Fintech
Minka Joins EBANX and dLocal in LATAM Fintech Expansion into Africa
In recent years, a handful of Latin American fintechs have made inroads into Africa to tap into its growing digital payments market. The latest entrant is Minka, a Colombian fintech backed by Tiger Global. Minka builds payment networks that allow people to send money between participating banks and other financial institutions.
Minka launched in East Africa on Tuesday, opening stores in Kenya, Tanzania, Uganda and Ethiopia. The company plans to expand to Mozambique, Zambia and Malawi in Southern Africa.
Minka’s arrival in East Africa follows a trend of Latin American fintech companies expanding into Africa. In 2022, EBANX launched in 11 African countries. Two years earlier, Uruguay dLocal launched in West Africa and Kenya. The expansion makes sense because both regions have similar challenges—over 350 million Africans Adults do not have access to financial institutions and rely exclusively on cash transactions.
“We are solving these problems across the Latin American region and now we want to bring these benefits to the people of East Africa,” the company said in a statement to TechCabal.
Minka sees “some real synergies between the work we’re doing in Latin America and the issues we’re addressing in East Africa,” the company’s chief growth officer, Alexander Perko, told TechCabal. Those similarities include high levels of financial exclusion, with eight of the top ten markets ranked for overall financial inclusion located in Latin America and in sub-Saharan Africa, and a strong reliance on cash transactions with large informal sectors.
Minka’s business model is quite simple: it uses internal financial protocols to speed up money transfers between banks and other financial institutions, creating a common language for communication between different payment systems, eliminating the need for complex reconciliations.
“There are approximately 2,000 separate payment networks globally, of which only 3% are interoperable,” Perko clarified.
From Latin America to Africa
Fintechs like Minka, EBANX, and dLocal offer a platform for Africans who want to buy global products but can’t, considering that some global merchants don’t accept their preferred payment methods, like mobile money or cash. Fintechs offer a solution by allowing global merchants to accept local African payments.
Like Africa, Latin America also has some gaps in financial inclusion: 58% of people in the region have access to credit cards, but fewer (3 in 10) have access to other financial products such as loans or investments. According to a report by the World Economic Forum, this gap it’s getting larger for low-income areas (59% with bank accounts) and rural areas (40% with bank accounts).
With over 1,500 registered fintech startups and friendly regulations and partnerships, Latin America has already made more progress with digital payments, so these companies say they can use that experience to help Africa do the same. They also have relationships with global merchants that they can leverage to enter new African markets.