“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.
]]>Happy new month
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In December 2020, Nigeria’s former minister of communications and digital economy Isa Pantami announced an integration policy to link SIM cards to the country’s National Identity Network NIN database.
The goal was simple: to ensure the NIN was a robust identification system for its citizens. Think of it as the equivalent of a social security number in the US. The government also hoped that the move would make it easy to track offenders of phone-related crime cases like kidnapping and banditry.
The move was however widely criticised by the citizens due to the inconvenience of linking their SIMs with the NIN and the almost impossible deadline of December 15, 2020, at which time telecoms would have to block all SIMs that were not registered with valid NINs.
The government has however postponed this deadline multiple times. And now, it appears the government is ready to take action.
Time’s up: Yesterday, the Nigerian Communication Commission directed all telecoms to block subscribers not yet linked to NIN. MTN, AIrtel and Glo are set to block about 12 million subscribers who are yet to comply with the Nigerian government directive.
The NCC said it “was committed to protecting consumers’ rights while ensuring their satisfaction.”
The NCC has made this promise before. In May 2023, the regulator directed all licensed mobile network operators (MNO) to use unified shortcodes—*310#—so users with multiple SIMs don’t need to have a headache memorising multiple short codes.
It remains to be seen if the NCC—out of its sheer love for users—will approve yet another deadline for the NIN SIM linkage.
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Nigeria’s headline inflation rose to a near three-decade high of 29.92% in January. The inflation coupled with Nigeria’s depreciating currency has fastened its fangs on the purchasing muscles of its people of which 133 million are multidimensionally poor.
Businesses and tech startups also bear the brunt, recording increases in operating costs and reduced profits.
For property tech startup Spleet which allows monthly rental on its leased properties instead of a yearly rental charge, the inflation and devaluation are driving rental prices up by 2x.
To cope with these new price changes, the proptech startup, on Thursday, said it was reducing operating costs and laying off some members of its workforce.
By the close of 2022, the tech ecosystem in Lagos, Nigeria, had reached a valuation of $8.4 billion. Yaba, a suburb within Lagos, emerged as a prime location for numerous companies, including the pioneering startup incubator, CcHUB.
Founded in 2010 by Bosun Tijani—now the minister of communications, innovation and digital economy—and his colleagues, CcHUB played a pivotal role in Yaba’s development. It gained momentum and collaborated with the government to install fibre optic cables in Yaba, which has now played a crucial role in creating what is arguably Africa’s most organic tech cluster, with CcHUB becoming Lagos’ leading tech innovation centre.
Abuja gears up for tech city: In more technological advancements, Nigeria’s federal government has signed a Memorandum of Understanding with Domineum/Edenbase UK to develop a state-of-the-art tech hub—Abuja Tech City— in the capital city of Nigeria.
The project seeks to replicate the success of London Tech City, valued at over £61 billion ($77 billion) in its fifth year of operation. Notably, the same consortium responsible for developing London Tech City will be behind the construction of Abuja Tech City.
The Abuja Tech City project, originally conceived as Abuja Tech Village during the tenure of former President Olusegun Obasanjo, has received renewed attention under the current administration. A standout feature of the Abuja Tech City is its designation as a Free Trade Zone, offering a conducive environment for tech-driven startups, industries, and innovation initiatives, with a vision for a smart and green city.
Clearing the Path for Progress: To pave the way for development, the government has directed illegal occupants to vacate the Pyakassa area of Abuja, where the Tech City will be built. The indigenous community had already received compensation in 2015, making the current step essential for taking full possession of the land and starting construction.
Zoom out: Other regions are catching up. Kaduna, in the north, which boasts of CoLab, the city’s first tech hub, has also partnered with the state government to establish Kaduna Technology City.
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Millions of Africans will enjoy greater access to digital payments thanks to a multi-market partnership between MTN Group, Africa’s largest mobile network operator, and Mastercard, a global payment processing company.
The deal will introduce a prepaid virtual card specifically designed for MTN’s MoMo customers, enabling them to access over 100 million acceptance points globally. This initiative will impact MoMo’s active monthly wallets, totalling 60 million across its expansive presence in 13 African markets, including Nigeria, South Africa and Rwanda.
There’s more: For Mastercard, the partnership also extends its benefits to entrepreneurs by providing access to Mastercard’s “SME-in-a-Box” solution—a package that equips businesses with the tools they need to accept digital payments, manage their online presence, and drive innovation.
The partnership follows Mastercard and MTN’s recent agreement to invest $200 million to acquire a minority stake in the digital financial services division of MTN Group.
Driving financial inclusion: With MTN’s extensive subscriber base of 290 million, the multi-market partnership holds significant potential for widespread adoption. Moreover, MoMo merchants will seamlessly integrate card payments into their operations, enhancing the platform’s capabilities for cross-border money remittances.
