Frontier Fintech GPS # 16 - January 15th 2025
Lemfi Raises a US$ 53m round, Kenya's Treasury moves a step closer to welcome crypto regulations, Mukuru launches wallets in Zim and many other stories that matter
Illustration by Mary Mogoi - Website
Hi All, Welcome to the 16th edition of Frontier Fintech GPS where I provide key insights on the top global Fintech news items that matter to you. This newsletter will be arriving in your inboxes every Wednesday morning. The idea behind Frontier Fintech GPS is to help you navigate the endless stream of Fintech news and get smart about global Fintech as it applies to Africa. To those who are yet to subscribe, hit the subscribe button below and share with your colleagues and friends. 🚀
Reach out at samora@frontierfintech.io to discuss sponsorships, partner pieces and advisory work.
Sponsored by Skaleet
Low-Risk Pilot Programs for a Test-Drive Approach
Banks tend to be risk-averse, especially with core infrastructure changes and rightly so, banks are trusted custodians by both their customers and their stakeholders. Skaleet addresses these concerns with low-risk pilot programs, allowing banks to test its platform in controlled environments before fully committing. Banks can launch small-scale digital propositions, like an SME-focused solution, to validate the platform’s capabilities and receive real-time feedback without large upfront commitments. The ability to move from idea to MVP within a bank is a very useful capability to have but it’s rare. Skaleet enables your teams to quickly ideate prior to fully committing.
Additionally, Skaleet’s platform is fully compliant with industry regulations, and the company is proactive in working with regulatory bodies to ensure continued adherence. By providing transparent compliance frameworks and security guarantees, Skaleet builds trust with conservative decision-makers, helping banks explore innovation safely.
🌍 LemFi Secures $53M Series B Funding to Expand Financial Services for Immigrants
LemFi, a trusted financial platform designed for immigrants, has raised $53 million in a Series B funding round led by Highland Europe, with participation from partners like Y Combinator, Zrosk, and Global Founders Capital. LemFi, which initially gained traction by serving African immigrants, plans to use this funding to expand its footprint into Asian and European markets. The platform offers services such as multi-currency accounts, instant money transfers, and exchange rate locking, addressing key challenges faced by immigrants in accessing affordable financial services. The funding will also support LemFi’s product development, strategic partnerships, and potential acquisitions to further its mission of making financial inclusion a reality for immigrants globally. With a rapidly growing customer base and innovative tech solutions, LemFi aims to redefine cross-border financial services and compete with established players in the remittance and immigrant banking space.
LemFI and Nala have done well to tap into global flows. It’s a testament to their capacity to execute in fragmented markets and across different regulatory environments. Nonetheless, I’ve argued that cross-border payments will get more and more competitive as stablecoin native providers enter the fray. With remittances, the most critical factor is stability and reliability and it seems that LemFi has done well in this regard given their volumes which are stated to be trending at US$ 1b per month as from 2025. In the long-term, I see both LemFi and other players in the space moving to sit in front of the customers both senders and recipients, to consolidate their market positions.
🇰🇪 Kenya’s Treasury Drafts Policy to Regulate Crypto and Digital Assets
The Kenyan Treasury is developing a policy framework to regulate cryptocurrencies and digital assets, aiming to address concerns over their growing use and associated risks. This move comes amid increased adoption of digital currencies in Kenya, despite the Central Bank's previous warnings against unregulated crypto trading. The policy will establish guidelines for the issuance, trading, and taxation of digital assets, while also setting measures to combat fraud, money laundering, and other illicit activities. By introducing a regulatory framework, the government hopes to foster innovation in blockchain technology while safeguarding consumers and maintaining financial stability. If implemented, Kenya could become a leader in Africa’s crypto regulation landscape, balancing innovation and oversight.
Kenya is following in the footsteps of both South Africa and Nigeria by moving towards regulating crypto providers particularly custody and movement of crypto. As I always argue, governments deal in facts and therefore their facts show that Kenyans are investing and transacting more and more in Crypto. A recent article by the Business Daily newspaper shed light on the increasing use of crypto in B2B payments further validating the growing role of crypto in the market. With a clear regulatory framework, I expect banks to invest in crypto particularly with custodial wallets to begin with. I expect Standard Chartered to lead the pack due to the embedded crypto knowledge across the group. The policy can be found here.
