In the commercial heart of Serekunda, The Gambia’s largest city, 25-year-old fashion designer Patience Browne is on a mission to create a unique swimwear range. Fusing tradition with modernity, she opens her Afrimoney mobile wallet and orders 40 metres of vibrant Ghanaian Kente cloth, reimagined on stretch nylon spandex, from a manufacturer in Accra, Ghana – 2500 km away by road.
Browne sends 12,000 dalasi (approximately $200) via the MoneyGram app with a mere tap on her smartphone, and the manufacturer instantly receives a notification on their MTN mobile wallet. They set to work, slicing through the rich, colour-laden cloth, before DHL whisks it off to Browne – boosting African commerce one stitch at a time.
Behind this seamless transaction, bridging two distinct West African markets, is Thunes. Originating within Singapore’s bustling fintech scene, Thunes now integrates over 30 African financial ecosystems, working in concert with key partners like M-Pesa, Orange Money, and MTN Mobile Money.
Operating in 132 countries globally, Thunes serves as a financial nexus, linking 3bn mobile wallet accounts with 4bn bank accounts. Since its inception in 2016, it has facilitated transactions exceeding $50bn, earning revenues by charging up to 5% per transaction.
Building bridges
“We’re a business-to-business company focusing on building bridges between different financial institutions,” explains Sandra Yao, SVP Africa at Thunes. “And our aim is to provide efficient, transparent and affordable payment solutions for our partners, allowing them to serve their customers more effectively.”
Through its collaborations with central banks and regulators, Thunes has built an expansive network that provides innovative solutions for markets that are typically overlooked by conventional banking systems.
Addressing thorny issues of unpredictable fees, volatile exchange rates and transaction uncertainties, Thunes uses technology to streamline international business operations. Its platform deploys application programming interfaces (APIs) – sets of rules that facilitate communication between diverse software applications – to integrate with existing banking and payment systems.
Furthermore, by accommodating a range of local payment methods, Thunes extends financial services to regions with limited access to traditional banking. Such areas in Africa are now experiencing enhanced financial inclusion.
Yao acknowledges the ongoing challenges. “The absence of interoperability between different payment systems and currencies, coupled with the lack of harmonisation among regulators, can escalate the cost of doing business in sub-Saharan Africa.”
“Our challenge isn’t only about disparate systems not communicating: it also hinges on regulatory convergence. Thunes has stepped in to bridge these gaps, but this is no easy task – it requires time, engagement with regulators, and compliance with local rules. Despite this, we’ve managed to establish about 200 active African corridors,” Yao says.
A vast market beckons
Projected to reach $40bn by 2025, Africa’s e-payment market presents a lucrative challenge. With a mere 5% to 7% of transactions currently electronic or digital – compared to over 50% in countries such as Turkey – the potential for growth is palpable.
Data released by the mobile network operators’ group GSMA paints a promising picture for Africa’s digital future. GSMA predicts nearly 100m new mobile subscribers in Africa by 2025, taking the total number of subscribers to 613m – reflecting the tech-driven attitude of Africa’s predominantly young population of 1.4bn.
This youthful demographic shows a readiness to leapfrog traditional stages of development, particularly in areas such as mobile banking. As internet connectivity continues to improve across the continent, the stage is set for a digital revolution. With the predicted rise in mobile adoption and the continuous enhancement of internet connectivity, Singaporean firms are strategically positioned, says Amit Jain, director at the NTU-SBF Centre for African Studies at Nanyang Technological University in Singapore.
Singapore-based CrimsonLogic has ventured into Africa’s digital landscape, partnering with governments to streamline public operations through e-government services. It focuses on trade and the legal and healthcare sectors. In 2015, CrimsonLogic launched Irembo, an eCitizen portal that enabled Rwandans to access over 89 government services online. The goal of this initiative was to transition Rwanda into a paperless, knowledge-driven economy.
Singapore’s Gozem started in Togo and Benin, but has expanded its reach. The venture has broadened from being a transport solution to delivery and logistics, aspiring to become a comprehensive superapp for West and Central Africa.
Another innovative player from the city-state, Crayon Data, is leveraging artificial intelligence to reshape Africa’s digital customer experience. Its proprietary “Maya” engine analyses extensive datasets to understand individual customer preferences, empowering companies to personalise their offerings and enhance customer engagement.
“The nature of digital technology; it knows no boundaries, so it’s built into the DNA of these firms. If you’re a CEO of a Singaporean digital tech company, your business model doesn’t focus on geographical constraints,” says Jain. “Instead, you look at the problem you’re solving and market demand, regardless of where it might be. You might even be the first one to venture into that place and gain first-mover advantage.”
This approach also holds great potential for venture capitalists and Singaporean private funds deploying seed and startup capital. “The scale of the investment doesn’t necessarily have to be substantial, but the potential upside is enormous, because of the borderless nature of digital technology,” Jain concludes.
Myriad challenges
Though Singaporean tech businesses have made considerable strides in Africa, smaller entities continue to grapple with a myriad of challenges. Primary among these hurdles is securing trade and project financing within an intricate and often poorly-understood landscape.
There was a political risk insurance scheme to safeguard Singapore-based companies from political uncertainties; but it ceased due to insufficient take-up – emphasising the complexities of getting into Africa’s market. Further complicating matters is the absence of established banking relationships between Singaporean and African banks, coupled with a labyrinth of regulatory climates across African markets.
To fully tap into Africa’s digital potential, harmonisation of technology, intellectual property, and data privacy laws is crucial, says Jain. Acknowledging the disparities in digital transformation across Africa and investing thoughtfully in infrastructure and talent is essential in successfully navigating this intricate terrain.
Bilateral trade agreements, such as that announced in May between Singapore and South Africa to expand cooperation in the information and communications technology (ICT) sphere and human capital development, are a step in the right direction.
The focus on human capital development points to a concerted investment in sustainable futures, solidifying the bilateral ties through leadership and capacity-building courses under the Singapore Cooperation Programme. This initiative has already empowered over 1,000 South African officials, reflecting the commitment to nurturing talent for a digital future.
Yet uncertainty persists about how these initiatives will aid Singaporean small and medium enterprises (SMEs) that aspire to break into South Africa’s tech landscape. According to analysts, there needs to be renewed effort to ensure that the benefits of these agreements reach smaller companies. Despite trade between Singapore and South Africa soaring 60% since 2018 and hitting over $2.7bn in 2022, the power of these partnerships to boost Singaporean tech SMEs remains largely untapped.
As these companies mature, their ambitions naturally extend towards regions pulsating with untapped potential, such as Africa.
Vast mobile potential
The vast potential of mobile technologies alone, contributing $154bn to Africa’s economy and generating 1.7m jobs according to Brookings, an American think tank, underscores the magnitude of the continent’s nascent digital revolution.
In July Thunes raised an additional $72m in its latest funding round, boosting its valuation to over $900m. The injected funds will be channelled towards expanding its network and customer base, further solidifying its market position, and deepening its ties in Africa.
“This is where the future is – 65% of the continent’s population are below the age of 25 and it’s where the world’s youngest workforce will be. The opportunities are enormous,” says Yao.
Read more about the growing relationship between Singapore and Africa