This partnership also aligns with Mastercard’s commitment to bringing one billion people and 50 million SMEs into the global digital economy by 2025.
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This week, MoneyHash, an Egyptian fintech startup, raised $4.5 million in seed funding. COTU Ventures and Sukna Venture led the round, and other investment outfits such as RZM Investment, Dubai Future District Fund, VentureFriends, and individuals like Tom Preston-Werner (founder of GitHub), among other strategic investors, participated.
Here are other deals for the week:
Before you go, our much anticipated State Of Tech In Africa Report for Q4 2023 is now out. Click this link to download it.
Follow us on Twitter, Instagram, and LinkedIn for more funding announcements. You can also visit DealFlow, our real-time funding tracker.
Source:
Coin Name |
Current Value |
Day |
Month |
---|---|---|---|
Bitcoin | $61,333 |
– 1.97% |
+ 41.71% |
Ether | $3,349 |
– 0.92% |
+ 44.67% |
Tether USDt |
$1.00 |
– 0.07% |
+ 0.03% |
BNB | $400.30 |
– 3.85% |
+ 28.85% |
* Data as of 12:53 AM WAT, March 1, 2024.
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The Africa eGovernance Conference is set to hold from the 12th to the 14th of March 2024. The conference and exhibition will feature
plenary and deep-dive, networking and dealmaking sessions featuring relevant technology solutions tailored for the urgent transformation
of Africa. Join strategists and policymakers like Bak Barnaba Chol, Minister for Finance South Sudan; Cina Lawson, Minister for Digital Economy and Transformations, Togo; and Paula Ngabire, Minister of ICT and Innovation, Rwanda to create the pathways into the future of digital governance. Register here.
What else is happening in tech?
Written by: Mariam Muhammad & Faith Omoniyi
Edited by: Timi Odueso
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Payment processor Mastercard Inc. has agreed to buy a minority stake in the fintech business of MTN Group Ltd., a major telecom company in Africa. MTN’s CEO, Ralph Mupita, says that they’re finalising the investment arrangements, as reported by Bloomberg. The cornerstone of MTN’s fintech endeavours is its mobile money product, MoMo, which has been valued at $5.2 billion, nearly 40% of MTN’s total market capitalisation.
This follows Mastercard’s $100 million investment in Airtel Mobile Commerce BV, the holding company for Airtel Africa’s mobile money operations. With the investment, Mastercard bought a minority stake in the fintech arm of the telecom, just like it is set to do in MTN.
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Mastercard has previously connected its virtual payment service to MTN wallets, enabling MTN customers to make international payments online without needing a bank account. This puts MTN in competition with established fintech companies such as Flutterwave, and other major telecom contenders like Airtel Africa Plc, Safaricom Plc, and Vodacom Group Ltd. have also ventured into the fintech sector.
MTN had previously shared plans to raise around $1.3 billion by selling assets. These plans include recent actions like selling and leasing back assets in West Africa and South Africa. This involves things like mobile-phone towers and their share in IHS Holding Ltd., a tower company listed in New York. However, the sale of this share has been postponed due to a disagreement with the management of IHS Holding.
]]>Mastercard, a leading global payment services provider, has partnered with SomBank, a Sharia-compliant bank in Somalia, to launch the SomBank Card, a Mastercard-branded debit card. The collaboration aims to enhance financial inclusion in Somalia by providing customers with access to digital payment options. In the initial phase of the partnership, 100,000 SomBank customers will receive the SomBank Card in 2023, with the potential for further expansion in subsequent years.
By offering digital payment services, this collaboration seeks to address the growing demand for convenient and secure transactions in Somalia. Customers will be able to make purchases, withdrawals, and online payments using the SomBank Card at Mastercard-accepted merchants and ATMs. The partnership represents a significant step towards improving financial access and empowering more Somalis to participate in the digital economy.
“As a global technology company with a deep commitment to financial inclusion, Mastercard is proud to partner with SomBank to bring digital payments to Somalia. This also supports our commitment to work with financial institutions to bring more people into the digital economy,” said Shehryar Ali, Country Manager for East Africa at Mastercard. “By providing access to secure and convenient payment solutions, we believe that this partnership will help drive economic growth and improve the lives of millions of Somalis.”
This strategic collaboration aligns with Mastercard’s broader strategy to expand its presence in regions with strong digital growth potential. Somalia, with its increasing (yet low) internet penetration and smartphone usage, offers a promising landscape for digital development. In 2021, Mastercard entered into partnerships with MyBank and Premier Bank in Somalia to further promote the digitalization of financial services.
