The Next Wave: The age of lending to strangers is ending

Cet article est aussi disponible en français In partnership with --> First published June 28, 2026 The first generation of African digital lenders believed it had found banking’s blind spot. Millions of people earned money, ran businesses and moved cash around every day, yet remained invisible to lenders because they lacked collateral, formal employment or a long relationship with a bank. Technology promised to close that gap. If banks lent against paperwork, fintech would lend against data. It was one of the easiest stories in African tech to believe because the numbers appeared to support it. Credit penetration remained low by global standards, large parts of the economy operated informally and traditional lenders had little appetite for small borrowers. The total addressable market looked enormous. If hundreds of millions of people lacked access to formal credit, then surely the opportunity for digital lenders was measured in the tens of billions of dollars. What the industry may have confused was demand for credit with the ability to build a profitable lending business around it. Those are not the same thing. A payments company benefits every time money moves through its network. A lender only wins if the money comes back. The distinction sounds easy, but much of the first generation of fintech lending was built as though software economics would eventually overpower lending economics. Acquiring customers cheaply, automating underwriting, disbursing instantly, and scaling would take care of the rest. Instead, lending behaved exactly as lending has behaved for centuries. Next Wave continues after this ad. 2026 Africa’s Business Heroes Top 100 Is Here! We are thrilled to unveil the 2026 ABH Top 100 — 100 visionary entrepreneurs selected from thousands of applicants across Africa. These founders are building real businesses, from agriculture to fintech, healthcare to clean energy. They are creating jobs, solving problems, and shaping the continent’s future. Meet the builders defining Africa today. Explore the full list and be inspired! Find out more here! This week, Tala announced another restructuring exercise affecting teams across all of its markets as it centralised more functions and reduced local operating complexity. In Kenya, seven employees were affected out of roughly eighty-five staff, following another round in April 2025 that affected twenty-eight employees locally. The headlines naturally focused on the layoffs, but the more interesting story sits underneath them. Tala is not retreating from Kenya and it is not leaving lending behind. The company appears to be moving away from the old idea that large local teams and ever larger volumes of unsecured consumer loans create durable businesses. Embedded finance, partnerships and products attached to existing commercial relationships offer something consumer lending apps have struggled to find consistently over the last decade: visibility into repayment. Branch Mfb has arrived at a similar destination through a different route. Earlier this year, the company cut staff in Kenya and Nigeria despite generating roughly $30 million in profit globally . During the years when capital was ‘cheap’, investors rewarded customer growth and loan book expansion above almost everything else. However, the mood has shifted. Investors now care more about margins, collections and capital discipline than they do about how quickly a lender can originate loans. Then there is 4G Capital, which spent the better part of the last decade doing something that looked almost old-fashioned. While the rest of the industry tried to automate lending decisions and remove people from the process, 4G Capital built field teams, opened branches and focused heavily on merchants and small businesses whose inventory cycles and cash flows could actually be observed. Earlier this week, the company crossed $1 billion in cumulative disbursements across Kenya and Uganda . Next Wave continues after this ad. Founders. Investors. Policymakers. Enterprise leaders. Moonshot 2026 brings together the people shaping Africa’s technology ecosystem across AI, commerce, climate, enterprise, and culture. Spotlight your brand today. Click here to find out how. That milestone is important in this argument because it challenges one of fintech’s favourite assumptions. Technology did make lending faster and cheaper, but it never removed the need to understand the borrower. In many parts of Africa, relationship banking turned out not to be a relic of the past but an effective risk management tool. Make no mistake, the market is not abandoning unsecured credit. Consumers still borrow for school fees, emergencies or entertainment because income volatility remains a feature of everyday life rather than an exception. The appetite for short-term loans remains enormous, and lenders are unlikely to run out of customers an