Co-founded by Fara Ashiru and David Peterside in 2019, Okra initially began as an API provider that allows the real-time exchange of financial information between customers, fintech applications, and banks. However, as is the current trend among open banking startups, Okra has also begun providing payment APIs to businesses in diverse sectors such as finance, e-commerce, and insurance, among others. Okra is also a payment checkout option on GooglePay.

The company has focused on the Nigerian market for four years, but it is currently working to expand to South Africa and Kenya.

Okra is governed by a board of directors and executively led by Ashiru, who was previously a software developer before the startup was founded, and wears two hats—chief executive officer and chief technical officer. She explained to TechCabal that she currently holds both roles because as an infrastructure provider, “Okra’s business vision and the technology are closely intertwined, and often blurred into each other.” However, she looks forward to having someone else join the team and take on the CEO reins in the near future. 

Ashiru’s co-founder, Peterside left his office as chief operating officer in 2022. Now every executive team lead directly reports to Ashiru. The leads include Bodunrin Akinola (head of people), Gbenga Oyedele (senior financial analyst),  Abiodun Oni (business development lead), Dayo Fasan (customer success lead), and Habib Akinpelu (senior legal counsel).

This TechCabal org chart details the leadership at the startup.

“In 2023, we moved from negative to positive gross profit, and we want to be profitable by the end of the year,” Abdul Hassan, founder & CEO of Mono, told TechCabal. The startup expects to achieve profitability by scaling the adoption of its open finance tools. “We have more partnerships like this in the pipeline.”

The startup, like its competitors, has been expanding its focus from providing lenders with open banking APIs to servicing a wide range of fintechs to increase revenue. 

Before partnering with Mastercard, it had partnered with Flutterwave, one of Nigeria’s largest payment providers, to enable merchants to receive payment through the account-to-account (A2A) option which it calls DirectPay Pay with Bank. According to Mono, this payment option has facilitated payment transactions exceeding ₦5 billion since it launched in 2022. Mono can expect to facilitate even more volume as the Mastercard Payment Gateway System services numerous merchants across several African countries, including Kenya, Ghana, South Africa and Nigeria, where Mono currently operates.

On the other hand, this partnership is advantageous for Mastercard, as it has been finding new ways to digitalise spending. Through partnerships with payment providers, Mastercard has been exploring non-card payments in Africa for years: mobile money wallets, contactless payments, and QR payments. Around 2020,  over 1 million merchant locations across Africa were accepting  Mastercard QR payments.

”In three years, cards will mostly be used for offline payments,” said Hassan, who claims that Mono has connected more than 3 million financial accounts across Nigeria, Ghana and Kenya. He predicts that this account-to-account payment method will see even quicker adoption, especially in Nigeria, where  QR payments and contactless payments have slower uptake rates.

This optimistic outlook might be a breath of fresh air for established card networks like Mastercard and Visa, whose deployment of account-to-account payment in developed markets like the US and UK has met reluctance from users. Experts believe the consumer market in those regions favours the familiarity and ease of card payments for everyday spending and argue that users might require more incentives to adopt A2A options.

In contrast, in Nigeria, a lot of merchants are enabling the pay with bank option, which is repeatedly used even when there are USSD and card options, according to Hassan. “I think it is because of the ease and perceived security.”  Also, the settlement is instant and much faster than cards.

Hassan reasons that the success of this payment method for Mastercard spells good tidings for Mono’s dream to become a household name. 

“We currently have a web-based app that allows users to see how many fintech apps their bank details are linked to.” The four-year-old startup hopes to gain familiarity with the larger consumer market and eventually launch the web app as a mobile app with added features.

Three years ago, Nigeria’s Central Bank released the first draft of a regulatory framework for open banking. It was a pivotal moment, and Nigeria enjoyed the privilege of becoming the first African country to adopt the practice last year. 

It was commendable work from a regulator that’s often on the receiving end of criticism from the public. Yet, months after moving quickly to adopt a framework, the apex bank has stalled on introducing a much-needed standard, keeping open banking in theory.

A standard will ideally create a uniform way of transferring data through APIs and a public register of all the participants in open banking. Standards are very important. For example, before the IBM standard, the personal computer industry operated multiple user interfaces, making PC parts very expensive and out of reach for most people. 

The IBM standard helped create the uniformity that the modern PC industry was built on. Open banking needs this uniformity and the CBN’s apparent lack of urgency towards creating this standard risks delaying a pivotal step towards financial inclusion.

How can open banking change Nigeria?

Take lending as an example. Loans contribute significantly to the income of financial institutions, and to ensure that they are repaid, banks like to have data points on the customers to make informed lending decisions. So far, bank-led lending has resulted in low credit penetration, with as much as 70% of bank account holders locked out from accessible credit.

In the last few years, several fintechs have entered the credit market to fix this despite having limited data. The result has been a mixed bag of sub-prime loans and predatory collection methods.

With open banking, lending fintechs would receive data (transaction history, consumption patterns) from banks—there are at least 120 million bank customers in Nigeria—to assess creditworthiness and also help create a much-needed credit score for Nigerians. 

Fintechs can also create new types of personalised financial products backed by data, as Nigerian banks are not incentivised to innovate given that the majority of their profits come from non-banking sources. In what was a record year for profits, most banks made money from the devaluation of the naira last year, with minimal income from core banking interests or new products.

