Digital Payment Solutions for SMEs
Digital Payment Solutions for SMEs
Business Model Description
Provide payment solutions for Small and Medium Enterprises (SMEs) to digitize financial transactions, integrated with existing accounting systems for efficient online management of invoicing and payroll. Digital finance solutions reduce cash reliance, support real-time transaction tracking, and offer scalability. Revenues are mostly generated through transaction fees and subscriptions, supported by actions to boost financial and digital literacy.
Expected Impact
Enhance financial inclusion and economic empowerment for SMEs and marginalized groups, including women and rural communities, leading to greater equity and resilience in economic growth.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Angola: Malange
- Angola: Bié
- Angola: Namibe
- Angola: Huíla
- Angola: Kuando Kubango
Sector Classification
Financials
Development need
Angola's predominance of the informal economy is coupled with low access to bank accounts, insurance and social security services, particularly among women (1, 2). SME operators in the formal and informal economy need to access to such services to improve their businesses.
Policy priority
The national program of formalization of the informal economy is supported by increased banking and financial inclusion, namely mobile money and digital services, for SMEs (30). New legal instruments have been enacted to support businesses (3).
Gender inequalities and marginalization issues
People living in remote or rural areas often lack access to traditional banking services, which may hinder entrepreneurship and investment in these areas. Access to banking facilities is further challenging for populations in underserved areas of the country (19).
Investment opportunity introductions
Five traditional banks command nearly 80% of the total assets, deposits, and loans. There exist significant opportunities for strategic partnerships or market entry for entities capable of disrupting this concentration through technological innovation (4).
Key bottlenecks introduction
Angola's financial sector faces challenges like market dominance by top banks, heavy state influence on credit distribution, high non-performing loans and reliance on costly third-party banking (4).
Corporate and Retail Banking
Development need
In Angola, nearly one in three people above 15 years old have access to a bank account and only 2% of citizens actively use this financial product, underscoring a significant gap in financial services accessibility, particularly among SMEs (5).
Policy priority
Angola introduced laws to modernize payment infrastructure, promoting electronic and mobile payments. Law 40/20 sets a framework for a safer, more effective, and modern Angolan payment system (6).
Investment opportunity introduction
Digital financial services (DFSs) are crucial in a market where technology adoption is rapidly growing, yet traditional banking infrastructure remains limited (7).
Key bottlenecks introduction
Challenges may include limited infrastructure for instant payments, insufficient technological infrastructure, poor internet coverage, and low digital literacy (8).
Consumer Finance
Pipeline Opportunity
Digital Payment Solutions for SMEs
Provide payment solutions for Small and Medium Enterprises (SMEs) to digitize financial transactions, integrated with existing accounting systems for efficient online management of invoicing and payroll. Digital finance solutions reduce cash reliance, support real-time transaction tracking, and offer scalability. Revenues are mostly generated through transaction fees and subscriptions, supported by actions to boost financial and digital literacy.
Business Case
Market Size and Environment
> USD 1 billion
10% - 15%
The digital payments market is showing promising expansion, with a projected transaction value of USD 8.45 billion in 2024 and an annual growth rate of 14.88% for 2024-2028 (10).
Indicative Return
15% - 20%
African investors expect a ROI of 18% from FinTech-related investments, including digital financial solutions. Financial institutions aim to make the returns in many ways, including adoption of one of the many solutions brought by innovators (11). The ROI of FinTech-related projects in Angola can be influenced by factors, such as economic diversification, regulatory environment, digital infrastructure, financial inclusion, local market demand, and political stability.
Investment Timeframe
Short Term (0–5 years)
Investments made in this business model are expected to have payback periods of between 1 year and 3 years (12). Investments in Angola may experience varied payback periods due to factors like economic stability, regulatory environments, infrastructure challenges, currency volatility, financing access, market demand, and political risks.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Market - High Level of Competition
Impact Case
Sustainable Development Need
Angolan SMEs have limited access to banking and payment services, which is hindered not only by challenges in accessing payment services such as credit cards due to their credit history, but also by factors such as high membership and usage costs, as well as low levels of financial literacy (31).
Gender & Marginalisation
SMEs in rural areas often lack access to traditional banking services, which may hinder entrepreneurship and investment in remote areas. Access to banking facilities is further challenging for populations in underserved areas of the country (19).
Expected Development Outcome
Digital payment solutions for SMEs contribute to improved access to financial services for small businesses leading to better market integration.
Digital payment solutions for SMEs provide tools for better financial management and access to services that help improving businesses' productivity and efficiency, including the ability to engage in e-commerce (17).
Integrating payment solutions with accounting systems can lead to increased efficiency and productivity, reducing the time and resources spent on manual financial management (17).
Gender & Marginalisation
Digital financial solutions empower women by providing them with personal accounts and financial autonomy, often for the first time. This can transform their socioeconomic status, providing opportunities for entrepreneurship and investment, and increasing their participation in the economy (18).
