The “Francophone Fintech Shock” in West Africa: Lessons for Venture Investment in Africa  (June 6, 2025)

1. Introduction

2. Background

WAEMU countries share a common currency, the West African CFA franc (XOF), which is pegged to the euro. Core monetary functions such as currency issuance, financial supervision, and regulatory oversight are centralized under the Central Bank of West African States (BCEAO), headquartered in Dakar, Senegal. In 2024, the BCEAO introduced sweeping new regulations aimed at strengthening consumer protection and mitigating money laundering risks. These were formalized in Instruction No. 001-01-2024 Relating to Payment Services in the West African Monetary Union, issued in January 2024. This directive mandates licensing and registration for all entities offering payment services—including mobile money operators, remittance apps, and digital payment platforms. To gain regulatory approval, fintech providers must now meet a broad set of requirements: minimum capital thresholds, legal incorporation within a member state, due diligence on key shareholders and executives, robust business continuity plans (BCP), strict anti-money laundering and counter-terrorism financing (AML/CFT) compliance, data localization measures, two-factor authentication for fraud prevention, and regular reporting obligations. [See here for key provisions.]

3. The “Francophone Fintech Shock”

After the directive’s announcement, a six-month transition period was introduced to allow existing providers time to comply. Though this was once extended, the BCEAO issued Notice No. 004-03-2025 Relating to the End of the Transitional Period in March 2025, confirming that the grace period would not be extended beyond May 1, 2025.
When that deadline arrived, only a small number of fintech firms had secured regulatory approval. According to local reports, just 11 providers¹ had obtained licenses by May 27. Many others²—unable to meet the stringent requirements in time—were forced to suspend services altogether. The ripple effects were immediate and far-reaching: individuals, small businesses, startups, SMEs, and e-commerce companies, heavily relying on fintech services, were left without crucial financial infrastructure. This sudden disruption has since been dubbed the “Francophone Fintech Shock.” In response, the BCEAO announced a second grace period extension until August 31, 2025. However, the path toward a soft-landing remains unclear.

4. Root Causes

Was this crisis inevitable? The objectives of the new regulations—enhancing consumer protection and strengthening AML/CFT frameworks—are not inherently controversial. Similar efforts have taken place in other parts of Africa, including Nigeria (2022), Kenya, and South Africa (2023). The challenge lies in implementation. Unlike banks and large financial institutions, many fintech providers are startups—lean, fast-moving, and often under-resourced. For these players, meeting comprehensive regulatory standards within a limited timeframe could be a major hurdle. Indeed, several industry associations voiced concerns about the rollout pace.
Key questions that emerge include:

1. Was it appropriate to apply the same regulatory timeline to both large institutions and small fintech startups?
2. Was there adequate communication between regulators and the fintech community throughout the transition?
3. Did a sense of complacency emerge among some providers, expecting further deadline extensions?

5. Key Lessons for Investors in African Markets

Fintech remains a cornerstone of Africa’s startup ecosystem. According to DFP’s research, fintech accounted for 45% of total startup investment in Africa (by value) in 2024. That such a vital sector was so significantly disrupted by regulatory enforcement carries implications for investors across the continent. Several important takeaways have emerged:

Issue	Takeaway
Regulatory Awareness	・Regulatory compliance must be treated as a must-have, not a nice-to-have. Non-compliance can lead directly to service suspension or business shutdown. ・When assessing an investment, thoroughly review applicable licensing and compliance status. Consider how national regulations align with those in neighboring countries or international frameworks. For example, new rules in WAEMU countries this time may be replicated in other markets. ・Investigate whether regulators are effectively engaging with the industry, and whether startups are actively participating in regulatory dialogues.
Organizational Capacity to Comply	・Evaluate whether the management and administrative teams of a target company have the competence and mindset to stay on top of evolving regulations. ・Fintech is a highly regulated space—even for startups. The ability to navigate multiple jurisdictions and comply with local rules is essential, especially for firms pursuing regional expansion, factor in the cost of compliance when assessing the scalability of a business model.
Financial Resilience Against Shocks	・Unexpected events—including regulatory changes—are part of the operating reality. Reassess the company’s financial buffers and resilience strategies.
Local Intelligence and Networks	・Regulatory transitions often involve extensive local consultation and informal communication. Ensure your team or local partners can access timely, on-the-ground intelligence. ・Build networks that provide early warning signals and contextual insights during periods of policy change.

On the ground, there are some investors who remain cautiously optimistic. They see this as a potential inflection point: while initial disruption is inevitable, it may lead to a more consolidated and resilient fintech landscape. As weaker, unregulated players exit the market, capital may concentrate in compliant, well-managed firms, supporting the sector’s healthy long-term development. That said, the broader lesson is clear: risk in emerging markets is not theoretical. It is real—and it requires real due diligence. For global investors, especially those active in Africa, this is a timely reminder of the importance of (1) robust information-gathering structures and (2) diversified portfolios that are resilient to market shocks. At Double Feather Partners, we remain committed to strengthening our local intelligence networks and are actively exploring fund structures that enable diversified, risk-managed exposure across African markets.

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Disclaimer

This document has been prepared by Double Feather Partners Inc. solely for informational purposes and does not constitute an offer, solicitation, or recommendation to purchase, sell, or hold any specific securities, financial products, or investment strategies. The opinions, forecasts, and views expressed herein reflect the judgment of the author(s) at the time of publication and are subject to change without notice. While efforts have been made to ensure the accuracy and completeness of the information contained in this report, no guarantee is provided. Readers are advised to make investment decisions at their own discretion and responsibility.

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¹ Burkina Faso (InTouch), Côte d’Ivoire (SYCA, TouchPoint, Firstcom, Julaya), Mali (InTouch), Niger (i-Futur), Senegal (PayDunya, Mikaty, Bictorys, Flutterwave).

² For example, the following fintech companies were providing services: Benin (Moneex, FedaPay, CashZone), Burkina Faso (LigdiCash, Coris Money, SwagPay, M-SCORE), Côte d’Ivoire (Julaya, Djamo, Bizao, Hub2, Auto24, Cinetpay, QuickCash), Mali (Oko), Senegal (Baobab+, Wizall Money, Touch, Weebi), Togo (Gozem, Cagecfi, Koosmik, Mojipay, NamCredit, Relika, Semoa), Multinational (Wave, Orange Money, Daba, MyFeda, PayPlus).