- November 16 2024
MTN Nigeria raises ₦75bn in oversubscribed commercial paper
MTN Nigeria, the country’s largest mobile network operator, has raised ₦75 billion through its commercial paper issuance program. The funds will support daily operations and meet immediate financial obligations. This concludes the Series 11 and 12 issuances under MTN Nigeria’s ₦250 billion Commercial Paper Issuance Programme. Initially targeting ₦50 billion, the offering was oversubscribed, reaching 150% with ₦75.18 billion issued, according to a filing with the Nigerian Exchange (NGX) on Friday. The oversubscription reflects strong investor confidence in the company despite a challenging financial year. MTN Nigeria reported a loss after tax of ₦514.9 billion for the nine months ending September 30, 2024, primarily due to the devaluation of the Nigerian Naira. The company faced net foreign exchange losses of ₦904.9 billion, significantly raising finance costs. Despite these setbacks, MTN Nigeria recorded robust growth in service revenue, which increased by 33.6% year-on-year to ₦2.35 trillion for the period. The growth was driven by a 52.3% surge in demand for data services and an 18% rise in fintech services. The commercial paper issuance attracted participation from asset managers, banks, insurance companies, and other institutional investors. However, pension funds were excluded due to a temporary suspension by the National Pension Commission, pending updated guidelines from the Securities and Exchange Commission.
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- November 16 2024
It’s all about location: Nigeria’s biggest tech companies choose Ikoyi
When Facebook planned to establish its first Nigeria office in 2018, Yaba was the obvious choice. Yaba had become a focal point for tech innovation, hosting startups like Andela and the accelerator CCHub. When Mark Zuckerberg visited Nigeria in 2015, Yaba was a crucial pitstop, and he praised the vibrant tech community. As Yaba’s ecosystem matured, its space constraints and aging infrastructure became more apparent. Companies began seeking out alternatives that offered more modern amenities and room for growth. Inspired by Silicon Valley’s move from crowded urban areas to expansive campuses in Menlo Park and Mountain View, Lagos tech companies shifted their focus to Ikoyi, a posh neighbourhood with larger office spaces and better infrastructure. Ikoyi has office buildings like the 14-storey King’s Tower, Heritage Place, and Famfa Tower. These buildings, priced at $600 to $800 per square meter annually, offer security, parking, and environmental standards. In 2021, Meta moved its Nigerian office to King’s Tower. Other tech giants soon followed. Flutterwave and Microsoft joined Meta at King’s Tower, while Google moved to Heritage Place, and Amazon settled in Victoria Island. Ikoyi became the ideal location for global companies like Meta to establish a foothold. Heritage place Image source: Google Why Ikoyi is the new choice location The shift was inevitable, says Aderemi Dada, CEO of Spacefinish, which designed offices for Andela, Flutterwave, and Meta. “We began to see global companies operating under a different paradigm than the local tech ecosystem,” he told TechCabal. Buildings in Ikoyi have proper maintenance structures, which is a priority for global corporations, and one thing that is lacking in buildings in places like Yaba and Marina, which has a good concentration of high-rise buildings. William Aimakhu, CEO of PWAN Perfection, an affiliate of PWAN Group, a commercial real estate provider, emphasised the strategic value of an Ikoyi address: “An Ikoyi office isn’t just an address; it’s a strategic asset. The visibility alone can increase clients’ interest (in a company), a key factor in the competitive business environment.” Famfa Tower. Image source: Google World Class Experiences Some companies, like BetKing – now KingMakers – and Canon, have created custom spaces to fit their needs. BetKing wanted a campus with recreational centers, restaurants, and studios, so Spacefinish designed a 5,000-square-meter complex for them. These multinationals also standardise office experiences across global locations, ensuring that employees in Lagos enjoy the same quality as those in the U.S. Spacefinish took six to nine months each to design the offices for Meta, Flutterwave, and Google in Ikoyi’s King’s Tower and Heritage Place. Despite Meta reducing its office space in June 2024, demand for premium buildings remains high, with an 80% occupancy rate across Lagos and Abuja. Tech companies aren’t the only ones moving to Ikoyi. Finance and consulting companies are increasingly drawn to Ikoyi’s premium spaces. Verod Capital, an African venture capital firm works out of Heritage Place alongside oil and gas companies. NumberOne Lagos (IMB Building) Image source: Google. While Ikoyi’s premium office spaces attract global giants, the high cost of leasing—denominated in dollars—remains a challenge for many local businesses. The volatility of the local currency also adds to the cost concerns locking out local startups and SMEs from these locations. Amazon’s recent setup at Number One – formerly IMB Plaza – in Victoria Island shows that while Ikoyi is popular, areas like Victoria Island and Eko Atlantic are getting more attention for their adherence to global standards. With new high-rise projects like Dangote House underway, Ikoyi’s real estate market is expected to grow significantly, adding 100,000 square meters of premium office space for local and international businesses seeking premium office spaces. “Investors are looking at macroeconomics. They’re looking at the demand. They want to ensure that they are not building buildings that will not be occupied. So the market forces are also another consideration for the type of office landscape that we have,” Dada said.
