Impact investment firm Goodwell has established a fund to assist tech start-ups in sub-Saharan Africa. The fund is targeted at the demographic groups currently excluded from the formal financial services.
“We are a fund that invests in technology start-ups and financial service businesses that serve the needs of the underserved, an area called financial inclusion,” Wim van der Beek from Goodwell Investments told CNBC Africa.
“We invest in businesses that cater to the needs of the majority of the lower income group that are not reached by the banks and other financial services providers,” he added.
He also said this was a huge growth market across Africa as it is clear that banks and other service providers will not reach this demographic group anytime soon.
“Start-ups are coming up with innovative ways to reach those people through mobile wallets and other solutions that enable them to use bankable services,” said Van der Beek.
He also added that banks were not reaching lower income segments and start-ups properly; people who need loans and savings accounts find it difficult to access financial services which drive them to informal alternatives such as stokvels.
The fund currently relies more on foreign direct investment from Europe and the developed world.
“Currently we are getting most of the money we use from Europe but in the near future we would want to mobilise resources from within Africa.”
Vahid Monadjem from Nomanini which is one of the companies that has benefited from the Fintech fund said payments and money are the connective tissue of commerce.
“In order for commerce to be effective there is need for more efficient mechanisms of payment. Our focus is making small payments more affordable,” he said.
“At the moment we have seen great advances in financial inclusion, mobile money has made payments more available but the question is on affordability,” added Monadjem.