Nigeria is already a prime market, with startups like Okra, Mono and Stitch offering innovative solutions similar to open banking due to demand. Real-time payments, a crucial enabler, are booming. Last year, Nigeria’s largest real-time payment infrastructure processed 9.6 billion transactions, according to data seen by TechCabal. 

Chart by Stephen Agwaibor/TC Insights

Should the CBN regulate open banking?

There are concerns that because open banking relies on technology, an ever-changing field, the CBN should not regulate it; instead, it should be regulated by Nigeria’s data protection agency, the Nigeria Data Protection Commission (NDPC), as data privacy is a foundational pillar of open banking. 

“The central bank’s job is to implement policies, not technology,” said David Peterside, the co-founder of Okra, an open banking startup. 

The CBN’s guidelines from last year focused on two main issues; availability of technology and security. Peterside added that the CBN should instead focus on making the banks and API providers partner because the CBN’s regulatory burden would require banks to build APIs, inflating costs for the banks. Large British banks have spent more than £500 million on implementing open banking. With startups already providing similar services, banks can forgo this bill. 

But given the sensitivity of financial information that would be shared, there is no ideal way that the CBN would not be involved in a regulatory capacity, said Ikemesit Effiong, head of research at SBM Intelligence, a Lagos-based think tank. 

“Nigeria is a bank-led financial system, so it will not be unusual for the CBN to give out the regulations. However, violations will be [the responsibility] of the data protection agency,”  Babatunde Obrimah, chief operating officer of the Fintech Association of Nigeria, told TechCabal. He added that because banks, fintechs, and mobile money operators obtain licences from the CBN, it is the only body to regulate them properly, but interoperability must be ensured.

What’s in it for the banks? 

Right now, there is fear in the banking industry that the implementation of open banking would inevitably lead to more competition. “It’s the same pie that everyone is eating out of, and you don’t want anyone to eat into your part,” is how an industry insider puts it. 

This is, however, an unfounded fear because most Nigerians use legacy banks and fintechs, Effiong said. A similar example of user inertia is how the Nigerian Communications Commission (NCC) introduced SIM porting a decade ago, allowing customers to switch network providers easily, but less than 2% of customers have ported since. 

Revenue sharing, the prospect of mergers and acquisitions, and the CBN’s backing are some of the ways banks can be incentivised to share their customer’s data, Nnamdi Ifechi-Fred, a digital economy analyst at Stears, told TechCabal. 

Public awareness can spur the CBN 

Public awareness of the benefits of open banking can spur the CBN to finalise open banking. The United Kingdom became one of Europe’s leaders in open banking by increasing awareness of the benefits of open banking. Within two years, 11% of British consumers were active users of open banking.

Since India’s apex bank introduced the Account Aggregator (AA) framework, which facilitates secure financial data sharing via APIs, about 60% of Indian businesses see open banking as a gateway to acquiring consumer-consented data. It has now become a staple in India and is powering the next stage of open banking—open finance. 

This can be replicated in Nigeria, but the CBN’s lack of a uniform standard is severely halting this progress. Fintechs have already integrated and partnered with banks, but the current reality of open banking cannot power the scale that would bring change to Nigeria. Why is the CBN stalling?

In a statement shared with industry players, the central bank says that “in appreciation of the Industry feedback and foster [sic] collaboration and innovation, we are aligned with the “Open” aggregation model. While affirming NIBSS’ neutrality as a shared service provider, the bank explained that NIBSS would only support the central bank to develop an Open Banking Registry to meet industry requirements. But the operations of the registry would be “the sole responsibility of the Regulator.”

Recall that Nigeria’s central bank recently announced rules to guide Open Banking in Nigeria. The recently announced rules to guide Open banking are the first of its kind in Africa and will potentially pave the way for Open Finance. Open Finance is the next rung on the data-sharing ladder, extending access and sharing of consumer data to more financial products and services like loans, consumer credit, investments, and pensions.

Keeping Open Banking, open

Two weeks after the Open Banking guidelines were announced, TechCabal learned of a proposal to centralise access to its Open Banking APIs with the National Inter-Bank Settlement System (NIBSS). This was hotly contested by banking and fintech professionals.  “I want to connect to fintech or bank directly. Why do I have to go through NIBSS? It is the opposite of Open Banking,” an industry expert told TechCabal. “It is like forcing everyone to watch one TV station in order to see broadcasts from other television networks,” the person added.

Industry players TechCabal spoke to said the decision to make Open Banking API consumers and providers talk to each other through NIBSS was at odds with the CBN’s published guidelines. Those sources expressed hope that the central bank would see reasons to walk back its stance. Clearly, the bank has listened.

Had the central bank stood its ground, its decision might have called into question the operation of firms like Mono, OnePipe and Okra. These API firms have already implemented solutions that allow retail bank customers to securely connect their financial accounts to business apps and services. The resulting stalemate might have hindered wider progress in building the foundation for Open Finance, which enables a wider integration of financial data with non-financial industries, such as healthcare, education and government.

As the next steps, the central bank says it is willing to receive further operational and technical feedback from the banking and fintech industry to help make the Open Banking guidelines operational.

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22 MARCH, 2023

IN PARTNERSHIP WITH

Good morning

Disney is pulling off its first round of layoffs. 

Yesterday, Daily Mail reported that The Walt Disney Company will lay off 4,000 employees in the coming weeks.

