Fintech: State of Innovation and Opportunities in Latin America and East Africa

1        Introduction

Venture capitalist, private equity firms, corporations are increasingly channeling an unprecedented flow of capital into global financial technology (fintech) companies. Technology is changing the way consumers relate to their finances and the way institutions function in our financial system.  For instance, in Latin America, a wave of exciting and ground-breaking fintech innovations are attempting to take advantage of a lack of financial services. Fintech companies such as NUbank, Pingit, and ContaAzul are more appealing to the underbanked, underserved due to their more advanced and user-friendly systems. In Africa, fintech is essentially creating a new industry from scratch. The widespread use of mobile wallets is enabling companies that are already serving low and middle income segments to broaden their service offering to include other financial services.

2        Trends in the Fin-Tech Sector

Reduction in Corruption

The trend of corruption will set to be minimized when cash is digitalized – mobile services like Easypaisa in Pakistan and M-Paisa in Afghanistan are allowing the transfer of money straight from government accounts directly to the account of the target user. This renders the role of the middlemen to be unnecessary – which in most emerging economies, a corruptive influence. [1]


Blockchain is a peer-to-peer technology that uses its distributed ledger and advanced encryption to guarantee the provenance of every transaction. An up and coming trend is blockchain digital identities, which is based upon a mobile biometric fingerprint or eyeball, with a mobile wallet that has interoperability and standards. This movement is set to become a mainstay in Africa in the near-term future where a cheap mobile identity scheme takes over the world.[2]

Mobile Revolution

Another exciting aspect is that most models will be built and scaled in an AI-enabled and mobile-only world. P2P platforms will scale with intelligence embedded into their algorithms and payment systems will include API-friendly platforms. Let us look at the absolute numbers in Latin America: there will be more than 605 million smartphones in the region by the year 2020 – a figure only dwarfed only by the Asia Pacific region[3] – therefore there is no doubt that crowdfunding platforms and wallets will target millions through their mobiles.[4]

2.1      Developments in Latin America

Mexico – one of the largest economies in Latin America, with an emerging middle-class signifies boundless opportunities. However, against this backdrop, lurks a financial services industry of contrasting fortunes: large, nimble banks and financial institutions thrive in a country with abysmal credit penetration, low financial inclusion and a prevalence of frauds.

The Mexican government has sought to rectify this through the launch of its National Financial Inclusion Strategy (NFIS) – a roadmap to accelerate access to financial services for more than half of the population currently left out of the formal and regulated financial system.

In the private sector, Mexico’s fintech industry has practically conditions ideal for venture capitalist: large untapped markets, highly scalable models, startups with solid traction and multiple exit scenarios.

Mexico’s key challenge is to increase financial service penetration, and to extend financial access to people who are currently out of the reach of the regulated financial sector. Today, more than half of internet users bank online and microcredit institutions have fostered a better environment for financial inclusion by creating a culture of credit in micro-business owners.

In Colombia, there has been an emergence of approximately 70 startups in the fintech industry in recent years[5] which business models include payments and remittances, online loans and improved financial services. According to Asobancaria[6], in Colombia “the decrease in the cost of processing, storage and operation and the new ways of ascertaining the identity or the credit capacity of customers are the key features that have allowed fintech companies to design more affordable products for low- income homes and companies, which –if it weren’t for these innovations– would not have access to financial products and services.

Finally, an interesting development that is worth observing in the upcoming years is the increasing utilization of bitcoins in Venezuela. The colossal social spending program carried out by the Venezuela government has led to astronomical levels of inflation. As a result, Venezuelans are turning to Bitcoin as an alternative to protect their savings from the rapidly decreasing value of the bolivar.

2.2      Development in Africa

An interesting trend is taking place in Africa where telecos are playing the role of banks and banks are taking on the role of telecos. For example, FNB Connect, a “virtual mobile network” launched by the South African bank aims to compete in the telecommunication space in the country. On the flip side of the landscape, M-Pesa, a mobile platform owned by Kenya’s telecommunication company Safaricom has evolutized the financial industry in East Africa.

Traditional banks are also now reaching out to fintech startups – acknowledging that their innate bureaucratic structure does not them to be flexible and hence having difficulties riding along the fintech wave. They also know they have failed when it comes to reaching lower income consumers in informal markets and therefore the partnerships with the smaller startups to help them connect with the consumers and in turn, provides the opportunities for smaller companies to scale.

