Traditional financial savings options do not always take into account people with limited income. As a solution, Kenyan start-up Koa offers an application that aims to help its users better control their spending and savings.

Entrepreneurs Delila Kidanu, Alexis Roman, and Ubunyo Nyavor have developed a solution to boost savings culture among Kenyans. The fintech Koa allows its users to set personal savings goals for specific expenses such as school fees, buying a new phone, a car, or even planning a wedding. The app incentivizes users by sending them daily, weekly or monthly reminders. Koa also allows them to track their progress and provides tips on how to better control their spending.

“We spent a lot of time in Ghana, Nigeria, and Kenya. Both Delila and I saw the popularity of digital saving products in Nigeria, like PiggyVest and Cowrywise, and how they were serving a real need for customers. But when we looked beyond Nigeria, as a market, we felt like there was a significant gap in other countries,” Koa’s CEO Roman told TechCabal.

According to the founders, although Kenya is the third-largest economy in sub-Saharan Africa and the financial and trade hub of East Africa, the country has a savings rate of only 12%. They attribute this low rate to factors including cumbersome savings options and a lack of appropriate financial education that would raise awareness among people.

To stand out from other solutions, the startup encourages its users to invest their money to earn more. As part of this strategy, Koa has partnered with Britam, an asset manager in Kenya. Users can earn up to 10% interest on their money per year, depending on market conditions. They also earn interest daily, allowing them to see their money grow in real-time.

The platform has already exceeded 12,000 users and has received $100,000 in deposits since its launch in 2020. The founders plan to expand to neighboring countries such as Tanzania and Uganda.

Aïsha Moyouzame

Despite a notable evolution of fintech in sub-Saharan Africa, the Islamic segment of this market has issues taking off.  This gap, however, could be exploited by the region for its growth.

Talking about regions that leverage opportunities offered by Islamic fintech (iFintech), Sub-Saharan Africa keeps lagging – according to the Global Islamic Fintech Report 2021. “Sub-Saharan Africa, MENA (ex-GCC) have gaps across the 9 iFintech services segments,” the report reads.

Sub-Saharan Africa (SSA), the report’s authors found, has seven (7) iFintechs - the lowest compared to the world’s other six (6) regions. In detail, SSA has 2 Islamic Fintech firms in the alternative finance category, 2 in deposits and lending, and 1 each in the raising funds, wealth management, and social finance categories. Meanwhile, a region like Europe, which ranked third out of six, has respectively 11, 13, 8, 8, and 4 iFintechs in these same categories.

The findings contrast with the rapid evolution of fintech services - mobile money, and microcredit services notably - in SSA. At the country level, Nigeria has the most iFintechs in Sub-Saharan Africa. In Africa, it is even ahead of countries like Egypt, Morocco, and Tunisia where Islam is more widespread.

According to the report, skill deficit, poor regulation, and insufficient resources are the reasons preventing iFintech from thriving in Africa. However, the authors estimate that by 2025 the fintech market could grow at more than 25% CAGR in Senegal, Tunisia, and Nigeria. A projection that corresponds to a target transaction volume of $2 billion.

Idriss Linge