Kenyan FinTechs eye climate kitty to develop solutions for the Blue Economy

By Steve UMIDHA

Kenyan financial technology (FinTech) firms are among 7 African startups set to benefit from climate resilience funding to develop solutions for the blue economy.

Announced Wednesday by Triggering Exponential Climate Action (TECA), the seven startups will each receive $55,000 in funding to advance their solutions for the blue economy in Africa – an industry estimated to generate nearly $300B for the continent, according to estimates by African Union Blue Economy Strategy.

The deal will see each startup receive $27,500 in seed capital and $27,500 in hands-on venture-building support to progress financial and tech-enabled solutions that bolster the climate resilience of communities and ecosystems in and around the oceans, lakes, and rivers across the Eastern region of Africa.

“These seven startups represent the forefront of the blue economy in Africa, and we look forward to seeing the impact of their financial and tech-enabled solutions on communities and ecosystems,” said David del Ser, Chairman, and Chief Innovation Officer at BFA Global.

The program, managed by BFA Global and supported by FSD Africa, was created to accelerate the development of climate-resilient solutions to protect and sustain the environment and vulnerable communities.

Founders of the seven startups including Vua Solutions and Wezeshaa Aqua farms among others from six countries in Africa—Kenya, Egypt, South Africa, Uganda, Zimbabwe, and Tanzania—with ideas focusing on bridging existing gaps in aquaculture; ecotourism; measurement, reporting, and verification (MRV) in conservation; seaweed value chain; mangrove restoration and protection; and financial services for fisher folk.

This comes even as industry trends suggest that the market for such players will continue to grow this year.

In fact, between 2020 and 2021, the number of tech start-ups in Africa tripled to around 5,200 companies. Just under half of the fintech companies are making it their business to disrupt and augment traditional financial services.

The McKinsey analysis for 2021 shows that African FinTechs have already made significant inroads into the market, with estimated revenues of around $4 billion to $6 billion in 2020 and average penetration levels of between 3 and 5 percent – excluding South Africa.

Similar announcements by the World Bank-backed financial lender International Monetary Fund (IMF), unveiled a US$225 million venture capital to be applied to scale up operations and back early-stage developments of FinTechs in key markets predominantly in Africa with Kenya as a key beneficiary target where most technology firms are domiciled.

Fintech founders have had to contend with the devastating financial constraints from the Covid-19 pandemic, coupled with the war in Ukraine, with most having to lay off or temporarily shut down operations.

Kenya has an estimated 56 local-based Fintech companies whose successes are being fueled by increasing smartphone ownership, declining internet costs, and expanded network coverage, as well as a young, fast-growing, and rapidly urbanizing population.

Access to capital has been worsened by a slowdown in global venture capital investment, the COVID-19 pandemic, the rise in food and supply chain costs, higher interest rates, and currency depreciation also limiting the firms’ expansion ability.

The number of finance app installs or downloads in mobile money-based loans rose by 5 percent between January and September 2022, highlighting the growing prevalence of app-based borrowing use in the country.

The study by mobile marketing analytics platform AppsFlyer and Tech Company, Google also shows that app installs ads or commercial spending rose significantly during the period before cooling off in the latter stages of the year due to global macro challenges.

This article first appeared on People Daily