Read More- November 16 2024
How digital innovation can drive Africa’s economic future
This article was contributed to TechCabl by Daniel Novitzkas According to the World Bank, access to broadband internet among the African population increased from 26 to 36% from 2019 to 2022, while the internet penetration rate (which measures the percentage of a population that has internet access) for the Southern Africa region was at 73.1 percent by January 2024. These are just some of the many statistics that provide a cursory outlook of the efforts to close the digital divide. While the gaps still exist, Africa’s journey of attaining the global standard of internet and digital access is not impossible anymore. But while internet access is one thing, do we ever ponder the positive impact digital education (digital tools and technologies to facilitate teaching and learning) and innovation can have on a community, especially if said community has previously been technologically excluded from the rest of the world? This is a conversation worth having today, especially in South Africa, where a number of people live in outlying, rural, or otherwise remotely based communities. By improving our country’s digital infrastructure, we can collectively ensure the delivery of digital education to underserved regions across the country. This has the potential to unlock a wave of cascading benefits aimed at community development and economic empowerment over the short, medium, and long term. On the surface, citizens living in remote locations could enjoy access to quality education by leveraging digital platforms from across the world, especially those that offer high-quality educational resources and courses that may not be available locally otherwise. While this ensures that community members, especially youth and adults, enjoy a number of diverse learning opportunities, it also empowers them to access the best standard of education, regardless of where they live. With access to quality education opportunities such as online courses and digital learning tools, members of rural communities can also embark on a skills development drive and acquire new skills relevant to modern industries and entrepreneurship. Citizens can be empowered to participate in a wider range of economic activities, with the potential to start their own businesses. Think of how a local community member could upskill their woodworking and open a small furniture-making business within their community, thereby creating employment opportunities for other members of the same area and passing on those skills to them. There can be no doubt about it: continued digital education and innovation in remote regions will encourage a greater culture of innovation and entrepreneurship among South Africans who gain access to market trends, business management, and technological advancements. This undertaking could play a critical role in ensuring that South Africans are not restricted to running a business locally. With the right knowledge and access to information, they could endeavour to compete with other businesses across the country and the world. Digital education further provides the opportunity to improve capacity building in our society. Teachers and other educators can access teaching resources and training programmes that can empower them to apply new teaching techniques and practices that have the potential to improve the overall quality of education within their communities. Digital education also provides the opportunity for remote learning. This would enable community members in the most rural corners, who may be logistically unable to access traditional schools, to engage in quality education and virtual training. It is in this manner that no one can be left behind. Most importantly, digital education can connect South Africans to global networks that foster collaboration, partnerships, and opportunities for learning and knowledge sharing Digital education can empower locally-based communities to share their stories, culture, and identity with the rest of the world. If used strategically, digital platforms can also preserve, promote, and educate a community’s indigenous knowledge and cultural heritage, while guaranteeing that these practices and values are passed down to younger and future generations alongside modern education. Overall, by leveraging digital education strategically, we can successfully empower citizens living in remote locations with the knowledge, skills, and resources needed to thrive in a rapidly changing global environment. To visualize this differently, consider the story of Estonia, which has aggressively driven innovation over the past decade. This effort has fostered a vibrant startup ecosystem, resulting in the proliferation of unicorns—privately held startup companies typically valued at over $1 billion. An example includes the e-hailing company, Bolt. Now think of how accelerated digital education and innovation could nurture a flourishing African startup ecosystem that offers African-centric services and products to the rest of the world. African economies would no longer need to solely rely on tourism to the continent for those interested in seeing herds of wild animals during Safari visits but can also experience the herds of African unicorns and the products and services they offer, bolstering growth for local economies and opportunities for entrepreneurs. In a world where digital education, infrastructure, and innovation remain at our fingertips, there is no reason why Africa should be left behind. ____ Daniel Novitzkas is co-founder and chairman of Specno, an app development and digital innovation agency that has helped start-ups and fully-fledged businesses alike grow and expand their operations in and outside of the country.
