, then, the largest fintech deals of recent date have been born in Nigeria and have set the trend for the type of success to be expected from Africa’s fintech industry in general, and its mobile money industry in particular. The two most notable examples of Nigeria’s fintech prowess in action are Paystack’s acquisition by Stripe and Flutterwave’s recent $1 billion valuation, making it Africa’s first unicorn.

Paystack, a fintech company and Y Combinator alum that helps businesses in Africa get paid by anyone, anywhere in the world (the self-proclaimed “Stripe of Africa”)⁷ became Stripe’s largest acquisition in October 2020 with a purchase price reportedly over $200 million, representing the largest acquisition in Nigeria to date⁸. Fintech solutions company Flutterwave, also a Y Combinator alum, closed its Series C funding round at $170 million, the largest single founding round for an African tech startup and securing the company’s status as Africa’s first unicorn.⁸ While these two companies are not specifically mobile money entities, their fintech products serve as the backbone of the mobile money industry and allow for mobile money platforms to operate. Moreover, their success demonstrates two key elements of the mobile money industry in Africa:

1) global players are increasingly taking notice of Africa’s fintech prowess, and

2) Nigeria is a market leader in the production of scalable fintech solutions.

These assertions are evident in the fact that Nigeria-headquartered companies accounted for roughly one-fifth of all venture-backed funding deals in Africa from 2019 through Q1 2021, and one-third of all such deals in the fintech sector.⁹

Finally, there are two recent events on the continent that point to future growth of the mobile money industry in sub-Saharan Africa. First, is the Flutterwave integration with PayPal that will allow for African merchants to receive payment via PayPal, the absence of which proved a longstanding source of frustration for retailers on the continent. Second, is the acquisition of Kenyan-born mobile money progenitor m-Pesa by South African telecom giant Vodacom and its Kenyan counterpart Safaricom. The acquisition opens up the doors for m-Pesa to expand into the southern African market. The combination of these two events, in addition to the aforementioned Flutterwave $1 billion valuation and Paystack’s acquisition by Stripe, collectively point to the strong continued growth of the mobile money sector in sub-Saharan Africa.

Major Players in the Africa Mobile Money Industry

There are several venture capital firms and accelerators that have played an outsized role in investing in fintech and mobile money in Africa.

• Ingressive Capital: Ingressive Capital, founded by Maya Horfan Famodu is a Nigeria-based VC firm that invests in pre-seed and seed-stage tech-enabled businesses in the B2B space in Africa. The company averages US$200,000 to US$400,000 ticket sizes and targets 10 percent ownership into companies it funds. The firm recently doubled its AUM from $5 million to $10 million, making it perhaps the largest first-time tech fund raised by a solo Black woman GP.¹⁰ Of the firm’s twenty-one publicized investments, ten are in the fintech sector, including Paystack (exited), of which half are either direct mobile money providers or associated with the mobile money industry.¹¹ The fund has made five investments from 2019 to present. Among Ingressive’s limited partners (investors) include Arlan Hamilton, Founder of Backstage Capital.
• Future Africa: Future Africa is a Nigeria-based, early-stage innovation fund that creates syndicates where members pay a $1,000/year fee and in return receive five deal opportunities per quarter.¹¹ As a result, the fund is able to make a number of investments relatively quickly. As of 2020, the fund held $12 million in AUM. Of the fund’s 31 publicized investments, eight are in the fintech sector, including Flutterwave, nearly all of which are in the mobile money industry. The fund has made five investments from 2019 to present.¹²
• Y Combinator: Y Combinator, a seed-stage accelerator with global recognition, has gradually increased the number of African-based startups it has included in its twice-yearly cohorts. Starting with a single African company in its Spring 2015 cohort (Flutterwave was one of the two African companies in the Spring 2016 cohort), the accelerator has accepted a total of 47 African startups in its program, 18 of which are in the fintech sector.
• Kepple Africa Ventures: Kepple Africa Ventures easily outperforms any and every VC fund operating in Africa in terms of sheer number of deals. The Japan-based firm was founded in 2018 and has already invested in 82 companies across 11 African countries, 36 of which were made in 2020 alone.¹³ The investments run the full gamut of industry, ranging from healthcare to energy to logistics to fintech. The firm focuses on seed stage rounds, with a geographic focus primarily in east and west Africa.¹⁴

