Fintechs and the economically invisible

Series "The informal sector, SMEs and the economy in Africa", article 8 of 11

This article builds on the argument I make in "Should we really formalize the informal sector?": rather than forcing the informal sector to formalize, integrate it, starting from what it already does.

At the market, the trader has no bank account, but she has a phone. She takes payments, sends money, receives it, pays back what she owes. Without knowing it, she writes her financial history every day. The bank cannot see her; her phone can. The question is who will read that history, on what terms, and whether it will work for her or against her.

Introduction: the bank does not talk to everyone

Millions of Africans remain invisible to traditional banks: small traders, day labourers, rural women, young people with no steady income, micro-businesses with no banking history. No formal income, no collateral, no track record: some fintechs are trying to fill that gap with simple mobile tools. If collecting the contribution and delivering the rights it opens are to go through the phone, we first need to know who is doing what today, for whom, and with what results.

I. Banks stood still, phones moved ahead

Figures from the Central Bank of West African States (BCEAO) sum up the paradox. In 2024, in the WAEMU, the strict bank account ownership rate was 25.2%, down slightly on 2023. But the overall rate of use of financial services reached 73.6%, driven, according to the BCEAO itself, by e-money services, the "main vehicles of financial inclusion" in the zone (BCEAO, 2026).

Inclusion remains uneven. In sub-Saharan Africa, 52% of women had an account in 2024, against 64% of men, a 12-point gap, the second largest in the world (World Bank, 2025; see my article "Women of the informal sector: from the Gouro market to equal access"). On top of the familiar obstacles (cost, distance to branches, procedures, mistrust), micro-businesses face their own constraints: irregular cash flow, little collateral, reliance on cash. Without an account, saving is hard; without savings, there is no credit; and without credit, a small business stays small.

Box: the economically invisible and their five needs A qualitative survey of mobile credit users carried out in Abidjan in May 2025 describes budgets "shaped by irregular income, multiple jobs and heavy exposure to shocks". Mobile credit, loans between relatives and friends, and savings all exist side by side: tontines, associations, mobile money "safes", money left with someone close, or cash put aside. Most of the people interviewed had never had access to bank credit or to microfinance loans (Ducourant, 2026). Their needs come down to five verbs: get paid (customer payments, without loss or theft); save (put money aside, even a little, even every day); borrow (short-term working capital, to buy stock); insure (against illness, accidents, a fire at the stall); keep count (know what you really earn). This five-verb grid is my own synthesis, not a statistic.

II. What makes a fintech inclusive?

An inclusive fintech offers simple financial services to people the banks do not serve: services designed for mobile, including basic phones through USSD codes; micro-payments, savings, credit, insurance; low costs; simple interfaces, sometimes in local languages. The best ones start from the field and work towards the tool, not the other way round: they watch how people already pay, save and borrow, then digitize those habits.

III. Three case studies from West Africa

A. Wave (Senegal, Côte d’Ivoire): the price war

Launched in Senegal in 2018, Wave imposed a 1% fee on person-to-person transfers, against a historical range of 6 to 10%, with a simple app and highly visible marketing (GSMA, 2024). Today it advertises free deposits and withdrawals and transfers at 1% (Wave, n.d.). The effect on prices is documented: in Senegal, the incumbent operators cut their fees to 1% (GSMA, 2024); at the end of November 2021, Orange Money even scrapped its withdrawal fees and set its sending fee at 0.8% (Velluet, 2021).

The downsides are just as well documented. Lower fees cut agents’ commissions: some Orange Money agents in Senegal reported losing 50% of their income; in Côte d’Ivoire, agents went on strike for several days in August 2022 (GSMA, 2024). Their unions, in fact, were targeting the incumbent operators more than Wave, accusing them of paying, for more than a decade, commissions "which already did not allow us PDVs (point-of-sale owners) to make a decent living from our work" (KOACI, 2022). Finally, a 15% cut in its workforce led Wave to scale back its operations in Mali, Burkina Faso and Uganda. The GSMA questions whether a 1% model funded by venture capital can last (GSMA, 2024). A useful caveat: the GSMA represents the operators, Wave’s direct competitors; its conclusions are those of an interested party, even if the facts it cites can be checked. Without independent data, I give no user numbers for Wave.