According to one report, the executives have tasked managers to identify employees—other than the executives themselves, apparently—who are “redundant and disposable”.

This isn’t the first we’ve heard of impending layoffs at Disney, though. In February, returning CEO Bob Iger announced during an earnings call that Disney would cut over 7,000 jobs during the year in a bid to save $5.5 billion in operating expenses. This came after the platform also revealed it lost over 2 million subscribers on Disney+, its streaming service.

So far, nothing is known about which units will be affected by the layoffs, but senior managers are sniffing around for frogs camouflaging as princes. 

In today’s edition

• The World Wide Web3
• Nigeria’s plan for NIBSS
• Kenya protesters to boycott Safaricom
• Opera ups its OPay support
• South Africa to audit media space
• Event: TechCabal at 10
• Opportunities

THE WORLD WIDE WEB3

Bitcoin	$28,133	+ 1.43%
Ether	$1,805	+ 3.04%
BNB	$336	+ 0.38%
Solana	$22.45	+ 0.26%
Name of the coin Price of the coin 24-hour percentage change		Source: CoinMarketCap

* Data as of 04:20 AM WAT, March 22, 2023.

The US is planning to tax NFTs. CoinDesk reports that the US Internal Revenue Service is considering whether to tax non-fungible tokens (NFTs) the same way it taxes other collectibles such as stamps, works of art, and fine wine.

Polygon and Immutable are partnering up to expand the Web3 gaming ecosystem and onboard 100 million users. TechCrunch reports that the partnership will help grow the scaling and adoption of the subsector. The collaboration will focus on making Web3-enabled games faster to build, easier to use, and less risky for larger gaming studios and independent developers to get involved.

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CBN WANTS NIBSS TO MANAGE OPEN BANKING REGISTRY

Hey there, remember that time we all cheered and did a happy dance when Nigeria released open banking guidelines? Well, now the Central Bank of Nigeria and industry experts are having a hard time agreeing on how to take the next step.

ICYMI: Open banking is a system that allows financial institutions and fintech companies to exchange the financial information of their users. Nigeria is the first country in Africa to nationally adopt open banking.

What is the next step? 

The next step is to operationalise the rules for open banking by creating an open banking registry that will function as a public repository for details of registered participants. The registry will also function as a repository for the APIs that allow banks and non-banks to exchange customer data.

Last week, at a meeting with players in the financial sector, the CBN said that it wants the Nigerian Inter-Bank Settlement System (NIBBS) to design and maintain the registry. But banking experts are saying No thanks, we don’t want that responsibility.

Who needs a cheaper middleman man? 

Banking and fintech insiders have described the suggestion as “forcing everyone to watch one TV station in order to see broadcasts from other television networks”. They refused because it’s the opposite of open banking, as an aggregator (NIBBS) will be between the banks and fintech. They would rather have an industry-led infrastructure. 

Moreover, NIBBS is a settlement corporation co-created by the CBN and the Bankers’ Committee. It may also complicate things if NIBSS is both a regulator of open banking and a participant in the open banking system. 

The central bank thinks it would be cheaper to have NIBSS handle everything, but industry experts think that the cost is marginal compared to the inconvenience of a centralised open banking structure.

KENYAN PROTESTERS TO BOYCOTT SAFARICOM KCB AND RADIO AFRICA

Raila Odinga, BusinessDaily

The protest in Kenya rages on. 

According to Business Daily, one Kenya leader, Raila Odinga—who contested against Kenyan president, William Ruto—has asked protesters to stop using products and services owned by telecom Safaricom, KCB bank, and media company Radio Africa. This is because of their alleged affiliation with the Kenya Kwanza administration.

To kick off what he calls the second phase of the ongoing protest, Odinga also announced that the protest will now be held twice a week, every Monday and Thursday.

What are the protests about? 

Odinga and his supporters are agitated by the high cost of living. They are protesting against the regime of President Ruto which they say is illegitimate. 

The protest has reportedly seen two people shot, one fatally, and hundreds of others arrested.

More protests

South Africans also recently protested against their current leader President Cyril Ramphosa for the lingering power shortage in the country.

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OPERA UPS ITS OPAY SUPPORT

Opera, developer of the eponymous web browser, has increased its stake in OPay from 6.4% to 9.5%. 

This comes two years after Opera, in June 2021, sold off 29% of its stake in Opay for $31.1 million.

What changed?

Earlier in 2022, OPay bought Nanobank, a fintech company headquartered in the Cayman Islands, for an undisclosed sum. At the time, Opera had a stake worth $127.1 million in Nanobank, a sum that OPay agreed to pay in eight quarterly instalments. 

This year, however, Opera agreed to convert its fees into OPay shares. By choosing OPay shares instead of cash, Opera settled for $35.9 million less than the book value of its investment in Nanobank, leaving the internet brand with a net fair value of $76.3 million, as of year end 2022. 

“The settlement was based on the valuation applied in the transaction as well as an estimate for the value of Nanobank’s remaining business. Opera has stepped into the relevant provisions of the sales agreement, including potential adjustments depending on the business performance. Consequently, Opera will report the value of its increased OPay ownership based on a weighted set of scenarios for the performance of the sold business,” the company statement reads.

