Nigeria’s biggest banks will spend at least ₦82 billion on core banking software
Since September 2024, at least four Nigerian commercial banks have changed their core banking applications. Costs and a need for customisation drove these technological changes. The frustrations of the process—millions of customers unable to access banking services—have been documented, but little has been said about the financial costs of these changes. On October 14, Guaranty Trust Bank told customers it finalised its core banking platform switch to Finacle, weeks after TechCabal first reported the technology change. That switch could cost the bank up to ₦25 billion ($15.3 million) in yearly licence fees, said one person familiar with the matter. Depending on the specifications of the core banking application, Nigerian commercial banks spend at least $10 million each year, the same person said. This suggests that the biggest Nigerian commercial banks—First Bank, UBA, GTBank, Access Bank, and Zenith—will spend $50 million (₦82 billion) annually on their core banking applications. These core banking software costs will amount to 1% of the FUGAZ banks’ half-year 2024 revenues. According to their financial statements, the five banks reported ₦8.52 trillion in gross earnings. With millions of customers to serve across hundreds of banking channels, the need to invest in technology is a no-brainer. Based on their capital raise presentations, three of Nigeria’s biggest banks will spend up to ₦224.22 billion ($136 million) on technology upgrades. GTCO, the holding company of Nigeria’s cost-efficiency leader in commercial banking, planned to spend ₦98.5 billion on technology infrastructure upgrades. Access Holdings, the parent company of Nigeria’s biggest banks by assets, will spend ₦68.62 billion to upgrade and develop technology its infrastructure. Zenith Bank Plc, Nigeria’s largest lender by market capitalisation, will spend ₦57 billion on technology infrastructure. These technology costs cover the core banking applications, customer relationship management (CRM) software, cloud storage, digital banking channels, risk management systems, ATM networks, database management systems, fraud detection systems, electronic document management systems (EDMS), among others. While tier-1 banks can take these costs on the chin, tier-2 banks are keen to manage costs and find avenues for profits. In September 2024, Sterling Bank, a tier-2 Nigerian bank with a market capitalization of ₦115.16 billion, switched to SEABaaS, a new custom-built core banking application. It hopes to recoup some of the building costs by selling SEABaaS to other banks in the near future. The lender previously used T24 built by Geneva-headquartered Temenos AG. Cost considerations drove that switch, two people with direct knowledge of the matter said. Commercial banks often rely on different modules of the core banking software built to their specifications but that service is expensive. These modules include account opening, transaction processing, loan management, and risk assessment. Changing a core banking application also requires several months of planning and internal approvals from a bank’s top management. One person with direct knowledge of the matter said Sterling Bank first discussed the possibility of changing from T24 in 2022 and it took at least seven months before a new core banking application was built. GTBank’s switch to Finacle also began in the fourth quarter of 2023. The process involves setting up a change management plan including a rollback strategy, a series of tests of the new core banking application in different environments, and navigating the bureaucracy of the bank’s leadership, one person familiar with the matter said. “You’d need to get approval from all the different heads of the units in the bank before going live [with the new core banking application]. Sometimes, it turns into a vote,” that person said. It also meant longer working hours for the technology team. Data migration is the most critical part of a core banking application. As one bank engineer described it, “billions of data including customer and transaction details are migrated to the new platform and you can’t afford to mess it up.” The bank cleans and reformats existing data to ensure compatibility with the new system. Banks operate large and complex datasets with several millions of customers and transactions, that process could take weeks and often result in extended downtimes that leave millions of customers unable to access banking services. Since the banks cannot share extensive details of their core banking changes, they risk losing customer trust. For now, banks will need to do more than issuing statements to pacify aggrieved customers
Read MoreNigeria drops charges against Binance executive Tigran Gambryan after months of lobbying
