The LHoFT’s flagship financial inclusion programme this year takes place in Togo, Africa. Meanwhile, the programme is expanding to South-East Asia.
Fintech has the potential to be a gamechanger by boosting access to financial infrastructure for individuals and businesses in developing countries. Whether for insurance, microfinance or banking services, greater use of fintech has been “significantly associated with a narrowing of the class divide and rural divide” a recent IMF report (1) found.
Launched in 2018, LHoFT’s Catapult Inclusion Africa accelerator programme seeks to boost the reach of budding fintechs to further this impact.
“It [the programme] has gained so much over the years and it is very fulfilling for us in the impact we know we’re creating,” LHoFT CEO Nasir Zubairi told Silicon, adding: “That impact comes through the feedback or the people that have gone through the programme […], the success of the alumni in terms of growth of their services and solutions, but also in the fundraising we’ve seen occur.”
The initiative attracts a strong following. In 2022, 500 startups applied for the Catapult programme, many of them discovering it thanks to alumni. The core programme of the 2023 edition will be held outside of Luxembourg for the second time, this time in the French-speaking West-African nation of Togo.
“Given that nobody is hitting us on the head telling us ‘why haven’t you done more in francophone [countries]?’ We felt it was time that we at least try to see if there is a demand from the francophone Africa region to be on this programme and for us to do the programme in French so that they’re not excluded,” said Zubairi.
Startup Fundraising Access
Catapult Africa will take place from 16-20 October, to coincide with African Microfinance Week SAM, hosted in Lomé, Togo and claiming to be the largest inclusive finance event in Africa.
“It [Catapult] has expanded massively to the point where we usually have 20 major impact investors involved and who […] see it almost as a scouting venue, so there’s an increased likelihood to get access to finance,” said Zubairi.
“We also learn so much about their businesses, their opportunities, and their particular challenges, which are quite different as well.”
Nasir Zubairi, CEO of the LHoFT
Among Catapult’s alumni are Kenyan SME finance enabler Pezesha, which in 2022 raised $11m in pre-Series A, as well as local startups Ibisa, helping uninsurable or smallholder farmers access to agricultural insurance using earth observation data, and Koosmik.
“One of the biggest values is that Catapult does a great job bringing the right people to the table. Beyond that it’s strategic partners, capital providers for potential capital partners,” Pezesha founder and CEO Hilda Moraa told Silicon in 2022, adding: “And the ability to learn from other entrepreneurs who have solved these problems, the challenges they faced and how they overcame them is really powerful in that platform.”
Financial Inclusion
Inclusion is a critical part of the ESG puzzle which the finance industry is currently grappling with. But more than just a box-ticking exercise, it was also logical to host an inclusion programme in Luxembourg, a country that hosts major microfinance players.
Zubairi said: “Aside from putting a focus on many of the other more prestigious, somewhat traditional sectors of finance, we see it as part of our goals to focus on microfinance.”
And efforts from Europe and elsewhere are paying off. Globally, more people than ever before are accessing financial services. In 2021, three quarters of adults owned a bank account, up from half in 2011. And from 2017 to 2021, the average rate of account ownership in developing economies increased from 63% to 71% of adults, according to World Bank data (2). In Sub-Saharan Africa, it credits this expansion largely to the adoption of mobile money.
The COVID-19 pandemic further accelerated digital financial inclusion with increased digital financial services (3). But not all geographies are equal. For example, in the East Asia and Pacific region, the proportion of banked adults ranges from 34% and 37% in Cambodia and Laos to 96% in Thailand (4). And mobile banking is just one element on the spectrum of fintech solutions needed to boost financial resilience of populations in developing countries.
Catapult South East Asia
Conscious of the huge number of solutions being developed in these places, LHoFT is in the process of establishing a permanent presence to lead a programme in South East Asia, in either Bangkok or Vietnam starting in 2024.
“It’s not just about doing good and helping firms that are really making a massive impact. It’s also expanding the Luxembourg brand in a very positive way,” Zubairi said, adding: “It’s also been a great two-way learning process because we are there to leverage our experiences to help these firms but we also learn so much about their businesses, their opportunities, their particular challenges, which are quite different as well.”
(1) MF Fintech: Financial Inclusion or Exclusion? (2022) (2) IMF The Global Findex Database, Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19 (2021) (3) Asia Pacific Economic Cooperation Strategies and Initiatives on Digital Financial Inclusion: Lessons from Experiences from APEC economies (2022) (4) Findev Gateway research
This article was first published in the Silicon Luxembourg magazine. Get your copy.