B. Moniepoint (Nigeria): lending on real cash flows

Moniepoint offers SMEs and micro-businesses an integrated package: payment terminals, business accounts, credit. Its key innovation fits in one rule: only entrepreneurs whose business account has been active for at least six weeks, and who use it regularly for all their transactions, can apply for a loan (Moniepoint, n.d.). Credit no longer rests on collateral or a balance sheet, but on observed cash flows. This is exactly the logic to apply to the contribution: regular payments build a history, and that history opens rights.

C. Orange Bank Africa (Côte d’Ivoire): microcredit in the mobile wallet

Orange Bank Africa offers the Tik Tak loan directly in the Orange Money app. You must have been an Orange Money customer for at least six months; the amount offered depends on how the account is used (bill payments, transfers, withdrawals) and on savings. For loans of 5,000 to 50,000 CFA francs over one month, the advertised cost is 1.15% before tax, plus 2,400 CFA francs before tax per year for access to digital services; after three days late, a 10% penalty applies and the borrower can be reported to the credit bureau (Orange Bank Africa, n.d.). In 2023, the International Finance Corporation (IFC) announced a 50% guarantee on a portfolio of digital loans to MSMEs worth up to the equivalent of 30 million dollars, with a target of about 300,000 additional loans by 2025, particularly in rural and underserved areas (IFC, 2023). That was a target; as far as I know, no results have been published.

Box: the three solutions compared

	Wave	Moniepoint	Orange Bank Africa
Countries	Senegal, Côte d’Ivoire, others	Nigeria	Côte d’Ivoire
Main service	Transfers, payments, deposits and withdrawals	Accounts, payment terminals, business credit	Microcredit and savings through Orange Money
Access	Free deposits and withdrawals, transfers at 1%	Account active for 6 weeks to borrow	Orange Money customer for 6 months
Innovation	Price disruption	Cash-flow-based credit	Amount based on mobile usage
Target users	Individuals, traders	SMEs, micro-businesses	Individuals, traders, MSMEs
Watch-out	Agents’ income, sustainability	Concentrated in Nigeria	Late-payment penalties, credit blacklisting

Sources: GSMA (2024); Wave (n.d.); Moniepoint (n.d.); Orange Bank Africa (n.d.); IFC (2023).

IV. Mapping: who does what?

This map is not exhaustive. It describes services as the companies themselves present them; it is not an impact assessment.

Table: a map of solutions serving micro-businesses and informal workers

Fintech	Countries	Main service	Target	Notable point
Wave	Senegal, Côte d’Ivoire…	Payments, transfers	Individuals, traders	1% fee (see III.A)
Paystack	Founded in Nigeria	Online payments	Merchants, businesses	A Stripe company
Paga	Nigeria	Payments; Doroki management app for SMEs	Individuals, SMEs	Payment infrastructure for third parties
Moniepoint	Nigeria	Accounts, terminals, credit	SMEs	Credit based on real cash flows (see III.B)
Orange Bank Africa	Côte d’Ivoire	Microcredit, savings	Orange Money customers	Tik Tak loan (see III.C)
JUMO	Several African countries	Credit and savings infrastructure	Banks, mobile operators	White-label technology
Numida	Uganda	Working capital loans through an app	Micro-businesses 6 months old or more	Interest of 13 to 25% per month
Izili (formerly Baobab+)	Senegal, Côte d’Ivoire, Nigeria, Madagascar	Solar kits and digital devices on credit	Households, entrepreneurs	425,000 households equipped (self-reported)
Oze	Ghana, Nigeria, Rwanda, Madagascar	Bookkeeping, invoices, inventory; access to credit	Micro-businesses, SMEs	Management and credit linked
Turaco	Kenya, Uganda	Embedded health and life micro-insurance	Partners’ clients (microfinance)	Premiums from $0.50 a month
MaTontine	Senegal	Digital tontine and credit	Tontine members, mostly women	3% default rate during the pilot

Sources: company websites consulted in October 2026 (Paystack, n.d.; Paga, n.d.; JUMO, n.d.; Numida, n.d.; Oze, n.d.); BioLite (2025) for Izili; ASA International (2025) for Turaco; Murthy and Fernandez-Vidal (2019) for MaTontine.

Two examples stand out. In Senegal, MaTontine digitized the tontine without replacing it: during a six-month pilot, it signed up 1,047 members in 62 tontines, 95% of them women, and lent to 602 of them; the default rate stayed at 3%, but rose to 8% in groups where members did not know each other (Murthy and Fernandez-Vidal, 2019). Social trust is still the best collateral. Turaco, working with the microfinance institution ASA International, builds life and hospital insurance into loan disbursement, with premiums from 0.50 dollars a month, in Kenya and Uganda (ASA International, 2025): the insurance comes with no extra paperwork.

