The combination of digital financial services and climate-positive business has gained mainstream momentum in Africa. 

• Innovative cleantech firms increasingly provide related financial solutions. 

• This trend has given birth to a hybrid: Green fintechs.

• They deploy new financing tools to widen public adoption of climate solutions.

From the start: Some of the green fintechs were born green.

• Solar systems provider Sun King always knew that making renewable energy affordable meant solving payment issues.

• Recently launched electric motorbike maker Zeno put proprietary consumer financing into its first business model. 

In the meantime: Original non-green fintechs increasingly see profitable opportunities in Africa’s fast-growing climate economy. 

• South Africa’s Yoco went from payment processing to serving eco-friendly business models.

• Ecocash in Zimbabwe, once a mobile money play, now supports “revolutionary energy solutions”.

• Trade finance specialist Mercore increasingly provides its digital financing contracts to green businesses.

On the flip side: Ever more climate entrepreneurs are also leveraging fintech solutions to get traction in a tough market.

• Consumer finance provider M-Kopa has seen electric motorbikes overtake phones and televisions as a top earner.

Tech is key: Green fintech could not have been a thing a decade ago. Only recent innovations made it possible.

• Mobile money removed tired banks from the loop.

• New agent networks made rural Africa accessible. 

• Wireless monitoring replaced the need for trusted relationships. 

• Blockchain technology removed further intermediaries. 

Innovation helpers: This didn’t happen in a vacuum. It resulted from years of enabling — intentional or not.

• Some African governments have deregulated to make room for new ideas. 

• Others have been asleep at the wheel while innovators snuck past regulators.

Why it matters: Africa’s green economy long struggled with consumer adoption. Fintech is a key to scaling climate solutions that in some cases have existed for decades. 

• Perhaps the single biggest breakthrough has been the rise of Pay As You Go (PAYG), which now powers the majority of green consumer products.

Investor cash: At the level of the economy, fintech unlocks access to larger pots of money. At last.

• African nations need an estimated $3 trillion by 2030 to meet their Nationally Determined Contributions (NDCs) under the Paris Agreement. 

• With only a fraction of that mobilised so far, green fintech may be the best chance of bridging some of the gap (see our cheat sheet below).

Investment context: Why this marriage of fintech and cleantech in Africa is happening now is no great secret. Each needs the other.

• Fintech startups so far this year raised $158 million in funding compared to $852 million last year. Cleantech funding is growing but still falls short. 

Watch out: Critical challenges remain for green fintech. 

• The regulatory landscape across Africa is still wildly fragmented. 

• Financial infrastructure has improved but remains dysfunctional. 

• A lack of financial literacy among consumers slows adoption. 

Hope next: The sector is still at an early stage. Many (of the often homegrown) solutions are yet to meet customers at scale. 

• Nairobi-based startup ProsperHedge is offering foreign exchange hedging, which is inaccessible to all but the largest players in the economy.

• Other innovators focus on biodiversity credits, peer-to-peer lending and alternative credit scoring. Not bad for two elephants getting together.

2. Cheat sheet: Six types of green fintech

(i) Deposit & lending solutions: Savings and loans linked to climate-positive actions (e.g. consumer finance for e-bikes).

(ii) Investment solutions: Digital platforms for green financial planning and trading (e.g. portfolio allocation).

(iii) ESG analytics: Green data collection for asset rating and indexing (e.g. automated climate ratings).