Digital payment solutions for SMEs provide increased access to financial solutions to rural communities who generally lack access to quality communications and services.
By offering digital payment solutions, the digital financial services industry helps to include unbanked or underbanked SMEs in the financial system. This can improve access to financial services for small businesses in remote or marginalized communities (17).
Primary SDGs addressed
8.3.1 Proportion of informal employment in total employment, by sector and sex
8.10.2 Proportion of adults (15 years and older) with an account at a bank or other financial institution or with a mobile-money-service provider
Proportion of informal employment in total employment for 2021 was 90% (28).
N/A
N/A
N/A
9.1.1 Proportion of the rural population who live within 2 km of an all-season road
N/A
N/A
10.2.1 Proportion of people living below 50 per cent of median income, by sex, age and persons with disabilities
The proportion of people living below 50% of median income reduced from 23.4% in 2000 to 22.8% in 2018 (27).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Data privacy risks: As more financial activities are conducted online, there is an increased risk of data breaches and misuse of customer data, leading to privacy concerns (20).
Technological unemployment: Automating financial services could reduce the need for traditional banking jobs, leading to job losses in certain sectors (21).
Impact Risks
Low digital literacy and poor infrastructure are barriers for some marginalized groups and can prevent them to use digital payment solutions.
Impact Classification
What
Increase in the accessibility of financial services through digital solutions.
Risk
There is a risk that those without access to digital technology or the internet remain excluded from the financial system.
Contribution
The payment solutions facilitate financial inclusion, empower SMEs with digital tools for business management, and contribute to a more transparent and efficient financial ecosystem in Angola.
Impact Thesis
Enhance financial inclusion and economic empowerment for SMEs and marginalized groups, including women and rural communities, leading to greater equity and resilience in economic growth.
Enabling Environment
Policy Environment
The National Bank of Angola (BNA) approved the National Strategy of Financial Inclusion. BNA has also introduced two Notices to force commercial banks to boost access to credit to SMEs in key sectors. Angola's government has introduced various initiatives, such as FinScope Angola 2022, that will provide credible benchmarks on level of financial inclusion and guide the National Financial Inclusion Strategy (22).
Financial Environment
Fiscal Incentives: Private Investment Law (Law 10/21 of 22 April 2021) offers benefits to digital financial sector via incentives, legal framework, innovation support, Public Private Partnerships (PPPs), streamlined procedures, and local content development (24).
Regulatory Environment
Law No. 40/20 establishes a comprehensive legal framework for the management, regulation, and operation of the Angolan payment system, focusing on safety, effectiveness, and modernization. This law grants the National Bank of Angola (BNA) extensive regulatory and supervisory authority, including the power to grant, revoke, and oversee licenses for Payment Services Providers and Operators (6).
Licensing is regulated by the National Bank of Angola (BNA). Law No. 13/05 defines Angola's financial system framework, mandating that banking institutions establish administrative and supervisory bodies (23).
Laboratory of Innovation of Payment Systems in Angola is an initiative by the Banco Nacional de Angola to promote innovation in terms of the fintech and wider entrepreneur and financial services ecosystem of the country. Beta-i, together with Banco Nacional de Angola and the local accelerator Acelera Angola is helping to create an experimental regulatory environment for fintech in the country (29).
Marketplace Participants
Private Sector
Afrimoney, EMIS, KixiCrédito, UNITEL Money.
Government
Ministry of Finance, National Bank of Angola (BNA), Ministry of Telecommunications and Information Technologies.
Multilaterals
United Nations Development Bank (UNDP), World Bank, International Finance Corporation (IFC), USAID, African Development Bank (AfDB).
Target Locations
Angola: Malange
Angola: Bié
Angola: Namibe
Angola: Huíla
Angola: Kuando Kubango
References
- (1) National Bank of Angola and National Institute of Statistics (2022). Source: https://www.ine.gov.ao/.
- (2) Statista (2022). Share of adults who owned a financial account in Angola between November 2019 and January 2020. Source: https://www.statista.com/statistics/1226262/financial-account-ownership-in-angola-by-area/#:~:text=Aug%201%2C%202022%20A%20huge,nearly%2060%20percent%20of%20the.
- (3) African Development Bank Group (2023). Angola Economic Outlook. Source: https://www.afdb.org/en/countries/southern-africa/angola/angola-economic-outlook.
- (4) US Department of State (2023). 2023 Investment Climate Statements: Angola. Source: https://www.state.gov/reports/2023-investment-climate-statements/angola/.
- (5) Inquérito de Literacia Financeira (2023). Principais resultados do inquérito de literacia financeira. Source: https://governo.gov.ao/noticias/1050/economia/em-parceria-com-o-ine/bna-apresenta-inquerito-sobre-literacia-financeira-em-angola.
- (6) ITA (2024). Angola - Country Commercial Guide. Source: https://www.trade.gov/country-commercial-guides/angola-trade-financing.