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- November 15 2024
CcHub-backed iHub opens new Nairobi HQ, eyes greater Pan-African collaboration
Five years after its acquisition by CcHub, iHub has moved to a sleek, two-storey headquarters in Nairobi’s upscale Lavington area, a clear sign of the accelerator’s growing influence in Africa’s tech ecosystem. iHub’s spacious new office in Lavington features an entertainment and media hub designed to provide specialised advisory support for film, television, and social media professionals. The facility also includes co-working spaces, private booths for calls, conference rooms, and dedicated venture capital offices for firms like TLcom and Verod-Kepple Africa Ventures. “We have gone through different stages of growth. Moving here means we are scaling up our work and restating our commitment to Kenya. This move is part of our strategic focus and reflects our growth phase,” Ojoma Ochai, CcHub Managing Director who heads iHub operations, told TechCabal. iHub has had a busy year, partnering with telco Safaricom and Spark Accelerator to support startups like Chaptr and Chumz. Through a partnership with the Mastercard Foundation, iHub and CcHub invested $1.2 million in 36 edtech startups. iHub’s pan-African footprint, with operations in Nigeria, Rwanda, Kenya, and Namibia, enables it to connect and support startups across the continent. This collaborative approach is a cornerstone of CcHub’s strategy to drive growth and foster innovation in Africa’s tech ecosystem. iHub connects its portfolio startups with dilutive and non-dilutive funding, ranging from seed to Series A investments. Through its syndicate model, iHub pools investors’ resources, offering funding instruments like loans, grants, and convertible notes. The typical investments range from $20,000 to $250,000. While iHub strengthens its presence in Kenya, CcHub is also expanding its footprint across Africa. In November, it will launch the Janta TechHub in Togo, a new initiative in partnership with the Togolese government. This move underscores CcHub’s commitment to supporting innovation and entrepreneurship across the continent. “It will be a CcHub managed hub – the hub belongs to the government of Togo, but we are going to set it up and run it for them,” Ochai said. “All in all, this is part of our strategy to drive growth in Kenya and provide enhanced support to the startup ecosystem and the creative community. And that’s really what the move is about,” Ochai said.
