American multi-national financier, Mastercard, has selected financial technology (fintech) startup, Lipa Later, as the second African start-up this year and one of eight later-stage global start-ups to participate in Mastercard’s Start Path programme.
Lipa Later is an award-winning start-up engagement platform that offers risk free payment options for consumers.
The fintech also offers curated access to Mastercard’s global ecosystem of partners and channels, and a gateway to operational support, technology expertise and opportunity to secure strategic investment.
Started in 2014, Start Path programme has been working with later-stage startups with a key focus on those in fintech and commerce.
According to the company, the program offers operational support and technological expertise to address fintech needs and collaborate on solutions aimed at solving major challenges in payments, technology and financial inclusion today.
The Start Path programme has been able to raise $ 1.4 billion worth of an investment since its inception.
“At Mastercard, we actively search for start-ups like Lipa Later that are committed to long-term value creation. These strategic partnerships, particularly with regional fintechs, are important to foster local innovation and create maximum market impact for Mastercard customers,” says Mr Adam Jones, the Area Business Head Mastercard East Africa.
Launched in 2016, Lipa Later provides a payment option that allows consumers unlimited access to products and services as they pay for them over time. It is designed to meet customer needs through the use of technology and innovation and its wide partnership network in East Africa.
The Chief Executive Officer (CEO) and co-founder of Lipa Later, Mr Eric Muli added that the partnership with Mastercard will enable them broaden their reach in the continent.
“We are excited about the future and the work that we are doing on the continent and we believe that the innovation that happens at Mastercard will help us get closer to our mission,” he says.
According to a report published in 2019 by EY on fintechs, global adoption of fintech services, such as mobile wallets, edutech startups, or insurtechs, has moved steadily upward from 16% in 2015, to 33% in 2017, to 64% in 2019.
In Africa, a combination of favourable demographics, an under-represented banking sector and minimal financial infrastructure are promising for growth with consumer demand growing rapidly.
Other than corporates such as Mastercard, others such as Naspers, Paypal and Credit Saison have invested in fintech startups, states a report by Partech Ventures.
With the right amount of resources and support, the fintech sector will not only yield substantial returns, but also provide significant benefits to the population by continuing to be a key driver of financial inclusion.
Lipa Later joins other fintechs that have been able to raise attraction in this sector.
Earlier this month, the British government announced the Kshs 1.3 billion Catalyst Fund for fintechs in the country working in this sector ahead of the UK-Africa Investment Summit, though analysts have sought to suggest that this could be a strategy to gain a foothold of the Kenya’s development, which is losing out to other global investors such as those in Asia.
A research done this year by Ernst & Young reports finds that the United Kingdom has invested $ 17. 6 billion in the African continent, though it is superceded by China and France, with investments worth $72.23 billion and $34.17 billion, respectively.
“ Ahead of the UK-Africa Investment Summit to be held next, investors from the United Kingdom will be able to work with the British government’s Department of International Development to work with fintechs in Nairobi,” says Mr Peter Estlin, the Lord Mayor of London.
According to the World Investment Report that was published in 2018, China has been able to grow its influence in the continent owing to its investment in Africa is through infrastructural projects, such as railways and roads. An example includes the Entebbe-Kampala express railway in Uganda.
“ China has been able to grow its footprint in the continent by giving loans to countries that require commodities, energy, and transport support. For instance, the 15 year $ 1.3 billion loan offered to Ethiopia to finance its railway line or the 16 year $ 500 million Mem’vele hydropower project in Cameroon,” further adds the 2019 Global China report.
It is such funding that has enabled China to gain a foothold in other areas such as politics and diplomacy, other than purely gaining a purely financial muscle. But, in the same light, China has been accused of “trapping its lendees in debt” because they are unable to repay their finances on time, explains the report.
Ten countries, comprising of Egypt, Ethiopia, Kenya, Nigeria, South Africa, Zambia, Cameroon and Uganda had a debt of 36.5 percent of the nations’ income.
A country like Uganda owes China $ 10 billion in terms of funding, media reports state.
In 2018, the Chinese government pledged $ 14 billion worth of funding to South Africa, its largest trading partner in the Africa for the last decade. China exports minerals to South Africa, while the latter imports textiles to China. But analysts also claim that China is also leveraging on its economic might for a political hold in South Africa.
In 2018, the Chinese pledged $ 14 billion to South Africa, which exports minerals to China, while the latter imports textiles from South Africa, states official reports.
Another criticism that has been levelled at those countries seeking for Chinese financing is that they have overlooked local companies in preference for the Asian tiger.
Chinese projects have also been accused of being of a low quality, quick to dissipate to break down though at most times being rather convenient.
In Europe, another African partner that has been making strides into the continent is Russia.
“ Unlike China, Russia is more interested in natural resources such as oil, minerals and gas in North and Western Africa. It has also been able to expand its area into other energy sectors such as nuclear plants, in countries such as Egypt and Algeria,” says Iol.
At the first ever Russia-Africa summit being held in Sochi between October 23rd to 24th and hosted by Vladimir Putin, the European country is also keen to invest in the Angolan telecommunication sector, by focusing on such areas as research, security systems as well as networks.