Read on Twitter
Today I’d like to share a thread on the Rise, Fall and Resurrection of Tala, East Africa’s notorious ex-digital lender, now a reformed crypto Fintech start up
So tala started out as Mkopo rahisi, MFI style lender using mobile. The time was right around post MFI boom, the smart wazungus from Grameen and MFI, DFI we’re moving into the early stage of Fintech boom in East Africa
Mkopo rahisi and KIVA earliest lenders of small businesses and unsecured micro loans. Both quickly pivoted into the new a Fintech startup boom.
Kiva founders later formed Fintech digital lender, Branch.
Mkopo rahisi morphed into Tala, Mobile digital lender.
Kiva founders later formed Fintech digital lender, Branch.
Mkopo rahisi morphed into Tala, Mobile digital lender.
My sketch shows the boom years that followed, before the burst caused by public perception, regulatory measures and a post pandemic economic shock. Tala’s digital lending business is literally dead.
Red is corona
Green is day of CBK clampdown
Red is corona
Green is day of CBK clampdown
In the grand scheme of things, digital lending is a microcosm of a Fintech meta trend of other digital financial services besides lending. Each service has emerged at a different time. See
Purple (payments, investments, savings, lending).
Purple (payments, investments, savings, lending).
Some services like payments are part of Fintech since as far back as 2010, digital lending only exploded in 2017 and new banks like carbon is post 2020.
In black is Talas digital lending phase w/in a bigger Fintech trend from 2013 till post corona
In black is Talas digital lending phase w/in a bigger Fintech trend from 2013 till post corona
Cryptocurrencies is also part of Fintech. This is a timeline of 2 Crypto models in East Africa from 2013 to date.
Deep red is models dependent on regulators
Yellow is peer to peer models Independent of regulators
Deep red is models dependent on regulators
Yellow is peer to peer models Independent of regulators
Regulator dependent model performed well until a regulator clampdown in 2015 by Central Bank (green) killed this model.
Peer to peer model in yellow picked up and was able to withstand regulator controls. Paxful, binance peer to peer, LBC, Localcryptos, informal , offhsore
Peer to peer model in yellow picked up and was able to withstand regulator controls. Paxful, binance peer to peer, LBC, Localcryptos, informal , offhsore
The story of crypto from 2013 - 2021 is documented on this thread. Crypto performed better in growth and adoption despite corona and regulatory choke points https://twitter.com/pesa_africa/status/1357938874845175809
Globally, another trend has been unfolding. Since 2013 decentralized cryptocurrencies have grown in adoption and maturity. Even after corona
Stablecoins, backed by national currencies grew gradually but recently exploded due to regulations (green FATF) and corona
Stablecoins, backed by national currencies grew gradually but recently exploded due to regulations (green FATF) and corona
USDC is the latest compliant cryptocurrency backed by the US dollar. Issued by an American company Circle on the Stellar blockchain. Traditional payment Companies like VISA are taking Cryptocurrencies mainstream
VISA Is diving into cryptocurrencies https://twitter.com/pesa_africa/status/1388826868938326016
VISA Is diving into cryptocurrencies https://twitter.com/pesa_africa/status/1388826868938326016
VISA moves to payments settlement using USDC Cryptocurrencies https://twitter.com/pesa_africa/status/1376467563769704448
In recent times, VISA has moved to investing / acquiring/incubating startups in Fintech in Africa, even adapting its products for local market realities such as mobile money and mobile phones
So Visa is always looking for partners for last mile and distribution and acquisition..
So Visa is always looking for partners for last mile and distribution and acquisition..
Tala, is one such partner, one of many to come https://twitter.com/pesa_africa/status/1390174781530689540
Let’s tie it all together
Tala used to be a digital lender, went through a business cycle, died after corona. Right around the same time, crypto regulations emerged from FATF drawing in compliant payment companies looking for partners like Tala who can now reinvent themselves
Tala used to be a digital lender, went through a business cycle, died after corona. Right around the same time, crypto regulations emerged from FATF drawing in compliant payment companies looking for partners like Tala who can now reinvent themselves
Tala has managed to pivot into another boom cycle just at the right time due to a change in regulatory environment. Pre and post FATF compliance. Tala is well position for the medium crypto cycle
Tala reportedly has 6 million customers
Press release says “Tala’s customers will gain access to the digital coin USDC in Tala's in app wallet, supporting asset storage, cross-border transfer, and crypto-fiat exchange functionalities.”
Press release says “Tala’s customers will gain access to the digital coin USDC in Tala's in app wallet, supporting asset storage, cross-border transfer, and crypto-fiat exchange functionalities.”
“Visa will provide Tala with the ability to issue Visa cards linked to the wallet, enabling Tala’s customers to spend against their USDC balance”
Tala now has massive capabilities to shape shift into anything crypto or banking related
Tala now has massive capabilities to shape shift into anything crypto or banking related
In Kenya 
regulatory hostility since 2015 (marked purple arrow) has suppressed Crypto models reliant on gateways/banks for (area shaded in red) Virtual Asset Service Business
Peer to peer crypto models (yellow) continue to thrive, but their model too uncertain post FATF 2021
regulatory hostility since 2015 (marked purple arrow) has suppressed Crypto models reliant on gateways/banks for (area shaded in red) Virtual Asset Service BusinessPeer to peer crypto models (yellow) continue to thrive, but their model too uncertain post FATF 2021
Kenya is gearing up for Joint Fintech regulatory sandbox to find a path forward for crypto asset frameworks, after 7 years of hostility. This from a note by the Capital Markets Authority on it’s Capital markets soundness report q1 2021 page 33 https://www.cma.or.ke/index.php?option=com_phocadownload&view=category&download=616:the-capital-markets-soundness-report-cmsr-volume-xviii-quarter-1-2021&id=5:capital-markets-soundness-report&Itemid=261
is gearing up for Joint Fintech regulatory sandbox to find a path forward for crypto asset frameworks, after 7 years of hostility. This from a note by the Capital Markets Authority on it’s Capital markets soundness report q1 2021 page 33 https://www.cma.or.ke/index.php?option=com_phocadownload&view=category&download=616:the-capital-markets-soundness-report-cmsr-volume-xviii-quarter-1-2021&id=5:capital-markets-soundness-report&Itemid=261
Tala will be ready for this markets. Tala can wait it out, while experimenting in its other markets. Tala has experience battling in grey areas, like unregulated digital lending. Tala is familiar with Kenya and East Africa.
By complying at a global level, Tala is also one foot ahead of local crypto companies. Tweeted about impact of global crypto regulations on local companies here https://twitter.com/pesa_africa/status/1381614836895911937
Generally I believe Crypto, and crypto rails is extending the Fintech S-curve in East Africa. The last 7 years was gradual, crypto was never seen as a contender. But its somehow crept into mainstream Fintech by insidious means. Who could have seen it?
I did. Crypto is the new rails Already some pan African Fintech’s are pivoting to crypto or adding crypto products or affiliating with crypto https://twitter.com/pesa_africa/status/1273177347274006536
Ps: Muse for this thread inspired by the 3 horizon framework of thinking about the future https://twitter.com/pesa_africa/status/1222648418050486272
I believe Tala played smart to jump ship on declining trend Horizon H1 for Horizon 2
/End of thread
I will add links to prior threads as sources
I will add links to prior threads as sources