- (7) GPFI (2023). Global Partnerships for Financial Inclusion. Angola. Source: https://datatopics.worldbank.org/g20fidata/country/angola#:~:text=English%20Email%20Facebook%20Tweet%20G20,25.
- (8) Inocêncio Cordeiro (2023). Open Banking in Angola: Challenges of modernizing payments and technological infrastructure. Source: https://medium.com/@inocenciocordeiroarmando/open-banking-in-angola-challenges-of-modernizing-payments-and-technological-infrastructure-7002e74db35a.
- (9) Ver Angola (2023). A system that allows for the electronic transfer of funds from the banking customer's financial institution. Source: https://www.verangola.net/va/en/042023/BankingInsurance/35241/Multicaixa-network-expects-to-increase-transactions-by-20-percent-this-year.htm.
- (10) Statista (2023). Digital Payments - Angola. Source: https://www.statista.com/outlook/dmo/fintech/digital-payments/angola#:~:text=Total%20transaction%20value%20in%20the,US%2414.72bn%20by%202028.
- (11) FSD Africa (2018). Exploring new frontiers in fintech investments in East Africa. Source: https://www.fsdafrica.org/wp-content/uploads/2018/02/18-02-27-Exploring-New-Investment-Frontiers-for-Fintech-in-East-Africa-FINAL-Report_compressed.pdf.
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- (15) McKinsey & Company (2022). A digital approach to SME banking. Source: https://www.mckinsey.com/industries/financial-services/our-insights/a-digital-approach-to-sme-banking.
- (16) World Bank (2017). Digital Financial Services: Challenges and Opportunities for Emerging Market Banks. Source: https://documents1.worldbank.org/curated/en/750421502949470705/pdf/118736-BRI-EMCompass-Note-42-DFS-Challenges-and-Opportunities-PUBLIC.pdf.
- (17) ElDeeb, M.S., Halim, Y.T. & Kamel, E.M. (2021). The pillars determining financial inclusion among SMEs in Egypt: service awareness, access and usage metrics and macroeconomic policies. Source: https://fbj.springeropen.com/articles/10.1186/s43093-021-00073-w#citeas.
- (18) Klapper, L. (2024). Digital finance boosting women’s financial inclusion in sub-Saharan Africa: Emerging evidence. Source: https://www.brookings.edu/articles/digital-finance-boosting-womens-financial-inclusion-in-sub-saharan-africa-emerging-evidence/.
- (19) Epo, Boniface & William, Mougnol & Kamdem, Yvan Audrey (2023). Mobile banking and financial inclusion in sub-Saharan Africa: Cost versus geographical constraints. Source:https://www.researchgate.net/publication/365668994_Mobile_banking_and_financial_inclusion_in_sub-Saharan_Africa_Cost_versus_geographical_constraints
- (20) Nadeau, J. (n.d.). Banking and Finance Data Breaches: Costs, Risks and More To Know. Source: https://securityintelligence.com/articles/banking-finance-data-breach-costs-risks/.
- (21) UXDA (2023). Banking Industry Cuts Millions of Jobs due to Digitalization and AI, Source: https://www.theuxda.com/blog/banks-will-cut-millions-of-jobs-in-the-next-decade.
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- (23) Global legal insights (2020). Banking regulation. Source: https://www.vda.pt/xms/files/05_Publicacoes/2020/Livros_e_Artigos/GLI-BR7_Chapter-2_Angola.pdf.
- (24) Law 10/21 of 22 April 2021. See also: UNCDTAD (2021). Amendments to the Private Investment Law. Source: https://investmentpolicy.unctad.org/investment-policy-monitor/measures/3705/amendments-to-the-private-investment-law-.
- (25) World Bank Group (2020). Fortalecendo a Capacidade e a Inclusão Financeira em Angola. Source: https://dw.angonet.org/wp-content/uploads/2020_angola_financial_inclusion_study_-_wb_bna.pdf.
- (26) Inquérito de Literacia Financeira (2023). Principais resultados do inquérito de literacia financeira. https://governo.gov.ao/noticias/1050/economia/em-parceria-com-o-ine/bna-apresenta-inquerito-sobre-literacia-financeira-em-angola.
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- (28) ILO (2021). ILO STAT Explorer. Source: https://rshiny.ilo.org/dataexplorer40/?lang=en&id=SDG_0831_SEX_ECO_RT_A.
- (29) Beta-I (n.d.). Building the fintech ecosystem in Angola. Source: https://beta-i.com/impact/building-the-fintech-ecosystem-in-angola.
- (30) Governo de Angola (2018). Plano de Desenvolvimento Nacional 2018-2022. Source: https://faolex.fao.org/docs/pdf/ang179971Plan.pdf.
- (31) World Bank (2019). Pagamentos instantaneos e moveis em Angola. Source: https://documents1.worldbank.org/curated/en/987361576671768359/pdf/Pagamentos-Instant%C3%A2neos-e-M%C3%B3veis-em-Angola-Orienta%C3%A7%C3%B5es.pdf