Unlocking Africa s MSME potential: the transformative power of fintech innovation

It is widely acknowledged than African micro, small and medium-sized companies (MSMEs) have long been underserved, lacking access to financial services tailored to their needs. Since the launch of mobile money at the end of the 2000s, waves of innovation have revolutionised financial services across the continent though. These breakthroughs have demonstrated how fintechs were able to develop assets and tools that bring down the barriers traditional financial providers struggle to overcome in African markets. Originally targeting consumers, fintech innovations are now set to unlock the growth potential of African MSMEs, by optimising payment operations, improving management of working capital or easing access to financing.

Innovation is expected to significantly smoothen corporate payment operations

Across the continent, payment operations still remain a significant burden for MSMEs. In several countries, it is not uncommon to see business owners visit clients to collect payments or hand over cheques or cash to suppliers. At month’s end, employees queuing at the accounting department to collect the payment of their salary - a procedure often calleds “billetage” in French speaking countries- is also a familiar scene. And as MSMEs struggle to meet their tax obligations, they frequently have to organize visits to tax authorities to ensure payments are made.

In this context, fintech offering professionals access to digital or proximity payment points to pay for settling corporate taxes have created significant value. The likes of Egyptian fintech Fawry have allowed MSMEs to save on time and costs when paying taxes, among other benefits. Other fintechs such as Julaya in Cote d’Ivoire have specialised in providing solutions that enable the digitalisation of salary payments. Furthermore, several fintechs have been exploring how salary advance could be implemented and scaled: South African unicorn TymeBank offers a salary advance solution to employees of partner companies, alleviating these enterprises from the operational burden of managing advances while fostering 'improved productivity and reduced absenteeism'.

But innovation in MSME payments goes far beyond streamlining tax and salary payments. Payment collection remains a hot topic: alongside a vibrant ecosystem of payment gateway providers across Africa, fintechs such as Maviance, Paydunya, Flutterwave or SycaPay are exploring how digital payment requests (sometimes called ‘payment links’) can efficiently support businesses in collecting payments.

Bridging MSME credit gap

Studies conducted by Sofrecom have highlighted to what extent working capital issues still affect African MSMEs, sometimes significantly hindering their development. In parallel, their ability to invest is limited by poor access to financing. In West African Economic and Monetary Union region for instance, the World Bank reported that less than 25% of companies had access to a formal loan or a line of credit in 2024, underlining that ‘the financial sector [is] failing to adequately support businesses, in particular MSMEs’.

Fintech credit has proven highly efficient in addressing African MSME lending specificities: by leveraging data, automated scoring and digital delivery, it has overcome many of the challenges preventing African banks from adequately serving smaller companies. For clients, digital lending offers convenience (limited paperwork, faster processes, no need for physical branch visits etc.) while also improving access, as credit histories and collateral are often not required.

Scaling MSME digital lending will lie in fintechs’ ability to source alternative data required to assess MSMEs’ creditworthiness. Telco-backed fintechs still hold a significant advantage as they can access telco usage data. However, some players serving the retail sector such as Kazang, Yoco or Fawry have developed multi-faceted business models that give them access to relevant merchant data. In 2025, Yoco reported having disbursed over 3 billion rands of ‘cash advances’ to a large portion of their 200,000 merchant clients in South Africa.

Fintech is a game changer for African micro-retailers

The digitalisation of retail payments has long been seen as an eldorado by financial service providers. While adoption of digital merchant payments in Africa remains moderate, recent momentum is undeniable: according to the World Bank, it almost doubled in Sub-Saharan region since 2021, with 20% of adults making a digital merchant payment in 2024.

For micro-retailers, digital payment solutions do more than just secure transactions—they transform their entire business. These solutions streamline operations, reduce risks, and enable merchants to deliver a superior point-of-sale experience. Further to digitising payments, number of fintechs have developed comprehensive value proposition that create substantial value for merchants. Players such as Flash in D. R. Congo, Basata in Egypt, Blu Label in South Africa or InTouch in several markets across the continent offer retailers access to a wide portfolio of products and services (airtime, gaming, pay TV etc.) that open new revenue streams. Beyond, these fintechs empower merchants with reporting tools and, in many cases, access to cash advances or loans, further strengthening their business resilience.

Telco-backed fintechs must rethink the playbook to unlock MSME segment potential

While small businesses are often not addressed with dedicated mobile offerings on the telco side (they mainly use B2C services), the model certainly must be adapted for mobile money. MSMEs frequently report that current mobile money services are not fit for purpose, for instance in terms of thresholds of transactions, pricing, access to transaction history or to receipts. Moreover, mobile money ‘closed loop’ services lack the appeal of solutions offered by aggregators or open ecosystem players. Altough mobile money is increasingly interoperable, this still relies heavily on bilateral agreements, far from delivering the seamless, universal connection need. This limits how MSMEs can leverage mobile money with partners, clients or employees.

Credit will be another major battleground: mobile money providers have lagged behind other fintechs in addressing business needs such as overdraft facilities, salary advances, payment facilities with suppliers or investment support.

With the MSME segment offering immense untapped potential, telco-backed fintechs will have to innovate and shift paradigms to stay ahead in this high-growth market.