Zoom out: Opera may have increased its OPay stake, but it doesn’t appear to want to keep it. It already sold almost all its stake in the fintech previously, and this time, it has marked its OPay ownership as “held for sale”, noting that it is banking on the value of said shares going up.

SOUTH AFRICA PLANS TO AUDIT ITS MEDIA SPACE

South Africa may be planning to ban Search. 

South Africa’s Competition Commission has announced that it has published the draft Terms of Reference (ToRs) for a market inquiry into the distribution of media content on digital platforms.

According to the commission, the inquiry has been set up to address existing market features in digital platforms that distribute news media content. The features are said to impede, distort, or restrict competition, which may have adverse implications for the news media sector of South Africa. This imbalance, according to the commission, can have implications on fair payment for content and the sustainability of independent journalism.

The inquiry will be underpinned by the value of a properly funded press to advance a well-functioning democracy, including the diversity of views from smaller media businesses and media owned by historically disadvantaged persons.

Furthermore, the inquiry will focus on the interaction and dependency of South African news media businesses on relevant digital platforms as an intermediary, distributor, and link to online users for the dissemination of news content online. This includes the impact, thereof, on news media businesses to aggregate, display, create, and monetise their news content online.

The main digital platforms that the inquiry will focus on include search engines, social media sites, video sharing platforms, and news aggregation platforms. It will also look at new technologies adopted by digital platforms, such as generative artificial intelligence (AI) search support, including ChatGPT.

The main focus will be on the significance these may have on the operations of businesses in the South African news media sector, including news publishers and broadcasters.

Zoom out: South Africa’s move closely mirrors Australia where,in February 2021, a law aimed at making Google and Facebook pay for news content on their platforms was passed. At the time the Australian Competition and Consumer Commission (ACCC) stated that publishers have had little negotiating power because they were so reliant on tech monopolies like Google and Facebook. Canada also has a similar law in the works, with a similar reaction from the tech giants.

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EVENTS: TECHCABAL AT 10

Here’s a list of all the Twitter Spaces we’ll be holding to celebrate our 10th-year anniversary.

• March 23—What is the future of tech in Africa? In the last 10 years, the African tech ecosystem has evolved quickly. We know this firsthand at TechCabal. What does the future look like? Join us for an insightful conversation with Ola Brown, Stephen Deng, Hope Ditlhakanyane, and Ngozi Dozie where we answer these questions. Set a reminder here. 

• March 30—The role of the media in covering African tech. How can the media help Africa’s developing tech ecosystem? What responsibility does the media owe the ecosystem, and what can the media expect in return? Should the media only cover the good stories? Find out here.

IN OTHER NEWS FROM TECHCABAL

Interview with Dieudonné Kayembe, founder of Kinshasa-based Motema.

Credable, an infrastructural digital banking platform, raises $2.5 million to scale products. 

OPPORTUNITIES

• The Jasiri Talent Investor Programme is looking for highly driven individuals with a history of achievement and/or entrepreneurial action who aspire to launch a high-growth venture. Apply by April 23.

• The Growth Africa Accelerator Programme is calling for applications from ambitious and committed entrepreneurs from Kenya, Uganda, Ethiopia, Zambia or Ghana with the potential to grow and create impact through their businesses. Apply now.

• The HiiL Justice Accelerator Programme is now open for applications from Kenyan startups with solutions that help people resolve their legal problems. Eight selected startups will receive $10,000 in equity-free funding as well as the chance to win up to $21,000 on Demo Day. Apply by March 31.

• Google has announced that the Google for Startups Black Founders Fund is now accepting applications from Black founders across the African continent. Apply by March 26.

• The Africa Business Heroes (ABH) Prize Competition, a philanthropic initiative sponsored by the Jack Ma Foundation and Alibaba Philanthropy, is calling for participation from Africa’s entrepreneurial talent. Apply by May 12.

• Dream VC has announced that it’s now open for its Launch Into VC (LIVC) and Invest Accelerator programmes. Junior professionals keen on breaking into the investor space can apply for LIVC to get a carefully curated investor talent accelerator led by existing venture builders. Senior professionals should apply for its Investor Accelerator 2023 Programme where future investment leaders and ecosystem builders will be upskilled. Apply for LIVC and Investor Accelerator Programme by April 16.

What else is happening in tech?

• OjirehPrime, the quintessential Nigerian digital bank, is offering innovative savings and seamless banking.

• Kenya Power is negotiating its Ksh6 billion ($45 million) loans.

• Protests against government policies are roiling all four corners of Africa. 

• African infrastructure is getting a boost from this $12 billion climate fund. 

• Meta security manager was reportedly hacked by Greek intelligence agency.

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After two years of planning and drafting regulations, Nigeria’s central bank announced rules to guide Open Banking in Africa’s largest economy two weeks ago. Adopting Open Banking in Nigeria “will foster the sharing of customer-permissioned data between banks and third-party firms to enable the building of customer-focused products and services,” reads the central bank statement. 

The announcement was hailed by banking industry and fintech professionals in Nigeria and globally. The next step to operationalise the rules for open banking involves creating a registry that will function as a public repository for details of registered participants. The Open Banking Registry will also function as a repository for the APIs that allow banks and non-banks to exchange customer data.  