The Mastercard-SomBank partnership marks an important milestone in Somalia’s journey towards financial inclusion. The introduction of the SomBank Card will offer a convenient payment solution for everyday transactions and provide access to essential financial services. As digital payment solutions become more accessible, the collaboration aims to drive economic growth and empower more Somalis to participate fully in the economy.
With the launch of the SomBank Card, Mastercard and SomBank are working together to accelerate the adoption of digital payments in Somalia, bringing the benefits of secure and convenient transactions to individuals and businesses alike. This partnership represents a significant stride towards a more inclusive and digitized financial ecosystem in Somalia.
“This is a truly remarkable day for us, as we take another step towards making banking more accessible for our customers. We are excited to partner with Mastercard to bring digital payment solutions to our customers,” said Abdullahi Aden, CEO of SomBank.
Somalia has been trying to rebuild its digital payments rails since most of its financial institutions crumbled in the aftermath of its 1991 wars. In June 2022, Techcabal reported the national launch of SOMQR, a standard QR code for the country. The move was criticised by several industry watchers, who cited the country’s low internet and smartphone penetration. For these experts, the bet should be on cards—exactly what Mastercard and SomBank are driving with their latest partnership.
]]>Happy pre-Friday
Threads launched earlier today, and it’s looking good so far!
ICYMI: Instagram launched a Twitter-like app that will allow users to do everything they can do on Twitter but with their Instagram usernames.
Already, the platform surpassed 2 million users within its first two hours. The platform’s interface and look are so similar to Twitter’s, Elon Musk will have to thread carefully or he’ll lose the fight for the next big social media space.
Justice is in trouble.
South Africa’s Information Regulator has fined the Department of Justice R5 million ($266,331) for not renewing its licences for antivirus software.
The Protection of Personal Information Act (Popia) sets basic rules for gathering and exchanging personal information. Mail & Guardian reports that when the regulator discovered that the department was breaking some of these rules, it issued an enforcement notice on May 9. It had 30 days to follow the notice, but it didn’t. As a result, the regulator has now imposed a fine on the department, using its power for the first time since it was established two years ago.
Why is this a big deal? In September 2021, the department experienced a severe ransomware attack. This attack disrupted court operations and all electronic services provided by the department because employees couldn’t access information systems. Personal information in documents was compromised, and a significant amount of files were lost.
Two years prior, the court faced another hacking incident in which hackers stole R10,000 ($532) from the Guardian’s Fund account at the Pietermaritzburg office. Recently, there were reports of hackers stealing R18 million ($958,071) from the fund once again. The Guardian’s Fund was established to receive and manage money on behalf of individuals who are legally incapable or unable to handle their own financial matters. Now, due to inadequate security measures, their money has been lost.
Zoom out: South Africa is increasingly becoming a hotbed for financial cybercrimes. Some businesses are paying $5 million dollars or more to ransomware attackers.
Per Business Daily, the establishment of the new subsidiaries is subject to shareholders’ approval at the July 28 annual general meeting.
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Safaricom is venturing into venture capital.
The Kenya-born telecom giant Safaricom is set to incorporate two venture capital firms into its business, Business Daily reports. The VC firms will focus on funding and incubating seed-stage and growth-stage start-ups. With this, Safaricom hopes to gain a big share of the startups in the country as it currently does in the telecom and mobile money sector.
Sidebar: Seed-stage startups are those that are typically yet to begin generating revenue and are in need of capital to turn their money-making ideas into reality. Growth-stage businesses are those that are actively generating revenue even though they may still not be profitable.
Nuru, a Democratic Republic of Congo (DRC) solar startup, has raised $40 million to build the biggest mini-grid in Sub-Saharan Africa
The Series B equity fund will see to the construction of three mini-grids in Eastern DRC, including Goma and Kindu, with the largest in Bunia. The grids will use solar power and batteries with a total generation capacity of 13.7 megawatts.
Investor highlights: The round was led by the International Finance Corporation (IFC), the Global Energy Alliance for People and Planet (GEAPP), the Renewable Energy Performance Platform (REPP), Proparco, E3 Capital, Voltalia, the Schmidt Family Foundation, GAIA Impact Fund, and the Joseph Family Foundation.
Future plans: Nuru plans to raise $300 million to hit its target to provide 24-hour electricity to five million people in DRC by September 24, 2024. Its Series B raise of $40 million is still far from the $300 million needed to achieve this goal. However, Bloomberg reports that a $90-million Series C round is expected to get underway later this year.
The company also hopes to close off an additional $28 million in project finance by the end of July
Zoom out: Less than 20% of the 100 million people in DRC have access to energy, with the majority who lack access in eastern DRC. The upcoming mini-grids in eastern DRC will enable renewable energy adoption, eliminating reliance on fossil fuels for power generation.
