**Five challenges you have to deal with when building a fintech in Africa (and solutions)**

[\\ Back to Kora Blog](https://www.korahq.com/blog) In Industry Insights # Five challenges you have to deal with when building a fintech in Africa (and solutions) October 20, 2024 October 21, 2024   Moyo Oluwatuyi Brand Storyteller Share Article [](https://www.facebook.com/sharer.php?u=https://www.korahq.com/post/challenges-with-building-a-fintech/)[](https://www.linkedin.com/shareArticle?url=https://www.korahq.com/post/challenges-with-building-a-fintech&title=Five%20challenges%20you%20have%20to%20deal%20with%20when%20building%20a%20fintech%20in%20Africa%20(and%20solutions))[](https://twitter.com/share?text=Five%20challenges%20you%20have%20to%20deal%20with%20when%20building%20a%20fintech%20in%20Africa%20(and%20solutions)&url=https://www.korahq.com/post/challenges-with-building-a-fintech/) # Table of contents - [Opportunities in fintech in Africa](https://www.korahq.com/blog/challenges-with-building-a-fintech#toc-opportunities-in-fintech-in-africa) - [Challenges to building a fintech in Africa and how to navigate them](https://www.korahq.com/blog/challenges-with-building-a-fintech#toc-challenges-to-building-a-fintech-in-africa-and-how-to-navigate-them) - [Conclusion](https://www.korahq.com/blog/challenges-with-building-a-fintech#toc-conclusion) # Editor's note: ‍ This blog post is a part of an ebook we wrote on how to build a fintech in Africa. You'll find answers to most of your questions here. But if you want to read the full ebook with all the insights on how to build and launch a fintech product in Africa, download the ebook [here](https://www.korahq.com/build-a-fintech-in-africa). ‍ ‍ ‍ If you walked up to any African fintech founder and asked them, "What are the things you wish you knew before you started building your product?" you’d hear stories for days. ‍ But it all boils down to one truth: building a fintech in Africa is not for the faint of heart. It's like playing whack-a-mole. As you solve one problem, another one pops up. ‍ This guide is a quick and dirty guide on how to build and launch a fintech company in Africa. ‍ It’ll help you answer key questions like: what types of licences do you need?  What should your engineering stack look like? What regulations should you be paying attention to? How do you minimise fraud? How do you acquire your first 100 users? ‍ Whether you're a founder or an operator in the fintech industry, this blog post is for you. ‍ ## Opportunities in fintech in Africa People say the fintech space in Africa is oversaturated. But we don’t think so. ‍ [350 million people](https://www.africanenda.org/en/blog/2023/what-does-it-feel-like-to-be-unbanked) still struggle to access simple financial solutions across Africa. While financial inclusion is somewhat of a buzzword in fintech, it is still a big concern in Africa. As long as the financial inclusion gap exists, there’ll always be an opportunity to build a fintech product. ‍ Cash is still the preferred payment method for [90% of transactions in Africa.](https://www.mckinsey.com/industries/financial-services/our-insights/fintech-in-africa-the-end-of-the-beginning) This is a substantial gap that payment companies can fill because cash transactions are inefficient, inconvenient, and generally not secure for businesses. ‍ Moreso, VCs love investing in fintechs. In 2022, African fintechs raised over [$1.4 billion. While that number slightly dipped in 2023](https://old.disruptafrica.com/wp-content/uploads/2023/02/The-African-Tech-Startups-Funding-Report-2022.pdf), there are indications that more funding will flood the fintech space in 2024. ‍ For example, Norrsken22, a pan-African venture capital firm, wants to invest in African growth-stage fintechs in 2024 [after closing a $205 million round](https://www.benjamindada.com/norrsken22-african-fund-growth-fund/). Other indicators include [Mastercard’s $200 million stake acquisition](https://techpoint.africa/2024/02/06/mastercard-acquires-minority-stake-momo/) in MTN’s mobile money product. ‍ With all these signals, it makes sense that significant growth is expected in the fintech category. Boston Consulting Group projects the African fintech market will reach [$65bn in revenue by 2030](https://web-assets.bcg.com/66/7e/a36d7eab41e2b4b65c3e687a17f5/bcg-qed-global-fintech-report-2023-reimagining-the-future-of-finance-may-2023.pdf). This is a tremendous growth opportunity, making now the best time to build a fintech product in Africa. ‍ The market is there, and the funding is there. ‍ ### **Fintech opportunities in Africa** According to our experts, Adetola Onayemi, Bukola Gentry and Oluwasegun Adeleye, these are some of the fintech segments you can build in: ‍ - B2B Payments: Products that help businesses [embed finance into their product](https://www.korahq.com/blog/introduction-to-embedded-finance-and-banking-as-a-service) and accept payments from other businesses and their customers. To understand how big of a problem payment is, check out this post by [Caleb Maru](https://techsafari.beehiiv.com/p/africas-25-billion-payment-problem). - Wealth creation and wealth building: Solutions for savings, investments, financial planning, micro-investing and personalised finance tools for children. - Infrastructure: These are products other startups and businesses can use to build their own solutions. They could be for security, API integrations, data management, [cross-border payments](https://www.korahq.com/blog/best-cross-border-payment-gateway-in-africa), etc. - Escrow services: Solutions that help buyers and sellers reduce the risk of transacting by smooth exchange of goods and services. - Financial inclusion: Build simple financial solutions to help bank the unbanked population across Africa. ‍ ## Challenges to building a fintech in Africa and how to navigate them ### 1\. Regulatory requirements Regulatory bodies can impose requirements that are difficult for early-stage startups to meet. Capital requirements and licensing fees are examples of such requirements. ‍ For instance, [Safaricom paid as much as $150 million](https://thepaypers.com/mobile-payments/safaricom-to-launch-mobile-money-service-in-ethiopia--1264082) to get a mobile money licence in Ethiopia. This can be a huge limitation for players starting with limited resources. ‍ > **_To get licences very quickly in some countries, regulators sometimes require you to register your fintech in those markets. And sometimes, to satisfy regulatory requirements, there are cases where 50% of your ownership must be residents of the country. -Adetola Onayemi, CEO, Norebase_** ‍ Regulations sometimes require major changes to your company’s management structure. ‍ For example, [foreign founders establishing a digital lending company](https://koriatlaw.com/how-to-set-up-a-digital-lending-company-as-non-deposit-taking-financial-institution-in-rwanda/) in Rwanda must appoint a resident director. This director needs to be a Rwandan citizen or a foreigner with a valid resident or work permit. ‍ If you plan to build or expand to other African countries, factor in such requirements. ‍ ### 2\. Overlapping regulatory bodies ‍ > **_So there are times when I've had to deal with some fintechs, and they'll say things like, I don't know who my regulator is. I don't know if it's the Central Bank, the Secu