Assessing Intellectual Property Risks and Opportunities in Africa's Fintech Sector

Africa's fintech sector is a paradox: a rapidly evolving innovation hub constrained by fragmented legal frameworks. For investors, the interplay between intellectual property (IP) risks and opportunities defines the calculus of long-term value creation. Nowhere is this tension more evident than in Kenya, where Safaricom's dominance in mobile money-via its M-Pesa platform-has reshaped financial inclusion while attracting legal scrutiny. This article examines how dominant platforms like Safaricom navigate IP challenges and sustain market leadership, offering insights for investors navigating Africa's high-stakes fintech landscape.

Kenya's Regulatory Evolution: A Double-Edged Sword

Kenya's 2025 Virtual Asset Service Providers Act (VASPs Act) marks a pivotal shift in the country's fintech regulatory approach. By establishing a dual-regulatory regime under the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA), the law formalizes oversight of digital assets while aligning with global standards like the EU's MiCA framework, according to a Bowlman Law analysis. This legislative clarity is a boon for innovation, enabling platforms to tokenize real-world assets and expand into crypto-adjacent services. However, the act's stringent anti-money laundering (AML) and data protection requirements also raise compliance costs, particularly for smaller players lacking Safaricom's scale.

The VASPs Act's emphasis on licensing-from wallet providers to trading platforms-reflects Kenya's ambition to balance innovation with consumer protection, according to the Bowlman Law analysis. For Safaricom, this means leveraging its existing infrastructure to dominate emerging segments, such as stablecoin issuance and tokenized assets. Yet the same regulatory rigor that attracts capital could also stifle competition, raising questions about market concentration.

Safaricom's IP Defense: Legal Challenges and Strategic Resilience

Safaricom's market leadership is not without friction. Between 2024 and 2025, the company faced two high-profile IP lawsuits. In Solut Technology Limited v Safaricom Limited, the plaintiff alleged copyright infringement over the Thibitisha app, which the court dismissed due to lack of registered copyright and breach of confidentiality terms, according to a CIPIT report. Similarly, a claim over the "Reverse Call" feature was rejected, with the court emphasizing that copyright protects expression, not ideas, as noted in a TechCabal report. These rulings underscore a critical vulnerability for African innovators: the absence of formal IP protections often leaves them unable to enforce claims against larger firms.

Safaricom's legal victories are not accidental. The company's strategy hinges on preemptive risk mitigation. For instance, its terms and conditions for idea submissions explicitly disclaim confidentiality, a tactic that shielded it in the Thibitisha case, according to the CIPIT report. This approach, while legally defensible, highlights a broader issue: Africa's IP frameworks struggle to reconcile the informal nature of idea-sharing with the formal requirements of copyright and patent law.

Market Leadership Through Ecosystem Expansion

Safaricom's dominance stems from its ability to transform M-Pesa from a money-transfer tool into a financial ecosystem. By 2025, M-Pesa's revenue had grown 14% year-on-year, driven by services like savings, insurance, and merchant payments, according to a Serra Group report. This diversification not only deepens user dependency but also creates IP barriers to entry. For example, the Bonga Points loyalty program-integrated with M-Pesa-has captured 15.6% of Africa's loyalty market, projected to reach $852.4 million by 2025, according to an Africa Loyalty Programs Market Databook 2025. Such innovations are protected not by patents but by network effects: the more users engaged, the harder it is for competitors to replicate the experience.

Navigating Risks: A Blueprint for Investors

For investors, Safaricom's trajectory offers both cautionary tales and opportunities. On the risk side, the company's reliance on unregistered IP (e.g., trade secrets) exposes it to future legal challenges, particularly as African courts become more receptive to IP claims. Additionally, regulatory shifts-such as Tanzania's ARIPO trademark reforms-could disrupt cross-border IP enforcement, according to an Olaniwunajayi blog post.

However, Safaricom's proactive approach to compliance and ecosystem-building mitigates these risks. Its Ethiopian expansion, which reduced losses by 59% in 2025, demonstrates how IP-driven services like M-Pesa can scale profitably in new markets, according to the Serra Group report. For investors, this suggests that platforms with robust IP strategies and regulatory agility will outperform in Africa's fragmented fintech landscape.

Conclusion: The IP-Regulation Tightrope

Africa's fintech sector is at a crossroads. While regulatory advancements like Kenya's VASPs Act create fertile ground for innovation, they also amplify the stakes of IP management. Safaricom's legal defenses and ecosystem-driven growth illustrate how dominant players can navigate this terrain-but also reveal systemic gaps in IP protection for smaller innovators. For investors, the lesson is clear: prioritize platforms that combine legal foresight with scalable innovation, while remaining wary of market concentration risks in regions with evolving IP frameworks.