How to Create a Fintech Startup in Sub-Saharan Africa
May 16, 2024
Adam Wakefield

Are you interested in learning how to create a fintech startup in Sub-Saharan Africa? 

You’ve come to the right place. 

The fintech industry in Africa expects to generate $65 billion by 2030. Thanks to a youthful population and a growing middle class, the Sub-Saharan African region is teeming with untapped potential. Still, many people living in this region cannot use banking services. Conventional banking can’t reach remote areas, nor can it effectively resolve the needs of the financially marginalised. 

These challenges have inspired many African entrepreneurs to create fintech startups. These startups have made a dent in the financial industry using cutting-edge technologies. They have broken the shackles that limited financial inclusion, resulting in 33% of people in Sub-Saharan Africa using a mobile money account. 

However, creating a fintech startup can be challenging if you are just starting. This article will guide you through seven essential steps to help create a fintech startup in Sub-Saharan Africa.

Why is Sub-Saharan Africa a promising region for fintech startups? 

With a population of approximately 1 billion, Sub-Saharan Africa provides ample opportunity to access potential users seeking inclusive financial solutions. The success of fintech startups like Yoco in South Africa and Flutterwave in Nigeria has made it clear that there is a sizable demand for user-friendly and innovative financial services.


Government support for regulatory frameworks has increased to help protect consumers, creating a conducive environment for fintech startups. For example, South Africa established the Intergovernmental Fintech Working Group (IFWG) in 2016. This collaborative body includes many financial regulators from the country, including The Competition Commission, South African Revenue Service (SARS), South African Reserve Bank (SARB), National Credit Regulator (NCR), Financial Sector Conduct Authority (FSCA), and Financial Intelligence Centre (FIC).

IFWG developed an innovation hub that helps South African fintech firms simplify the regulatory landscape, offering a secure space for testing new ideas and driving innovation in financial services.The innovation hub also offers a Regulatory Guidance Unit, Regulatory Sandbox, and Innovation Accelerator. 

Similarly, the Central Bank of Nigeria established a regulatory sandbox to empower fintech startups to test their innovative solutions in a controlled environment. According to a 2022 McKinsey report, cash accounts for 90% of all African transactions.  If penetration levels continue to increase across the continent, African fintech startups could get 8x more revenue opportunities.  

A step-by-step guide on how to create a fintech startup in Sub-Saharan Africa 

Here are seven steps to launch your fintech startup and transform the financial landscape in Sub-Saharan Africa.

1. Identify an unbanked/underbanked audience in the region 

Traditional banks and financial institutions usually develop generic services for the broad market rather than creating customised products for specific target groups. As a result, many people don’t have access to the financial system. These include the following:

  • People from rural communities
  • Woman entrepreneurs 
  • Youth and students 

M-Pesa is a Kenyan fintech startup that has succeeded in serving the unbanked. They offer financial services to people without a bank account. The only requirement is a phone with a SIM card to make payments and send money. This simplicity removes the need for extensive paperwork, minimum balances, and other conventional bank account requirements that discourage many underbanked and unbanked Africans from opening a bank account. 

Follow M-Pesa’s lead and identify underbanked and unbanked audiences in your target market. These ignored segments will become your future consumers. Use the following strategies to study your audience: 

Data analysis

Collect demographic data and analyse categories including income, employment status, and education levels to determine underbanked and unbanked groups. You will also want to analyse geospatial data to map areas with limited bank access. With this, you will identify potential customers more likely to benefit from your fintech platform.  

Market research

Conduct in-person surveys, visit communities, and distribute questionnaires to gain deeper cultural insights into high respondent engagement. Face-to-face interviews also lead to open-ended discussions that offer qualitative insights into your audience’s financial needs and behaviours.

Local partnerships

Local partners help you establish connections within your target communities to gain access to hard-to-reach areas. They guide you in approaching different communities respectfully by equipping you with cultural understanding. 

