FinTech

FinTech

Six development challenges for Fintech in Senegal

FinTech

Six development challenges for Fintech in Senegal

By Bery Dieye Kandji, KM Consultant in Senegal
December 13 , 2017
Dakar, SENEGAL - 

« Fintech », contraction of «technology» and «finance», refers to a structure that offers innovative financial products and services without itself being a financial institution (bank, microfinance institution...). In Senegal, Fintechs are entering into the market, offering various products and services that could contribute to the growth of digital finance in the market. However, they are having to experiment in an environment that is not necessarily set up to favor them.  

If you're a Fintech start- up be prepared for the following challenges:

  • As a Fintech, you must develop innovative offerings, in accordance with the existing legal, financial and tax regulations in Senegal. But who are the authorities with whom you need to validate this compliance?  Identifying them will be your first big challenge. There is more than a dozen in the country: Bank of West African States (BCEAO), Directorate of Money and Credit (DMC), Regulatory Authority for Telecommunications and Posts (ARTP), Directorate of Micro Finance (DMF), just to name a few.
  • You will also have to deal with regulations that are not always aligned with your commercial realities. For example, if crowdfunding is your core business, you may suffer from banks’ monopoly on providing credit and the regulatory context around public offering.
  • The regulatory framework on electronic signature, set up by the Agency of Information of the State (ADIE), can be complex for Fintechs to understand. To dematerialize contracts, you will need a lot of time and patience. This may be tough for a structure whose originality is its ability to develop instant and digital offers.
  • A Fintech needs to build partnerships to expand its offerings. In Senegal one of the difficulties in this area is the weak bargaining power with big billers and incumbent financial institutions and operators. This may impose constraints for Fintechs whose business models are mainly based on the aggregation of services. This leaves little room for them to maneuver which could in turn affect the viability of their business model.
  • Despite robust growth potential, finding financing remains a challenge for Fintechs. The banks are still reluctant to finance emerging business models. And even if there are guarantee funds, their processes are often too long and unsuited to the development cycles of Fintechs.  
  • Another problem, you must be aware of, is the lack of an ecosystem fostering the development of Fintechs. There is almost no framework in Senegal to share your projects with research centers, large companies, public actors, and investors, and develop partnerships.

This last point probably includes all the obstacles to the development of the Senegalese Fintechs. So where does this leave Fintechs? Is there a future for these new market players?

Yes, because innovation, the main added value of the Fintechs is one of the core drivers of digital finance. When it comes to digital financial services, people are hungry for innovative services tailored to their needs and aspirations

Fintechs in Senegal need assistance to overcome their challenges, whether these are related to regulation, funding or establishment of partnerships.

The MM4P program whose mandate is to act as a neutral broker in market and bring together all the relevant stakeholders in digital financial services, is actively working on assisting Fintechs in the regard. A first meeting was organized on the 7th of September2017, in the offices of MM4P, to broker an exchange with Fintechs on their current projects, challenges and perspectives. The next step will be to formalize a framework to assist them in the market. 

Pour lire en français, cliquez ici.

For more information, please contact
Bery Dieye Kandji
KM Consultant, Senegal
Additional Information
Bery Dieye Kandji
KM Consultant, Senegal

Goodbye Notebook, Hello Tablet

FinTech

Goodbye Notebook, Hello Tablet

How Dairy cooperatives in Western-Uganda are digitizing their records
December 06 , 2017
Kampala, UGANDA - 

Digitizing basic transactions such as records of milk delivery and sales, is essential for the further growth of the dairy sector in Uganda. A small change can bring big changes. If instead of writing down the 15 litres brought to the collection centre by farmer Godfrey this data is entered into an application, farmer organisations unlock the power of data. And with this information farmer groups can potentially access financial services which are now not willing to provide financing, because of the lack of collateral.

Nearly 80% of the people in Uganda live in rural areas where banks have no or limited presence. Consequently, the countryside is lacking financial services needed to develop the local economy. Over 70% of Ugandans are active in agriculture. The sector is largely organized through farmer organisations such as cooperatives, who typically have their own Savings and Credit Cooperative Organisations, SACCOs, that provide financial services to their members.

However, cooperatives and SACCOs struggle with many issues such as limited access to finance, high loan default rates, safety concerns around large quantities of cash and cumbersome admin processes. It is challenges such as these that prevent cooperatives and SACCOs from growing and professionalizing their business; becoming an agri-business that can impact the lives of small-holder farmers, their members. Especially in rural areas.

That is why the UNCDF supports the development of an app that will provide dairy cooperatives with the right tool to digitize their transaction records. Across the dairy sector UNCDF is supporting digital payments on mobile phones instead of in cash. One of the key lessons learned from digitizing these payments, is that the foundation first needs to be laid. Paper-based cooperatives need to go digital.

Together with Laboremus Ltd., UNCDF is designing and creating an app that will do just what is needed for dairy cooperatives. Pius Peter, General Manager from Dwaniro Dairy Cooperative says that he is looking forward the new application being used. “I feel with the step to digital we are entering a modern Uganda, where we can ensure our members, small holder farmers, access to the finance they need to grow. Entering our delivery and sales in this application will advance and strengthen our cooperative and the way we serve our farmers.”