3        Challenges

One of the gating factors to financial inclusion is the ironic fact that the poorer one is, the more one has to pay for transacting and transmitting.  For example, the average remittance cost of sending money from Kenya to Uganda is over 10% if performed through a bank and 8% through Western Union.  In fact, the cost of sending money back home to Africa is higher than anywhere else in the world.[7]

Another uphill battle Fintech startups are facing both in Latin America and Africa is the excess regulation set in place. There is a real risk that financial innovation will fall through the cracks of a complicated system of regulation in emerging markets – the need to comply with complex regulations and navigate through political power is stumping Fintech innovation.

Some other common challenges would-be FinTech innovators face across the country are lack of funds to expand and scale; antiquated credit scoring methods; inability to identify users; and sub-par infrastructure that prevents access to both online and brick-and-mortar financial institutions.[8]

4        Opportunities & Moving Forward

The banking sector in Africa is set to be disrupted faster than anywhere in the world. With bitcoins and blockchain technology, a lot of the financial infrastructure will be leapfrogged, rendering the need for third parties like banks operating as trust brokers. Blockchain, in particular is hyped to be the most significant social and political innovation to impact Africa in 100 years. A possible groundbreaking movement could be a digital economy based on blockchain and bitcoins which could hold political leaders to a higher level of accountability.[9]

According to the World Bank[10], with the rapid development and advancement of fintech, there is an urgent need to safeguard financial stability. In the unfortunate event should a failure occur in these new products (bitcoins, blockchain technology etc.), public confidence would be severely eroded given the amount of investment – emotionally and financially, by the underserved, compromising years of financial sector development.

In a nutshell, this new risk landscape requires new ways of thinking about regulation and financial supervision in particular cybersecurity risks, where banks and regulators have to depart from traditional supervision processes. We are starting to see an uprising in terms of financial innovation and inclusion. In order to maintain and uphold the integrity of the sector, there is an imminent need to regulate Fintech effectively, coupled with applying regulatory knowledge in new ways both from the private and public sector.












Healthcare: State of Innovation and Opportunities in Latin America and East Africa

Executive Summary

There is a democratization of healthcare taking place globally. On a macroeconomic level, political decisions and disease trends are influencing growth and development of the health sector. On the field, there is an appetite for cross-region and cross-sector collaboration, creating unique environment to scale up manufacturing innovation, for instance, small scale providers are giving way to delivery networks that can scale and take advantage of tools and technology that improve efficiency and financial sustainability.

However, there is a need to overcome the lack of coordination and collaboration among parties in the sector (public & private, different investor types, etc). One major setback holding back the sector is the dearth in growth capital – mainly a mismatch between available capital and venture needs and gaps in innovator knowledge. There is a huge disconnect in the type and size of capital being demanded and supplied with venture capitalist willing only to invest in amounts ranging from tens of millions whereas many small ventures require a few hundred thousand to a few millions. Another obstacle is the huge disconnect between health and technology – many niche areas in digital health markets remain unexploited. This problem is largely due to the challenges of running a mobile clinic with the major one being many doctors wanting to work in public health.

We see the public sector to play a significant role as a regulator and payer. To scale, the private sector must have a synchronized relationship with the public sector – the need to structure high level partnership encompassing knowledge transfer, capacity building and sharing. We need to rethink the concepts of global health – more specifically where we deliver care and access resources, with people being the center of health systems, places are social network where people live.

1       Introduction

Globally, 2.4 billion people are still without sanitation facilities and 780 million do not have access to an improved water source. It has been estimated that given the continuing trend, the lack of WASH will result in the death of 25 million kids under 5 by 2035 – the largest killer of children under 5.

There is an increasing recognition that governments cannot tackle the myriad of healthcare problems on their own. There are 3 main themes in the approaches being utilized to solve these issues. Firstly, we see increasing solutions that focus on the empowerment of individuals – entrepreneurs are increasingly realizing that when the populations they serve are empowered with the information, tools and resources they need, healthcare outcomes can improve, even in the absence of formal settings, systems and providers. Secondly, entrepreneurs are looking at lower-tech, lower-cost solutions that expand access without sacrificing quality and ultimately saves lives. Thirdly, entrepreneurs in emerging economies are building their services around the way people live their lives – they are taking healthcare to places where communities live, work and play.

2        Trends in the Global Healthcare Sector

We see a more robust private sector health marketplace with the growing middle class being one of the main drivers. As a result of this, we see businesses adopting differential pricing, increasing interest from multi-nationals corporations who see developing economies as their future source of growth – so they can sell equipment to smaller clinics. In addition, the greater mobility of populations and increasing urbanization allow greater access to services. This increase in access to technology and information allows consumers to understand the benefits of healthcare services. This virtuous cycle has captured the attention of investors from developed countries and governments as they are exploring new ways to deploy capital to solve capital problems, as evidenced by the G8 Taskforce and working groups. Fund managers and DFIs with a footprint in Sub-Saharan Africa and India are increasingly looking at health as a focus sector.