Nigeria’s Federal Government has unexpectedly dropped charges against Tigran Gambryan, a Binance executive arrested in February 2024 and initially charged with tax evasion and money laundering. While the tax evasion charge was dropped, Gambryan and another Binance executive, Nadeem Anjarwalla, were charged with money laundering and illegal currency speculation. However, the Economic and Financial Crimes Commission (EFCC), which was the prosecuting body, dropped those charges this morning, Premium Times reports. “Announcing the withdrawal of the charges, the lawyer said Mr Gambaryan, a United States citizen, was merely an employee of Binance, whose activities he was being prosecuted for,” a Premium Times report said Gambryan and Nadeem Anjarwalla were arrested in February 2024 shortly after their arrival into Nigeria for a meeting with government officials. That meeting was supposed to defuse tensions between Nigeria and Binance after the country claimed the crypto company was responsible for FX volatility after the decision to float the naira. While the naira pared back some of the losses it made against the USD in April, it has since gone back on a slide. While Nadeem jumped bailed in Abuja earlier in the year, Gambryan continued to be held despite pressure from the US government and lobbying from Binance. US lawmakers wrote to the Nigerian government and visited Gambryan, a US citizen in prison. Sixteen American lawmakers accused Nigerian authorities of holding the American citizen hostage and on June 6, Axios reported that a group of former prosecutors and federal agents in the US wrote to US Secretary of State Anthony Blinken, urging him to “step up” efforts to secure Gambaryan’s release. Yet, Nigeria appeared reluctant to budge. Bail applications for Gambryan were rejected twice, even as his health continued to deteriorate. “We found him suffering from the conditions there, as he has malaria and double pneumonia, and he reports that he has lost significant weight. Even worse, he’s being denied access to adequate medical attention,” one lawmaker wrote on X. US lawmakers visit detained Binance executive in Kuje prison
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🚀Entering Tech #77: Old School Tech, New School Impact
Old school tech was cool, and so was Augustine Ugi 23 || October || 2024 View in Browser Brought to you by Issue #77 Old School TechNew School Impact Share this newsletter Greetings ET people Few grass-to-grace stories in tech will make your heart skip with joy like this one. For this edition, we spoke with Ugi Augustine Ugi, a big shot solutions architect partnering with the Cross River state government to build the future of tech in the state. The interview ran for nearly two hours and it didn’t feel like a bore. If you’ve ever wondered what it was like to be a tech bro in the early 2000s—when access to learning was limited, and entry-level courses were expensive—and then go on to build one of the top computer training facilities in Cross River State, you’re about to find out. Emmanuel Nwosu & Timi Odueso Old school tech and where it began “I see myself as an old-school techie who had to understand how modern technology works to compete. Building websites, for example, was done differently ten years ago.” Those were the words Ugi Augustine would use to end the nearly two-hour interview in which he walked me through glimpses of his large life. Born in Obudu and raised in Calabar, Cross River State, Ugi was always curious about how things worked. A career in medicine had appealed to him and his family, but tech won him over, thanks to a lab technician who spurred his interest. Ugi Augustine Ugi MTN had built an IT lab in his high school and one fateful day, this lab technician came around to do some maintenance job on the servers. Ugi, being the lab prefect, had access to the technician and watched closely as the technician worked and answered his barrage of questions, explaining how the systems functioned and what they were used for. “I asked a lot of questions about what those servers were. He tried to explain but I don’t think I understood him.” That short conversation left an indelible impression on Ugi. It wouldn’t take long before he abandoned his dream of medicine to pursue tech. *Newsletter continues after break #HerMoneyHerPower The She Tank & BellaNaija’s #HerMoneyHerPower campaign has sparked a national conversation, and we’re here for it! PwC Nigeria says closing the gender equality gap could increase Nigeria’s GDP to $229 billion by 2025. A stronger Nigerian economy starts with women’s economic power. Learn more here. From Calabar to Middlesex Ugi’s first foray into tech was through a tech-ish adventure. In 2006, shortly after finishing high school, he found an e-commerce course that taught how to sell goods online. The fee was ₦200,000 but a scholarship reduced it to ₦140,000 ((fun little trivia: ₦140,000 in 2006 is about ₦ 1.1 million today). Yet, that amount was still too high for Ugi to pay for his tech dreams. Open courses were not available then, which made it harder to learn for free online. “My parents had a combined monthly salary of ₦6,000 ($47 in 2006; Nigeria’s minimum wage at the time was ₦5,500.) Paying for a ₦140,000 course was a no-no. They only wanted me to go to university.” Ugi (top left) with his parents and siblings Yet, Ugi did something remarkable—his GOAT story was using his dad’s phone to win ₦20,000 on the Who Wants to Be A Millionaire TV game show. He gave his dad ₦5,000 from his winnings and used the rest as a down payment for the course. He later sold computer software apps, earning enough to pay the remaining fees. He finally got another opportunity to study Software Development at the National Institute of Information Technology (NIIT), a