A New Wave of Financial Innovation in Africa

Renew Capital has announced its inaugural Renew Venture Lab: EmFi Series, selecting 15 companies from a pool of over 500 applicants across 48 African countries. This initiative highlights a growing trend: some of the most promising embedded finance opportunities may emerge from tech companies already serving SMEs rather than traditional financial institutions.

The Untapped Potential in Africa’s SME Sector

Africa’s SMEs are critical job creators yet face an estimated $330 billion annual credit gap. However, several converging factors suggest this is about to change:

  • Rapid mobile adoption: Smartphone penetration in sub-Saharan Africa is projected to jump from 54% in 2024 to 81% by 2030.
  • Falling data costs: Making digital financial services more accessible.
  • Tech-enabled SMEs: Businesses are increasingly using technology for operations and customer engagement.
  • Diverse tech ecosystems: Innovation hubs across the continent are developing solutions in payments, logistics, healthcare, and agriculture

These trends create an ideal environment to embed financial products within existing digital platforms, reaching underserved businesses with tailored solutions.

Beyond Traditional Fintechs

Renew Capital’s selection process focused on companies demonstrating:

  • Deep SME understanding: Solutions built from experience working directly with these businesses
  • Data advantage: Leveraging transaction or usage data for more accurate risk assessment
  • Trust factor: Already serving as essential tools in SMEs’ digital workflows

The 15 selected startups represent a diverse geographic footprint, including Ethiopia, Ghana, Kenya, Morocco, Nigeria, Senegal, South Africa, Togo, Uganda, and Zambia.

Matthew Davis, Co-CEO of Renew Capital, noted: “The next generation of Africa’s small business banks won’t be banks. They’ll be startups that already understand how SMEs operate, have their data, and have earned their trust.”

This approach aligns with a broader shift toward embedded finance globally - integrating financial services into non-financial platforms where customers already spend their time - but carries particular promise in Africa given the continent’s unique digital landscape.