On the ground level, there are increasing activities of entrepreneurs collaborating with different partners. Some movements we see from the bottom up are –

  • Innovators tend to be earlier stage, for-profit companies concentrating on technology solutions.
  • Care providers are aggregating into networks and using improved tools, processes, and technologies to create economies of scale and improve quality.
  • Industry-academic collaborations
  • Public Private Partnership (PPP) to enable solutions

2.1       Developments in India

Healthcare spending has grown at a 10.3% CAGR since 2008 and is projected to grow to $158B in 2017. Currently, 74% of hospitals and 40% of beds are run by the private sector. Common themes are overarching health sector needs – challenges in India include shortage of medical professionals; lack of necessary grant funding for R&D phase of development; and distribution challenges. One major barrier for growth is the political nature of healthcare – fragmented governments make it hard to replicate consistent service across geographies. Another is a large reputational risk of dealing in healthcare in India because of all of the negative stories about quality. It is hard to invest in rural private clinics in India because the benefits of care are not understood – it takes a lot of coordinated work to make this happen. It is partly why we have not seen many scalable business model focused on serving rural populations. In addition, debt financing is not readily available as banks do not understand the business models enough and they have no risk scoring methodology in place.

2.2       Development in Africa

Sub-Saharan Africa especially Kenya and South Africa, represent large areas of interest and growth. Healthcare spending has grown at a 9.6% CAGR since 2000. Although the private healthcare market is highly fragmented, private sector investing is expected to grow from USD 11B to USD 20B from 2007 to 2016 with 50% devoted to healthcare provision.

In Kenya, we see the emergence of healthcare innovations like mHealth (eg clinical management system, SMS based health reminder) and micro-insurance schemes. Digital health is an interesting space with the huge NGO support, more deal flow around commercial and the development of primary care delivery system to serve lower income. The IFC noticed that the use of technology decreases unit cost, improves quality of products – thereby advising entrepreneurs to focus on asset light instead of the capex heavy model healthcare companies are known for. The key is to build model around it being agile and allowing it to scale.

Some issues the sector is dealing with include talent recruitment, management, medical training and human capital in the form of more medical professionals. There is also a foundational issue where some do not see the urgent need for a private sector health solution, ideologies which are hampering the development of the industry.

Regarding business models, providers are mostly independent entrepreneurs. The field is in a ‘pioneer stage’ where entrepreneurs need both capital and technical assistance. There is an increasing recognition that to provide care to the lowest income group, there needs to be a cross-subsidy model. On the financing aspect, traditional investment timeframe of 7-10 years for equity funds are too short hence unsuitable for these businesses to take on these forms of capital. On the flip side, the market is flooded with early stage free money from aid agencies, which ironically are not helping the entrepreneurs as over time, these leads to a reliance on funding. The solution is also not that straightforward either – local companies have no access to debt because they are not available, at high rates or require too much collateral, leaving these enterprises with little option but to pursue grants as a means to sustain their business.

2.3       Development in Latin America[1]

LatAm countries are currently facing increasing rates of chronic diseases, high mortality rates from maternal and child death and infectious diseases. Therefore, there is an urgent need to change the status quo – health systems must evolve into more comprehensive approaches to tackle these complex, chronic conditions.

Over the last decade, although the proportion of public health expenditure as a percentage of GDP generally grew, private spending still represents a significant portion of healthcare expenditures, just over half of total health spending (51.8%) in Brazil and nearly half of total spending in Mexico (48.3%) in 2013.

These themes have emerged from research by the Innovations in Healthcare –

  • Relative to other regions, in LatAm, the government plays a very large role in healthcare delivery and payment, especially for low-to-middle-income populations. As a result, the government factors heavily in the ecosystem surrounding innovation activity, while also directly shaping the strategies of individual innovators and funders.
  • Outdated regulations are hampering labor flexibility and implementation of task-shifting models. This limits opportunities to test the efficiency and effectiveness of task-shifting models, which are central to many cost-cutting innovations in countries around the world—and address healthcare workforce shortages while increasing efficiencies in care delivery.
  • Private sector innovators face a lack of appropriate growth funding – the majority of investors are fairly new to the sector and cannot effectively evaluate healthcare entrepreneurs; do not fully understand the risks and rewards; nor can they provide technical assistance to help facilitate business growth.

