Papers around the world have for some time been reporting the GDP of Nigeria beating that of South Africa. By March, 2020 a Bloomberg report placed the West African country’s GDP at $476 billion. A rising tide they say, lifts all boats. This has been true in Nigeria, however vast disparities exist between the wealthy and those still fighting their way into the country’s growing middle class. And for millions of Nigerians financial literacy and inclusion remains a challenge.
Cowrywise, a fintech cofounded by CEO Razaq Ahmed, is aiming to help the large growing mass affluent consumer base by educating and then facilitating a savings and investment culture. A cursory look at their site showcases the usual trapping’s of startup success, including “The Y Combinator” logo and marquee backers such as JP Morgan, through the Catalyst Fund which is also backed by UKAid, Rockefeller Philanthropy Advisors and many other household names targeting financial inclusion across the developing world. A company tweet confirmed their participation in the programme back in January, 2020 (see below).
The startup recently raised a pre-Series A round of $3M from a cast of local angels and Sahil Lavingia (founder of gumroad; who gets special mention because of arguably the cutest use of a Kittycorn on his angel investment site – yes thats a cat with a single horn and another fabled symbol of startup lore).
The institutional money in the latest round comes from Quona Capital (investors in ZEST in India and a broad portfolio). Quona bills itself as a growth stage fund and its mission to help with financial inclusion is (if you will excuse the pun), bang on the money when it comes to how Cowrywise is looking to service a huge swathe of population that has historically been ignored by incumbent financial services firms in Nigeria.
A report issued by McKinsey & Co in December, 2020 notes the perfect storm for Nigerian financial services with the Covid-19 pandemic highlighting and accentuating a number of issues with the incumbent players resulting in a significant decrease in margins and tougher trading conditions. The report highlights the astronomical growth of fintech in the region, investment in the space has grown at c. 197% over the last three years. These startups will in a way similar to any other geography begin to attack the traditional players while also growing the overall market by bringing in new market participants in part thanks to the appeal of fresh and user centric design, pervasive mobile phone ownership, internet penetration and the millennial segment flocking to trendy coloured cards.