WATCHLIST: Early-Stage Mobile Money Startups in Africa

This list, presented in alphabetical order, focuses on early-stage mobile money startups headquartered in or operating primarily in sub-Saharan Africa that are still in either Seed stage or Series A stage of funding. The primary criteria is that the companies be early-stage startups. Given that access to early-stage funding has proven an abnormal hindrance for African startups, this list is designed to present high growth opportunity startups that are still in early stages of funding. For example, a universally acknowledged successful fintech startup like Flutterwave, with its $1 billion valuation, already concluded its Series C round of funding, so it’s not included in this list. Similarly, MFS Africa, a fintech operating as the southern African equivalent to Flutterwave (an API connector for mobile wallets) and notable for its acquisition of east-African based Beyonic, was also left off the list as that it concluded a Series B round of funding.

Additionally, the list includes companies that are mobile money-adjacent, such as startups focused on API connectors (early-stage versions of Flutterwave of MFS Africa) that serve as the building blocks for mobile money services.

At the same time, the list excludes African fintech companies that, though successful in terms of growth, revenue, transaction volume, etc., ultimately fall outside the scope of the mobile money industry. Two prime examples of such companies include the Nigerian investment platform Bamboo, which has received venture backing from all of the major players highlighted above,¹⁵ and the wealth management platform and Y Combinator alum Cowrywise, which raised a successful $3 million pre-Series A round, but wouldn’t necessarily be described as a mobile money startup. These two companies are certainly African fintech startups to watch and deserve recognition, but for the specific purposes of this list, they have not included.

Top 10 Early-Stage Mobile Money Startups in Africa¹⁶

1. Afriex

Pitch: Afriex, founded in late 2019, is a Nigeria-based startup that provides instant, zero-fee transfers to Africans at home and in the diaspora. The startup’s platform allows users to deposit cash on the app, send money to a bank account or another user, and withdraw money to a connected bank or debit card. The company is operational in the United States, Canada, Nigeria, Ghana, Kenya, and Uganda, thus capturing anchor markets in east and west Africa while also providing viable test cases with diaspora remittances from the United States and Canada.

Problem Solved: Cross-border money transfers are still incredibly slow and expensive. Afriex solves for this by buying cryptocurrency in one country and selling it in another in order to capture better exchange rates.

Previous Funding:

• Pre-Seed: $150,000 (Investors: Y Combinator)
• Seed: $1.2 million (Investors: Launch Africa (lead), Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Russell Smith, Mandela Dixon, Processus Capital, Uncommon Ventures, A$AP Capital, Furquan Rydhan, Precursor Ventures, Ivernet Holdings, Andrea Vaccari)

2. Blueloop (Flux)

Pitch: Nigeria-based Blueloop, via its product Flux, offers a mobile payments app for cross-border payments using cryptocurrencies. Launched in September 2020, Flux allows users to send and receive money globally, instantly convert it to cash, and spend it locally. Flux differs from BuyCoins (below) in that it uses cryptocurrencies solely as an intermediary step, rather than allowing for customers to buy/hold/invest in cryptocurrencies.

Problem Solved: Existing money transfer solutions, such as Money Gram and Western Union, are too expensive and take too long to process for freelance workers in Africa who are receiving funds from foreign clients. Flux addresses this issue by allowing users to send funds to/from a crypto wallet, and then send that money directly into a fiat wallet.

Previous Funding:

• Pre-Seed: $77,000 (Investors: Hustle Fund VC, Pioneer, Mozilla, angel investors)

3. BuyCoins

Pitch: Nigeria-based BuyCoins allows for customers to buy and sell cryptocurrencies instantly using local currency. With the addition of its new product SendCash, the platform also allows for customers to receive funds into their bank account from any country using Bitcoin. SendCash processed around $300,000 from about 400 users as of mid-year 2020.

Problem Solved: BuyCoins and SendCash provide for faster, cheaper payments to be sent to/from Nigeria, Ghana, and other African countries to international recipients. By using cryptocurrencies as intermediate steps in the transaction, the company can secure lower rates than through traditional money transfer services.