3        Challenges

First and foremost, the status quo in the sector is how incentives are not correctly set up for consumers to adequately demand preventative healthcare, which brings us to the demand for businesses serving those in need of healthcare services. Another set of problem surfaces as it is challenging to find enterprises that are not highly subsidized with grants for technical assistance. For investors looking in the healthcare sector, different forms of financing might be required instead of the traditional equity or debt. As a result, lots of silos of investors have difficulty working together.

For the sector to grow, there is a need to overcome the lack of coordination and collaboration among parties in the sector (public & private, different investor types, etc), lack of adequate health insurance schemes, a need for an enabling policy environment, and a pipeline of human capital (with medical and business training). In East Africa – more specifically in Nigeria – regulatory hurdles are the main barriers to growth in a country further burdened with a need for large capital expenditure. Furthermore there is a tension stemming from an imbalance of supply and demand when the genuine concern is the ability of customers or consumers to pay.

4        Opportunities

For every challenge faced, there is an opportunity to create value. Take the example of tele-health models which are evolving quickly – there is a huge opportunity to reach out to through mobile phones as an increasing number of the population now own a smart phone. Henceforth, social marketing could be used as a tool for healthcare awareness and services in different ways.

There is also a need to stop looking at the field from a disease-focused lens as there are lots of opportunities in cross-disease business models like diagnostic, mHealth, health data tracking (EMR), franchise models[2].

Further opportunities are identified below:

1) Pushing healthcare outside of healthcare facilities to a more patient empowered model – there are several benefits in this approach. Firstly, the cost of delivering primary care will decrease dramatically as the power has now shifted to the consumers. A patient empowered model means the greater need for more advanced technology and technology will bridge human resource gap, skill transfers, boding well for the sector.

2) Growing market demand but limited successful innovations currently seen in these areas:

i. Financing solutions – Over 50% of East Africans lack any form of health insurance. 90% of Kenyans and Ugandans lack any form of health insurance. However, a health financing product for the mass markeut has yet to scale in the region and demand among private sector patients and providers for such a product continues to increase.

ii. Non-communicable disease (NCD) management models – East African countries continue to face the double burden of communicable and non-communicable diseases with NCD now accounting for one-third of all premature deaths. However innovations in this area remains sparse.

3) Patient-centered solutions – Existing healthcare innovations are offering provider-led solutions like training, improved payment models, or process improvements. However, other patient-centered solutions like patient engagement, education, and embedding solutions into the daily life or community of patients are not as prominent.

4) Opportunities across the value chain –

  • Physical delivery system
  • Medical devices and supplies
  • Pharmaceuticals
  • Payment systems
  • Mobile & other technology
  • Logistics & distribution

5        Moving Forward

5.1       Supporting the Healthcare Innovation Ecosystem

1. Strengthening private-private partnership – Structuring mutually beneficial partnership between health-care innovators and multi-national corporations and other prominent private sector players across the healthcare value chain can help innovators grow and ensure that the best innovations are being leveraged by those well positioned to reach a large portion of the population.

2. Understanding how to engage with the public sector – Understanding how to structure high value public private partnership can open up a path to scale for small-scale healthcare innovators and multi-national corporations while making progress towards public sector goals. The public sector needs to be more responsive and collaborative with the private sector – the private sector healthcare does not get considered in policy making or decision making which can distort the market.

3. Making growth capital more entrepreneur-friendly – Deploying early and mid-stage growth capital (both grants and investments) in a way that allows innovators to learn, iterate, and scale successfully can create more impactful enterprises in the long term.

4. Leveraging the connections between the technology and healthcare sectors – Improving the connections and understanding between the healthcare and technology sectors could lead to faster growth and more efficient scaling of healthcare innovations across the region.

5. Increasing knowledge sharing – Sharing what market intelligence and assumptions inform the design of healthcare innovations, how companies have tested these healthcare innovations, and what they found to work and not work can prevent duplication, funnel resources to the right innovations, and accelerate the growth of the best ideas.

5.2       Innovation

1. Technology – Technology was a big part of the conference, with several companies presenting technological innovations in healthcare across the globe. Some of the most impressive companies in this category include’s core product amHealth that automates communication with patients and digitalize patient information to better connect patients and doctors in Africa and platforms of AccuHealth (Chile) and Wisercare (USA) that gather biometric data to help predict bad outcomes for patients and use algorithm to provide treatment guidance for individual patients respectively. Another notable example is MTTS (Africa and South-East Asia), whose technologies include technology for respiratory distress syndrome, two kinds of phototherapy for neonatal jaundice, warmers for hypothermia, and hand sanitizers for infection control.

