Rise of the African Super Apps — Quartz Africa Member Brief — Quartz
Hello Quartz Africa members,
Elon Musk may be planning the creation of the super app X, but some African startups are way ahead of him. The interconnected nature of challenges and opportunities in financial inclusion, e-commerce and logistics in Africa has provided a fertile ground for super apps that aim to seamlessly integrate into users’ lifestyles.
Building stand-alone do-it-all ecosystems is increasingly important for startups competing to capture the lion’s share of a massive market: two-thirds of adults in sub-Saharan Africa lack access to formal financial services. Companies and individuals need access to regulated credit, savings, insurance, consumer financing, better logistics and secure transactions.
The possibilities are endless. For startups, expanding the range of services they offer becomes a way to differentiate themselves as they compete for the same customer base.
It is therefore no surprise that fintech still accounts for the largest share of venture capital funding on the continent. The sector represented 54% of the over $4 billion in venture funding for African startups in 2021. And in 2022, the mega rounds – rounds over $100 million – have come almost exclusively from startups working in financial services and logistics.
Packaging and offering such important services in such a large and underserved market inevitably comes with its share of challenges. Navigating infrastructural and regulatory gaps, including tax and compliance issues, as well as building consumer trust and constant innovation, is a difficult affair.
But startups are sure of the possibilities of being unlocked.
💡The possibility: Millions of Africans lack access to a wide range of formal financial services. Startups can offer multiple products, including savings, lending, consumer finance, payments and insurance.
🤔The challenge: Building consumer trust in addition to navigating poor infrastructure, regulatory loopholes and multiple taxes can make it difficult for startups to offer formal financial services affordably.
🗺️The road map: Startups need to reach Africa’s vast underserved market with affordable, tailored products that provide access to a range of essential services, while working with other stakeholders to improve policies and infrastructure.
💰The stakeholders: Startups, governments, regulators, mobile money services, lenders
By the numbers
54%: Fintech’s share of venture funding of more than $4 billion raised by African startups in 2021
$330 billion: The financing gap for small and medium-sized enterprises in Africa
73%: Percentage of adults in Egypt who are unbanked
60%: The proportion of electricity bills paid with cash in Egypt
2/3: The proportion of adults in Africa who lack access to formal financial services
2.78%: The insurance penetration rate in Africa
MNT-Halan may only be five years old, but the roots of the new super app developed a decade ago. In 2009, MNT-Halan co-founder Mounir Nakhla established Mashroey, a capital financing company that helped drive sales of two- and three-wheelers in Egypt. He then ventured into microfinance in 2015 with the launch of Tasaheel, a licensed lender targeting low-income earners. Tasaheel grew rapidly and opened more than 200 branches in Egypt.
Realizing the opportunity in technology, Nakhla established Halan, a ride-hailing and logistics service, in 2017. But while Halan recorded over 10 million rides and deliveries, Nakhla saw no path to profitability and chose to expand into financial services by leveraging her microfinance background . “In 2019, we made a strategic decision to reduce investment in transportation and logistics and move to financial services,” he told Quartz.
Neuron is MNT-Halan’s proprietary core banking software. Launched in 2021, the software operates wallets and processes transactions such as lending, payments, merchant services, transportation and logistics. In July 2021, the startup secured a $120 million investment to fuel its growth and expansion, having issued more than $1.7 billion in loans.
MNT-Halan claims to be Egypt’s largest and fastest growing lender to the unbanked and underbanked. According to the company, business loans represent 70% of the loan book, mainly taken by small businesses and traders who need working capital. Consumer loans represent the rest. These are mostly taken by individuals who buy devices such as mobile phones and other electronics.
MNT-Halan recently introduced education loans, and partners with education providers who refer customers by offering them the credit payment option through the company. It has invested heavily in growing its team, and currently has around 150 engineers.
MNT-Halan ventured into B2B e-commerce in June 2022 with the acquisition of Talabeyah, which enables small retailers to order fast-moving consumer goods (FMCG) directly and offers next-day delivery. The acquisition will increase MNT-Halan’s offer to small businesses by expanding the credit offer to SMEs, which already make up a large part of the loan book. The B2B e-commerce space in Africa has become increasingly attractive to investors. Startups in the area have raised larger funding rounds, such as Wasoko’s $125 million Series B in March.
To ease pressure on its balance sheet and unlock capital for further growth, MNT-Halan also announced in June the securitization of around $150 million of its loan book in the issuance of a $600 million program with Commercial International Bank (CIB), the largest private bank . owned bank in Egypt.
In conversation with
🛍️ On why MNT-Halan bought Talabeyah:
“Talabeyah is a fast-moving consumer goods disruptor. It has a catalog for retailers. We issue a loan to the merchant paid over seven days, and then they can re-order from Talabeyah. The process is 100% digital.”
💸 About securitization of parts of the loan book:
“We’ve grown very, very quickly and ran into a cash crunch last year. We needed about $70 million every year to grow. We needed to find funding to grow, which is why we initially signed a $600 million contract.”
🗺️ About plans for expansion:
“In Egypt, we are consolidating and adding more verticals, including insurance. But we are also looking at expanding further in Africa and possibly South Asia.”
More super apps for 👀
Enjoya Francophone Africa-focused super app with services including transportation, e-commerce and financial services, raised a $5 million Series A in November 2021. It was established in 2018 as a motorcycle ride service before expanding into financial services.
Jambo, a Web3 super app that integrates ride-hailing, banking, communication and food delivery, raised a $7.5 million round from prominent crypto investors in February 2022, three months after its launch. It aims to use decentralized financial services (DeFi) including currency exchange and money transfers as well as games to earn money to increase the use of web3 financial ecosystems in Africa.
SafaricomEast Africa’s largest telco plans to spin off mobile money service M-Pesa into a separate company by 2023. The M-Pesa super app, unveiled in 2021, includes mini-apps linked to various service providers, including transport, health and insurance providers all integrated with the mobile money platform .
This member brief was prepared while you were listening BTW and more music by Maandy, Exray and Trio Mio 🇰🇪. Have a great, productive week!
—Martin Siele, Nairobi-based contributor
A 💰 thing
As of July 2022, Africa accounted for 70% of the world’s $1 trillion mobile money value, according to GSMA data.