Per the Open Banking Guidelines, the Open Banking Registry’s API interface would serve as “the primary means by which API providers manage the registration of their API consumers.” Last week, the central bank held talks with financial sector players to discuss the next steps for creating the Registry and accessing bank APIs. Multiple sources who were privy to the talks say the Central Bank of Nigeria told representatives of financial sector institutions that it wanted the registry to be designed and maintained by The Nigerian Inter-Bank Settlement System (NIBBS). The apex regulator also told industry representatives at the meeting that it wanted NIBSS to control access to banks’ APIs in what one person close to the talks described as an ”aggregator model”.

Industry professionals who were at the meeting say that while they have no qualms with NIBSS building and maintaining the Open Banking registry, they oppose the CBN’s move to impose centralised control to Open Banking APIs through NIBBS. “I want to connect to fintech or bank directly. Why do I have to go through NIBSS? It is the opposite of Open Banking,” one person who is close to talks, disclosed. “It is like forcing everyone to watch one TV station in order to see broadcasts from other television networks,” the person added.

Already, firms like Mono, Okra and OnePipe allow retail bank customers to securely connect their financial accounts to the business apps and services they choose. The CBN’s new move may imperil how these firms connect to the financial institutions of their customers. Formalising Open Banking rules was supposed to bring transparency, support competition and foster innovation in the delivery of financial services. But making Open Banking API consumers and providers talk to each other through NIBSS risks turning the industry-led Open Banking effort on its head and is at odds with the CBN’s guidelines.

Banking and fintech insiders argue the settlement corporation—which was co-created by the CBN and the Nigerian Banker’s committee—cannot be both regulator of open banking and a participant in the open banking system.

NIBSS was created in 2014 to enable same-day clearing and settlement of inter-bank transfers and payments in Nigeria. NIBSS also offers other payment products including mCash, a customer-to-merchant payments product, NQR, a QR-code-based payments platform and e-Bills Pay, for collecting levies, and fees. Centralising Open Banking within NIBBS would make it both a regulator and a competitor.

Industry professionals concede that the CBN may have other legitimate reasons for proposing this arrangement, but they ask that the apex regulator be open to suggestions from fintechs and banks. “We’re engaging with the CBN. They have always given us a listening ear,” one person close to ongoing talks told TechCabal.

Update: This story was updated to more accurately reflect how the CBN’s proposal affects Open Banking in Nigeria.

Lire en français

9 MARCH, 2023

Happy pre-Friday

There’s never enough content for International Women’s Day.

So here’s some more. The theme for this year’s celebration is DigitALL: Innovation and technology for gender equality. 

To speak to these values of inclusion and diversity, we have curated a series from leading women in technology across Africa who want to see a more gender-inclusive world where women are accorded equal rights as their male counterparts.

Here’s what these 7 women think empowering women in tech means. 

In today’s edition

• Crypto market
• Nigeria greenlights open banking
• A $75 million fund for Ghanaian investors
• Cross Switch gets ESPP licence in Ghana
• Moniepoint hires new COO
• Event: The AIJA Seminar
• Opportunities

CRYPTO MARKET

Bitcoin	$21,802	– 1.63%
Ether	$1,542	– 1.12%
BNB	$289	– 0.01%
Solana	$18.61	– 6.69%
Name of the coin Price of the coin 24-hour percentage change		Source: CoinMarketCap

* Data as of 04:50 AM WAT, March 9, 2023.

NIGERIA GREENLIGHTS OPEN BANKING

The Central Bank of Nigeria (CBN) has given the green light for open banking to hit the scene in Nigeria! This is touted to be a game-changer for financial innovation and financial inclusion in Nigeria and Africa as a whole. 

Sidebar:  Open banking is like giving the keys to our financial data castle to third-party financial service providers. Just like how we let social apps access our data to provide a more personalised experience on the apps, we can give permission to these providers to access our financial data from our banks. This allows for more customised and tailored financial services that suit our individual needs and preferences.

Sounds dangerous

Yeah, sharing data can be risky business. That is why, to ensure our data privacy, the Nigeria Data Protection Regulation was released in 2019 as a foundational pillar for open banking.

Speaking about foundations…

The CBN didn’t just wake up two days ago and decide to break down all the walls between traditional banks and the fintech peeps. 

It all started when a group of industry veterans like Adedeji Olowe formed an “open banking” working group, which ultimately became known as “Open Banking Nigeria“. They talked to banks, fintech, the CBN, and other international stakeholders. They also earned early backing from the likes of Sterling Bank, KPMG, PwC, EY, Paystack, TeamApt, Wallet Africa, and OnePipe. Eventually, other fintech operators like Mono, Switch, Lendsqr, Palmpay, Carbon, and Trium joined the crew.

Subsequently, the CBN released the regulatory framework for open banking in Nigeria on February 7, 2021. This laid the groundwork for the draft of the operational guidelines in May 2022. This draft is what has now become the law for bankers, fintech and tech companies supervised by the CBN.

Now, fintech companies such as Mono, Okra, and Stitch won’t have to contort around a maze of regulations looking for innovative ways to access and provide banking data for your favourite fintech, as getting data will feel like plucking low-hanging fruit.

Zoom out: With this, Nigeria becomes the first African country with open banking regulations. Open banking, however, is already being explored in 11 countries across Africa including countries like Kenya, South Africa and Ghana.

IMPACT INVESTING PLEDGES $75 MILLION FUND FOR GHANAIAN INVESTORS

It’s not every day we hear of investors raising money for other investors.

