Zambia fintech ecosystem open to international participation

The Zambia fintech ecosystem is seeing growth of existing fintech verticals and the emergence of new ones according to the UN Capital for Impact for Development report.

The sector of digital payments and lenders has seen the most growth over the past few years. The significant rise in the adoption of digital financial services in the past decade had added to growing the diversity of the financial sector.

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Currently, mobile wallets are considered the most accessible driver of financial inclusion in the country. This coincides with the marked increase in the access and usage of formal banking products and services.

The growth has been quite considerable with mobile money transactions going from 14% in 2015 to 50% in 2020, as opposed to banking transactions which went from 24.8% in 2015 and declined to 20.7%.

Fintech distribution by product and service has also spread widely with digital lending at 3%, payments at 23%, Enabling technology at 12%, Asset management at 9% and Insurance at 3%.

Where are Zambia’s fintech players getting Funding from?

The sources of funding for these fintech enterprises include bootstrapping (relying on savings and personal computing equipment funded by friends and family) with most of the enterprise runners still in formal employment and with about 2-5 employees.

The challenges that they face include limited resources and limited skills to run the business (both technological and financial knowledge), as well as the struggle to retain talent in the business.

Some start-ups started small but grew slowly such as Mangwee, which was acquired by ZeePay of Ghana. Furthermore, fintechs that offer B2B services, which don’t require physical presence such as Fluteware, integrate their systems with Zambian entities without having formal registration within the country.

Zambia Fintech heavily leans on digital for customer interactions (that’s an excellent thing)

Currently, the majority of fintech startups in Zambia use digital payment infrastructure for both customer acquisition and service delivery channels such as:

• Digital lenders leverage mobile money for collection and disbursement of loans.
• Micro investment products offered on the mobile money platform.
• Insurance products built into mobile money wallets.
• Payment gateways integrated with the open APIs of various mobile money providers, to offer specific payment uses for clients.

Most notably, local Zambian fintech startups in the digital mobile money sector show growth potential and room for healthy competition, and several opportunities remain to be explored within the industry.

In the past ten years, there have been new entrants as well as competitive prices and service offerings and increased investment. Some even offer digital investment and asset management solutions. The current local fintech market in Zambia is 60% local companies and 40% international entities. There is a big prospect for fintech entrepreneurs and the advantage is the ease of doing business in Zambia.