The problem with copying Silicon Valley fintech models in Africa

I remember when I first left banking and started spending more time around early-stage founders like me who were “solving financial inclusion.”

You could almost predict how the conversation would go before it even started.

Someone would lean forward, confident, and say they were building a wallet app that would bring financial access to millions of people who had been excluded.

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At some point, I even bought into that optimism myself and put money into one of those plays. And truthfully, I did make a lot of money.

So, trust me when I say I am not speaking from a place of bitterness or regret. But if we are being honest about how those models perform long term, it was clear early on that many of them were not built to last in this environment.

That disconnect is where most of the trouble starts. People see what has worked in Silicon Valley and assume the same script can simply be copied and pasted into Africa with minor adjustments.

The problem is not ambition, and it is not even the quality of the founders in many cases.

The problem is that the underlying assumptions behind those models do not hold up here, and the consequences of getting it wrong tend to be far more unforgiving.

This “let’s build a wallet” script needs to be retired

There was a period where almost every other pitch sounded like some variation of a digital wallet that would unlock financial inclusion at scale. It became the default answer to a very real problem.

The thinking was straightforward. If people do not have access to traditional banking, give them a digital alternative and let adoption take care of the rest.

What people underestimated was how difficult it is to change financial behavior in markets where trust is earned slowly and alternatives, even informal ones, already exist.

A wallet on its own is not a product people wake up needing. It must be tied to something immediate and tangible in their daily lives, and even then, distribution and trust take time to build.

A lot of those wallet-first companies raised capital, spent heavily to acquire users, and celebrated download numbers that looked impressive on dashboards.

Then reality kicked in. Usage was inconsistent, retention was weak, and the economics did not justify the burn.

You saw versions of this in North Africa with guys like Fawry expanding aggressively into wallet-led experiences, only to realize that distribution, merchant integration, and offline touchpoints mattered far more than the app layer itself. The product had to be anchored in real-world usage, not just downloaded.

The obsession with speed and sleek apps misses the real problem

Then you move into lending, and the same copy-paste thinking shows up in a slightly different form. The focus shifts to speed, automation, and how smooth the app feels. The goal becomes removing every possible friction point so a user can go from onboarding to disbursement in minutes.

That approach looks great in demos and investor updates. In this market, it is also set up for avoidable losses if you do not respect what lies underneath lending.

The further your capital moves away from you, the more exposed you are. If your underwriting is weak and your recovery strategy is an afterthought, that exposure compounds very quickly.

What I have seen repeatedly is money going out faster than it should, risk models that are not grounded in local realities, and collection processes that turn chaotic once defaults start climbing. At that point, nobody cares how smooth your interface is. You are dealing with a portfolio problem, not a design problem.

The “spend first, figure it out later” mindset burns out quickly here

There is also this obsession with scaling at all costs that comes straight out of Silicon Valley, where the idea is to subsidize growth heavily, capture users at scale, and then figure out monetization over time. This, to me, might be the most reckless import of all.

You see versions of it in different industries, including AI, where companies price products far below their actual cost with the expectation that scale or future efficiencies will close the gap.

We hear about companies like Anthropic, where a product that costs them close to $5,000 to deliver is being sold for $100 or $200, subsidized by investor capital in the hope that scale will eventually fix the economics.

That logic, stressful as it is even in San Francisco, becomes something close to financial genocide when you bring it to a much harsher terrain like Lagos without adjusting for the realities on the ground.

You end up with businesses that are constantly raising money just to stay alive, burning through capital in the hope that scale will magically fix weak unit economics. It rarely does. The funding environment here is not as forgiving, and once the capital tightens, the cracks become impossible to hide.

If you do not know exactly how you make money per user, how long it takes to recover your cost, and what risks sit on your balance sheet, you are essentially gambling. The idea that you can build first and hope that users will come and monetization will sort itself out later is one of the fastest ways to destroy a fintech business in this market.

Regulation is not something you “figure out later”

Another dangerous habit is treating regulation as something to work around rather than something to engage with directly.

There is this quiet assumption that you can operate in a grey area long enough to gain traction and then regularize things once you are big enough.

That approach might buy you some time in certain ecosystems. In places like Nigeria, it is a different story. Regulators may move slowly at times, but when they act, they can reset an entire market overnight.

The bike-hailing story in Lagos is a perfect example. Once the government clamped down, the economy collapsed instantly because Lagos was the core market holding everything together.

SafeBoda tried to pivot to other cities, including Ibadan, thinking demand would simply transfer. What they found instead was a completely different dynamic; they packed their bags and scrammed. You cannot assume the same behavior, pricing tolerance, or operational model will hold.

An Ibadan guy is not paying for convenience the same way a Lagos commuter might. If anything, he will look at you, laugh slightly, and find a beatdown Micra to get to where he is going without your app in the middle.

That’s why I’m of the strong opinion that if your model depends on ignoring regulation or assuming you can adjust later, you are building on borrowed time.

Failure exists everywhere, but the consequences here are heavier

To be fair, companies fail in Silicon Valley all the time. Anyone who pays attention to the ecosystem knows that shutdowns are a regular occurrence. The difference is in how those failures play out and what they cost.

In more developed ecosystems, failure is almost expected. Founders reset, teams get absorbed into other companies, and capital finds its way into the next idea.

Here, the impact tends to be heavier. A failed fintech can wipe out investor confidence, disrupt customers who have limited alternatives, and create regulatory backlash that affects the entire sector.

So, while it is easy to borrow the risk appetite of Silicon Valley, you cannot borrow the safety nets that make that risk easier to absorb.

Networks matter more than most people admit

One thing that does not get talked about enough is how important local networks are.

In Silicon Valley, relationships open doors, unlock partnerships, and help founders navigate complex challenges.

That same principle applies here, but it shows up differently.

You occasionally see diaspora founders come in with impressive credentials; they land in Lagos having done a YC batch, take a picture next to the logo, post it on Twitter, and think that’s their network. It isn’t.

The person who can help you, as a founder, navigate a CBN inquiry, or get a meeting with the right person at an Interswitch, or warn you before you make a move that will get you quietly blacklisted from partnerships, that person is not going to materialize because you have an American accelerator badge.

You have to build relationships here, on the ground, over time, with the people who know how this place works.

Showing up speaking polished English, talking about market disruption, to people who have seen enough foreign founders crash out or fizzle out, is not the networking you think it is.

You can make serious money here, just not by copying blindly

The irony in all of this is that Africa is not some hopeless market where good ideas go to die. There is real money being made across different segments, from telecom-driven financial services to well-structured lending businesses that understand their customers and manage risk properly.

The opportunity is hardly ever the issue. Usually, it’s the approach.

What does not work is copying a model because it succeeded somewhere else and assuming the same inputs will produce the same outputs here. That approach keeps failing, and it will continue to fail because the gap between assumption and reality is too wide.

If you want to build here, you must do the harder work. Understand how people actually behave with money. Build products that fit into that behavior instead of trying to overwrite it. Respect the regulation early. Stay close to your numbers. Grow at a pace your business can support.

There is nothing wrong with learning from Silicon Valley. The mistake is assuming you can copy it without doing the hard work of adapting it. In this market, that assumption is bloody expensive.

Adedeji Olowe is the Founder of Lendsqr, a global loan management and credit infrastructure company serving lenders across multiple markets. He also chairs Paystack and initiated Open Banking Nigeria, the industry movement that led to the country’s open banking regulatory framework. Olowe writes and speaks extensively on credit systems, financial infrastructure, and digital finance, with a focus on expanding responsible access to credit for households and small businesses in emerging markets.