On August 12, 2022 three fintech startups graduated from the second cohort of the Fintechub programme. The graduation was held at Norrsken Kigali House during the 9th Edition of Fintech Friday hosted by The ICT Chamber in partnership with the Ministry of ICT and Innovation, United Nations Capital Development Fund, Norrsken House, and Rwanda Events Group.

Launched by UNCDF, the Rwanda ICT Chamber, Kigali Innovation City (KIC), the Ministry of ICT and Innovation (MINICT), and the Ministry of Trade and Industry (MINICOM) in 2020, the FinTecHub is a virtual, cohort-based accelerator offering support to selected Rwandan fintech startup companies to scale by addressing their needs for skills, partnerships, access to capital and markets, and navigating the regulatory environment. The first cohort of four startups out of 13 applicants successfully completed the program in June 2021 while the second cohort graduated with three fintech startups out of 11 that had applied.

The FinTecHub which is the first fintech-focused accelerator programme in Rwanda was born from recommendations brought forward by the Rwanda fintech landscape analysis report published by UNCDF in 2019 to map out the key enablers, inhibitors, actors, as well as the defining dynamics of the fintech ecosystem in Rwanda.

By leveraging on the insights from the assessment report, UNCDF in Rwanda worked with other ecosystem facilitators, including policymakers, regulators and private sector players to design this customized programme for fintechs to foster an enabling environment and help fintech start-ups achieve innovative, market-fit, inclusive, and scalable products.

By engaging stakeholders and nurturing participants' talents and business growth, the hub contributes to the Government of Rwanda’s ambition to position the country as a regional hub for ICT, innovations, financial services which have attracted investors from around the world. Rwanda wants to be a launch-pad for investors seeking to expand to market across the region and around the continent. These long-term goals are enshrined in the various policies put in place to enable a favorable environment for innovations in the financial sector such as the National Strategy for Transformation (2017-2024), the Payment Services Providers Regulation (2018), the Rwanda Payment System Strategy (2018-2024), and the Rwanda Fintech Policy and Strategy (2022-2027) that are being drafted.

Participants in the FinTecHub’s first two cohorts received:

• TAILOR-MADE TECHNICAL ASSISTANCE: Every startup received up to 4.5 million RWF (≈ US$ 4,500) to address specific needs identified during the diagnostic risk analysis.
• LEGAL ADVISORY TOOLKIT: The FinTecHub serves as a central contact point to streamline queries and provide support, guidance, and relevant toolkits to start-ups, helping them navigate the regulatory environment.

• MILESTONE-BASED GRANTS: In addition to the funds provided as technical support, every startup received seed capital of up to 15 million RWF (≈ US$ 15,000) in the form of a milestone-based grant. The milestones achieved by each company were evaluated in terms of customer and revenue growth after they had joined the program.

• POLICY AND REGULATORY ADVOCACY: In addition to guiding participating startups in navigating the regulatory environment, as a result of the hub and needs identified the Ministry of ICT and Innovation developed a policy and strategy for fintech.

The graduation of the second cohort was held during the ninth edition of Fintech Fridays, bi-monthly meetups between fintechs, financial service providers (FSPs), big tech companies, investors and other key stakeholders in the fintech sector to exchange on fintech solutions and growth in the ecosystem hub partners emphasized the need to scale up support and investment for fintech startups in Rwanda. At this event, speakers emphasized the necessity of programmes such as the FinTecHub to enable the ecosystem to keep up with emerging trends and spark innovations as a mechanism for a more inclusive digital financial sector.

“The reason why we keep inviting you all here is because we do not have any plan to stop. We keep going. It takes a whole village to raise a child. Same as for the fintech sector in Rwanda, it will require all of us. You can ask yourself how to get involved in this journey. Yes, you can get involved as a customer, financier, mentor, advisor, etc.” noted Alex Ntale, the Chief Executive Officer at Rwanda ICT Chamber in his opening remarks, as he thanked event attendees and called everyone to engage in the growth of the Rwanda fintech sector. The Fintech Friday event was hosted by The ICT Chamber in collaboration with MINICT and UNCDF.

As the fintech sector continues to emerge in Rwanda during this digital era, facing challenges and becoming consistent will be key for “techpreneurs.” Roselyne Uwamahoro, Country Lead at UNCDF Rwanda encouraged graduates to apply the skills they gbefore seeking support from other hubs.

“Learning never ends because people always want to learn. My plea to the fintechs that are graduating and that graduated before is ‘Can you please apply what you have learnt before you go to another hub?’ This will surely help you to detect the experience, knowledge and skills that you have gained. From this, you will also be able to assess the gaps you have before jumping to another hub.”

As the graduating companies pitched their solutions, they also called for greater collaboration to boost them in the emerging markets. In his closing remarks, Angelos Munezero, Public Sector Digitization Analyst at the MINICT underlined this need for collaboration, urging the public and private sectors to push the fintech sector forward. “These solutions are bringing better experiences than what we used to have and therefore we should all be aiming to support them. From the ministry perspective, we will be there to support you (startups) but we also look to you to actually put more efforts to ensure that we are moving from one stage to the other” noted Munezero.

Lessons Learnt and next steps

1. Partnerships and community engagement

To continue tackling existing and emerging challenges in the sector such as the need for more diverse financial products available to startups, limited funding prospects, low levels of financial and digital literacy and low levels of trust in digital solutions among clients, UNCDF will leverage its collaboration with the Government of Rwanda and other partners to strengthen and expand the support offered by the FinTecHub, advance the implementation of fintech policies in Rwanda and promote the uptake of the fintech regulatory sandbox that was launched by the National Bank of Rwanda (BNR) in 2018.

As financial technology continues to evolve at a faster rate in Rwanda, it leaves regulations and policy curators to play catch up. This eventually sets the pace for continued discords between the regulators and innovators as brick-and-mortar regulations are enforced on new innovative technologies. While regulators strive to provide sandboxes, UNCDF and its partners understand that the lack of institutional alignment, prohibitive requirements, and lack of ecosystem engagement to get feedback on the effectiveness of regulations and sandbox incentives, throttles the vision of having a budding fintech ecosystem in Rwanda.

In line with its inclusive digital economy strategy for 2022-2025 and by leveraging lessons learned from the FintecHub, UNCDF and the Central Bank of Rwanda are organizing a series of workshops that bring together regulators, fintech companies, and other stakeholders in the ecosystem to raise awareness on existing regulations and codesigning legal advisory toolkits that will help fintech start-ups to navigate the regulatory environment. The workshops’ end goal is to raise the number of regulatory-compliant fintech companies in Rwanda by expanding their apprehension of regulations and licenses core to fintech services providers, helping fintech startups to understand how to navigate the regulatory environment at the early stages of their business, to sharpen regulators' understanding of regulatory challenges for new and established fintech services providers, and raise awareness on existing regulation incentives to drive innovation.

2. Programme sustainability

In addition to the core programme activities, partnering with a private sector entity like ICT Chamber to run the FintecHub has enabled the platform to expand and interact with other players in Rwanda’s digital innovation space through workshops and mentorships. Nevertheless, with the institutional structure of a donor-funded project or program for a limited timeframe, the FintecHub falls short of being a self-sustaining initiative as it is limited by its legal status to engage in raising more funds, generating income, or expanding independent from its implementers. As a startup accelerator program, the FintecHub needs to ensure its sustainability by establishing well-defined processes and procedures, policies, structure, and operating guidelines to build resilience.

To address these constraints, UNCDF continues to engage and seeks to broker partnerships between the private sector such as venture capitalist firms or financial institutions and the public sectors which could help the hub to explore new revenue models in the long run including offering income-generating services, establishing a legal and institutional structure, building a core team, and standardizing its operations and partnerships strategies.

Watch the FintecHub’s second cohort graduation highlights here

Learn more about the first cohort’s experience in the video below