EXECUTIVE INTERVIEWS > PUBLIC SECTOR
DIGITAL BANKING
Fintech startups in Africa have raised nearly US$ 3.0 billion in capital in 2021, more than double the US$ 1.4 billion they raised in 2020. The lion’s share of this capital went to four countries: Nigeria, Egypt, Kenya, and South Africa. The rationale behind the amount of funding going to African fintech startups is clear to see: The World Bank has estimated that there are 1.7 billion unbanked people globally, with
an overwhelming portion in Africa; 80% of the population in Sub-Saharan Africa is
unbanked.
Capital injected into fintech startups is only likely to increase with deepening mobile phone usage and internet penetration. Mobile subscriber penetration across the continent is predicted to increase by four percentage points to hit 615 million — half of the continent’s population — by 2025.
Sudan is yet to play a prominent role in the fintech revolution in Africa. However, all necessary ingredients are in place. The combination of a young, tech-savvy, and entrepreneurial population, high smartphone adoption, fintech-friendly regulation, juxtaposed with low banking penetration, make Sudan ripe for a fintech boom. The removal of sanctions, alongside significant economic reforms, including the exchange rate liberalisation, will boost investment in Sudanese startups, and the early signs are promising.
Bloom – a fintech startup founded in Khartoum – is the first Sudanese company to be accepted into the prestigious (and highly selective) Y Combinator, which has launched companies with total valuation in excess of US$ 600 billion; its alumni include 25 unicorns, including luminaries such as Dropbox, Airbnb, Stripe and Reddit. This is the most significant development in Sudan’s nascent technology ecosystem and may be an inflection point for the country.
“We are excited by our investment in Bloom and we value the diverse, yet complementary skillsets of its experienced founding team. Their passion and understanding of the financial challenges faced by consumers
in Sudan, and the wider East Africa region, position them uniquely for success.”
CEO of Y Combinator
Founded by childhood friends Ahmed Ismail, and Merghani Mahgoub early last year, alongside co-founders, Youcef Oudjidane, Khalid Keenan and Abdigani Diriye, Bloom has partnered with a reputed bank to launch Sudan’s first fully digital mobile banking experience. Its mobile app gives customers digital KYC and online bank account opening, fee-free Sudanese Pound and United States Dollar accounts, a free Mastercard, free, instant domestic transfers, and free, instant remittances to Sudan from several countries globally.
“We are delighted to embark on our mission to democratise financial access in East Africa, starting with our home market, Sudan”, Ahmed said.
According to the United Nations, total remittances into Sudan peaked at US$ 3.3 billion in 2013 and settled at US$ 2.9 billion in 2017 and 2018. About 90 percent of households receive remittances through unofficial channels. The parallel market exchange rate spread had a negative and significant impact on the economy and drove remittances out of the banking system.
“Remittances are particularly important as they provide a reasonably stable source of foreign exchange that can be utilised to fund essential imports, and Bloom’s objective is to aid Sudan’s economic recovery by bringing the country’s US$ 2.6 billion of informal remittances into the banking system”, Merghani said.
Indeed, total remittances have been able to cover more than 70% of the trade deficit over the past decade.
Despite the remarkable technological advances of recent decades, remittances remain extremely expensive in Sudan. While the direct cost is borne by the senders and their family recipients, there is a profound effect on the wider Sudanese economy. The UN has set a goal for remittance pricing and commissions to be no higher than 3% of the total sent for any company. Bloom is one of the first African companies to commit to that goal.
“Moving money into Sudan is not only expensive, but also cumbersome. Bloom envisages making remittances as simple as “sending a text message”, and in order to achieve that, Bloom has assembled the strongest founding team in Sudan, and arguably in East Africa”, Merghani said.
Bloom’s founding team includes four second- time founders, educated at Imperial College, UCL and the University of Nottingham. Prior to starting Bloom, the team had built three venture-backed companies, raised and successsfully deployed a first-time fintech venture capital fund, built a startup accelerator in East Africa, and held senior positions in finance and technology at Goldman Sachs, Barclays, Amazon, Microsoft and IBM.
In just one week, Bloom has already amassed over 10,000 people on its waitlist (which can be joined at www.withbloom.com). The plan is to invest heavily to scale in Sudan, and then launch in several other markets in East Africa.
“We are excited by our investment in Bloom and we value the diverse, yet complementary skillsets of its experienced founding team. Their passion and understanding of the financial challenges faced by consumers in Sudan, and the wider East Africa region, position them uniquely for success.”
“Sudan presents a fertile environment where venture-backed startups can build successful businesses that leave a positive mark on the economy. We are particularly proud to represent Sudan on the global stage, and we hope to be the first of many Sudanese startups to go through Y Combinator”, Ahmed noted.
What is Y Combinator?
Known as the “Harvard of startups”, Y Combinator (YC) is a Silicon Valley based startup accelerator, founded in 2005. To date, YC has invested in over 3,000 companies that are worth over US$600 billion combined, including Airbnb, Dropbox, Stripe and Reddit. YC interviews and selects two batches of companies per year. The program provides seed funding, intensive company building training, and exposure to the founders of the world’s most successful companies. The strict selection process, which claims that less than 2% of applicants are accepted, positions YC as the most selective and prestigious startup accelerator globally.
Sudan Business Magazine