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SomBank is making banking more accessible to its customers.
On Tuesday, SomBank announced its partnership with Mastercard, a leading global technology company in the payments industry to bring digital payments to consumers in Somalia.
The partnership: Through the introduction of the SomBank card, the Mastercard-branded debit card, Sombank now offers secure Mastercard payments, enabling customers to make safe transactions for purchases, withdrawals, and online payments. The card will be initially provided to 100,000 SomBank customers in 2023, with future program expansion in subsequent years.
The Sombank card also offers a seamless payment solution for daily transactions across Somalia, offering access to an extensive network of merchants, ATMs, branches, and agents, all accepting Mastercard payments.
Zoom out: Through this partnership, financial inclusion in Somalia will be advanced, allowing more individuals to participate in the economy and gain access to vital financial services like savings, loans, and insurance.
Source:
Coin Name |
Current Value |
Day |
Month |
---|---|---|---|
Bitcoin | $30,511 |
– 1.19% |
+ 18.57% |
Ether | $1,913 |
– 1.44% |
+ 5.62% |
BNB |
$240 |
– 1.47% |
– 13.05% |
Solana | $19.51 |
+ 1.21% |
– 2.45% |
* Data as of 05:00 AM WAT, July 6, 2023.
Join our Twitter Space on July 7 to explore the perils of digital loan recovery in Nigeria and Kenya.
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Following the $1.2 billion chargeback fraud fiasco which saw the startup halting operations for eleven months, Zambian fintech Union54 is back with another product: a superapp called ChitChat.
ChitChat is a collaborative effort between Union54 and global payments technology company Mastercard and will enable users across Africa to send messages over an encrypted platform. ChitChat will also double as a social commerce platform, enabling users to send each other money, access a USD debit card, and purchase from digital storefronts within the app. ChitChat’s card and payments features, supported by Mastercard integration, will roll out in a beta for Angola, Tanzania, and Ghana with more markets to be added this year.
“We are excited to announce our ChitChat product and at the same time, announce our expanded partnership with Mastercard,” said Perseus Mlambo, CEO of Union54. “We believe that mobile payments and chat platforms can be a powerful force for increasing trade across Africa, and we are committed to building a platform that accelerates this. We’ve built payments into a chat platform, giving everyone a USD card on demand – on our terms.”
Union54 and Mastercard claim to have issued over 2 million cards to Africans through their partnership.
“We are delighted to deepen our partnership with Union54 as we work towards creating a world beyond cash. Our collaboration will not only enable us to expand our reach into new markets, but it will also provide consumers with a secure and convenient way to access financial services,” said Gabriel Swanepoel, country manager at Mastercard, southern Africa.
In July 2022, Union54 halted its services following an attempted $1.2 billion chargeback fraud which saw many African startups that previously used its card-issuing services rush to find alternatives. In an interview with TechCrunch in March this year, Mlambo stated that Union54 intended to use lessons from the event and their subsequent hiatus to re-enter the African fintech market, a promise which has culminated in the launch of ChitChat.
]]>According to the CBN governor, Godwin Emefiele, this move will drive financial inclusion and concentrate card financial data in Nigeria, even as it serves as a symbol of national pride for its adopters.
“The national domestic card avails us the sovereignty of our data. Secondly, it comes at lower costs, ” he said.
With the annual value of card transactions in the Nigeria cards and payments market capped at $18.2 billion in 2021, Nigeria remains a huge market for players in the card payments market, which is largely dominated by global players like Mastercard and Visa, with Verve by Interswitch following behind.
These global companies provide central payment networks which they link to debit and credit cards to enable and facilitate cash transactions with the card. The cards can then be issued to customers by banks, financial institutions, or even shopping malls.
By breaking the triopoly and establishing a national card payment scheme, the CBN, in partnership with the Nigeria Inter-Bank Settlement System (NIBSS), is positioning itself to disrupt and possibly dominate a fast-growing market. The CBN cites reduced operating costs and optimised foreign exchange usage as the hallmarks of its latest fintech foray.
“At this time when foreign exchange challenges persist globally, it is important for me to say that we have come up with this card to ensure that all online card transactions will now, effective immediately, begin to go on the nigerian national domestic system,” Emefiele said.
“NIBSS and CBN will work together to make sure foreign exchange is charged for only international transactions made on Visa and Mastercards as we have it now. This is so because many of the cards we use currently charge in foreign currency. However, with the launch of the national domestic card, all domestic transactions are to be carried out on the national domestic card scheme,” he added, speaking further on the payment of forex.
