January 27, 2016
One of the most interesting emerging regions in the world just got even more exciting to explore as Rand Merchant Insurance Holdings (RMI) and Rand Merchant Bank Holdings (RMBH), which are strategic active managers of a R759 billion financial services portfolio power AlphaCode - a collaborative club for entrepreneurs in next generation financial services based in Sandton, South Africa. Even though the hub has just launched, it has already signed up 50 diverse, rapidly-growing financial services entrepreneurs.
Fully funded by the RMI, AlphaCode doesn’t charge entrepreneurs for membership. However, there are 4 membership models for startups of various sizes and stages of development. The memberships range from green entry level up to diamond. Green membership is open to everyone and approval is immediate. Gold, platinum and diamond memberships are subject to AlphaCode team approval and have to meet certain revenue and other requirements.
As stated in the official press release, the pioneering hub provides a platform for members to engage and work alongside experienced entrepreneurs, technology investors and industry experts, resulting in accelerated growth and access to market. It offers office space and a clubhouse for entrepreneurs, an active online community and regular networking opportunities. The AlphaCode concept is modelled on Level39, London’s Canary Wharf FinTech development hub, which is one of the world’s leading FinTech hubs.
Commenting on the creation of AlphaCode, RMI Senior Investment Executive, Dominique Collett said: RMIH’s investment in this development gives a clear indication of the future direction of financial services. The FinTech business models of the future are agile, disruptive ventures, often started by emerging entrepreneurs. With this in mind, AlphaCode provides a vehicle to identify strategic key investments in the financial services industry and be a catalyst for the development of FinTech in Africa.
Head of Ecosystem Development and Management at AlphaCode, Chipo Mushwana says, "African FinTech businesses have provided some of the most exciting developments in global financial services in recent history, and we will help to grow promising, impactful businesses."
As exciting as AlphaCode looks, it is certainly not the first time African FinTech is making waves internationally. The LTP team has been actively following the news on African FinTech and there were certainly other impressive moves made by global companies in the region.
For example, yesterday, US insurer, Prudential Financial, Inc. and LeapFrog Investments announced the launch of a $350 million investment partnership to access high-growth markets in Africa. The partnership, to be managed by LeapFrog, will invest in life insurance companies in African countries, including Ghana, Kenya and Nigeria, over three-to-five years. Prudential is an investor in LeapFrog’s most recent private equity fund, and also a member of the LeapFrog Insurance Innovation Circle, a knowledge-sharing and innovation initiative that convenes many of the world’s leading insurers and reinsurers.
Another example is MFS Africa, which in November last year announced the signing of a group framework agreement with Vodafone, expanding the partnership between the multinational mobile operator and the pan-African FinTech firm globally.
Impressively, remittance via mobile has picked up a rapid pace in Africa. An interesting example here is that Kenyans have been using mobile money for over eight years already. M-Pesa is Kenya’s dominant mobile-money provider. Such mobile money services allow people to make P2P payments by simply texting. Mobile-money accounts now outnumber bank accounts in 9 countries – Cameroon, the Democratic Republic of Congo, Gabon, Kenya, Madagascar, Tanzania, Uganda, Zambia and Zimbabwe. Moreover, one of the African countries may become the hottest mobile money market in the world by 2020.
The list of examples proving the rapid growth of FinTech and the well-deserved attention to the African region can be endless. Here’s another example from a week ago, when WorldRemit, the global money transfer app, introduced instant transfers to Nigeria. In addition to its same-day bank transfer service, WorldRemit now allows people to send money to more than 140 cash pickup locations in Nigeria, instantly. People in more than 50 countries can use the app to send to Nigeria. Recipients can collect money instantly from 140 branches of Skye Bank. Impressively, Nigerians living abroad sent home $20.8 billion in 2015, by far the largest volume of remittances to any country in Africa and the 6th largest in the world.
Due to the region's cultural specifics, some other wonderful initiatives have developed in Africa. New digital currency, Stellar, aims for financial inclusion for girls in South Africa. Current supporters of Stellar include Stripe and Praekelt Foundation in South Africa and it could expand to Indonesia soon. The initiative is targeted towards girls in South Africa to educate them on financial decisions as part of their existing social networking experience, with rewards in the form of airtime minutes.
There are certainly even more examples of international companies looking to pave their way to the African market and in the nearest future the region may become one of the world’s hubs of innovation attracting the attention of bright entrepreneurs and high-potential startups looking to further evolve the focus from traditional hubs to challenging and exciting opportunities in Africa. Follow the LTP team to stay up to date when the African FinTech revolution happens!