Kenya’s dx5 set to pick East Africa’s most influential CIOs in its 15th awards conference
dx5 will also pick a number of companies that have used technology to drive their operations, including county governments. Kenyan publisher dx5, formerly CIO East Africa, will hold its 15th annual technology awards, the CIO100 awards this month. The organisation, which also publishes hardcopy technology magazines, selects influential technology players such as chief information officers (CIOs) in the East African region. It also handpicks 100 companies that have played a key role in driving innovation in their products and services. In the 2023 installment, British American Tobacco (BAT) Nigeria, Kenya Tea Development Agency (KTDA), and Sarova Hotels & Resorts will take part in the fair. “We received applications from over 600 organisations across the continent, which reflects Africa’s growing embrace of technology and its positive impact. Technology is the ultimate winner here, and it’s inspiring to witness our continent’s technological evolution,” dx5’s chairman and co-founder, Harry Hare said. Besides picking the CIO of the year winner – who has led the most compelling project that not only successfully incorporated technology but has also merged business strategy with the organisations vision – the show will run 14 other categories. Other award categories include Education, Health, Manufacturing, SACCO, Insurance, and Banking. Notable accolades include the dxNova Woman of the Year, Company of the Year, and CXO Influencer of the Year Awards. Moses Onkundi of ABSA bank won in 2022 and will be defending his title alongside James Nyakomitta, Group CIO, APA Insurance, Martin Mwarangu, Group General Manager – ICT/SAP Project Manager, KTDA, Peter Kanda, CIO, Gertrude’s Children Hospital, Gilbert Mutai, Head of IT, Car and General Group, Sachin Samat, Director – Group IT, NCBA Bank Kenya, and Charles Washika, Director ICT & Innovation, Co-operative Bank of Kenya, among many others. County governments, including Kitui, Nyandarua, and Makueni, are contenders for the local government award. Government entities such as the Ministry of Water & Environment Uganda, Nairobi City Water and Sewerage Company, and Uganda Electricity Generation Company Limited (UEGCL) will also take part in the competition. Winners will be revealed on the evening of November 24, 2023
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Meet the startups that say your salary shouldn’t wait till payday
The 30-day salary presents a liquidity gap between paydays. To bridge this gap, employees often turn to costly options like high-interest payday loans. Startups like Pade offer on-demand access to their accrued pay as a better alternative. If your salary is paid monthly, you’re familiar with all the jokes about money vanishing as soon as it hits your account or even the reality of counting the days till the next payday minutes after your salary is paid. During the 30-day wait for the next salary, many workers take out expensive payday loans to cover unexpected or costly expenses. Yet, in a survey of 101, the majority (70.6%) of employees said they would rather receive their salaries at the end of the month than request a portion of the salaries they had worked for on a weekly or daily basis. That preference contrasts with the growing market for loans and alternate financing products like buy-now-pay-later products across the continent. Pade, a Nigerian HR-tech company, told TechCabal that although people frown at the idea of chipping at their salaries before payday, their financial behaviour shows that it is what they need, as real-time access to their pay is a cheaper alternative to salary advances, loans, buy-now-pay-later, and other credit services they resort to. The 30-day salary creates a liquidity gap from one paycheck to the next, breeding a crop of startups offering employees real-time access to the money they have earned instead of waiting for the lump sum on payday. These products are called earned wage access (EWA). Respondents to our survey said they would rather stick to the status quo instead of earned wage access because it supports their financial management style, and withdrawing their pay mid-month may encourage reckless spending. The others said they may use EWA as the flexibility will enable them to meet emergencies ahead of payday. “The devaluation of the currency against the dollar is drilling a hole into the pockets of Nigerians who are taking up multiple jobs, requesting salary advances, and taking loans [at high-interest rates] to meet their daily needs,” Ore Badmus, marketing lead at Pade, told TechCabal. Charles Njoku, Ore Badmus, and Seye Bandele. Pade recently added earned wage access to its payroll and staff management features, toeing the line of a competing startup, SeamlessHR. It eponymously named the new feature EWA, the acronym for “earned wage access.” “We are marketing it towards people who earn ₦200,000 and less because of the inflation rates,” Badmus said. The startup says that the service, which will give salary earners access to up to 50% of their income, comes at no new cost to employers. Although Pade currently operates in Africa, EWA is only available to employees and businesses in Nigeria. “We’re also partnering with Money Africa to educate people on how