Fintech investors flock to Africa in landmark deals

Continent tipped to be next key growth market for new wave of innovative financial services

Leading corporate players have staked claims to Africa’s burgeoning financial technology – or fintech – sector in two major deals.

In the first, regional mobile-money specialist LeapFrog Investments has secured $350m of backing from insurance giant Prudential to fund a host of new services across the continent, forming a strategic partnership.

Meanwhile, Cape Town-based fintech firm Jinja Interactive has been purchased outright by Deloitte Digital – an online strategy agency with headquarters in Belfast and London that works as a specialist offshoot of the Big Four auditor.

Announcing Prudential’s hefty stake, Charles Lowrey – executive vice president and COO of the firm’s International Businesses wing – said that the LeapFrog deal reflects its belief that Africa “offers tremendous potential for growth over the long term”.

LeapFrog founder and CEO Dr Andrew Kuper explained: “The global insurance industry is looking for ways to close the protection gap for millions of people in emerging markets. This partnership will help address that need, while tapping some of the world’s highest growth markets.“

He added: “By enabling LeapFrog to pursue larger and more established assets than [we have been able to] via our private-equity funds, this partnership also diversifies our capabilities as an alternative-investment group.”

Welcoming his firm’s new division into the fold, Deloitte Digital lead director Valter Adão said of the Jinja Interactive team: “They will help reinforce our ability to set ourselves apart by engaging our clients with strategic and innovative thinking, emerging and exponential technologies and creative design.”

Adão added that Jinja’s main service offering will continue its existing focus on strategy, design and digital development in the wealth- and asset-management arena, with an emphasis on digital investment and advice management.

Former Jinja Interactive managing director – now Deloitte Digital associate director – Morné Fischer said: “Digital advice management (aka robo-advisory services) has been a major growth market in recent years in mature economies, but is only starting to gain traction in South Africa.

“We believe that this global trend is perfectly suited to the South African market – it keeps investor costs down in an increasingly price-sensitive market, and it allows businesses to decrease the costs to administer individual investment portfolios, thereby broadening their market.”

The deals mark astute manoeuvres from Prudential and Deloitte, following a Davos conference at the beginning of the year that was dominated by talk of the competitive threats that fintech firms pose to traditional institutions.

Indeed, according to the Financial Times, topics such as blockchain software took precedence over issues related to the heavyweight Basel III regulations.

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