Impact Investing Ghana is laying the groundwork for its Ci-Gaba fund of funds. Ci-Gaba will provide as much as $75 million in funding for impact investors in Ghana who are providing capital for small and medium enterprises (SMEs) that are advancing the Sustainable Development Goals (SDGs).

But it’s not Ghana stop there

The Ci-Gaba fund of funds is the first of its kind domiciled in Ghana but it will also invest regionally. It will also provide capital for SME capital providers in West Africa too. Disrupt Africa reports that Ci-Gaba is receiving a grant from the UK Foreign Commonwealth and Development Office (FCDO) RISA Fund, which will help them launch their operations and get invested in making a difference.

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CROSS SWITCH GHANA GETS EPSP LICENCE

Cross Switch Ghana LTD has obtained approval from the Bank of Ghana to operate as an Enhanced Payment Service Provider (EPSP).

What does the fintech need an EPSP for?

Ghana’s demand for payment technology isn’t slowing down and Cross Switch Ghana hopes to use this licence to help the country’s fintech space match its pace.

 With its shiny new licence, the fintech will digitise merchant payments, collections and disbursements for e-commerce, and remittances. It also hopes to foster financial inclusion, for which Ghana’s National Payment Systems Strategic Plan (2019–2024) created an enabling regulatory environment. 

Over-achiever much?

Cross Switch Ghana is part of a big family—Cross Switch International S.A.R.L. The pan-African company told ITnewsafrica that they’re over the moon about their new licence, but let’s be honest, it’s just another shiny addition to their already impressive cap of accomplishments.

The company has acquired and established a number of technology and payments businesses in Benin, Egypt, Ghana, Kenya, Morocco, Nigeria, and South Africa. It also recently announced its acquisition of a 50% stake in Vantage Payment Systems, a leading Moroccan fintech that provides online payment solutions. 

So, Cross Switch is not just switching things up in Ghana but all across the continent.

MONIEPOINT APPOINTS NEW COO

CEO Tosin Eniolorunda and COO Pawel Swiatek

Two months after rebranding from TeamApt, fintech Moniepoint has appointed a new chief operating officer (COO): Pawel Swiatek.

Swiatek joins Moniepoint from US-based bank Capital One, where he was managing vice president. He also worked at US-based hedge fund Bridgewater, where he helped the company grow from 150 workers to over 2,000. 

At Moniepoint, he will develop policies, tools, metrics, and a culture that will support the expansion of Moniepoint’s business. Already, Moniepoint has a customer base of more than 600,000 businesses in 2022. The company processed an annual total payments volume (TPV) exceeding $170 billion. The company currently employs 967 staff and 6,000 business relationship managers, and managing their operations is where the bulk of Swiatek’s efforts will be concentrated. 

Swiatek marks the third C-Suite level manager at Moniepoint, joining CEO Tosin Eniolorunda and CTO Felix Ike. 

EVENT: THE AIJA SEMINAR

The AIJA will host a seminar themed “The Silicon Savannah: Emerging Trends, Doing Business in (and With) Kenya and Africa’s Tech Ecosystem. 

Set for Nairobi from March 22 to 25, the seminar will discuss the latest trends in law, tech, sustainability, funding and industry best practices.

Register here.

IN OTHER NEWS FROM TECHCABAL

Why MFS Africa is piloting its Western Union remittance play in Madagascar.

Nigerian banks will begin deducting ₦50 ($0.10) for transfers into domiciliary accounts.

Google announces 15 women-founded startups in its inaugural accelerator.

OPPORTUNITIES

• The 100x Impact Accelerator is open to applications from impact-driven social enterprises that work across eight sectors including health, climate and education. Selected enterprises will receive £150,000 grants and access to LSE’s world-class expertise, plus a 12-week programme of bespoke support from experts and social unicorn founders. Register by March 10.

• The Jasiri Talent Investor Programme is looking for highly driven individuals with a history of achievement and/or entrepreneurial action who aspire to launch a high-growth venture. Apply by April 23.

• The Growth Africa Accelerator Programme is calling for applications from ambitious and committed entrepreneurs from Kenya, Uganda, Ethiopia, Zambia or Ghana with the potential to grow and create impact through their businesses. Apply now.

• The HiiL Justice Accelerator Programme is now open for applications from Kenyan startups with solutions that help people resolve their legal problems. Eight selected startups will receive $10,000 in equity-free funding as well as the chance to win up to $21,000 on Demo Day. Apply by March 31.

• Google has announced that the Google for Startups Black Founders Fund is now accepting applications from Black founders across the African continent. Apply by March 26.

• The Africa Business Heroes (ABH) Prize Competition, a philanthropic initiative sponsored by the Jack Ma Foundation and Alibaba Philanthropy, is calling for participation from Africa’s entrepreneurial talent. Apply by May 12.

• Rwandan startups have been invited to apply for the ZEP-RE InsurTech Programme, which will support scalable startups in creating new markets and optimising efficiency. Apply by March 15.

What else is happening in tech?

• Payfi and SDG partner to offer Nigerians Starlink device purchases in instalments with Naira cards.

• Villigro Africa invests $2 million in African healthcare startups.

• Kenya reportedly has 300,000 5G users.

• Six million African women are set to benefit from Unstoppable WoW3’s web3 and metaverse education programme. 

• TikTok creators can now put content behind paywalls.