to properly manage the money they now have free access to,” Badmus told TechCabal. Like several HR tech startups that have added this feature to their platforms, Pade is advertising the service as a way for employers to increase employee retention and productivity. HR professionals whom TechCabal spoke to agreed that the service could cater to the pain points of employees. However, the professionals also emphasized that, from the employers’ perspective, it is considered a desirable but non-critical offering. “We had a zero-interest salary advance policy that only about two people used per year at the startup I formerly worked at,“ an HR manager who declined to be named told TechCabal, but she thinks organizations can benefit from it if an internal poll shows that it is something the employees want. However, there is a shared concern that employees may abuse the flexibility. ”It is thoughtful, but there is a chance that some employees may abuse it and resign after withdrawing their pay without turning in a notice, an HR manager at fintech startup Herconomy told TechCabal. On the flip side, 31% of respondents to our survey say the option will increase their likelihood of staying with an employer. “[Such an option] indicates some level of (perhaps contrived) agency that the employer is willing to bestow upon me. It builds up trust and admiration to a degree,” one respondent said. While HR startups like Pade only offer these services to clients whose payroll they handle, some providers offer earned wage access as a standalone product directly to consumers through their employers (as a B2B2C service). Both models are in close competition with one another. Still, time has seen upstarts that start out providing solely earned wage access and add on other services so that they can continue to offer EWA services at the lowest possible charge, increase distribution, and thereby compete favourably. For example, Earnipay recently expanded its earned wage access solution to provide more tools for payroll management, bulk bill payments, purchase order financing, and even loans. In South Africa, EWA platform Smartwage rebranded into an HR platform now named Jem. Egyptian EWA provider Khazna also evolved from an EWA provider to a financial super app. Providers of the service typically monetise it in two ways: they either charge a one-time, flat fee to withdraw their earned wage, or they charge a withdrawal fee for each withdrawal that the user makes, depending on the size of the withdrawal. Some allow employers to pay for the charges or charge the employee directly upon withdrawal. For example, a Nigerian earned wage access provider, Earnipay, has a one-time flat fee starting at about ₦250. On the other hand, Pade offers this service at no cost to the employers themselves. “But we charge a withdrawal fee to the employee,” Badmus told TechCabal. However, regardless of the models, EWA providers need access to significant lending capacity to profitably offer this service. Even when fulfilling the traditional 30-day pay, employers often have shortfalls, as they also struggle with long wait times between when they’re paid by their customers. To give employees on-demand access to their salaries at any time, EWA providers need access to liquidity. Pade, for
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How YC-backed Chowdeck hit ₦1 billion in monthly order value
Chowdeck, the Y Combinator-backed Nigerian food delivery startup, says it has crossed ₦1 billion ($1.2 million) in monthly gross merchandise value (GMV). It marks a 10x growth spurt for a company that reportedly crossed ₦100 million monthly GMV ten months ago. ChowDeck’s CEO, Femi Aluko, told TechCabal that the startup had over 60,000 active users in October, up from 7,000 in January. The company also says it makes a profit from each delivery with more than a “25% take rate per order.” “Our strength is building products; we execute and grow fast,” Aluko explained. “Even though we’re not the cheapest food delivery service in the country, we are the most efficient.” Key Takeaways Chowdeck has crossed ₦1 billion ($1.2 million) in monthly gross merchandise value (GMV) with over 25% take rate on each order. The startup has 1,300 riders across four Nigerian cities who earn an average of $70 weekly. It has 300,000 users and an average of 60,000 active users monthly. He claims that Chowdeck’s growth in October was organic and that the company did not run any marketing campaigns in October to boost its numbers. Instead, it focused on adding new features and applying learnings from Y Combinator, the San Francisco-based accelerator program that has backed dozens of successful startups. ChowDeck has also expanded to three cities, namely Port Harcourt, Ibadan, and Abuja, since January. The startup claims it has over 1,300 riders, making an average of 10,000 daily deliveries across the four cities. Spurred by the effects of COVID-19, Africa’s food delivery industry has taken off as more vendors and consumers embrace the convenience of digital takeouts to serve customers in major cities like Lagos. The industry is expected to grow 18% annually over the next few years and will cross $7.45 billion in revenue this year, according to Statista. In Nigeria, Africa’s most populous country, eating at restaurants and other food vendors