Notably, this “homegrown” scheme is the first of its kind in Africa, but it’s a route common to some top economies like China, India, Brazil, and Turkey. In India, Rupay, the government-backed card payment scheme, dominates the card market, owing to its efficiency, relatively low cost, and policy backing. To date, more than 600 million Rupay cards have been issued.
Mr. Premier Oiwoh, the managing director/CEO of the NIBSS, noted that the scheme was developed to address the specific pain points of Nigeria’s payment industry and provide customised innovative offerings.
If this scheme records the successes of Rupay, then Nigerians will be able to pay lesser amounts for debit cards and the likes. But the question of reliability and interoperability can only be truly answered when the cards enter circulation.
Speaking on how this move could stifle competition from global players, Emefiele said, “The Nigerian market is vast and the current participants have done so much in the last 12 years to transform the ecosystem. Yet there is much ground to cover as millions of Nigerians are still without cards to consummate transactions.”
“I am convinced that the national domestic card scheme will make this a reality in the coming months. We can no longer neglect the vast majority of Nigerians,” he added.
AfriGOpay Financial Services Limited (AFSL), a NIBSS-affiliated organisation, is responsible for deploying and overseeing the adoption of the national domestic card scheme.
]]>#BoycottMondays
Spotify is testing NFT integration on its platform.
According to The Verge, Spotify is allowing artists to display their NFT collections on its Android app, with an option to link purchase requests to OpenSea.
In today’s edition
WhatsApp has launched a new developer tool, WhatsApp Cloud API, to help all businesses integrate WhatsApp business into their backend.
The WhatsApp Business API has been around for a while. Launched in 2018, it was WhatsApp’s first revenue-generating product, allowing pre-approved businesses to respond to client messages.
Sidebar: An API is an application programming interface that allows different computer servers to speak to one another. It’s how you can use different applications on Slack, or how you can add Zoom meetings to your Google Calendar. With WhatsApp Business API, it allows verified businesses to integrate WhatsApp with their websites so clients can order, raise inquiries, or just contact businesses using WhatsApp. It’s also different from the WhatsApp Business app which can only be used by 1 user. The WhatsApp Business API can be used by several users in a business.
Before last week, businesses that wanted access to WhatsApp’s Business API would have to apply for it through one of WhatsApp’s partners, and the thorough process could take anywhere from days to weeks.
Last week, Meta CEO Mark Zuckerberg announced the launch of WhatsApp Cloud API, a free version of the Business API that is now available to all businesses, big and small.
The CEO also announced new Premium features coming to the WhatsApp Business app. This includes the ability to manage chats across 10 devices, and customisable click-to-chat links.
Zoom out: This is great news for all small businesses. With either the WhatsApp Cloud API or the WhatsApp Business App, they can now connect with clients on apps almost everyone already uses.
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Nigerian fintech unicorn, OPay, has announced a partnership with global payments service provider Mastercard.
The partnership will allow OPay customers to access global online platforms with their OPay e-wallets which will be linked to Mastercard’s virtual payment solution. This means small businesses can access
Across the continent, OPay reportedly has over 15 million active users with a monthly transaction value of $3 billion. This number will be seeing a boost as users can now use their OPay e-wallets to pay on more global online sites.
Both firms state that the partnership aims to “grow the cashless ecosystem and advance digital financial inclusion for millions in Nigeria, other African countries, and the Middle East”.
“As the leading fintech in the Middle East and Africa, we are delighted to be partnering with Mastercard as we continue on our journey to promote financial inclusion, helping to open up the global economy to more consumers and businesses across the Middle East and Africa,” Yahui Zhou, CEO of OPay, said.
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In the early days of the internet, web applications were the day’s order. Most online tasks required users to open websites or online portals to access digital services. With low mobile phone penetration, open websites or online portals were the only option available to people.
But with rapid increase in smartphone use, specifically in emerging markets such as sub-Saharan Africa, the era of accessing digital services via open websites is gone and mobile access to digital services is becoming the norm. Data from GSMA reveals that about 495 million people subscribed to mobile services in Africa by the end of 2020, representing 46% of the continent’s entire population. With over 40% of the region’s population under the age of 15, young consumers owning a mobile phone for the first time will continue to increase and drive the growth of mobile access to digital services.
According to a report by AppsFlyer and Google, Africa is currently experiencing a growing mobile app market. Between Q1 2020 and Q1 2021, the report found that overall instals on Google Playstore increased by 41%. Nigeria showed the highest performance, with 43% growth in mobile apps installed on Google Playstore, followed by South Africa and Kenya with 37% and 29% growth respectively.
Amid an expansion in African consumer spending, more people are accessing goods and services online than ever before, with the number of online shoppers using Android and iOS devices growing by 55% and 32% in 2021 respectively. In the same vein, more businesses are increasingly turning to mobile apps as a way of reaching new users and diversifying their numerous offerings.
Sectors like e-commerce and fintech continue to experience rapid growth as more consumers, especially non-tech-savvy shoppers, access these services via mobile applications. Currently, mobile apps remain the easiest way to acquire new users, and with the rise of super apps and more startups springing up across the continent, mobile app usage will only increase in the coming years.
Rama Afullo, Apps Lead for Africa at Google, added, “While it’s clear that mobile adoption is increasing, there’s still room for growth when it comes to app marketing, with many marketers in the nascent stage of their app maturity journey. Taking advantage of app promotion and engagement tools like Google’s App Campaigns, using analytics and measurement tools, and working with mobile measurement partners like AppsFlyer, will be key for companies looking to grow their user base, drive customer value, and continue improving the user experience.”
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LinkedIn will no longer operate in China.
The platform joins Facebook, Twitter, Google, and even Clubhouse, who have been forced to exit the country after the Chinese government demanded that their content be regulated.
Unlike Facebook and Twitter, though, LinkedIn’s exit is only partial. The platform will be taking out the social aspect that allows users to share posts and articles, leaving only an InJobs feature that helps with job opportunities. China is LinkedIn’s third largest market so it makes sense that they’re not pulling an Elsa and letting it go.
In today’s edition:
An earlier version of this edition contained some news about MTN Nigeria’s refund to its customers.
We’d mentioned that MTN Nigeria was giving 1MB to all its Nigerian subscribers but didn’t include news of a later release from MTN where the telecoms company retracted that offer and instead enforced a refund on all purchases made between 12 p.m. and 7 p.m. on Saturday, October 16.
Since we closed out last week’s newsletter with a blackout story and an MTN quip, let’s open this week’s with another.
On October 9, MTN Nigeria experienced a network blackout. Millions of users across the country lost connection and were unable to access data, voice or text services.
Never where you go
Last week was the week everything was shut down, and for once, COVID isn’t to blame. Probably.
MTN’s internet problem was caused by a technical mishap on their own part. Yesterday, CEO Karl Toriola, in an apology video, attributed the blackout to a technical error that shifted all 4G band users to the 3G band. This, in turn, caused a strain on the 3G band that brought the whole network crashing down.
Yellowing Mellowing it out
Nigerians, who had to switch to alternate networks, took to social media to source for the cause of the issue. While some were undoubtedly concerned that MTN’s shutdown is related to Facebook’s and Snapchat’s, more Nigerians were concerned that the government was moving to shut down the internet in the wake of the first anniversary of the #EndSARS protests.
To compensate, Toriola announced that all MTN users would be refunded for data and airtime expenses made from 12 p.m. – 7 p.m. on Saturday.
Zoom out: MTN is Nigeria’s largest network provider, accounting for 82 million customers across the nation. Refunding customers for purchases made over a seven-hour period sounds like a commensurate way to show your customers that you care
Kenya, Uganda and Tanzania are rolling out a digital platform that will link the three countries’ security markets. Once the platform is up and running, investors will be able to buy and sell stocks with one click. Rwanda will also collaborate.
According to the chief executive of the Nairobi Securities Exchange (NSE), Geoffrey Odundo, the platform will enable seamless trading of “all kinds of securities” in the East African nations.
The goal is to integrate their securities exchanges in order to boost trading.
Trending trades
This is merely one of the new efforts that the NSE has been making to ease investment access for would-be traders via digital platforms.
In August, the NSE introduced a partnership with Safaricom that enables customers to invest in stocks by redeeming loyalty (or Bonga) points.
Coupled with MTN Uganda’s new platform that enables subscribers to buy shares in the company by phone, this looks like an emerging trend—the digitisation of East Africa’s investment landscape, that is.
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A few weeks ago, we wrote about the involvement of user-generated porn tubes like PorhHub and Xtube in underage and revenge pornography.
We’ve got an update.
In the struggle for ethical pornography, Mastercard has enacted a policy to help porn sites ensure that its users are of the minimum required age.
What’s the plan?
In April, Mastercard announced that a specialty merchant regulation was in the works.
The regulations took effect last Friday and they’re bringing quite a bit of change. The most important aspect of the regulation is that all adult sites that want to access Mastercard’s payment processor will need to provide, “clear, unambiguous and documented consent” for content on all of their platforms.
Mastercard is also requiring that porn sites document and verify the ages of every single actor that appears in videos uploaded onto their platforms.
It’s getting harder for sex workers
Not everybody is happy about this, and you probably can guess why.