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The regulation also provides responsibilities and expectations for the various participants (the banks, third-party financial institutions, and customers) and ensures consistency and security across the open banking system. An outline of minimum requirements for participants is also provided, which stipulates safeguards for financial system stability under an open banking regime. 

What open banking means

Open banking is the practice that allows banks to share customer data with third-party service providers—fintechs and mobile money operators—that will leverage the data to create solutions that boost financial inclusion and innovation in Nigeria. The data is shared via APIs and can only be shared with a customer’s consent.

Several fintechs like Mono, Stitch and Okra have all had to come up with innovative hacks to provide similar solutions to open banking. But with the new regulation, they can now provide a more robust set of data. 

What it means for Nigeria 

On a call with TechCabal, Adedeji Olowe, the CEO of Lendsqr, shared that although the regulation might take some time to bear fruits, it is the beginning of a journey towards increased partnerships between banks and fintechs in Nigeria. “ There are still some steps that need to happen before the regulations take effect but what it means is that if everyone speaks the same language, the friction of interoperability will reduce. That means people can build apps that have access to customer data and will do interesting things. Financial inclusion will explode, and custom loans can be built,” he said. According to the CBN, the regulation will allow for credit scoring and rating.

The clamour for open banking regulation in Nigeria began in 2017 when Adedeji Olowe led industry experts to form an open banking working group, which became known as Open Banking Nigeria. The CBN then released a regulatory framework for open banking in 2021, which led to an industry committee that created the draft of the open banking regulation in 2022. Now that the draft has become law, the next steps are for the CBN to build a registry and for the financial institutions to leverage the regulations to build new financial solutions. 

The regulation will also be supported by the Nigeria Data Protection Regulation (NDPR), which was released in 2019, as data privacy is a foundational pillar for open banking. The open banking regulations will also benefit merchants by allowing them to use the solutions provided by financial institutions to better manage the flow of money and will allow customers to enjoy more tailor-made opportunities for credit and investments. 

For the uninitiated, open banking is the fast-growing sphere of financial technology where banks and financial institutions allow third parties to access customers’ financial data through application programming interfaces (APIs).

Banking has been a historically private affair. Financial institutions typically guard their customers’ information closely. Nigeria’s Central Bank, for example, like most apex banks, expressly forbids financial institutions from disclosing customer account details to third parties without the consent of the customer.

Open banking turns this private banking relationship on its head by permitting, or in some cases like in the UK, mandating that banks give up their secrets to trusted third parties and allow them to access the account details and transaction information of their staff providing they obtain digitally authenticated customer consent.

The idea is that customers permit these third parties to sell new services to them without needing to open a new bank account with these fintechs.

This new type of transparency, finance executives claim, “benefit consumers with new insights that help people and businesses manage their money, access to products they may not have had before and new products that were not previously available.”

And everywhere you look online, and I assume offline, in corporate meeting rooms and offices, the benefits of this dramatic open system are loudly touted. This is the case in Europe, Latin America, and the US. In Africa, more people are taking it seriously as evidenced by new open banking guidelines and startups keen on exploring this trend.

Not very much it turns out–at least to this writer. Why? Poor data extant data systems and understated fraud risk.

Nothing new under the sun

Fraud is probably as old as finance, and in the hyper-digital world of modern finance, this well-established enemy is equally entrenched. By leveraging customers’ networked accounts, for example, open banking can help lenders get a more accurate picture of a consumer’s financial situation and risk. This is useful for building new consumer finance products. But this enterprise-wide view of customers’ financial data is precisely where immense fraud risks lie.

Open banking advocates are quick to point out that by using advanced digital tools, they are better equipped to prevent common fraud types like card fraud and that open banking itself has (so far) not spawned new types of fraud.

They are correct. Indeed open banking has not created new types of fraud. But it has created more touch points for it. In the words of Mike Haley, CEO at Cifas, a UK fraud prevention agency, “it has increased what’s known as the attack surface; the number of entry points for fraudsters to try to get into the system to initiate a payment, or to intercept personal information”.

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But many banks in Africa today struggle to keep up with the demands of modern banking, to say nothing of significantly tougher technical demands of real-time systems like open banking.

Analysts at Moroccan firm, Dataprotect, say sub-Saharan African banks are particularly vulnerable to cyberattacks (bank card fraud, phishing, invasions, and so on), owing to a lack of experienced specialists and investment in cybersecurity. Some banking insiders will privately admit to how weak internal data controls are, and regulators have roundly failed to enforce better governance and tech compliance systems.

Open banking depends upon access to customer data held by banks to function effectively, but if that data is compromised or unstructured it is useless. Valuables are at the greatest risk of being lost, damaged, or stolen when they are on the move. As open banking involves increasingly large amounts of data transfer, the volume and frequency of data being shared create multiple weaknesses that can be exploited.

Open, but not enough

It is now a matter of when, not if, open banking becomes the dominant way financial services are offered. If it succeeds in its current form, open banking will be a loosely coupled payment rails held in place with APIs. But besides vague general terms that lay out in broad terms the responsibilities of banks and third parties, Nigeria’s Central Bank draft guidelines, for example, leave broad swathes of the technology compliance open to interpretation. For example, in section 2.1, Appendix II – Risk Management Standards of the draft CBN guidelines, open banking participants are asked to “use secure protocols and secure application development lifecycle.” But the CBN does not offer what constitutes a secure protocol or application development lifecycle.