Read More- November 15 2024
Struggling Tantalizers paid ₦65,000 in fees to delivery apps in 2024 reflecting weak online sales
Tantalizers, Nigeria’s only publicly listed restaurant franchise, paid food delivery platforms ₦65,000 ($42*) in commissions in 2024—a stark contrast to the over ₦6 million ($5,459*) it incurred in 2023. It is the lowest amount the company has spent on service fees since joining platforms like Glovo in 2020. Despite this dramatic drop in e-commerce spend, Tantalizers, which operates about 40 franchises and corporate outlets across Nigeria, reported ₦2.1 billion in revenue by September 2024, 80% of its total revenue in 2023, a year marked by its largest e-commerce spend. Tantalizers began using delivery apps like Glovo and now-defunct Jumia Food to drive sales in 2019. By 2020, the company took a more direct approach, launching its food ordering platform and fulfilling orders with an in-house fleet of bikes, as COVID-19 restrictions caused a surge in demand for online food delivery. As a result, service fees were significant, climbing from ₦1.7 million in 2021 to ₦6 million in 2023 before declining to ₦65,000 in 2024. The reduction in service fees—commissions paid to food delivery platforms for their services—reflects poor sales on the platforms. Once a trendy restaurant chain, Tantalizers, one of the country’s oldest players, has struggled to keep up with competition. “Changing lifestyles reflected in online food ordering and home delivery has brought a number of faceless competitors into the food industry,” the company said in a 2019 financial statement. The restaurant has failed to capture the imagination of the younger demographic, with a poor 2.7-star rating on Chowdeck. The Place, one of its more trendy competitors, has 4.3 stars. The company’s struggle to compete is reflected in its financial performance and ongoing losses. For the nine months ending September 2024, Tantalizers reported a pre-tax loss of ₦231 million, following losses of ₦284 million in 2023 and ₦241 million in 2022. In October, Food Specialties and Organics and private equity firm Banklink Africa acquired a majority stake in Tantalizers for ₦1 billion. With new capital, Tantalizers will aim to reposition itself in today’s competitive restaurant scene. *Dollar conversions were made using the prevailing rate at the NAFEM window at the specified time.
Read More- November 15 2024
Nigeria’s headline inflation quickens to 33.8% in October, puts rate hike in focus
Nigeria’s headline inflation quickened in October after a hike in fuel prices and floods in food-producing areas affected consumer prices, increasing the likelihood of another interest rate hike. Data from the National Bureau of Statistics on Friday put October’s inflation rate at 33.8%, up from 32.70% recorded in August. Headline inflation slightly accelerated in September, reversing a two-month ease. October’s food inflation quickened to 39.16%, up from 37.77% recorded in September. Although Nigeria’s harvest season helped ease food prices, flooding in key agricultural states like Borno and increased transportation costs due to a fuel hike have reversed those gains. The flood destroyed food that would have fed 8.5 million people for six months. The country’s failure to implement a 150-day waiver on food imports also quickened food inflation. October’s inflation rate will add to the worries of Nigerians experiencing the country’s worst cost-of-living crisis in decades. Soaring fuel costs, with petrol prices exceeding ₦1,000 per liter and LPG prices rising over 10%, are increasing financial burdens for Nigerians. Despite significant increases in electricity tariffs, especially for high-tier consumers, Nigerians continue to suffer from unreliable power supply, with multiple grid collapses this month. At its last Monetary Policy Committee in September, Nigeria’s Central Bank said it would continue a tightening monetary cycle, arguing that core inflation continued to rise in July and August. The Central Bank will likely maintain the benchmark lending rate again, with analysts predicting a 25 to 50 basis point hike. In September, the Bank delivered a shock 50 basis point interest rate hike, increasing borrowing costs. It is due to give its next rate decision next week.