is a big part of the local culture, with Nigerian households spending 20% of their income on food cooked outside their homes. Noticing this trend, Y Combinator recently backed at least eight food delivery startups in Africa since 2021. Navigating the fuel subsidy removal Chowdeck’s feat comes as Nigeria’s economy continues to struggle after the removal of fuel subsidy in May significantly impacted transportation costs, including for mobility businesses across the country. Inflation has also grown unabatedly monthly, with food inflation rising to 30.6% last month as the biggest driver. Despite the rising operating costs, Nigeria’s online food delivery market is highly contested, with several international companies, such as Glovo, Jumia, and Bolt, competing to own a larger chunk of the market against startups like EdenLife, FoodCourt, and Chowdeck. ChowDeck’s Aluko described the month of May as one of the company’s toughest periods. As costs jumped, the startup had to increase delivery prices by 50%, becoming the first food delivery company to do so following the subsidy removal. “No matter how good or bad the economy is, we won’t build our company or product on bad unit economics or subsidise prices based on VC funding,” Aluko said, referring to the popular venture-building model of the last decade that helped create multiple billion-dollar companies that have since struggled to break even as sustainable businesses. Image Source: Faith Omoniyi/ TC Insights He added that Chowdeck decided not to compete on pricing. Instead, the company is focused on improving its product and increasing the weekly earnings for riders based on the number of food orders they complete. “Chowdeck riders are the best-paid in the delivery space today; we know we can’t afford to have riders that are disgruntled or don’t earn a lot of money.” Hiring agents to validate orders One strategy that Chowdeck has used is to hire agents who validate orders for riders at the busiest restaurants. For these busy restaurants, the agents manually verify if a customer’s order is in stock and ensure that an order is canceled if the restaurant does not have the order. Aluko told TechCabal that the startup only hires agents for the top 20 restaurants out of the thousand on its platform and only when “the demand has grown more than the supply at these restaurants.” “At that point, they’re doing enough orders for us to cover the cost of hiring agents and still make us profitable,” Aluko said. Getting riders to be effective When Chowdeck entered the food delivery scene, it faced stiff competition from incumbents. However, the company discovered that the average delivery time for its competitors was longer than 30 minutes. Chowdeck set out to differentiate itself in the market with a shorter turnaround time for delivery. Aluko explained that he devised a model for faster deliveries after a trip to Dubai. At the time, the model relied heavily on more compliant and reliable delivery riders, two attributes the average Nigerian dispatch rider tends to lack. Chowdeck’s management team piloted the model by fulfilling food delivery orders themselves. This helped them understand the challenges, they said. They developed rider incentives like providing housing support and offering promotion opportunities to high-performing riders to join Chowdeck’s operations team. Aluko added that Chowdeck discouraged cash on delivery for newly recruited dispatch riders because this caused accountability problems. Rewarding good behaviour has helped onboard more drivers as Chowdeck scaled across Nigeria, the company shared. Editor’s note: The exchange rate used in this article is $1 = ₦788.33
Read MoreBacked by 30+ unicorn founders and institutions, Norrsken22 raises $205 million to back high-growth companies in Africa
Norrsken22, an Africa-focused venture capital firm, has reached final close at $205 million—$5 million more than its goal—to back African startups that are ready to scale, otherwise called growth-stage startups. First launched in January 2022 and reaching the first close at $110 million, the Norrsken22 African Tech Growth Fund counts wealthy Swedish founders including Skype co-founder Niklas Zennström, iZettle co-founder Jacob de Geer, and Delivery Hero co-founder Niklas Östberg as limited partners; Flutterwave co-founder and CEO, Olugbenga Agboola also invested in the tech growth fund. According to TechCrunch, approximately 59% of the funding came from a consortium of 30 unicorn founders globally. Institutional investors in the fund include Standard Bank Group Ltd., Norfund, British International Investment, the International Finance Corporation, and the US International Development Finance Corporation. In October African-focused venture capital firms announced deals worth $144.3 million (excluding grants) per data from funding tracker Africa: The Big Deal. Since January deals worth $1.3 billion have been announced compared to $2.9 billion in 2022 and $3.3 billion in 2021, according to the same report. At the same time, the pace of growth-stage investments in African startups has declined; in 2023 there have been only 26 Series A and onwards deals disclosed according to analysis of data from Africa: The Big Deal. This compares unfavourably with 69 deals in the same category in 2022, and 76 in 2021. Large deals from the continent’s Series A and onwards firms used to make up the bulk of venture capital investments as investments and valuations raced upward globally. “We used to markup valuations almost every quarter,” one seed-stage venture capital investor told TechCabal. Seed-stage venture capital firms have raised millions from local and international limited partners to find and back early-stage companies, but the continent’s pool of dedicated growth-stage capital has remained limited. Norrsken22 is one of the few growth-stage funds dedicated to backing African startups. Its sister asset manager, Africa Seed Fund is currently in talks to raise additional capital to support early-stage companies building out another end of the pipeline.