The absence of standardisation may mean everyone is left to build as they see fit as long they can say, it complies with the broad provisions.

The resulting tangle will in turn make it harder for players to talk to each other and for regulators to understand how to fix the issues when they occur.

The point is not calling for more onerous rules, but for more sharing and collaboration among players. Banks do not want to be open, but since the regulator has taken this upon itself, it must go all the way. In other words, consumers alone do not have to give up data, the very businesses building open banking infrastructure will need to be open.

Since open banking prides itself on openness and sharing, it only makes sense to go all the way in being open to collaboratively fight fraud. The groups behind some of the most successful data breaches themselves operate as a collective. It is either open banking moves beyond competition or consumers and the “open banking” revolution will suffer death at the hands of the world’s enterprising and fraternal fraud corps.

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Two things can be true at the same time. Open banking holds some promise for bringing financial services to more people. But Africa’s fragile banking systems are barely able to keep up with the technical requirements for serving her growing digital native population. As the system is structured now, opening multiple potential entry points for fraud will simply overwhelm banks, imperil open finance fintechs, and hurt customers.

A potential solution will involve building a culture of sharing that goes beyond customer data—the part of open banking that has commercial benefits—to the very core of the systems that will allow players to effectively fight fraud and protect consumer data.

In return, telcos are leveraging their big budgets and large infrastructure spread to channel expansion dollars and efforts towards short-term profit in Africa’s hot but tight mobile payment space.

This is not something that only guidelines will fix; regulators, banks, and fintech operators will need to roll up their sleeves to make this work. Sadly, we are still stuck at policy papers and siloed competitiveness, leaving open banking more risky than beneficial. Something has to give.

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However, as technology innovations began to drive global digital transformation and the financial landscape experienced a drastic shift, how financial institutions approach customer identification started to change. 

In a bid to meet the digital customer identification requirements for financial services, the Central Bank of Nigeria (CBN) through the Bankers’ Committee, and in collaboration with all banks in Nigeria, on February 14, 2014, launched a centralised biometric identification system for the banking industry tagged the Bank Verification Number (BVN). As intended, the BVN would go on to become the single most important means of identification when onboarding people into Nigeria’s financial ecosystem. With the BVN, customers can now open a bank account or digital wallet without having to submit several documents of physical identification every time.

Today, open banking, a banking system where third-party providers are granted open access to consumer banking, transactions, and other financial data from banks and non-bank financial institutions (NBFIs), through the use of Application Programming Interface (API), is one the newest and hottest innovations in the financial industry. 

The CBN, again, in 2019, released the Regulatory Framework for Open Banking in Nigeria to regulate the transmission of financial data between banks and third-party financial service providers in the country. This move indicates that the apex bank supports the success of this innovation and ensures users’ data is properly handled.

So there’s open banking, and there’s digital identity. What’s their relationship with each other and their shared challenges; and what must be done to optimise their promise?

For the 4th edition of Digital Identity Matters, which was sponsored by VerifyMe and took place on April 22, TechCabal hosted a panel with Ope Adeoye, founder and CEO of OnePipe; Adedeji Olowe, founder and CEO of Lendsqr and Trustee at Open Banking Nigeria; and Esigie Aguele, co-founder and CEO of VerifyMe. The discussion was moderated by Tosin Olaseinde, founder and CEO of Money Africa.

Challenges facing open banking and digital identity

According to Olowe, the biggest problem facing open banking and digital identity is the lack of synergy between stakeholders in the field, which has segued into a failure to standardise processes. 

“Providing a general standard for the digital identity providers is as important as the identity itself,” said Olowe. “African providers don’t use the same standard. This means a company can’t change its identity provider without rewriting almost all their lines of code—so time and context will be lost during this period.” 

Until there is a sync, he said, there won’t be standardisation, and without that, the whole concept of digital identity will continue to struggle with seamless integration into the open banking infrastructure. 

Building blocks of a robust digital identity system

It has been established that for any digital financial institution to function properly, it must have a robust identity verification system. But without a robust identity system, that can’t happen. 

“The first thing to having a robust digital identity system, I’ll say, includes having a lot of people digitise; and we still have a long way to go in this area,” Aguele said. “Then we can talk about continued regulation, strong infrastructure, open banking, and system interoperability that allows, for instance, data from A to be understood by B.”

Aguele also thought that regulations that communicate proper standardisation are needed.

How far has Africa gone in open banking and digital identification?

Olowe thought Africa is doing really poorly on the open banking and digital identification front. Adeoye agreed but with a caveat, explaining that the poor performance is because “the whole concept is still nascent, and we haven’t picked up the baton really.”

How can stakeholders drive adoption of open banking?

Adeoye said, among all the stakeholders involved, the private sector is the best bet to massively drive adoption for open banking. Olowe supported Adeoye’s submission. 

“I think it starts from a proposition. And I think most times propositions are better led by the private sector, just because propositions that will be sustainable need to have some kind of source, monetary gain, or value to the organisation trying,” said Adeoye. “Number two is then creating frameworks that allow citizens to find their way to the grassroots.”

Olowe said the speed with which the private sector makes decisions makes them the best driver of open banking. “Regulators are slow, and when they finally show up, they stuff their ideas down everybody’s throats, and some people will choke and die.”

You can watch the full conversation here: