Fintech for the Informal Economy: Designing Products That Truly Fit
Why the Informal Sector Matters
What many call 'informal' is, in fact, the backbone of Africa’s workforce. In Sub‑Saharan Africa, around 80–90% of employment and up to 65% of GDP come from informal businesses, street vendors, market hawkers, gig workers, micro-retailers, and farmers as reported by Fintech Insider Africa.
These entrepreneurs operate outside traditional systems and depend on flexible, trust-based tools not conventional bank products. Fintechs must design around the realities on the ground and local norms, not legacy frameworks that have already failed this sector.
How Fintech Is Bridging the Gap
1. Mobile Money & Agent Banking
In Kenya, M‑PESA revolutionized access growing from 26% adoption in 2006 to 84% by 2021, reaching over 30 million monthly users. Nigeria’s agent networks like Moniepoint, OPay now process over 800 million transactions monthly, bringing digital payments to neighborhoods across the country. Agent-led, mobile-based services bring financial tools to where people are, reducing friction and building trust in areas offline or underserved.
2. Inclusive Credit, Built on Alternative Data
Startups like Branch, Tala, or Kenya’s Twiga Foods offer microloans to market vendors, as previously mentioned in my instagram post, delivery partners using behavioral and transactional data in place of formal credit histories. Twiga’s B2B model, for instance, delivers produce and offers working capital to vendors and has facilitated over $55 million in sales per year. This transforms informal transaction patterns into reliable credit signals changing lives and livelihoods.
3. Savings & Investment Tools That Resonate
Traditional Rotating Savings and Credit Association (ROSCA), SuSu and “ajo” groups are now digital through platforms like PiggyVest, CowryWise, and Bankly in Nigeria. These apps enable informal workers like transport operators and market sellers to save consistently, invest in goals, and earn interest in ways they couldn’t before.
4. Micro‑Insurance & Pensions
Platforms like MicroEnsure in Ghana and Awabah in Nigeria offer micro-insurance and micro-pensions tailored to daily-wage earners working informally often with mobile-based onboarding and minimal KYC friction. These tools protect people who otherwise lack any financial safety net and slowly shift them toward resilience.
Design Principles That Fit the Informal Economy
Tailor to Low-Tech Contexts
Many users operate via feature phones or USSD, not smartphones. Jamii in Tanzania offers health insurance via USSD for less than $1/month. Design for minimal data use, local languages, and offline accessibility.
Build Trust Through Local Partnerships
Systems built with trusted local agents and not faceless apps will drive higher adoption. Nomanini’s “business-in-a-box” PoS turned informal retailers into digital agents, increasing incomes by 20–30% according to Afri Digest.
Use Local Economic Behavior as Credit Signals
Informal traders don’t have credit history but they have patterns. Twiga, Branch, Jobzy (in Kenya/ETH), and others leverage transactional data to assess credit risk and deliver working capital with low default rates.
Layer Financial Products into Daily Workflows
M‑Kopa delivers solar devices, mobile phones, insurance, and lending to gig workers all through pay-as-you-go models aligned with informal incomes.
Our Challenges
Low device penetration: Sub-Saharan Africa’s smartphone penetration hovers around 48% as of 2021.
Digital literacy and trust: Many informal entrepreneurs still rely on cash and resist unfamiliar tech. Education and customer care matter.
Infrastructure gaps: Broadband, consistent electricity, and regulatory clarity especially around identity and data privacy are still emerging in many regions.
Build with Local Context, Not Assumptions
Embedding fintech into Africa's informal economy is not about applying Western templates, it's about listening to economic behavior that’s already working.
If you're designing for this economy, center your efforts around real-use cases: USSD, agent networks, pay-as-you-go flows, alternative credit logic, and local partnerships. That’s where trust, scale, and genuine impact are found. We don’t need fintech that imitates banks. We need fintech that meets people where they earn, trade, and thrive.
