Affinity secures USD 8 million in seed funding

According to TechCrunch, the traditional banking sector in Ghana remains profitable despite mobile money’s widespread use. However, banks largely depend on fees, and operational challenges have left many consumers and businesses underserved. According to World Bank data, fewer than 10% of African businesses have access to credit, and more than 60% of adults do not use formal financial services. This gap has spurred demand for digital banking solutions that promise a more accessible and cost-effective alternative. 

TechCrunch reveals that, since launching in October 2024, Affinity has onboarded over 50,000 customers. A significant share of these users, approximately 65%, had no prior experience with formal banking, and more than 60% are women operating in the informal sector.  

Regulatory challenges in Ghana have played a role in the slow emergence of digital banks; unlike in Nigeria, where microfinance licenses are more readily available, Ghana’s stricter licencing requirements have made market entry more difficult for fintech firms.

Regulatory and operational challenges 

Affinity’s officials explained that Ghana’s regulatory framework places a strong emphasis on consumer protection, especially for institutions handling deposits. They noted that the company was required to demonstrate robust risk management, achieve a break-even status as a microfinance institution, and align its objectives with the government’s aim to extend banking services to the unbanked.  

The fintech offers free savings and current accounts with unlimited transactions and uses transaction history to build credit profiles. After a few months of account activity, the platform extends lines of credit at monthly interest rates ranging from 3% to 7%. To date, Affinity has disbursed over USD 15 million in loans, with its instant loan product showing a 30% month-over-month growth rate and maintaining a non-performing loan rate of around 3%. 

Affinity’s service portfolio extends beyond lending, including savings, payments, investments, and transfers to both bank accounts and mobile money wallets. Recently, mobile money top-ups accounted for 89% of deposit inflows, while bank transfers made up the remaining 11%. Loans continue to be the primary revenue driver, contributing more than 90% of income, with the rest coming from fees and commissions on additional services. 

Affinity’s recent funding round was led by European venture capital firms Grazia Equity (Germany) and BACKED VC (London), marking their first investment in Africa. Other investors include Enza Capital, Launch Africa, Renew Capital, Finca International, Attijariwafa Ventures, ImpactAssets, and early backer Eldon Capital.