WealthTech: Africa’s move to secure, invest funds digitally

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  • Data by the World Bank reveals that at least a quarter of the African population has internet access, a nearly fifty-fold increase in internet usage since 2000. 
  • The rapid spread of the internet across the African continent has been lauded as a key driver of prosperity and a sign of the continent’s technological coming of age. 

Over the past few years, the wealth management industry has seen a significant amount of diversification, from traditionally having products geared towards institutional investors and high net worth individuals to offering more accessible products to low and middle-income earners. 

While WealthTech is not a new concept in Africa, there is room for market players to leverage consumer demand for wealth management products that are more digitally accessible and easy to use. 

WealthTech or wealth management technology is the combining of technology such as AI, big data, SaaS, with financial assets, such as savings, investments, and patrimony, to create a digital ecosystem of finances.

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A sub-sector of FinTech, WealthTech changes how individuals and companies manage their finances by incorporating a set of technologies to automate and increase the efficiency of processes associated with wealth management and investments.

Over the past few years, the wealth management industry has seen a significant amount of diversification, from traditionally having products geared towards institutional investors and high net worth individuals, to offering more accessible products to low and middle-income earners. 

Data by the World Bank reveals that at least a quarter of the African population has internet access, a nearly fifty-fold increase in internet usage since 2000. 

The rapid spread of the internet across the African continent has been lauded as a key driver of prosperity and a sign of the continent’s technological coming of age. 

Through technology, more players have been able to adopt WealthTech by building platforms that have made investing easier and more accessible, leveraging the power of artificial intelligence to offer more accessible solutions. 

More and more low and middle-income earners are now showing an increased interest in passive compared to actively managed funds and the ability to provide intuitive user experiences on applications.

While traditional asset managers have been successful, there is a growing opportunity to establish WealthTech solutions in form of digital investing platforms that largely appeal to young tech-savvy investors.

The road so far 

One such firm working to digitally provide investment solutions across the continent is Ndovu. 

The WealthTech startup founded by Radhika Bhachu, Ro Nyangeri, and Gianpaolo De Biase has been officially launched in Nairobi Kenya to meet the growing demand for tech-driven wealth management solutions. 

“Our idea was born out of our passion to improve financial lives across Africa. Our vision is to provide every African, regardless of income level or financial knowledge, with the right tools to grow their wealth. We believe educating our people on how to make their money work for them will bring us one step closer to reducing poverty on the continent,” Bhachu said.

Ndovu cofounders Radhika Bhachu, Ro Nyangeri and Gianpaolo De Biase. [Photo/Ndovu.co]
The startup was founded back in 2019 after Bhachu’s return home to Kenya after spending several years in the UK studying Mathematical Science at the University of Nottingham and working at Black Rock’s pension fund business unit.

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As her interest to understand how she could penetrate the wealth management market grew, Bhachu met her co-founder Rogito Nyangeri while doing some analysis into the savings culture amongst Kenyans. 

Bhachu said a key insight the pair found in their analysis and research to build a retail investment platform in Kenya was that people were not well informed about the starting points to investing. The process was too cumbersome with fees and minimums being too high.

Although Ndovu primarily targeted middle to high-income clients a lot of the customers coming onboard are middle to low-income customers. 

She noted that this was a result of high digital adoption in East Africa thanks to the digital money transfer service M-Pesa.

Ndovu takes off in the Kenyan market where the aggregate value of wealth under management by different collective investment schemes stood at KSh117 billion (US$81.02b) in June 2021, having grown from KSh56 billion ($493m) in September 2017, as per data from the Capital Markets Authority (CMA).

“Our vision is to provide every African, regardless of income level or financial knowledge, with the right tools to grow their wealth. We believe educating our people on how to make their money work for them will bring us one step closer to reducing poverty on the continent,” Bhachu said.

By using Ndovu, which is regulated by the Capital Markets Authority (CMA), users can invest as little as KSh5,000 ($50) in local and global investments.

Other African firms that have ventured into WealthTech include EasyEquities established by South African serial entrepreneur Charles Savage back in 2015. 

According to Savage, the traditional wealth management industry had developed sophisticated access points to financial services by building products in boardrooms that spoke directly to the people sitting at those tables. 

“The assumption that was made is that South Africans were bad savers and the truth is they are not,” Savage said. 

The SA-based firm currently services over 1.1 million registered accounts, 40 per cent of which have converted into being real investors.

Similarly in Nigeria Tosin Osibodu and Bolanle Osibodu created Chaka in 2019 with the aim of offering digital investing to more African countries and to serve as a bridge for Africans to access global markets. 

The pair believed they could tap into a potential addressable market of about 2 million people to give the local population and the Nigerian diaspora channels to invest in local and global markets seamlessly, with direct access and in a visually engaging way.

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Kanyali Cynthia is a Kenyan-based financial journalist with key specialisation in data and tech reporting and over eight years of experience.

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