Previous Funding:

• Pre-Seed: $150,000 (Investors: Y Combinator)
• Seed: $1 million (Investors: Microtraction, Kepple Africa Ventures)

4. Diool

Pitch: Cameroon-based Diool is a mobile money-adjacent startup that makes it simpler for small merchants to accept payments from their customers and repay their suppliers using a variety of payment methods. Founded in 2015, the company pivoted in 2018 from a mobile recharge project to its current iteration. Since the pivot, the company has transacted more than $120 million with 2,000 merchants. Moreover, the company has developed “strategic integrations” with all of Cameroons mobile money providers as well as formed a partnership with a French multinational investment bank, Societe Generale.

Problem Solved: Limited payment methods available to merchants serve as choke points for both merchants and customers seeking to transact business electronically. Moreover, many existing solutions in other nearby markets (e.g. Nigeria and Ghana) are not typically accessible to Francophone Africa. Diool addresses both by offering a variety of payment methods to its Francophone customer-base.

Previous Funding:

• Angel: $850,000 (Investors: Undisclosed)
• Pre-Seed: $1.2 million (Investors: The Family (incubator))
• Seed: $3.5 million (Investors: Lundin Group)

5. Kudi

Pitch: Nigeria-based Kudi seeks to make banking more inclusive by making financial services available for the underbanked and unbanked. With its latest funding round, it plans to expand its extensive network of agents and solidify its plans to become a digital bank. Currently, Kudi processes more than $30 million in monthly payments.

Problem Solved: 80% of the Nigerian workforce is paid in cash, which is grossly counterintuitive to the reality of an increasingly digital economy. Moreover a cash economy prevents many of these workers from accessing basic financial banking services that are not designed for low-income workers. Kudi solves this by employing an extensive agent network that serves as the gateway to customers accessing mobile money solutions, as well as offering basic financial services such as money transfers and bill payments.

Previous Funding:

• Seed: $1.7 million (Investors: Y Combinator, others undisclosed)
• Series A: $5 million (Investors: Y Combinator, Khosla Ventures, Partech Partners)

6. Okra

Pitch: Nigeria-based Okra, founded in June 2019, offers an API that creates a secure portal and process to exchange real-time financial information between customers, applications and banks. In other words, Okra allows customers to connect their bank accounts directly to third-party applications, which will allow for greater access to services such as mobile money. Okra’s primary investor, TLCom Capital, an Africa-focused VC firm with $71 million AUM, rarely invests in such early-stage companies.

Problem Solved: Despite Nigeria’s status as a major financial hub for the continent, there still exists a disconnect between fintch apps and banks. Okra solves this by offering paid packages to clients that would allow for the clients to create opportunities for customers to connect their preferred fintech apps directly to their particular financial institutions.

Previous Funding:

• Pre-Seed: $1 million (Investors: TLCom Capital)

7. SimbaPay

Pitch: The UK-licensed and London-based SimbaPay enables customers to transfer money abroad seamlessly, even without access to the internet. The product primarily operates in Kenya and is also licensed in four other African countries with plans to expand operations into these countries.

Problem Solved: Speed and cost of international money transfers continues to be a hindrance across Africa. SimbaPay solves for these by use of USSD solutions that are not reliant on access to a smartphone or internet connections.

Previous Funding:

• Seed: $600,000 (Investors: Ingressive Capital)

8. VesiCash

Pitch: Nigeria-based VesiCash provides payment security for both merchants and buyers in P2P and marketplace transactions.

Problem Solved: Existing anti-fraud solutions still leave customers and service providers vulnerable to fraud, particularly in freelance or gig work. VesiCash addresses this by implementing a digital escrow system combined with a benchmark payment system that allows for freelance worksrs to be paid upon reaching certain milestones of the job’s completion, rather than risk zero payment at the end of the job. The company services as a mobile money-adjacent solution in that it facilitates digital transactions between customers and merchants.

Previous Funding:

• Pre-Seed: $100,000 (Investors: Undisclosed)
• Seed: Undisclosed (Investors: Ingressive Capital)

9. Wallets Africa

Pitch: Based in Nigeria, Wallets Africa allows for customers to send and receive money using personalized virtual debit cards or virtual dollar cards. Launched in 2018, the startup has recently partnered with Visa to provide physical cards to customers. Customers can also send payments to mobile money accounts in Ghana and Kenya.

Problem Solved: Wallets Africa addresses the issues faced by unbanked and underbanked customers by providing them with virtual debit card solutions accessible through phone numbers.

Previous Funding:

• Seed: $150,000 (Investors: Y Combinator)
• Post-Seed: Undisclosed (Investors: Y Combinator, Mozilla Corporation, 9Yards Capital, Samurai Incubate, Michael Seibel (Y Combinator CEO), Maria Alegre (CEO of Chartboost), Microtraction, Venture Souq, Brad Flora)

10. ZeePay

Pitch: The Ghana-based ZeePay is focused on providing digital rails to connect digital assets such as mobile money wallets, cards, ATMs, bank accounts and digital tokens to international money transfer operators, payments, subscriptions, international airtime and refugee payments. As a mobile money-adjacent service provider, the company has a footprint in more than 20 African countries, an existing partnership with Money Gram, and has a UK launch planned for 2021.

Problem Solved: ZeePay provides the digital rails (tools and add-ons) necessary to connect disparate aspects of mobile money transactions and increase opportunities for faster, cheaper remittances and other mobile money transactions to/from and throughout Africa.

Previous Funding:

• Seed: $940,000 (Investors: GOODSoil VC)

Conclusion

The fintech market in Africa is booming exponentially. Drilling down within that, the mobile money industry specifically is primed for huge growth, with numerous early stage startups across the continent offering a variety of solutions to an ever-expanding customer base. The startups listed above are not a definitive list of the major players in the mobile money industry in Africa. Nonetheless, they represent a snapshot of some of the early-stage startups on the continent that may see a degree of success in the future similar to Flutterwave or Paystack. Those interested in investing in Africa in general or in fintech in Africa specifically, should pay close attention to the companies on this list.

[1] State of the Industry Report on Mobile Money 2021, GSMA, available at https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2021/03/GSMA_State-of-the-Industry-Report-on-Mobile-Money-2021_Full-report.pdf.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] TechCrunch, Stripe acquires Nigeria’s Paystack for $200M+ to expand into the African continent, October 15, 2020, available at https://techcrunch.com/2020/10/15/stripe-acquires-nigerias-paystack-for-200m-to-expand-into-the-african-continent/.

[8] The Flip Africa, Inside the Stripe Acquisition of Paystack with Shola Akinlade & Matt Henderson, December 3, 2020, available at https://theflip.africa/podcast/stripe-paystack/.

[9] These statistics come from a dataset compiled by Maxime Bayen, a career venture builder focused on startups and entrepreneurs in Africa. The dataset comprises venture capital deal flow for African startups in 2019 ($500,000 and up), 2020 ($250,000 and up) and the first quarter of 2021 ($100,000 and up). Access to the dataset is available here: https://twitter.com/MaxBayen.

[10]Forbes Magazine, How To Start A VC: Interview With Maya Horgan Famodu, Founder, Ingressive Capital, August 2, 2020, available at: https://www.forbes.com/sites/edwardzimmerman/2020/08/02/interview-on-launching-a-venture-capital-firm-in-nigeria-maya-horgan-famodu-founder-of-ingressive-capital/?sh=44c4a4892ae4.

[11] The Ingressive Capital portfolio companies (as displayed on the website as of April 9, 2021) considered mobile money or mobile money-adjacent for the purposes of this article include: Paystack, Vesicash, SimbaPay, OnePipe, and Swipe.

[12] The Future Africa fintech portfolio companies (as displayed on the website as of April 9, 2021), considered mobile money or mobile money-adjacent for the purposes of this article include: Flutterwave, Afriex, FSI, Indicina, and Rise Capital.

[13] Disrupt Africa, Japanese VC firm Kepple backs 16 more African tech startups to take 2020 total to 36, December 17, 2020, available at: https://disrupt-africa.com/2020/12/17/japanese-vc-firm-kepple-backs-16-more-african-tech-startups-to-take-2020-total-to-36/.

[14] Id.

[15] Invest Bamboo has received funding from Ingressive Capital, Future Africa, Y Combinator, and Kepple Africa Ventures.

[16] All investment data for the top ten list is pulled from a combination of source data including Disrupt Africa, Crunchbase, and the investor websites.