The Tech
Leapfrog

In 2007, Safaricom launched M-Pesa in Kenya to solve a specific problem: most Kenyans had no bank account but nearly everyone had a mobile phone. The solution was simple — let people send money by text message. No branch. No application. No credit check. Within two years, M-Pesa had more users than all of Kenya’s banks combined. Today it serves 60 million people across seven countries and processes $364 billion in transactions annually. It did not disrupt banking. It replaced the need for it.

This is the leapfrog model. When you have no legacy infrastructure, you have no legacy to protect. Africa skipped landlines because it never built them — mobile towers were cheaper and faster to deploy. Africa skipped bank branches because the distances were too great and the populations too dispersed. Africa skipped card terminals because merchants could not afford them. Each absence created a gap, and each gap created an opportunity for a solution that was more efficient than what the developed world had built through decades of incremental improvement.

The fintech unicorns are the evidence. Flutterwave, valued at $3 billion, provides the payment rails that let a merchant in Lagos accept money from a buyer in Nairobi. OPay, valued at $2 billion, turned corner-shop agents into bank branches across Nigeria. Wave, valued at $1.7 billion, made mobile money free in Senegal and collapsed the fees that kept the poorest locked out. Stripe acquired Paystack for $200 million because it understood that African payment infrastructure was not a charity project — it was a commercial opportunity with no Western equivalent.

But the leapfrog has limits. Internet penetration in sub-Saharan Africa averages just 27%. The digital divide between Nairobi and Niamey is as wide as the divide between Nairobi and New York. Seventy percent of startup funding comes from outside Africa, which means the ecosystem is vulnerable to cycles it does not control — as the 2023-24 correction painfully demonstrated. Growth-stage startups that had raised over $100 million collapsed when funding dried up. The lesson was clear: African tech needs African capital if it is to be resilient.

The deeper question is whether the tech leapfrog can drive structural economic transformation or remains a thin layer of innovation on top of economies that are still overwhelmingly informal, agricultural, and underemployed. Nigeria processes $1 trillion in instant payments but its unemployment rate is 33%. Kenya’s M-Pesa serves 40 million users but 80% of employment is informal. The technology works. The question is whether it generates the productive employment that 20 million young people entering the workforce every year require.

The most interesting signal is the Pan-African Payment and Settlement System (PAPSS), launched under AfCFTA, which enables traders to settle cross-border transactions in local currencies without routing through US dollars. If PAPSS works at scale, it reduces transaction costs across the $3.4 trillion free trade area and gives African fintech infrastructure a structural advantage that no Silicon Valley company can replicate — because it was built for this market, from the ground up, from the beginning.