Collaborate with NGOs and development organisations to work with underserved and marginalised communities.FINCA International, Women’s World Banking, and Grameen Foundation are 3 of the more popular organisations. 

2. Understand regulations in your target countries 

Fintech and banking are heavily regulated industries, with most Sub-Saharan African countries enforcing these regulations on fintech companies. Studying these regulations is essential for your venture to avoid roadblocks.

Understanding regulations involves reviewing licencing requirements, compliance obligations, consumer protection provisions, and data security standards. Examples of these regulations include: 

You must also work with legal experts from your target country to learn how to navigate regulatory compliance, identify potential pitfalls, and ensure your startup adheres to the corresponding laws and regulations.

3. Brainstorm for a sustainable idea and define a USP 

In Sub-Saharan Africa, you need innovative thinking, local market understanding, and user feedback to develop a sustainable fintech idea. For innovative thinking, try different approaches like mind mapping, reverse thinking, and design thinking. 

Look for areas that make it difficult to access traditional financial services. As a case in point, consider the high costs in Sub-Saharan African countries when it comes to sending and receiving remittances. The World Bank found that remitting money to Sub-Saharan Africa is the most expensive. This presents an opportunity for fintech startups to provide affordable and quick cross-border payment services in the region, helping families that depend heavily on remittances from their loved ones. 

Other areas to consider are:

  • Loans for small business owners that fail to meet stringent collateral requirements.Saving accounts for people who can’t maintain a minimum balance.Digital payments for informal economy workers (e.g., street vendors, labourers and artisans). 

If you plan to expand into multiple countries, assess the socioeconomic situation in each . Economic conditions, cultural norms, and technological infrastructure might differ from country to country. For example, the technological infrastructure varies across Sub-Saharan Africa, with South Africa and Nigeria boasting more advanced digital connectivity. Yet, it's essential to recognize that the infrastructure in the rest of the region may not be as advanced. If you plan to expand to these countries, you must tailor your services to cater to smartphone and feature phone users.

Selecting the range of services your fintech startup will offer is a strategic decision. You might focus on lending, insurtech, payments, investments, or a combination. 

Define a unique selling proposition (USP). Your USP sets your fintech startup apart from competitors and informs your audience on what unique value you offer. For a region like Sub-Saharan Africa, where financial inclusion is a big challenge, your USP should focus on affordability, accessibility, and convenience. 

For example, Tugende is a fintech startup in Uganda with the USP offering lease-to-own financial to boda boda drivers. With this, it meets the financial needs of an underserved demographic while at the same time, it’s unique in solving the lack of access to vehicle ownership for boda boda drivers. 

4. Assemble a team of experienced professionals

Building a successful fintech startup requires more than a great idea; it demands a dedicated group of skilled professionals who can execute your vision effectively. Once you have an idea, you can hire a qualified team. 

Define the roles and skill sets you will need. Some of the common roles include: 

Hire people who have business acumen. These professionals can offer strategic direction and business development suggestions for scaling your fintech startup. Local experience helps too. For example, a local product manager understands the challenges individuals within rural communities face when borrowing loans from microfinance systems. Their input can help to build a user-centric design that aligns with real-life experiences of borrowers, boosting adoption rates. 

5. Develop your application 

Your software development team will create your platform by working on the following: 

Requirement analysis 

It's the process of gathering, documenting, and refining the project's functional and non-functional requirements. These requirements enter into a document known as a Software Requirements Specification (SRS). SRS is the blueprint for your design, development, and testing phases. 

Tech stack

Tech stack refers to programming languages (e.g., Python), frameworks (e.g., Django,) libraries, databases, and tools chosen to develop a software application. Finalising a tech stack is an important decision that impacts the app's performance, scalability, and development efficiency. 

Popular tech stacks for fintech apps include using React for front-end, Java with Spring for back-end, PostgreSQL for database, and AWS for cloud. 

Architecture design

Architecture design is the blueprint that defines your fintech application's high-level structure. It includes planning how different components interact, data flow, and the overall organisation to ensure scalability, maintainability, and alignment with requirements.

Data security and compliance

Security is a critical part of fintech applications. A robust cybersecurity strategy consists of: 

  • Encryption: Encryption prevents unauthorised access even if hackers intercept data.
  • Implement a strong encryption mechanism (e.g., AES) for data in transit and data at rest. Access controls: Role-based access controls (RBAC) ensure users can access resources (e.g., information) based on the permissions and privileges. 
  • User authentication: User authentication verifies a user’s identity before granting access to your fintech app. Multi-factor authentication (MFA) is a widely used user authentication that adds another layer of security by making people provide multiple forms of authentication. 
  • Compliance standards: Fintech applications must comply with different regulations, such as PCI DSS and AML.You will have to meet multiple regulatory frameworks based on your target industry and country

API development and integration

Application Programming Interfaces (APIs) enable seamless communication between your application and external services, such as financial data providers and payment gateways. Ensure your development team designs APIs that are efficient, well-documented, and easy to integrate.

Web and mobile app development

You have to develop a web and mobile application for your product. This includes using a responsive design to create user interfaces that work well between different browsers (e.g., Chrome, Safari), operating systems (e.g., Windows), and devices (e.g., PC, smartphone). You must design a user-friendly front-end, a robust back-end and integrate APIs for relevant financial services. 

6. Create a minimum viable product (MVP) 

A minimal viable product (MVP) is a workable version with core features to test your product in the market and show it to investors for raising capital. You can use Adobe XD or Figma to create wireframes and prototypes. 

Pick essential features for your solution and prioritise their development. Give precedence to features that address critical pain points and offer value to users. For example, if you plan to introduce cross-border payments, your core features will include transparent fee structures, real-time currency conversion, and secure transactions. 

Create a simple design that concisely communicates your solution’s functionality. Utilise user experience (UX) design principles to ensure seamless user journeys. You can:

  • Use a minimalistic approach 
  • Maintain a consistent layout
  • Select legible and clear fonts

Test your MVP by validating it through a small group of beta users. Begin by selecting a diverse group of users who represent your target audience. Provide them with instructions and context on what your MVP is supposed to do. Use interviews and anonymous feedback forms to collect feedback on your product’s pain points and usability issues. 

Once you receive feedback from beta users, look for common insights and patterns, and make improvements accordingly.

7. Obtain funding for your startup 

Once you develop your MVP, you must raise funds to grow your venture. Strategies to raise funds include:

  • Bootstrapping: Bootstrapping involves using personal resources (e.g., savings) to fund your fintech startup. It offers you complete control and ownership over your venture. 
  • Crowdfunding: Crowdfunding refers to using online platforms like Kickstarter to showcase your fintech idea to a large audience. Several individuals can invest a small amount of money in your startup in exchange for pre-orders, rewards, and equity. With this, you also have the opportunity to validate your idea.  
  • Venture capital firms: Venture capital (VC) firms are investment companies that offer capital in exchange for equity. Aside from substantial funding, they also provide connections, guidance, and expertise. 
  • Local accelerators and early-stage investors: Join a local accelerator with experience helping other fintech startups or partner with experienced, high-quality early-stage investors who can offer funding, mentorship, and provide access to resources in your target country. For example, Founders Factory Africa (FFA) is an early-stage investor that can support your venture in Sub-Saharan Africa. You can apply here.

Building Your Fintech Startup in Sub-Saharan Africa

Creating a fintech startup in Sub-Saharan Africa demands strategic planning, adaptability, and a keen understanding of the local ecosystem. With the region's growing technological embrace, there's ample scope for financial innovation. 

As you navigate this landscape, your Minimum Viable Product (MVP) serves as a critical stepping stone. For expert guidance, funding, and support, consider connecting with Founders Factory Africa (FFA). By utilising these strategies, you can position your startup to contribute to the fintech evolution, shaping the future of financial services across the region.

Further reading: Discover the ways Founders Factory Africa can facilitate your entry into Sub-Saharan Africa's fintech revolution.