Africa’s growing $100 billion credit shortfall for small and medium enterprises is forcing banks, telecom operators, and fintech companies across the continent to work together in ways that were unthinkable a few years ago. This huge financing gap, identified by the African Development Bank (AfDB), remains one of Africa’s most stubborn economic barriers. It affects job creation, slows industrial growth, limits entrepreneurship, and weakens economic diversification in many countries.
A new report titled “Banking on Innovation” by Briter and Lateral Frontiers shows that financial ecosystems in Nigeria, Kenya, and Egypt have entered a new era where collaboration, not disruption, is driving digital finance. For many years, African fintech startups were viewed as bold challengers that could overtake traditional banks. However, the situation has changed. Venture capital investments have slowed, regulatory rules have become tougher, and consumers are asking for more reliable and connected services. These pressures have pushed banks, telecom companies and fintechs to join forces to build products that can close long-standing gaps in the financial sector, especially the continent’s massive SME credit deficit.
Kenya provides one of the clearest examples of this shift. The country faces a working-capital deficit of about $25 billion, equivalent to almost a quarter of its GDP. Because of this shortfall, lenders have moved away from operating independently. Instead, they now rely on deeper partnerships across the financial ecosystem. The report highlighted a key example: the partnership between Citi, Visa and Cellulant which produced Citi Optimised Pay, a digital supply-chain finance tool. The platform allows big companies to pay their suppliers almost immediately using commercial cards built on Cellulant’s payment system. This bypasses the long delays that normally affect SME payments. For thousands of small businesses that often wait months for their invoices to clear, the platform has become a lifeline, providing fast liquidity through deposits directly into bank accounts or mobile money wallets. The Citi, Visa and Cellulant partnership is now being studied as a model for solving SME cashflow issues that no single institution could resolve alone.
In Egypt, the SME credit challenge is different because the financial system is dominated by banks and has a long history of state control. Fintechs need bank partnerships to scale. Yet innovation continues to grow. One major example is the partnership between valU, a buy-now-pay-later service backed by EFG Hermes, and Banque Misr, one of the country’s strongest banks. Banque Misr’s investment allowed valU to expand consumer credit services across the country, offering flexible financing to millions of Egyptians who previously could not access formal credit. The Central Bank of Egypt has supported such collaborations by promoting interoperability through platforms like Meeza and InstaPay. However, the report warns that Egypt’s slow adoption of open banking and its lack of modern data infrastructure still limit the availability of deeper and more dynamic credit products, leaving a large number of households and businesses without access to required financing.
Nigeria’s situation is more mixed. The country has made major progress in digital payments, agent banking and mobile wallets. However, the credit market remains largely informal and fragmented. Fintechs such as Paystack, Flutterwave, Carbon, Kuda and Moniepoint have introduced new digital lending tools, merchant-credit services, and automated lending systems. But the unpredictable policy environment has made it difficult for small and medium fintech companies to scale. Despite these challenges, cooperation is growing. Paystack’s model, which connected directly to banks for settlement and reconciliation, helped more than 60,000 Nigerian businesses move into digital payments before Paystack was acquired by Stripe. Banks such as FCMB and Ecobank have also partnered with fintechs to simplify customer onboarding, expand outreach, and create new lending channels. Joint innovation has become a necessity in a market where regulatory changes—from crackdowns on digital lending to inconsistent crypto rules—can affect standalone fintech operations almost overnight.
The report notes that the next phase of Africa’s financial development will depend on building stronger digital public infrastructure, improving cross-border payment systems, adopting modern data standards and ensuring regulatory stability. The authors say artificial intelligence and open banking can play a big role in improving credit access if governments allow transparent data-sharing and financial institutions agree to interoperable systems. They argue that Africa is no longer simply copying financial models from other parts of the world. Instead, countries across the continent are creating their own systems shaped by economic realities, population growth, and the unique mix of fintech innovation and institutional resilience.
According to the study, Africa’s financial future will be built on partnerships that cross sectors, borders, and traditional industry boundaries. As long as the SME credit deficit remains wide and funding remains tight, collaboration—not competition—will define the continent’s path forward.