Read MoreNairobi will host the 2024 Africa Fintech Summit
The 11th edition of the Africa Fintech Summit will be held in Nairobi, Kenya in 2024, said Zekarias Amsalu, the co-founder of Africa Fintech Summit at the ongoing 10th edition of the summit in Lusaka, Zambia. “We are excited to be in Nairobi next year,” said Andrew Barsden, the summit’s lead organiser. “Additionally, the relaxed visa requirements for Africans announced by President William Ruto will help in making the event much more open and inclusive to more people,” Barsden added. Key Takeaways 2024 Africa Fintech Summit to be held in Nairobi, Kenya. Organisers said the country relaxed visa requirements as one of the motivations. It will be the 11th edition of the summit. Some possible format changes in Nairobi The Africa Fintech Summit is often a two-day event, with the main panels and activities happening on day one, while day two consists of pitch events and other auxiliary activities. Barsden shared that in 2024, the event might be spread over three days to facilitate more networking opportunities for delegates. “We are also looking at including numerous excursions in the country for delegates, ”said Barsden. Over the course of next year, the summit will hold roundtable discussions with regulators, including ministers and governors, in major cities like Lusaka, Cape Town, Nairobi and Washington DC to facilitate discussions on fintech regulatory frameworks. The Africa Fintech Summit held its first event in Washington D.C in April 2018.
Read MoreExclusive: Chipper Cash expands partnership with Visa on card issuance
Chipper Cash has expanded its partnership with Visa to continue their collaboration on card issuance. The fintech hopes to leverage Visa’s capacities. Chipper Cash, one of Africa’s most valuable fintech startups, is partnering with global payments company Visa on strategic partnerships ranging from card issuance to product marketing. Both companies have worked together since 2021 on the rollout of Chipper Card to support consumer payments in Chipper Cash’s operating markets, especially in Africa. The new partnership builds on this existing arrangement and will see both fintechs expand collaboration on card issuance while also joining forces across regulatory and functional areas such as Visa licensing and marketing on the back of Chipper’s expertise and Visa’s network capabilities. Chipper Cash, which claims to have issued one million virtual cards, hopes to leverage Visa’s experience and investment across more areas of its business, especially as the American payments network expands its footprint in Africa. Last December, Visa pledged to invest $1 billion in the continent over the next five years, a plan that could include acquisitions and new investments in regional startups. “Today’s announcement means we can deliver on our priorities at a faster pace than we could do alone; harnessing Visa’s global reach to enable us to continue to bring the very best products and services to customers,” said Brett Macgrath, Chipper Cash’s Chief Product Officer. Visa said it is “thrilled” to double down on its Chipper Cash partnership. “This deepens our support in the growing demand for digital financial services in Africa and driving meaningful impact across the continent,” said Meagan Rabe, Visa’s Senior Director of Fintechs in Sub-Saharan Africa. “We look forward to continuing our work with Chipper Cash to redefine and expand the boundaries of financial accessibility and convenience.” The latest announcement comes just two months after Chipper announced the launch of Chipper ID, the AI-driven verification and onboarding tool built specifically for the African continent. The company is now betting that its strategic partnership with Visa will help it scale its card business and verification services within Africa. Chipper Cash said it serves over five million customers across Africa and the US. Chipper Cash has had a rough last couple of months as it consolidated its resources during a harsh funding winter. Between November 2022 and March this year, two of the startup’s most prominent investors — failed crypto company FTX, and Silicon Valley Bank — collapsed. In June, TechCabal reported that Chipper Cash laid off at least ten staff members in the company’s third round of layoffs over the previous year. Per our sources, those affected included the vice president of marketing, Alicia Levin, the global chief operating officer, and Leon Kiptum, the country director for Kenya. Now the company is looking to stay on a growth path in a sharky macroeconomic environment.
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The leading African tech moves from October 2023
1. Funding: Energy startups continue to lead funding In October 2023, 27 African startups secured $144.3 million in funding through 27 fully disclosed investment rounds. This marks a 23.6% rise compared to the $116.7 million raised in September 2023. It’s, however, a 22.6% decrease from October 2022’s 186.4 million. The three sectors with the highest funding are energy with $86.3 million in raises, fintech with $29 million, and healthtech with a modest $8.6 million. Image source: Timi Odueso/TechCabal In terms of sector performance, various sectors—most notably fintech—within the ecosystem have observed a decline in funding when compared to the levels from the previous year. Nonetheless, an intriguing trend surfaces: the energy sector has consistently secured the lion’s share of funding since June 2023, constituting a substantial 43.7% of the total capital raised between June 2023 and October 2023. Image source: Timi Odueso/TechCabal In October 2023, East African startups dominated the fundraising landscape, securing an impressive $79.1 million in investments. Southern African startups claimed the second spot with $36.8 million in capital raised, while West and North African counterparts followed closely, securing $18.9 million and $9.5 million, respectively. Image source: Timi Odueso/TechCabal The top five disclosed deals of the month are: Kenyan startup M-Kopa’s $65 million debt round from IFC. South African fintech Stitch’s $25 million Series A extension. Nigerian cleantech WATT’s $13 million raise. Kenyan agritech One Acre Fund’s $7.5 million raise. Kenyan healthtech Maisha Meds $5 million raise. *Note: This data is inclusive only of funding deals announced in October 2023. Raises are often announced later than when the deals are actually made. This data also excludes estimated grants from accelerators. 2. Startups: Patricia announces plans to kick off repayments In October, crypto startup Patricia announced plans for the repayment of customer funds. The startup, which suffered a $2 million hack in 2022, first offered users with assets stuck on the platform the chance to convert their funds into equity. Patricia also announced that it would kick off repayment of customer funds in November. The startup had initially engaged DLM Trust, an SEC-licensed trust company, to handle the repayment, but DLM Trust pulled out after disagreements between the two parties. 3. Layoffs: Dash and WhereIsMyTransport shut down, and Majorel lays off 200 employees Last month, Ghanaian fintech Dash announced its shutdown. Despite raising $86.1 million over five years, the company had to contend with mismanagement and financial misreporting, issues which the board of directors suspended CEO Prince Boakye Boampong for. Dash’s shutdown will see to the layoff of its 70+ employees. South African startup Where Is My Transport also announced its shutdown in October after failing to raise new funding. The startup, which raised over $140 million since 2016, will lay off its 140 employees as it winds down. Meanwhile, Majorel revealed that it would lay off 200 employees from its Kenyan subsidiary. Sources say the layoffs are due to the court case the content moderation firm is embroiled in with Meta and Sama. 4. M&As: Safaricom fully acquires M-Pesa Holdings, Writesea acquires CoverAI October saw Safaricom complete its acquisition of M-Pesa Holding Company Limited from Vodafone BV. While the acquisition—which cost Safaricom just $1—was initially announced in May, the telecom had to get regulatory approvals before acquiring the corporate trustee company that holds all M-Pesa deposits. Three-month-old Nigerian AI startup CoverAI was also acquired in October. Writesea, a US-based company which provides services to other companies to help them create and manage their online recruitment platforms, acquired the startup in a five-figure deal some estimate to be $50,000. 5. Telecoms: Airtel Africa and MTN Nigeria record revenue increases Right before the month wrapped up, Airtel Africa released its financial statement for the first nine months of the year. While the company recorded a 19.7% increase in revenue, it reportedly recorded $13 million after tax due to FX issues. MTN’s Nigerian subsidiary also recorded a 21.76% increase in revenue. The telecoms financial statements show that while revenue grew by 21.76% to ₦1.77 trillion ( $2.1 billion) in the first nine months of 2023, profits declined by 45.22% to ₦148 billion ($188 million). MTN Nigeria also received troubling news in October after a tax appeal tribunal ordered the telecoms to pay $72.6 million in back taxes for the years 2007–2017. The telecom, afterwards, revealed that it would be appealing the decision. 6. Economy: Nigeria announces plan to upskill 3 million people in tech In October, Nigeria’s country’s minister of communications, innovation, and digital economy, Bosun Tijani, announced plans to equip 3 million early-to-mid-career Nigerians with tech skills by 2027 as part of the ministry’s strategic blueprint. At TechCabal’s Moonshot Conference Tijani explained that 3MTT—short for the “3 Million Technical Talent (3MTT) Programme”—would be deployed with a 1–10–100% model that will 1% of the 3 million intended participants trained by February 2024. 7. Big Tech: Amazon confirms South Africa launch for 2024 E-commerce giant Amazon confirmed the launch of its online shopping service in South Africa in 2024. South Africa will become the second African country, after Egypt, to host a locally-dedicated Amazon shopping website. The company’s launch in South Africa should have happened earlier, but it experienced a pushback after a Western Cape High Court ordered a stop to the construction of its African headquarters. While the decision has now been overturned, Amazon still has local retailing laws in South Africa to adhere to before it can kick off business in South Africa. 8. Companies: Eskom records R24 billion in losses for 2022/23 FY Last month, South African power-generating company Eskom released its financial report for the year 2022/23. The company suffered losses up to R24 billion ($1.2 billion), twice the R11 billion ($588 million) in losses it recorded for the 2021/22 financial year. The company blames its decreasing generating capacity as well as increased municipal debt for the loss. CEO Calib Cassim, however, says that this is the last of such losses for Eskom. 9. Economy: South African Airways makes a comeback South Africa’s national carrier made a
Read MoreZambia announces plans to open smartphone factory in June 2024
Zambia has announced plans to open a smartphone factory in the country by June 2024 to reduce the prices of the devices for citizens. Zambia’s minister of technology and science, Felix Mutati, has announced the country’s plans to open a smartphone factory by June 2024. Mutati made the announcement at the ongoing Africa Fintech Summit in Lusaka, Zambia. “Building the gadgets in the country will enable us to reduce the cost of smartphones in the country and hence foster inclusivity when it comes to connectivity,” Mutati stated. Mutati further added that access to smartphones would boost the reach of fintech startups in the country as the devices are enablers of access to fintech services provided by the startups. In another effort to boost connectivity, Mutati also stated that the government plans to construct over 100 community digital centers nationwide. According to the 2021 World Bank FinDex report, 24% of adult Zambians aged 15 years and above owned a financial institution account. Of these, only 10% used mobile money or an online service to make payments and purchases. The purpose of the smartphone factory, per Mutati’s explanation, would be to boost these connectivity numbers and hence access to fintech services like mobile money. In October 2022, the government also announced that it would zero-rate imports of telecoms equipment, including smartphones, in a bid to encourage investment into the country’s ICT sector, which the government views as essential to job creation and economic development in the market. Data by ZambiaPrice states that smartphones in the country cost an average of between 2,500 kwacha (~$114) to 4,000 kwacha (~$182). However, data from the JCTR Home Survey report states that the average salary in Zambia is between 1,000 kwacha (~$45) and 3,000 kwacha (~$137), showing the discrepancy between income and affordability of devices for even employed Zambians.
Read MoreExclusive: Crowdyvest proposes converting ₦7.7 billion it owes customers to equity
Crowdyvest Limited, a Nigerian crowdfunding platform that allowed retail investors to fund a range of agritech businesses, owes 3,700 crowdfunding investors ₦7.7 billion, according to an internal document seen by TechCabal. The company defaulted on its payment obligations to customers in 2021, and in that time, it has never disclosed its total debt outlay. “We are concurrently exploring opportunities for our members to get quarterly payout as we recover funds from project partners that are owing us,” Temitope Omotolani, Crowdyvest CEO, told TechCabal in an email.” The company expects to recover around ₦2 billion from some of the businesses it funded within the next two years. Per the same internal document, those monies will be disbursed to investors by a registered asset manager. A significant part of debt—around ₦5.7 billion—will be converted to equity in Crowdyvest Management Limited, the company said. Customers who are owed will own 35% of the company. Converting the major part of the debt to company shares is a similar approach to Patricia, the crypto company that lost $2 million in customer assets. The company is also launching “Phoenix Fund,” a new investment vehicle to raise funds. Key Takeaways Crowdyvest owes 3,700 users N7.7 billion since 2021 The company is proposing converting some of that debt to equity The company is also raising a new fund How did Crowdyvest get here? Launched in 2019, Crowdyvest was a member of the EMFATO group alongside two other companies: Farmcrowdy and Treepz. It helped Farmcrowdy, an agritech business, raise money from retail investors who were promised up to 20% returns across several projects. Like many other agritech projects, Farmcrowdy cited the COVID-19 pandemic as a reason many partners could not repay those investments. When Crowdyvest left the EMFATO Group in March 2021, it took on the debts of Farmcrowdy. Since 2021, it has repeatedly assured investors it remains committed to repaying all debts; the company said it paid N18 billion between 2020 and 2023. “As a business, we’re dealing with the hard truths of what is lost, what is still redeemable and what can be done to completely solve this,” explained Omotolani. “We have come to the realization that our commitment to meeting our obligations to all stakeholders can only be legitimately fulfilled if we remain a viable and continually improving entity,” she added.
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Exclusive: Payments giant Interswitch loses ₦30 billion to chargeback fraud, launches recovery process
Interswitch, the African payments and infrastructure giant, has lost as much as ₦30 billion after a system glitch allowed some merchants to fraudulently file and receive chargebacks, according to court documents seen by TechCabal and three people with direct knowledge of the situation. The company is now attempting to recover the funds through legal action, and it has reported the fraud to the Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-money laundering agency. So far, Interswitch has recovered a little over ₦10 billion, according to one person with knowledge of the matter. Interswitch declined to comment for this story. Brett King, John Chaplin, Mitchell Elegbe, GMD Interswitch and Akeem Lawal, DCEO, Interswitch The court documents showed that Interswitch filed a motion at the courts on the suspected bank accounts. The payments giant has also requested that 54 banks place restrictions on hundreds of suspected bank accounts until the investigation and recovery process is complete, said a lawyer at a top Nigerian law firm with knowledge of the ongoing case. A clash between Nigerian banks and neobanks highlights financial industry’s complicated fraud problems The chargeback fraud dates back several years, two sources with knowledge of the situation told TechCabal, but they declined to share a specific timeline. The current incident, however, is directly linked to a few former and current Interswitch employees who likely exploited vulnerabilities in the company’s system, the sources said. At least one person has been arrested in connection with the incident, a source also said. Nigeria’s financial services industry has seen an increase in incidents of fraud in the last four years. Nigerian financial institutions have reported ₦159 billion ($201.5 million) lost to fraud cases since 2020, according to the Financial Institutions Training Centre (FITC).
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