Every second, about 28,000 people are surfing porn. If so much porn is being consumed, then it stands to reason that just as much is being created to keep up with the demand. While there’s no reliable information on how much porn is being made per second, there’s info on how much is being uploaded. It’s estimated that on sites like PornHub, which has hundreds of registered accounts, three hours worth of content is uploaded every minute.
That’s a lot of content to regulate, and a lot of actors to verify.
Sex workers are also opining that the new regulations only make things harder for them to do their jobs, and get paid for it. In September, over 1,500 sex workers and allies signed a letter demanding that Mastercard review its regulations.
There are also arguments that Mastercard’s actions are unnecessary, considering that adult sites are enforcing stricter trust and safety policies.
Zoom out: This isn’t a one-size-fits-all solution since Mastercard isn’t the only payment processing platform available to use. While it is one of the largest, there are other options including PayPal, Visa, and Stripe, some of whom are working with adult sites to find solutions that work for all.
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If you had access to the internet anywhere in Africa 20 years ago, you were a member of the 4.5 million club.
Back then, Africa lagged behind the rest of the world in terms of internet users. Twenty years and 560 million users later, the gap has reduced. Although there’s been significant progress, the work is far from done. Only 43% of Africans had access to the internet as of December 31, 2020.
A large number of Africans access the internet via their smartphones. As of October 2020, the majority of web traffic in key African markets originated from mobile devices. In Nigeria, one of the African countries with the largest internet populations, 75% of web traffic was generated via smartphones and only 24% via PC devices. This is because mobile connections are cheaper and don’t need the infrastructure required for desktop PCs with fixed-line internet connections.
Yet, mobile internet plans take a large chunk of the incomes of many African consumers. A mobile broadband subscription with at least 1.5GB of data costs around four times more in developing countries than in developed ones.Africans are charged an average of 7.1% of their monthly salary for a gigabyte of mobile data, more than 3 times the affordable amount, according to a report by the Alliance for Affordable Internet (A4AI).
To solve this problem, governments across Africa must formulate policies to increase competition in the mobile broadband market. Market competition is one of the important factors that influence the price of mobile data. Poor broadband policy that fails to create a healthy and competitive market costs users about $3.42 per GB, according to the 2019 Affordability report. Breaking up a broadband monopoly can create a savings of up to $7.33 per GB for users. For instance, a decrease in the price of mobile internet to $3.60 per month led to a 3.4% increase in adoption in Guinea-Bissau and about a 1% increase in Niger.
Given a choice between paying for expensive mobile internet plans and other basic necessities, many African consumers will go for the latter. If prices go down, the number of internet users will increase.
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Have you registered for the Endeavor Nigeria Catalysing Conversations summit happening next week?
Join speakers of Endeavor Nigeria’s fireside chats on October 21 at 10:30 am WAT, 2021, as they talk about the transformational power of technology in logistics and supply chains, financial freedom in frontier and emerging markets, building a unicorn, and their entrepreneurial journey.
Register here.
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On Wednesday, 15 January, Visa announced it was acquiring Plaid for $5.3 billion. Plaid is a US-based fintech that develops financial services APIs, similar to what Nigeria’s Flutterwave and Paystack are doing. But rather than process payments, Plaid APIs help other developers connect to customers’ bank accounts. It operates in the US and some European countries where banking APIs are more robust.
Plaid is an aggregator. It is connected to over 11,000 financial institutions making sure that users’ banking information can easily be connected from any Plaid-powered app. It doesn’t sell user data. It makes its revenue by selling licences to other companies and developers.
Visa sees Plaid as a valuable company; a must-have. The startup was valued at $2.65 billion in 2019, but Visa is comfortable to pay 2x that amount just to keep it all for itself. FYI, Mastercard also invested in Plaid in 2018.
While the Visa deal might seem like a one-off, it is part of a massive wave of deal-making that has happened in the global fintech space in the last few years.
The deal-making season started with Mastercard’s $920 million acquisition of VocaLink in 2016. VocaLink is a heavyweight in the financial systems of the UK, Singapore and Thailand. It processes over 90% of salary payments in the UK and billions of other transactions worth trillions of dollars.
Following the deal, other fintech companies have made serious moves.
Ant Financial, a fintech company owned by Alibaba, acquired the UK-based WorldFirst for $700 million in February 2019. In July 2019, America’s Fidelity National Information Services Inc (FIS) acquired payments company, Worldpay for $35 billion.
Visa made a move of its own. In May 2019, it acquired Earthport, a company that provides cross-border payment services for banks. And in July 2019, Visa snapped up another company. It acquired PayWorks, a German payments company developing POS technology.
Months later, Mastercard battled a number of companies for control of Nets, a European payments company. It ultimately acquired the company for $3.2 billion in August 2019.
