Two Fintechs Enter Botswana’s Underserved Market

The Fintech Association of Botswana (FAB) had just been established, and there was only one recognized startup operating in 2023, making the country’s fintech sector young. In a nation where mobile money and digital banking are still developing, two promising companies, N2 Pay and Pathetic Inc., are getting ready to establish themselves in the market. They both provide unique perspectives on digital finance.

Both businesses have mostly forged their own routes despite the establishment of FAB, which reflects the fintech industry’s infancy in Botswana. These firms have potential, according to FAB Secretary General Lemo Seitei, who also pointed out that the organization is attempting to create a more supportive environment through collaborations, incubation initiatives, and regulatory assistance, all of which may indirectly affect these up-and-coming businesses.

Ntungamili Keagile, the founder of N2 Pay, states that although the association is useful in uniting people, she has not yet gotten direct support, mostly because she is not a member and the organization is still relatively new.

With an electronic wallet for the underprivileged, Keagile’s adventure began with the straightforward query, “Why can’t sending money in Botswana be as simple as texting a friend?” With the goal of closing the gap between the banked and unbanked, N2 Pay is creating a digital wallet that enables users to send and receive money. It provides cryptocurrency payments at the point of sale, quick bank-to-bank transfers, and a slick interface that can function with very little data.

In order to incorporate USSD and data-free access, N2 Pay has partnered with Visa and Absa, bootstrapped its development phase, and is currently negotiating with mobile operators. Implementing stablecoin transactions based on blockchain technology and employing AI to detect fraud are among their goals. Recently, the business teamed up with Lacaisse.ma in Morocco to offer digital point-of-sale (POS) solutions to nearby retailers.

“All we need is a banking license; our product is ready,” Keagile explains. 

The license, which would allow the processing of digital/online transactions and mobile banking, is essential before they can enter the market and will cost two million Pula (about $150,000). N2 Pay has a number of possible investors and recently received an offer for a Simple Agreement for Future Equity (SAFE) agreement over $100,000, despite the fact that this creates a catch-22 situation where investors seek quantifiable results that are impossible to provide without the required regulatory approval.

“We have not yet met with potential investors from South Africa and Europe, but this is far from enough to cover licensing, operational, and marketing costs,” Keagile explains.

Although it does not provide startup money directly, FAB recognizes the financial and regulatory obstacles. Seitei claims that in order to create a single regulatory framework for the Southern African Development Community (SADC) and expedite fintech licensing, FAB is in talks with authorities, including the South African Reserve Bank. These initiatives are still under progress, but they show promise for N2 Pay and other entrepreneurs in the long run.

And the Combination of finance and sustainability, Pathetic Inc., a firm focused on encouraging sustainable behaviour, is taking a new approach.

“People don’t realize how powerful incentives are. According to co-founder Larona Seditse, “when you reward sustainable habits, you change behaviour – and that changes scales.”

Pathetic Inc. offers digital loyalty points that can be exchanged for products or used into cash as a reward for environmentally conscious behavior. They are already working with telecoms and financial institutions to offer Visa-enabled debit cards that are connected to their rewards system.

There are also plans for referral programs and community-focused digital literacy campaigns that will use brand ambassadors to promote adoption. The distinction between fintech and lifestyle is being blurred by the company’s investigation of financial advances linked to loyalty points.

Their methodology is in line with FAB’s objective of advancing digital and financial inclusion through strategic partnerships, even though FAB does not yet actively support it.

An emerging market full of possibilities and with an internet penetration rate of 81.4%, Botswana offers a favourable environment for fintech. With 36.6% of people aged 15 and over having mobile money accounts, mobile money usage is on the rise. However, 31% of transactions are still made in cash, and banks and huge telcos still hold a significant amount of market power.

According to Keagile, “the major players at the moment are telcos like Orange Money, but their platform is not deeply integrated with emerging fintech solutions.” “There is potential for significant disruption.”

Seitei of the FAB is upbeat about this innovative wave. “FAB strives to build infrastructures that can support the next generation of startups through collaborations with Mastercard, Visa, and international organizations like AllianceDFA and the African Fintech Network,” he stated.

Fintech’s potential in Botswana is evident given the presence of technical capabilities, the formation of partnerships, and strong mobile connectivity. However, scaling depends on more than simply innovation for firms like Pathetic Inc. and N2 Pay. Investor confidence, regulatory clarity, and backing from organizations like the FAB are all necessary.

Whether or not FAB helped them launch, its increasing power could influence how companies do business in the future. Additionally, these startups have the potential to change Botswana’s perspective on money and the environment if they are successful.