Can Paga Pioneer the Fintech Revolution for African Immigrants?
The traditional remittance model, once the cornerstone of African fintech, is facing significant changes. As the market matures, with a value exceeding $100 billion, African fintech companies need to innovate to stay ahead. Companies like Lemfi and now Paga are stepping up, and their strategies offer valuable lessons for the sector.
Expanding Beyond Remittances: A New Fintech Frontier
The initial focus on cross-border transfers provided a straightforward way for African fintechs to capitalize on the demand for dollar transactions in fluctuating African currencies. However, the profitability of this model has dwindled. Intense competition among numerous players has driven down FX transfer margins by approximately 30% in the last six years, as companies vie for customers based on speed, price, and reliability. Recognizing this shift, remittance startups now must diversify their offerings. Lemfi’s acquisition of Pillar, which introduced credit services for immigrants, marked a significant step forward by addressing a high-margin solution. The ultimate goal for African fintechs is building a multi-product, multi-market financial services platform. Paga is beginning to implement that vision.
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