In order to build on experiences from organisations that already digitized their records, UNCDF is organizing the third FinTech4AG meet-up on the 7th December 2017. In this event, cooperatives SACCOs as well as NGOs and other organisations, will share their main learnings. What are the main challenges for farmer groups who would like to go digital? And how can these challenges best be overcome?

Jointly answering these questions will provide feedback and a clear way forward for the further development of the application. Insights that will accelerate the digitization of farmer cooperatives all across the country, in different value chains to drop their notebooks and pick up their tablet.

FinTech4AG: Digitizing Farmer Organisations
7th December 2017
The Design Hub
10:00 - 12:30

For more information, please contact
Naomi de Groot
KM Consultant, Uganda
Additional Information
Naomi de Groot
KM Consultant, Uganda

SL FinTech Challenge 2017: Market Engagement Session

FinTech

SL FinTech Challenge 2017: Market Engagement Session

Conditional & Unconditional Cash Transfers
July 04 , 2017

SL FinTech Market Engagement- Cash Transfer 2017

Freetown, SIERRA LEONE - 

The Sierra Leone FinTech Challange 2017 in partnership with the SL FinTech association is organizing a Market Enagement Session with a critical use-case for fragile markets- Conditional & Unconditional Cash Transers.

The event is scheduled on:

JULY 6, 2017

2:00 PM- 3:30 PM

ACDI/VOCA OFFICE at HILL STATION, OFF

REGENT RD

FinTechs and partner financial institutions will hear from Cash Transfer Working Group, a sub-set of the Food Security Sector using cash to address food seurity needs in Sierra Leone. In Sierra Leone, over 3.5 million people are food insecure, without access to a sufficient amount of safe and nutritious food. This is also the volume of people that the Cash Transfer Groups face significant challenges in delivery cash-assistance to.

The distribution will provide valuable insights to the FinTechs and overall financial inclusion industry on designing and piloting tech-based solutions for reaching the vulnerable households in cost-effective, timely, and convenient ways which can also result in greater financial inclusion.

For more information, please contact
Tenzin Keyzom Ngodup
Technical Specialist Digital Finance
Additional Information
Tenzin Keyzom Ngodup
Technical Specialist Digital Finance
Related Documents
SL FinTech Market Engagement Session

Sierra Leone FinTech Challenge 2017

FinTech

Sierra Leone FinTech Challenge 2017

June 15 , 2017

The Sierra Leone FinTech Challenge 2017 is designed to encourage and catalyze the development of FinTech solutions that are useful and highly relevant to the people and businesses of Sierra Leone. 

Freetown, SIERRA LEONE - 

The Sierra Leone FinTech Challenge 2017 is an initiative by the Bank of Sierra Leone, in partnership with FSD Africa funded by U.K. aid from the U.K. government and UNCDF MM4P, with support from USAID and the Last Mile Trust Fund. The Challenge is designed to encourage and catalyze the development of FinTech solutions that are useful and highly relevant to the people and businesses of Sierra Leone. These innovations have the potential to introduce game-changing ingredients for expanding quality of access and usage of financial services in Sierra Leone, where over 87% of the population remain unbanked, especially those living in rural areas, women, young people, smallholder farmers and marginalized population groups.

The Bank of Sierra Leone, FSD Africa, funded by U.K. aid from the U.K. government, and UNCDF MM4P, with support from USAID and the Last Mile Trust Fund will provide financial rewards to the most promising ideas that expand financial inclusion. Specifically, the Bank of Sierra Leone, through its Youth Entrepreneurship Fund, FSD Africa and UNCDF MM4P will provide up to $13,000 seed capital to three winning concepts, including one youth award for a Sierra Leonean youth based in Sierra Leone through the Bank of Sierra Leone Youth Entrepreneurship Fund, as judged by a panel of FSD Africa, UNCDF MM4P, Bank of Sierra Leone and a Consumer Group representative. This capital will help test designs, buy in expert support and clarify the business case.

FSD Africa and UNCDF MM4P will then provide a $100,000 grant/debt mix to up to two winning finalists as judged by two panels – a consumer group panel, as well as an FSD Africa, UNCDF MM4P and Bank of Sierra Leone panel. This capital will be a contribution to the implementation of a pilot with clear targets.

The Bank of Sierra Leone will provide to all three finalist access to its newly launched Regulatory Sandbox – a safe space for unregulated financial sector innovations to grow under the guidance of the Bank of Sierra Leone staff and other specialists.

The Sierra Leone FinTech Challenge launched on June 15, 2017. To apply, please click on the application form.

To learn more, read the concept note and watch this video.

For more information, please contact
Tenzin Keyzom Ngodup
Technical Specialist Digital Finance
Anna Ferracuti
Knowledge Management and Communications Consultant
Additional Information
Tenzin Keyzom Ngodup
Technical Specialist Digital Finance
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