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- November 15 2024
TechCabal Daily – Big Monie move
In partnership with Lire en Français اقرأ هذا باللغة العربية TGIF! If you’re often missing TC Daily in your inbox, this is another reminder to move this email to your primary inbox. On your mobile, simply tap the three-dotted menu option and move to ‘Primary.’ On your PC, drag and drop the email in your main inbox. Also save our email sending address, newsletter@techcabal.com, to your contact list. This signals to your email service provider that you enjoy and prioritise receiving timely updates from us about Africa’s business and tech ecosystem. Moniepoint wants a commercial banking licence Carbon to resume issuing cards to customers Access Bank UK expands into Mauritius MTN Group posts 18.5% revenue slump in Q3 2024 Funding Tracker World Wide Web 3 Opportunities Fintech Moniepoint to acquire commercial banking licence Image Source: Google Africa’s latest unicorn Moniepoint is trying to secure a commercial banking licence from Nigeria’s central bank. If successful, the fintech will become the first Nigerian fintech with a commercial banking licence, allowing it to diversify its offerings, open branches nationwide, and compete with banks like Providus and Globus. The licence would allow Moniepoint to tap into the high-revenue foreign currency and treasury markets, which earned Nigeria’s top banks over ₦3.37 trillion ($2 billion) in 18 months. It also gives it a boost over competitors like OPay and Kuda, shaking up the fintech playbook in Nigeria. But the requirements of a licence are steep. Moniepoint will need to fork out $30 million for the cheapest licence, a regional bank licence which limits its geographical presence. It will also need to open physical branches which come with regulatory requirements like a strong room, loading bay, and banking hall. However, the licence would eliminate limitations imposed by its current microfinance bank status, offering a pathway to expand into corporate and investment banking. It would also show investors that the fintech is ready to embrace a more established regulatory framework. This would come in handy against a regulator that has increased its focus on fintechs and paused account openings for fintechs in April. Moniepoint, like other fintechs, responded with increased compliance hiring but a licence goes a long way to show it means business. Read Moniepoint’s Case Study on Funding Women After losing their mother, Azeezat and her siblings struggled to keep Olaiya Foods afloat. Now, with Moniepoint, they’re transforming Nigeria’s local buka scene. Click here for a deep dive into how Moniepoint is helping her and other women entrepreneurs overcome their funding challenges. Fintech Carbon to start issuing cards to customers six months after halting the service Image Source: Wunmi Eunice/TechCabal Nigerian digital bank Carbon, which also holds a microfinance banking licence, will resume issuing debit cards to its customers in November, after a six-month break. In June, Carbon announced to its over 3 million customers that it will stop issuing cards. At the time, we reported on the financial logistics and expenses it would cost to issue physical cards to customers, given that most of these fintechs in Africa typically have to partner with international card scheme giants like Mastercard and Visa. The processes are often cumbersome; these startups earn in naira, so they typically have to pay partnership and agreement fees with these processors in dollars—losing money in the forex. Yet, the pause has likely allowed Carbon to restrategise on the details, pick a cost-efficient provider, and overhaul its card delivery system. “We looked at the flaws in debit card usage in Nigeria and optimised the experience to make it better for customers and businesses.” Though Carbon declined to name its new card partner, there are speculations that the fintech will opt for local card payments upstart, AfriGo, that is co-owned by the Central Bank and the Nigeria Inter-Bank Settlement System (NIBSS). In banking, tier-2 bank Stanbic IBTC will also soon start rolling out AfriGo cards. The fintech startup has stated that it considers cards as a customer retention tactic. As of 2022, 1 in 3 Nigerians above the age of 15 use debit cards, despite the growing adoption of e-payments. As banks led the introduction of cards, fintechs have likely associated them with trust. Given their limited physical presences to adopt the move-fast DNA fintechs are known for, low-trust Nigerians have still not learned to put all their money into a fintech. Yet, one poser lingers on our minds: what is Carbon’s new play to make its card distribution process cost-efficient? Get Fincra’s Embedded Finance and BaaS Report 2024 for FREE Fincra in collaboration with The Paypers have released the Embedded Finance and Banking-as-a-Service Report 2024. This report examines the key challenges and innovative solutions defining the future of seamless cross-border payments and remittances across the continent, among other topics, with key experts. Get this valuable, free resource today! M&A Access Bank UK expands into Mauritius with Afrasia Bank acquisition Image Source: Imgflip “When you are the largest bank in Nigeria and one of the largest banks in Africa, where do you go from here?’ Our vision is now global, very, very global.” Those were the words of Aigboje Aig-Imoukhuede, Chairman of Access Holdings, the parent company of Nigeria’s biggest bank by assets, during a presentation at the Nigeria Exchange in July. If you have been following the events of the financial services space, you’d agree that Access Bank is easily the busiest mergers and acquisitions (M&A) machine. Since the start of 2024, the bank has made a string of strategic acquisitions across Africa to achieve its goal of becoming “the world’s most respected African bank.” Two weeks after Access Bank received a crucial first approval from Kenya’s competition watchdog to acquire tier-2 commercial bank National Bank of Kenya (NBK) from KCB Group, the bank conglomerate has struck another deal in East Africa. Its UK arm, Access Bank UK has reached an agreement to acquire a majority stake in Mauritius-based Afrasia Bank, the country’s fourth-largest bank. That acquisition helps Access Bank UK expand its personal and corporate banking services to Mauritius which boasts
Read More- November 14 2024
Nigerian digital bank Carbon set to resume card issuance after six-month pause
Carbon, the Nigerian digital bank, will resume issuing cards this month, six months after halting its card services. The decision followed changes to its card delivery system and rising customer demand, the company told TechCabal. “Our international card provider was expensive and some of the processes were too cumbersome for the product we want to give our customers. We looked at the flaws in debit card usage in Nigeria and optimised the experience to make it better for customers and businesses,” a spokesperson for Carbon told TechCabal. The fintech has refined its card collection and delivery system, one person familiar with the matter said. Fintechs, without branches, typically partner with logistic companies to deliver cards, which add costs to issuing costs priced in dollars. Like many neobanks, Carbon began issuing cards to retain customers and drive transactions after obtaining its microfinance license. At the time, the fintech described cards as “a big step” in its transition from a lender to a licensed microfinance bank. Despite the growing popularity of bank transfers, cards remain one of the most effective channels for customers to access their funds. For some, cards represent an easy option to access the cash in their accounts as Carbon operates without an agent network or physical branches. “Offering cards is not about attracting new customers to Carbon; it’s more of an essential service we provide. It’s about providing convenience and retaining our customers,” the spokesperson said. Most fintechs reevaluated their card operations due to the rising dollar costs of issuing Mastercard and Visa cards and a change in consumer behaviour. This reevaluation has boosted the popularity of Interswitch’s Verve card scheme, with the company issuing 17 million cards for Moniepoint and OPay. The Verve card faces competition from the central bank’s Afrigo card as both cards offer local costs and more accessible requirements. For Carbon, which issued Visa cards, it preferred to discontinue its card operation and rethink its operations. The fintech declined to disclose its new card issuer. .
Read More- November 14 2024
Access Bank UK to acquire Mauritius-based Afrasia Bank
Access Bank UK, a subsidiary of Access Holdings, a financial services group with a market capitalisation of ₦1.28 trillion, will acquire a majority equity stake in Afrasia Bank, Mauritius’ fourth largest bank by total assets. The acquisition will help Access Bank UK expand its personal and corporate banking services to Mauritius with a robust financial services sector which contributes 13.1% to the country’s Gross Domestic Product (GDP). Afrasia Bank recorded total assets of more than $5.7 billion at the end of its fiscal year ended June 30, 2024. “Furthermore, Access Bank will utilise Mauritius as a strategic hub for trade finance and regional connectivity, thereby enhancing its capacity to facilitate cross-border transactions across Africa and beyond,” Access Holdings said in a regulatory filing on Thursday. The deal continues Access Bank’s strategic expansion across Africa through acquisitions. In October, the Competition Authority of Kenya (CAK) approved Access Bank’s acquisition of the National Bank of Kenya (NBK) from KCB Group. That deal is thought to be worth $100 million. In June, the bank acquired African Banking Corporation of Tanzania (ABCT) Limited. In January, it acquired pension firm, ARM Pensions, and Megatech Insurance Brokers Ltd. “Mauritius offers immense potential as an international financial hub, and through Afrasia Bank, we are excited to unlock new opportunities to drive trade, support businesses, and foster economic inclusion across the region as we continue our mission to be the World’s Most Respected African Bank,” said Roosevelt Ogbonna, Access Bank CEO.
