A dynamic ecosystem for the attractive sector where Wave and Orange Money are engaged in a fierce battle, startups intend to play spoilsport and consumers are looking for the most disruptive and cost-effective solution. This is the state of fintech in Senegal.
The perfect financial inclusion solution, digital finance or Fintech is growing rapidly in Senegal. Solutions that combine financial and digital technologies, from money transfer to payment, banking infrastructure, savings or even insurance, are welcomed by a population largely excluded from the traditional banking and financial system.
According to the Central Bank of West African States (Bceao), on the dashboardFinancial inclusion in the West African Economic and Monetary Union (UEMOA), published on September 28 As of December 31, 2021, the bank rate has fallen to 18.9% compared to 19.6% in the previous year. Like Guinea Bissau, a decrease that contrasts with the progress noted in all other countries in the region between 2020 and 2021.
With such a low bank rate synonymous with a huge void to fill, startups specializing in digital finance have come up with advanced and disruptive solutions. This was helped by a mobile penetration rate of 114.21%, according to the Telecommunications and Postal Regulatory Authority’s (ARTP) Mobile Telephony Observatory.
If English-speaking African countries are experiencing more of a bubble in the fintech sector, Senegal is no exception. There are at least 24 startups specializing in this field in the country. Thanks to this dynamic ecosystem and the support of the government, Dakar is ranked ninth in the ranking of African cities in the Global FinTech Index 2020.
And fintech startups are attracting more and more investors. Fundraising is underway. In 2021, Wave succeeded in Series A funding of $200 million (132,026,460,000 FCFA); the largest Series A fundraising for a fintech operating solely in Africa. After this investment, Wave is now valued at $1.7 billion.
Today, the new African unicorn is positioned as the independent leader of mobile money in Senegal and Côte d’Ivoire. The Penguin brand is not ready to stop there. Far from it. Wave Digital Finance, a subsidiary of the Wave Mobile Money (Wave) group that surfs well, received approval for the issuance of electronic money from the Central Bank of West African States (Bceao) in April 2022. , suddenly, the first non-bank structure and non-telecom operators to obtain an EME license – Electronic Money Establishment of the Uemoa zone.
A disruptive business model
Fintech launched in Senegal in 2018 will therefore no longer be attracted by telecommunications companies and other banking institutions. Now, thanks to the EME license, it will be able to offer financial services and products directly to customers. Wave has just launched cross-border money transfers between Senegal, Mali, Burkina Faso and Côte d’Ivoire.
In just four years, the fintech has more than 6 million customers in Senegal and continues to deploy and develop in the Uemoa space, especially in Côte d’Ivoire. It only disrupted the Mobile Money ecosystem in Senegal with free services and forced the Orange-Senegal Group to review Orange Money prices downwards.
Wave and Orange Money
Penguin is already facing complaints from competition from giant Orange and its product Orange Money. The latter does not move. Deciding to compete in the same market segment, Orange Money divided its prices into four.
Senegalese Alioune Ndiaye, Orange’s general manager for Africa and the Middle East, belched in an interview with Jeune Afrique, marveling at Wave’s aggressive strategy. Wave is causing its distributors to lose 50% of their revenue, while its Mobile Money service accounts for half of its turnover of 65.3 billion CFA francs in the first half of 2022, down 15 points, he said.
A reduction that can be indirectly attributed to Wave and its policy of low or free prices, which the competition has to follow. Ndiaye talks about the destruction of about 20,000 jobs to point the finger at the penguin.
Because of this fierce economic war hidden between the African fintech unicorn and the giant of telecommunications and Mobile Money in Senegal and the Uemoa zone, we almost forget the emergence and development of other financial platforms. digital.
A dynamic ecosystem
Indeed, WIzall (2015), in addition to Touch by Omar Cissé, a computer engineer, graduate of the Dakar Polytechnic School, founded in 2014 and already present in 14 countries of the continent and soon in the Middle East, invest in the Senegalese market of new fintechs, PayDunya. NBA basketball player Gorgui Sy Dieng’s Optima, tycoon KPay, founder of EDK retail chain, KaliSpot™, newly 500 Global, startup accelerator based in San Francisco, USA, Cauri Money, etc.
With more than twenty start-ups and established companies, this strong fintech ecosystem reflects a certain dynamism.
Leading banks and financial institutions, telecom operators should show more interest in fintechs, which are becoming important in promoting digital transformation and financial inclusion. Bceao, which created the Fintech Knowledge and Monitoring Office (BCSF), made no mistake about it.
However, and despite the startup law, fintechs in Senegal still face serious challenges; access to finance, the presence of a clear and more encouraging regulatory framework, the lack of international-level local incubators, even cyber security and the protection of the personal data of more and more usersand those who always hope for more efficient, easy-to-use and affordable services for them.
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