In January, five fintechs enrolled in the FinTech4U Accelerator Programme to improve their service or product delivered through digital financial services (DFS).

By partnering together, UN Capital Development Fund and BongoHive provided extensive technical assistance in various areas and worked with regulators to assist the fintechs better manage regulatory requirements. The three-month accelerator programme classes ended in April with the five fintechs all learning and growing a great deal from the programme.

The fintech founders in the first cohort dug into the depth of getting to know their customers better and assessing if what they were proposing would deliver value. The structure of the programme helped do this with components such as:
i) critiquing the fintechs’ business models and product offerings to ensure they had the most appropriate value proposition;
ii) data analysis to assess customer data as the programme advanced;
iii) customer journey mapping to ensure the product was best suited to the customers’ needs and circumstances;
iv) tax and legal advisory to ensure the start-ups were compliant in these areas and better position them for success.

The fintechs realised that they had not undertaken all of these processes as they began their businesses; the opportunity to do so with high-calibre experts at their disposal was invaluable and enabled them to adjust their value proposition or seek additional guidance to address any areas where they did not perform or score well.

“The Accelerator Programme has allowed for a lot of self-introspection and has given our team the courage to question our solution design and problem fit. Through the various lessons and one-on-ones, we have been able to focus on the aspects of our core business that were not fine-tuned,” said Esther Kanduza of Digital PayGo, an interoperable digital payments platform.

In addition, the weekly sessions enabled the fintechs to closely track their performance and course-correct as needed if the data revealed shortcomings in meeting targets.

A key element of FinTech4U was the exposure fintechs gained, not just to technical knowledge, but to potential strategic partners or investors who can open doors and opportunities for the fintechs. “We have been able to leverage this linkage to pursue partnerships that will help us improve our value proposition and offering to our target customer base,” said a representative of EduPay, a credit provider offering micro-loans to parents of school-going children.

In an effort to carve out a niche market for themselves against the larger, more traditional financial service providers (FSPs), fintechs are highly specialised and sector-specific in their product and service offerings. However, they are often regulated in the same manner as traditional FSPs. During FinTech4U, the start-ups had the opportunity to address their regulatory needs. As a financial service provider using technology, these businesses fall under various regulators and have many policies that apply to their business. It is easy for young companies, often without in-house legal personnel, to omit various government directives. FinTech4U provided an opportunity to better understand the regulation governing their business. The Accelerator Programme provided an opportunity for regulators and fintechs to begin finding ways of overcoming restrictive regulation to allow for a more agile industry in Zambia that serves the people and allows for growth in this sector. The Accelerator Programme saw the start of this work, and though results will not be visible for many months to come, both UNCDF and BongoHive aim to keep collaborating with regulators to support and facilitate these adaptations.

The Accelerator Programme, though run over three months, provides support to the fintechs for an additional three months. “It takes a few months after the Accelerator Programme for start-ups to become a bit stronger in their business models and operations before their business really starts taking root and gaining traction in the industry. This is what we expect to see with our five fintechs,” said Simunza Muyangana, BongoHive Founder and Director of Entrepreneurship.

“As start-ups, the fintechs face a number of challenges, many of which we have tried to help solve in FinTech4U. The diversity in the challenges the fintechs are addressing, even now with the COVID-19 pandemic blowing against their sails, exposes how fragile our society is without financial security.”

-Simunza Muyangana, BongoHive Founder and Director of Entrepreneurship

During the last month of the Accelerator Programme, Zambia recorded its first cases of coronavirus and the country began to practice preventive measures to curb the spread of the virus. Reactions to the pandemic spread – businesses began to streamline or reduce their operations, Bank of Zambia strongly encouraged using digital methods to run transactions and schools closed three weeks earlier than expected. These measures impacted FinTech4U as all classes and meetings had to be conducted virtually. In addition, the start-ups were affected individually. While those running payment platforms, such as Digital PayGo and Mangwee mobile wallet, were afforded a new opportunity with the increase in digital transactions, others such as EduPay were adversely affected. With schools closed and parents not presently needing to meet school requirements, the start-up had to think of how to manoeuvre through the crisis in order to continue operating.

Another fintech, Bwino, who offers emergency loans for medical expenses to low-income earners used the opportunity to pivot into providing pharmaceutical-related services.

With the on-going pandemic and Zambia’s industries constantly adjusting to changes, it’s unclear how long it will be before the fintechs begin recording month-on-month success in their businesses. In the coming week, UNCDF and BongoHive will undertake debrief sessions with each fintech to fully capture their individual experiences and lessons, to inform the next version of the programme. With this cohort complete, and with many lessons and insights revealed, UNCDF and BongoHive will begin planning the next cohort of the FinTech4U Accelerator Programme. The second cohort, with another five fintechs, is planned to begin in July and a call for applications will be announced soon.