V. What fintechs really change, and where

Risk is redefined. Moniepoint and Orange Bank Africa assess borrowers on their cash flows and mobile usage rather than on their collateral.
Transaction costs are falling. The drop from 6-10% to 1% on transfers in Senegal is the clearest proof (GSMA, 2024).
Public infrastructure is catching up. On September 30, 2025, the BCEAO launched the interoperable instant payment platform (PI-SPI), available around the clock in all eight WAEMU countries, with a standardized merchant QR code; among its uses, it explicitly cites paying social benefits and collecting taxes (BCEAO, 2025).
The map is still uneven. Most of the players mentioned were born in Nigeria or East Africa; French-speaking West Africa is advancing mainly through partnerships.

This is where fintech meets the third lever I argue for in "Should we really formalize the informal sector?": a contribution paid regularly by phone could, with the entrepreneur’s explicit consent, strengthen their credit profile. Paying then becomes an investment: every payment brings the first loan a little closer.

VI. The cure-all mirage

Every case made for African fintech cites the same study, published in Science: it estimates that access to M-Pesa lifted about 194,000 Kenyan households out of poverty, or 2% of the total, notably women who moved from farming into business (Suri and Jack, 2016). The figure, which went around the world, is hotly disputed. Milford Bateman, Maren Duvendack and Nicholas Loubere call the analysis "extremely problematic": no control group to attribute the gains to M-Pesa rather than to the general trend of the economy, and no account taken of micro-business failures, over-indebtedness or the risks pushed onto the poorest (Bateman, Duvendack and Loubere, 2019).

Their strongest objection speaks directly to the informal economy: the displacement effect. When mobile money pushes newcomers into petty trade without local demand growing, they take customers from the women traders already there; the net gain in jobs and income can then be small, or close to zero (Bateman, Duvendack and Loubere, 2019). Ten more stalls in a market with no more customers is not development: it is sharing scarcity. That is why this series never treats fintech as an end in itself, but as the tool of a policy that must also act on demand, productivity and market outlets.

VII. Limits and challenges

The cost of credit varies enormously. Over one month, the Tik Tak loan costs 1.15% before tax and before annual fees (see above); the M-Shwari loan in Kenya, a 7.5% fee for 30 days (Safaricom, n.d.); a Numida loan in Uganda, 13 to 25% interest per month (Numida, n.d.). Annualized without compounding, 7.5% a month already comes to 90%. Quick credit can save a stock of goods; it can also trap people in debt if scores are poorly calibrated and the terms poorly understood.

Regulation is running behind innovation. Legal statuses remain hybrid, somewhere between bank, e-money institution and telecom operator, and frameworks vary from country to country. Interoperability is improving, with PI-SPI, but it depends on every provider actually connecting, which the BCEAO is still calling for (BCEAO, 2025). The players are fragile: in Kenya, the buy-now-pay-later fintech Lipa Later was placed in administration on March 24, 2025, after failing to raise new funds (Abuya, 2025). Personal data, finally, is the flip side of credit scoring: I devote my article "Beyond mobile money: economic inclusion, data and trust" to it.

Fintechs on trial

"Fintechs are private companies chasing profit, not inclusion." True, and that is not a flaw in itself: Wave brought prices down faster than any public policy. But profit can also come from double-digit monthly rates, or from squeezing vulnerable agents. Hence the need for clear rules on cost transparency, with costs stated as an annual rate, and for a public-private partnership in which the state sets the framework and fintechs innovate.

"Plugging the contribution into mobile makes the state dependent on private operators." Fair point: a collection monopoly would be dangerous, and taxing transactions can itself drive people back to cash, as Ghana’s E-Levy showed (see my article "Rethinking taxation of the informal sector: a single variable-rate contribution, a flat fee and gradual steps"). Hence multichannel, interoperable payment, built on the public PI-SPI infrastructure, and no tax on transactions: the contribution is paid by phone, not deducted from every payment.

Conclusion: a bank for the invisible is here, but it still has to be built

Fintechs are not a miracle cure, but they are an essential link: they need support, smart regulation and a connection to public policy, starting with the contribution and the social rights proposed in this series.

Because a mobile account is not an economic transformation. How many of these accounts are really used? Who owns the data they generate? And how do we build the trust without which nothing holds?

Also in this series: "Beyond mobile money: economic inclusion, data and trust". From access to use, and from use to transformation, without sacrificing data protection.

References

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