Emerging Opportunities: Agro-Financing, Savings, Insurtech, Credit Scoring & Lending

Emerging Opportunities: Agro-Financing, Savings, Insurtech, Credit Scoring & Lending


Farmers make up 70% of Africa’s workforce. However, many smallholder farmers are operating at a fraction of their potential capacity. Africa contains 60% of the world’s non-cultivated arable land, yet African governments spend $35 billion annually on food imports. A major hurdle for African farmers is a lack of access to agriculture finance: financial services that allow farmers to improve their
efficiency, adopt new technologies and connect with new markets. In recent years, governments and multinational organizations have invested in initiatives and incubators to boost agribusiness, and agriculture finance is a significant part of that trend.

What it means for startups: Agriculture fintech in Africa is a promising sector. New payments, insurance and investment startups are helping farmers access credit, track inputs and reach new markets. Supply
platform Twiga is often highlighted as a success in the region, having raised $13.3 million from 2017-18, but other startups, like Nigeria’s Farmcrowdy, have also seen recent success. Zenvus is playing a key role in this sector also.

Major Players
The agriculture value chain in Africa is driven by a number of high profile players, from farming to finished products. Upstream companies include Amiran in Kenya, which provides greenhouse technology and drip irrigation systems to farmers throughout Africa, and EcoFarmer in Zimbabwe, which insures inputs and crops against drought or excessive rainfall. Further downstream in the value chain are firms that produce and distribute finished goods, like Pioneer Foods in South Africa and SIFCA Group in Côte d’Ivoire. Financing and market access are critical components of the value chain that are not being fully addressed, and present an opportunity for startups.

Alternative Credit Scoring and Lending

Many Africans have limited access to formal lending options. Traditional lenders and banks hesitate to lend to those without a credit history or identity verification. As a result, the 66% of the population in Sub-Saharan Africa without a bank account struggle to access market-rate loans.

What it means for startups: An opportunity to innovate around credit assessment, lending, and identity verification. The ID verification market segment is fairly nascent in Sub-Saharan Africa, but startups in this space are beginning to surface. For example, Nigeria’s YouVerify provides a one-stop service for address and identity verification.

The lending market, on the other hand, has boomed in recent years. Roughly 20% of all fintech startups on the continent focus on lending, and they have received a proportionate amount of funding. New entrants include lenders, credit scorers and underwriters for loans (B2C, B2B/peer-to-peer, and debt origination). This year there have already been two major deals in the subsector: Branch International landed a $70 M Series B round in March 2018, and Tala closed a $65 million Series C round in April 2018.

Major Players
The lending industry in Sub-Saharan Africa has historically been dominated by savings and credit cooperative organizations (SACCOs), commercial banks and microfinance organizations. Startups are starting to change the dynamics between the major players:
• Savings and Credit Institutions: Harambee SACCO, Mwalimu SACCO, and Stima SACCO
• Commercial banks: Standard Bank, Equity Bank, Ecobank
• Microfinance: Kenya Women’s Microfinance (Kenya), Letshego (Botswana), Amhara Credit and Savings
Institution (Ethiopia), Malawi Rural Finance Company (Malawi)


Insurance in Africa has come a long way since Old Mutual was founded in Cape Town in 1845, but it is still far from widespread: Africa is home to 16% of the world’s population but less than two percent of insured catastrophe losses.27 The informal sectors fare the worst: private insurance companies generate income on policy premiums and asset management, which disincentivizes them from covering lower-income consumers, and government-run social security programs have largely failed to achieve scale.
However, new technology has reduced the cost of services and accelerated the time to market for new products, unlocking a market once thought to be unviable.

What it means for startups: There are four main components of insurance: pricing and underwriting, product design, distribution and administration, and claims management. Companies are innovating
around each of these areas, by building customized, usage-based solutions that offer real-time coverage. Insurtech companies offer front-end policy services, back-end claim services, improved customer experience, new sources of industry data and unique tools to analyze available data. The biggest opportunities are in Africa’s top five insurance markets – South Africa, Morocco, Egypt, Kenya
and Nigeria – which account for 85% of premiums, combined. As Kenneth Kayser, Vice President for Open Innovation at Absa Group Limited, says, “There is an enormous opportunity for insurtech
startups in Africa. As people gain disposable income, their appetite grows for insurance to protect their property and other assets.

Major Players
The insurance market in Sub-Saharan Africa is largely dominated by several traditional private and public insurance companies. Some provide region-specific coverage, like Jubilee Insurance Company, Sanlam and African Alliance Insurance. Others, like the British American Insurance Company (Britam), target clients across the continent.

Building Savings & Wealth

Seniors across the continent typically depend on their children or extended family to care for them. This is changing as people earn more and live longer. Between 2000 and 2016, the life expectancy in Africa rose by 10 years to 61.33 There is a growing need for infrastructure to help the next generation of Africans save and invest, build wealth, and plan for retirement.

What it means for startups: There is strong demand for solutions around savings, life insurance and pensions, as well as financial literacy, outside of what major banks can provide.

Major Players
The rise of the middle class in Sub-Saharan Africa has created demand for solutions around savings, life insurance and pensions. Savings and wealth management organizations such as Investment One in Nigeria and Coronation Fund Managers in South Africa provide capital market services as well as asset management solutions to clients across the continent. There are also several large life insurance companies, including South Africa’s Old Mutual and Sanlam.

Credit: Beyond Payments by Village Capital

Register for Tekedia Mini-MBA (4 months, online, costs $140 or N50,000 naira ). Class in session, registration ongoing.

Share this post

Post Comment