Visa’s Plaid acquisition on January 15 only builds this trend.
Iyin Aboyeji, co-founder and former CEO of Flutterwave told TechCabal that the buying spree is expected. “Mastercard had bought VocaLink which is the UK version of Plaid. Anybody would have seen that they [Visa and others] are going to look for an American [or other] buy,” he said. “It was only a matter of time.”
These are heavy deals. According to one report, the total value of mergers and acquisitions in the fintech space was $116.6 billion in the first half of 2019 alone, up from $31.8 billion in 2018. Fintech giants are also making key investments in startups in different markets.
And these companies are only just getting started. PayPal will spend “$3 billion each year on acquisitions going forward”, said its CEO Dan Schulman in 2018. In the third quarter of 2019, it spent over $4 billion to acquire browser extension, Honey and a 70% stake in Chinese company GoPay. With the GoPay acquisition, TechCrunch reported that PayPal became the first foreign payment platform to provide digital payments in China, a $30 trillion market.
Flutterwave and Paystack are two of Nigeria’s and Africa’s biggest names in the fintech industry. Within the last five years, both companies have disrupted the space. They’ve succeeded in crashing the cost of processing payments in Nigeria and are developing APIs that are making it easier for smaller players to develop innovative financial services.
Like Plaid, Flutterwave and Paystack have developed APIs for identity verification, checking of account balances, automating bank transfers, among many things. Both power companies of different sizes ranging from Uber, CowryWise, Wallet.ng among others.
Following Visa’s $5.3 billion Plaid acquisition, the Plaid’s CEO Zach Perret disclosed that they got to know Visa through its “initial strategic investment.” It served as a “jumping-off point for a series of conversations” leading up to the deal, he told CNBC.
Unlike their counterparts abroad, Paystack and Flutterwave have not raised “very huge” rounds. Paystack has raised $11.7 million. While Flutterwave recently completed a $35 million Series B round bringing its total funding to $55 million.
Yet, the two companies have scored major backing from important investors including venture firms and fintech giants. These deals represent significant validation and support for both companies, and they are also “strategic investments” from the world’s elite fintechs.
Paystack is backed by Visa, Stripe and Tencent which owns Chinese superapp, WeChat. Equally, Visa and Mastercard have invested in Flutterwave. Flutterwave has also secured an important partnership with Alipay. And with its latest funding round, American payment company, FIS, became a Flutterwave investor and partner.
In simple terms, what does this mean?
It means big companies are encircling Flutterwave and Paystack. As investors, these big companies could have privileged information about the growth levels at these startups. With enough information, it is easier for these strategic investors to make a decision about what company to acquire.
In the case of Plaid, Visa paid $5.3 billion, exactly two times Plaid’s book value. Some analysts believe this was no coincidence.
Since the start of the year, a number of insiders are predicting that a major Nigerian fintech could be acquired in 2020.
This prediction sounds plausible for a few reasons.
First, the African market, especially Nigeria, is making an important transition from cash and card payments to digital payments. Data from the Nigeria Inter-bank Settlement Scheme (NIBSS) shows that the volume of digital payments grew 494% in 2019.
The biggest growth came in December 2019 when Nigerians transferred ₦149 billion using their mobile devices, up from ₦28.14 billion in December 2018. This is good news for companies like Paystack and Flutterwave who process online payments for thousands of Nigerian and international companies.
The rapid adoption of mobile transactions could make plastic cards obsolete. Meanwhile, this could reduce business opportunities for card companies like Visa and Mastercard.
A second reason has to do with the fact that Africa is a frontier market and Nigeria is an important part of it. The Nigerian financial market is growing as different companies including banks and fintechs push financial services to more people. As these services continue to penetrate the market, financial enablers like SystemSpecs, Interswitch, Flutterwave and Paystack become important. So it’s no surprise that last year Visa acquired a 20% stake in Interswitch worth $200 million.
For fintech giants, Flutterwave and Paystack are more attractive. They are young, agile and are growing fast, both geographically and with their transaction volumes.
The consolidation in the global fintech industry could create an urgency for more acquisitions. Companies like FIS and Alipay are hungry for new growth opportunities. While Visa and Mastercard want to remain relevant in the post-card-world of Africa.
Would an acquisition happen anytime soon? We don’t know. But what is clear is that consolidation is ongoing in the fintech world and big companies may have Paystack and Flutterwave on their acquisition list.
But it’s not only these two companies that look like acquisition targets at the moment. Iyin Aboyeji believes companies like OPay and PalmPay, a service owned by Chinese companies Transsion Holdings and NetEase, are disruptors that could be acquired by big players. True to this, OPay has attracted big money investments from SoftBank, Sequoia Capital and ByteDance the company behind TikTok.