Read More- November 14 2024
Moniepoint to acquire a commercial bank license
Moniepoint, the Nigerian fintech unicorn, is working to secure a commercial banking license from Nigeria’s central bank, according to three people familiar with the matter. While regulatory approval could take up to a year, these discussions are a key milestone in the nine-year-old startup’s strategy to expand its retail banking operations and increase its share of Nigeria’s financial services market. A commercial banking license would enable Moniepoint to expand its product offerings across Nigeria, including international transactions and treasury operations—both stable revenue drivers for banks. It would also allow the fintech to open physical branches, building trust in Nigeria’s historically low-trust banking environment. Foreign currency transactions could significantly boost Moniepoint’s revenue, tapping into a lucrative market that earned seven of Nigeria’s biggest banks around ₦3.37 trillion in the last nine months. The license would also give it a major edge over competitors like OPay and make it the first Nigerian fintech to own a commercial banking license. A similar strategy worked for Nubank in Brazil, where its banking license allowed it to become the primary bank for nearly 60% of its customers, serving more than half of the adult population. Pursuing a commercial banking license underscores Moniepoint’s goal to distribute financial services more efficiently than its competitors. Despite being a late entrant, the fintech has already become a key player in the agency banking sector by leveraging technology and a vast network of agents. Moniepoint declined to comment. If granted a commercial banking license, it will again be a late entrant. With 24 commercial banks, Moniepoint will hope its momentum in retail banking, launched in August 2023 will help it stand out. While its exact number of customers is unclear, industry experts claim it is second only to OPay and ahead of Kuda, which has 7 million users. This rapid growth places Moniepoint’s customer base ahead of relatively new commercial banks like Globus Bank, which had 60,000 customers in 2022. There’s significant potential for disruption in the market, as Nigeria’s largest banks are often criticized for serving millions of customers with subpar services. A fintech-driven commercial bank could shake up the sector. If successful in acquiring the license, Moniepoint will join other major commercial banks like FirstBank and Zenith, which have vast networks of banking agents. The fintech began preparing for the license in the first quarter of 2024, shortly after hiring Bayo Olujobi as its new Chief Financial Officer (CFO) from Stanbic IBTC, one person familiar with the discussions said. Acquiring the license could take a year, as the central bank’s lengthy vetting process must be completed before granting approval to commence banking operations. Moniepoint has significantly bolstered its compliance team, hiring more than a dozen new employees in compliance and fraud monitoring since the beginning of the year. At $15 million, the capital required for a commercial bank license is a fraction of Moniepoint’s recent $110 million raise, which elevated it to unicorn status. Besides the cost, the fintech will also have to set up physical branches across Nigeria with regulatory requirements like a strong room, loading bay, and banking hall. While commercial banks operate under stringent regulations, acquiring a license would signal Moniepoint’s maturity and its readiness to embrace a more established regulatory framework. This would be an important step, especially as the central bank has adopted a more stringent regulatory stance toward fintechs since December 2023, which has created challenges for many startups. A commercial bank license would allow Moniepoint to overcome the restrictions of its microfinance bank license, which limits both product offerings and geographic expansion beyond Nigeria’s South-West region—a significant barrier in a country with such a large and diverse market. The fintech has worked around its geographical limits by opening “support offices” nationwide to maintain a physical presence in regions where it cannot operate branches. However, there is no workaround for its product limitations. Nigerian microfinance banks cannot offer complex financial services such as large-scale corporate banking, investment banking, foreign currency transactions, or extensive treasury operations that are typically profitable segments for commercial banks. A commercial banking license removes these limitations for Moniepoint and allows the fintech to generate multiple income sources beyond microloans and savings accounts. In 2023, Access Bank, Nigeria’s largest bank, generated only 29.4% of its total profit from retail banking, with most profits coming from commercial and corporate banking. Similarly, most banks rely heavily on corporate deposits. United Bank for Africa, a tier-1 bank valued at ₦1.06 trillion, reported ₦8.2 trillion in retail deposits compared to ₦23 trillion from corporate clients. The fintech has also gone on a compliance hiring spree, hiring more than a dozen compliance and fraud monitoring employees since the start of the year in response to the central bank’s ban on fintechs in April. Although a commercial banking license comes with higher regulatory standards and capital requirements, the long-term advantages—such as diversified services, increased credibility, and expanded growth potential—make it an appealing move for Moniepoint.
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