2. Patient engagement – Interestingly, we noticed that the technological innovations revolved around increasing transparency between patients and doctors. Applications and platforms mentioned above (, Accuhealth and Wisercare) worked about reducing the information gap between patients and healthcare professionals. Other companies we came across were North Star Alliance in Africa that uses a sophisticated technology system to track health trends and allow patients to access their records at any clinic and AFYA Research in Kenya which offers health supplies and diagnosis at each health kiosk through a model that incorporates co-ownership with community members.

3. Service delivery – Companies that serve to increase access to healthcare services were the majority. The more interesting business models that we pinpointed are Dr Consulta in Brazil, which integrates primary and secondary health services into one location, with prices 70-90% lower than the private market, Nationwide from India which combines physical clinics (company-owned and franchisee) and telehealth to improve sustainability of primary care delivery. Other ecosystem-centric model includes the hub and spoke model – utilized by Salauno (Mexico) and Livewell (Kenya) and the franchise network model (Vaatsalya and Visionspring from India), which drives costs down by centralizing administrative and management costs. Another unique model is by a Latin American non-profit entity, Pro Mujer that bundles financial services with healthcare delivery at the point of service.

4. Products – We also noted a few innovations pertaining to products that aim to provide affordable healthcare: AYZH, which operates in Asia and multiple countries in Africa developed a “$3 Clean Birth Kit” to reduce risks from infections linked to unhygienic birthing practices. We Care Solar, which has operations globally, developed a portable, cost-effective Solar Suitcase that provides health care workers with solar electricity. Sproxil created a mobile-based drug verification tool, Mobile Product Authentication (MPA) that enables tracking and verification of drugs at every step in the supply chain in various East African countries.

5. Financing – Serving the low income population has its inherent challenges – mainly the ability to pay for the healthcare services for those in need of them. Several companies have set to overcome this by structuring their models around leveraging technologies or tapping on economies of scale. In Columbia, BIVE’s services are discounted at rates up to 70% lower than regular health insurance, and provided through a flexible, affordable membership and payment structure. Changamka, a health financing company, leverages mobile technologies to improve the financing of healthcare services for the working poor in Kenya. Heartfile in Pakistan, developed an internet-based and mobile technology platform that allows providers to seek fast and transparent cash transfers for low-income individuals by accessing country demographic data to facilitate requests for funding of health care provisions.

6. Access to Healthcare – Innovations in this category are aimed to overcome infrastructure and communication barriers. Some attention-grabbing companies include Uganda’s ClickMedix that provides a smart-phone-enabled technology platform that connects medical providers and patients without the physical presence of a doctor, Riders for Health which develops end-to-end transportation solution – accurate budgeting and planning, appropriate vehicle selection, driver and rider training amongst others in various countries in Africa.

7. Collaboration – We noticed an increasing trend of partnerships with large multinational companies. For instance, MicroEnsure who operates in South Asia and Africa, leverages existing relationships between consumers and major brands to deliver affordable insurance at scale. MedicallHome in Mexico leverages the existing network and billing platform of the leading telecommunications company, TelMex, as part of a joint venture to provide customers with 24/7 access to medical advice over the phone, eliminating unnecessary travel and payment for clinic visits.

8. Hybrid model – There are 3 companies that operate as non-profit/profit hybrid. The companies in this category are: Projecto Cies in Brazil which receives contracts, mainly from government but also from companies/employers, care is free for the patients; it is the contracting organization that pays Cies. One Family Health manages a nurse-run, business franchise chain of primary care clinics through a public-private partnership with the Rwanda Ministry of Health, GSK, and EcoBank. And finally, Naya Jeevan pioneers a health insurance and catastrophic care coverage plan developed in partnership with multi-national corporations that pool risk and create bargaining power to negotiate rates.

9. Others – Other interesting models that we came across are the providing of workforce training to medical practitioners and health workers through live simulation courses (Pace in Mexico), mobile technology (Bodhi Health Education in India), franchise conversion model (Lifenet in Burundi). We also noted some companies implementing cross-subsidizing cost model to provide care to lower-income patients (Medica Santa Carmen in Meixco & L V Prasad Eye Institute in India).

[1] Healthcare Innovation in Latin America and the Caribbean: A Focus on Emerging Trends and Market Opportunities in Brazil, Colombia, and Mexico (2016). Innovations in Healthcare.

[2] Strengthening health systems in developing countries through private investment (January 2015)

References: Notes and sources were from the Innovation in Healthcare Forum 2016 and from reports in the Innovation in Healthcare website.  (