🇿🇼 Mukuru Launches Mobile Wallet in Zimbabwe
Mukuru, a leading financial services provider in Africa, has introduced a mobile wallet in Zimbabwe to enhance financial inclusion and streamline money transfers. The wallet allows users to store funds, make payments, and conduct transactions seamlessly via their mobile phones. This initiative aims to address the challenges of limited access to formal banking services in Zimbabwe, providing a secure and convenient alternative for the unbanked and underbanked population. Mukuru's mobile wallet is expected to support remittances, bill payments, and airtime purchases, while also promoting the adoption of digital financial solutions in the region. This launch marks a significant step in Mukuru’s mission to empower communities through accessible financial services.
The founders of Wave stated that a key reason for founding the company was that wallets were as broken as remittances which they had solved through Sendwave. It’s a recurring theme across Pan-African remittances. Mukuru’s move to launch wallets is likely a response to the fact that there’s significant remittance inflows whilst the payout options are broken and limited. Fixing wallets is a valid way of shoring up their remittance business from their core markets of South Africa and the United Kingdom.
🇪🇹 Ethiopia Implements Fayda Digital ID System for Banking Transactions
Ethiopia has launched the Fayda Digital ID system as part of its broader digital transformation agenda. The new system aims to streamline banking transactions by providing a secure and verifiable digital identity for citizens. Fayda will enhance financial inclusion by making it easier for unbanked individuals to access formal financial services and reducing the risks of fraud and identity theft in the banking sector.
The government plans to integrate Fayda across various sectors, including healthcare and e-commerce, to create a unified digital identity framework. This initiative positions Ethiopia as a regional leader in leveraging technology for national development, with the potential to modernize its financial ecosystem and boost economic growth.
Digital Identity and a Digital Stack are critical enablers of a robust Fintech ecosystem. We’ve seen this with both Brazil and India. Fayda Digital ID is a first step towards creating the foundational elements from which a Fintech ecosystem can emerge. This should be both a positive and negative for M-Pesa Ethiopia. On the positive side, it enables easier KYC and onboarding for them. On the negative, it does the same for every other player thereby obviating the natural KYC advantages that accrue to Telco enabled mobile money players. Pulling back, we will see a divergence in modern tech stacks. Centralised governments like Ethiopia can build robust and scalable digital infrastructure with the advantage that it enables more control. The other model is a more decentralised digital infrastructure and the US is pioneering this model.
🇿🇦 Stitch Partners with Vodacom Financial Services to Enhance VodaPay Wallet
Stitch, a leading API fintech company, has partnered with Vodacom Financial Services to enhance the capabilities of the VodaPay super app and digital wallet. The collaboration aims to integrate Stitch’s API technology, enabling seamless account-to-account payments and enhancing user experience within the VodaPay ecosystem. This partnership is part of Vodacom’s strategy to accelerate financial inclusion in South Africa by offering a more robust and versatile digital wallet. The enhanced VodaPay wallet will allow users to make faster, more secure payments and access a broader range of financial services, positioning Vodacom as a key player in South Africa’s digital payments landscape.
Stitch has deliberately focused more on enterprise clients where their advanced tech drives a better customer experience for their clients. This is done through higher payment success rates and a better customer experience overall. In as much as Vodapay is a Fintech, they have the savvy and budgets of a large enterprise client and therefore this is a double win for Stitch. In the long-term, adding such logos should add significant value to their enterprise sales efforts.
🌐 X Plans Payment Integration with X Money in 2025
Social media giant X (formerly Twitter) has announced plans to integrate X Money, its digital payment system, into the platform by 2025. This move aims to enable seamless peer-to-peer transactions, in-app purchases, and cross-border payments, creating a comprehensive ecosystem of social and financial services. The integration is part of X's broader strategy to evolve into a super app, combining social networking with financial capabilities. By offering a frictionless payment experience, X Money is expected to drive user engagement, enhance monetization opportunities, and position X as a key player in the digital payments landscape.
Around 10 years ago, Meta then Facebook launched their Libra project which was basically embedding crypto enabled payments (stablecoins) onto their global platforms to enable seamless money movement. David Marcus who headed the project wrote a long X Post detailing how politics and bureaucratic subterfuge detailed the process. X now is led by Trump’s closest ally Elon Musk and I think such moves will proceed much faster and smoother than before. With global payments sorted, X has a shot at being a global WeChat enabling all sorts of digital commerce. Musk is building something special.
