2020 was set to be a monumental year for the African FinTech sector. Almost all companies operating in the sector were expecting rapid growth fueled by increasing consumer adoption and advancements in regulatory controls.
Little did anyone think that by April, economies across the world would grind to a halt, tourism would all but disappear and consumers would be confined to their homes.
We took the opportunity of speaking to 18 leaders across Africa to get their views on business post-pandemic.
Simultaneously to the interviews, we ran a survey to our database of FinTech professionals not in leadership positions but working in the sector to gauge their thoughts, insights and future plans. The findings were insightful and we explore the alignment as well as dichotomies in this document.
Mainly, as a result of the instant demand for e-commerce, many FinTechs have seen tremendous growth during the period of March-June, and many CEOs are extremely confident that this will continue.
However, due to regulatory challenges in some markets, there is a fear that micro- lenders will be forced to comply which could have a negative impact on profit margins and the ability to seek additional capital.
Remittance/MTOs have also seen an increase in activity, with some reporting 25% increases in remittance traffic in 3 months. The popular corridors remain buoyant with the exception of some middle eastern countries.
The Hybrid Model
A hybrid team means that most team members are working from a fixed office location, however, have flexibility as to when they need to be actually in the office. Less than 50% of the employees will be working outside of the office, and even then, they might have to come in occasionally to work with the co-located team members.
As a result of the pandemic, this is becoming more popular with FinTechs. For more traditional businesses, such as banks, this can be a good way to get them started on the right remote track.
One significant fear shared by all CEOs is the effect this model, or a variation of, could negatively impact the culture of the business.
Another important factor to consider is that cities across the continent suffer from heavy traffic congestion, and so commuting to and from work for employees can be incredibly time-consuming.
New Product & Services
Whilst some FinTechs have had to temporarily shelve their growth plans, others are looking to capitalize on the opportunity. New products, international expansion and acquiring new talent is a consistent theme.
A threat or an opportunity?
There’s no question that the world has become smaller, but what does that mean for FinTechs in Africa, specifically regarding talent?
If a FinTech plans to implement some form of hybrid model, or even go fully remote, no longer are they constrained to hiring local talent, or for that fact, going through the headache of costly relocations.
The investment landscape
Nic Smalle, Managing Director of Apis Partners commented that Private Equity and Venture Capital firms were focusing on supporting existing portfolio companies through the 2nd quarter of 2020, rather than investing in new projects. Nic stated that those companies looking to raise >$10m see more limited options than in the past, however, those looking at $1m-$5m have a better chance, but companies should expect investors to push hard on valuations and pathway to profitability.
Download the full report to read the views of industry experts on the above topics – no forms to fill in.
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