Introduction

Aligned with its vision to catalyze SDG-impactful investments, UNCDF in Tanzania is partnering with PesaTech, a fintech accelerator programme. The accelerator builds the capacity of fintechs to raise investment and acts as a marketplace between startups, strategic partners, and investors.

Tanzania’s fintech ecosystem is rapidly expanding, offering a unique opportunity to drive financial inclusion, particularly for women. Despite progress, gender gaps in financial access persist. In this case study, portraying two women-led fintechs, Laina Finance and Mipango Finance, you will learn how fintechs design products for women by women and the challenges and solutions they face when seeking venture capital in Tanzania and the region.

Part I: Laina Finance’s Role in Women’s Financial Inclusion

Laina Finance, a Tanzanian fintech startup, focuses on offering flexible payment plans and instant credit to women and youth who lack traditional collateral. With 35 percent of their customers being women, Laina is committed to expanding this number by developing gender-specific financial solutions. They employ customer-centric research, tailoring products to meet the specific needs of women from different economic and social backgrounds.

Through strategic partnerships and tailored services, Laina works to digitize business operations for female small business owners, making them more creditworthy and helping to close the financial inclusion gap. Laina’s gender-intentional approach has made a significant impact, demonstrating the power of fintech in addressing women’s financial needs.

Customer-Centric and Gender-Intentional Product Design

Laina’s research-driven approach recognizes that women are not a homogeneous group. Their innovative credit and financing solutions address women’s diverse economic activities, from agriculture to domestic work. Moreover, they incorporate Sharia-compliant financial products to serve a broader range of women. This focus on customer centricity has led to more loyal female customers and greater financial inclusion.

Recognizing and Addressing Bias in Fintech Algorithms

One key issue in fintech is unconscious bias in credit approval algorithms, which can negatively impact women. Laina Finance combats this by refining their algorithms to be gender-neutral, leading to higher approval rates for women and better financial outcomes for the company. Research shows that removing gender bias can increase profitability by 20 percent, proving that gender-smart fintech is not just socially responsible but also economically beneficial.

Part II: Lilian Makoi’s Story – A Female Founder in Fintech

Lilian Makoi, founder of Mipango Finance, represents a growing number of women in Tanzania who are breaking barriers in the fintech space. Mipango Finance is dedicated to improving financial literacy and digital inclusion for women through its personal finance management app, the Mipango App.

Overcoming the Gender Funding Gap in Fintech

Female founders like Makoi face significant challenges in securing venture capital. Globally, women-founded fintechs account for only one percent of total investment. In Tanzania, 92.3 percent of startup investments are funneled to male founders. Makoi’s strategy involves leveraging grant funding and partnerships to grow her startup while aiming to overcome these barriers and secure venture capital in the future.

Addressing Social Norms and Balancing Family and Business

Makoi’s journey also highlights how traditional gender roles and social norms make it harder for women to succeed in fintech. Female entrepreneurs often face unique challenges in balancing family responsibilities with their business, leading to fewer networking opportunities and lower access to professional support systems. Despite these hurdles, Makoi has built a successful company that caters to women’s financial needs, demonstrating that women can be key agents of change in fintech.

Recommendations for Building a Gender-Inclusive Fintech Sector

• The expansion of gender-intentional fintech accelerators: Programs like the PesaTech Accelerator are crucial for promoting female-led fintech startups. They should be designed with women in mind, offering flexible schedules, networking opportunities, and gender-smart product design training.
• Bridging the financing gap: More efforts are needed from both government and private sectors to support female entrepreneurs with capital and resources. Initiatives like UNCDF’s Angel Investor Academy are excellent steps toward addressing this gap.
• Government-Led Initiatives: Encouraging more government-led programs that provide specific opportunities for women in ICT and fintech sectors can empower more women to participate in the digital economy.

Case Studies in this series

• Establishing effective partnerships in the innovation ecosystem
• Navigating the innovation ecosystem: choosing an accelerator

ABOUT D4T-TIDE

The European Union Digital4Tanzania (D4T) Programme is contributing to the impact of digital transformation on Tanzania’s inclusive economic growth and citizen wellbeing. With a budget of EUR 35M, its specific objectives include:

1. Digital government: improving the digital economy and the use of e-government and e-services
2. Inclusive connectivity: increasing accessible and equitable connectivity services in rural and peri-urban areas, in particular for social services.
3. Digital trade support: developing the fintech sector and innovation ecosystems in the country and the region.

The programme is jointly implemented by The Ministry of Information, Communication and Information Technology (MICIT), EU Member States and the UN Capital Development Fund (UNCDF).

Under the D4T programme, UNCDF is currently implementing the Tanzania Inclusive Digital Economy (D4T-TIDE) project. Launched in September 2022, D4T-TIDE is a four year project that aims to increase access to and usage of digital payments and digital financial services in Tanzania, while enabling the innovation ecosystem to better support entrepreneurs and further drive digital innovation.

ABOUT PESATECH ACCELERATOR

Pesatech Accelerator is a fintech accelerator program designed to support post-MVP and growth-stage fintech startups in Tanzania. The accelerator aims to build fintech’s capacity to raise investment through an Investor-Readiness Program (IRP) and act as a marketplace between startups, strategic partners, and investors.

PesaTech’s first cohort was implemented by Sahara Ventures in partnership with ENEA Advisors, Hindsight Ventures, and iPF Softwares with support from the European Union and SIDA.