Why Chinese capital is venturing into Africa’s fintech future

Deterred from the United States, China-based VC funds are tapping into the ‘spontaneous development’ breaking out from Nigeria to South Africa

The continent needs banking services and some first-movers are aiming to make the most of the growing uptake of mobile phones to plug into the potential

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The growing use of mobile phones in Africa is presenting opportunities for fintech, insiders say. Photo: AFP

Published: 8:30am, 8 Dec 2019Updated: 9:10pm, 8 Dec 2019

Until a year or so ago, it was almost unheard of for a Chinese venture capital fund to put money into an African tech start-up, let alone one of the continent’s fintech firms.

But in the past few months there’s been a flurry of investment in the sector.

In August, a trio of Chinese funds – Qingliu Capital, Jiuhe Venture Capital and Shaka Ventures – ploughed an undisclosed amount into Lagos-based service travel company GONA, which offers cashless bus service and payment solutions.

Then in November, Nigerian fintech firm PalmPay hit the ground running after raising US$40 million led by Chinese mobile-phone maker Transsion, with the PalmPay payments app to be pre-installed on millions of Transsion mobile phones by next year.

And just a few weeks ago, Africa-focused start-up OPay, owned by Norway-based consumer internet firm Opera, raised US$120 million, most of it from Chinese investors. That was on top of US$50 million OPay raised from Chinese investors in June to scale up its Lagos operations and expand its payments products to Kenya, Ghana and South Africa.

Observers say that the rush of Chinese investment in payments reflects a growing interest in African tech start-ups in general, thanks in part to the opportunities on the continent and the prolonged trade war between China and the United States.