🇪🇺 Standard Chartered Launches Crypto Services in Europe
Standard Chartered has introduced cryptocurrency custody and trading services in Europe, marking a significant step in its digital asset strategy. Through its digital banking unit, Zodia Custody, the bank will offer institutional clients secure storage and seamless trading of cryptocurrencies such as Bitcoin and Ethereum. This initiative addresses the growing demand for regulated crypto services among European investors and positions Standard Chartered as a key player in the institutional crypto market. The move reflects the bank’s commitment to embracing innovation while ensuring compliance with evolving regulatory frameworks in the digital asset space.
According to a recent Chainanalysis Crypto Report, over 70% of crypto transactions in North America between July 2023 and July 2024 were institutional in nature. In Europe, institutional activity stood at around 60% with a global average of around 60%. Institutional crypto demand is growing from key factors such as broader stablecoin adoption, the increasing role of crypto in investment portfolios and of course the growth in the value of Bitcoin and other cryptocurrencies. To this end, I expect this momentum to continue. In Africa, increasing Virtual Asset Service Provider licenses across the continent should ignite local banks to start offering crypto services.
🌍 Visa Launches Fourth Africa Fintech Accelerator to Empower Startups
Visa has launched its fourth Africa Fintech Accelerator, aiming to support and scale innovative startups across the continent. The program focuses on fostering financial inclusion by providing early-stage companies with mentorship, funding, and access to Visa’s vast network of resources. Startups selected for the accelerator will gain the tools needed to drive innovation in digital payments, embedded finance, and other key fintech areas. This initiative underscores Visa’s commitment to empowering Africa’s fintech ecosystem and addressing local financial challenges. By nurturing talent and innovation, Visa seeks to play a pivotal role in shaping the future of digital finance in Africa.
Nothing much to say on this, it’s more of a useful FYI for any readers who may want to apply. The deadline is March this year.
🌍 Redefining Success: McKinsey’s Playbook for African Fintech Leaders
The McKinsey report, Redefining Success: A New Playbook for African Fintech Leaders, outlines the evolving African fintech landscape, highlighting significant growth opportunities despite economic challenges like rising living costs and slowing GDP growth. With financial services revenue growing at 8% annually from 2018 to 2023, projections suggest this could rise to nearly 10% annually by 2028, driven by increasing digital adoption, mobile money penetration, and favorable demographics. Fintech revenues could climb from $10 billion in 2023 to $47 billion by 2028 if penetration reaches levels similar to Kenya. However, fintechs face declining equity funding, leading to a funding crunch and reliance on debt financing, which grew by 182% from 2022 to 2023. These dynamics, coupled with macroeconomic pressures, have prompted shifts in market strategy, including downsizing, mergers, and heightened competition for talent.
To navigate this landscape, the report identifies six key dynamics shaping African fintech: the rise of new partnerships, market consolidation, regulatory evolution, talent competition, increasing cybersecurity concerns, and technological advancements such as generative AI. McKinsey suggests that fintech leaders focus on sustainable growth, operational efficiency, clear value propositions, and robust governance to thrive in this competitive environment. The report emphasizes that these strategies will help fintechs achieve long-term profitability while addressing the sector's challenges, such as customer trust, efficiency, and the need for innovative solutions to drive further market penetration.
🇦🇪 Mashreq Bank Completes $385 Million Stake Sale in NeoPay
Mashreq Bank has finalized the sale of a $385 million stake in its payment processing subsidiary, NeoPay, to a group of investors. The transaction is part of Mashreq's broader strategy to unlock value from its digital businesses and focus on core banking operations. NeoPay, a leading player in the Middle East's payment processing market, is set to benefit from the new investment, which will drive its growth and technological innovation. This move reflects the rising demand for digital payment solutions in the region and positions NeoPay to capitalize on emerging opportunities in the evolving financial ecosystem.
What’s more interesting is the fact that Mashreq has successfully spun off an internal payments subsidiary. A number of banks have very interesting Fintech solutions within their portfolio. At an aggregate level, when these subsidiaries sit under the bank as fully owned subsidiaries, their value is not fully reflected in the public markets. A near term strategy by some of Africa’s largest banks could involve spinning off their Fintech propositions and enabling their shareholders to benefit from the value uplift.