computer training school in many parts of Nigeria. Ugi completed his software development program at NIIT before joining Hot-Minet, an IT services company in Calabar, for three years as an intern. In 2012, he found his way to Middlesex University in London, UK, to study Business Systems and IT, sponsoring his studies from his own pocket. The whole time he was at Hot-Minet, Ugi had been working on tech projects on the side and had come into some money. Ugi at Middlesex University, UK When Ugi returned to Nigeria, he started several businesses, including GTCO Calscan, an agency that provides software development, design, and marketing services. He later left to start Nugi Technologies, which eventually stuck. *Newsletter continues after break On building global tech talents Ugi started Nugi Technologies, a computer training and tech service provider in Calabar, in 2014 with a clear goal—to create opportunities for young Africans in tech. “If you place Nigerian engineers side-by-side with those from India, the Nigerian engineers will likely win. They don’t have more skilled engineers in India than in Nigeria, we’re just bad at developing our talents,” he said. Take it from a man who has spent a better part of his career working with engineers and clients from all over the world. His own journey into tech wasn’t straightforward, no thanks to the lack of access to open courses that techies in this era enjoy. You can get started with learning almost anything online for free without paying a dime. Old-school tech bros didn’t have this luxury. Ugi’s philosophy is to invest in people, which is why Nugitech started sponsoring its top students for international studies on the condition they return to work for the company. For Ugi, he sees the work he does as building tech talents that can stand toe-to-toe against furnished Ivy League CVs and work at the best companies. His fondest example, Emmanuel Etti—who used to work at Nugitech and was its first CTO—is now a Lead Software Engineer at global tech giant IBM. Emmanuel Etti before IBM stardom “I see myself as a door opener for others because I found it difficult to get through doors early in my career.” Ugi also talks about his work as a solutions architect in Cross River State—one of his company’s clients—to build the country’s biggest tech
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BasiGo raised $41.5 million to put electric buses on the road
BasiGo, a Kenya-based electric bus startup founded in 2021, has closed a $24 million Series A equity round and an additional $17.5 million in debt funding. The round was led by Africa50, a pan-African infrastructure investor, the British International Investment (BII), and the U.S. Development Finance Corporation (DFC). Other investors in the equity round included Novastar Ventures, CFAO Kenya, Mobility54, and SBI Investments. The loan includes a $10 million facility from DFC to support BasiGo’s operations in Kenya and a $7.5 million facility from BII to help BasiGo expand its electric bus services in Rwanda. BasiGo was launched in Kenya in 2021 by Jonathan Green and Jit Bhattacharya after raising $1 million in pre-seed funding to manufacture eclectic buses in Kenya and put those buses on the road in Nairobi as commuter vehicles, popularly referred to as matatu. As of March 2024, BasiGo electric buses had transported over 4 million passengers, reducing greenhouse gas emissions by 1,175 tonnes. The funding comes seven months after the Kenyan government launched a national e-mobility draft policy to promote the local manufacturing and assembly of electric vehicles. BasiGo will use the funding to grow its fleet of electric buses from 119 to 1,000 in Kenya and Rwanda over the next three years to compete with Roam Motors, which raised $24 million in February 2024. “With BII’s support to expand our e-bus model in Rwanda, we are ready to deliver hundreds of modern, emissions-free electric buses across East Africa,” said Jit Bhattacharya, CEO of BasiGo. The funding will also help scale up its e-bus assembly line and expand its pay-as-you-go model—a financing product that allows customers to lease BasiGo buses to cut high upfront costs—to new bus types. Its E9 Kubwa model can cost up to KES 7.5 million ($58,000). Ordinary buses used for mass transit in the cities usually cost a little over KES 5 million ($37,000). BasiGo CEO Jit Bhattacharya and Dr. (Eng.) Joseph Siror, Kenya Power Managing Director and Chief Executive BasiGo’s strategy is to tap into Nairobi’s Matatu culture, where small buses run by Savings and Credit Co-operatives (SACCOs) move millions daily. BasiGo has partnered with SACCOs, including Super Metro and Citi Shuttle, to introduce their buses into Kenyan roads. In 2022, it raised $4.3 million in a seed round, followed by $6.6 million later that year and $5 million in debt from BII. In March 2023, BasiGo raised $3 million in equity from CFAO and its venture capital arm, Mobility54. Roam Motors, BasiGo have a long way edge out diesel buses in Nairobi
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👨🏿🚀TechCabal Daily – One plus one equals one
In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning! Last Sunday, SpaceX made headlines and history for catching the Starship rocket, a reusable rocket booster with mechanical arms. Yesterday, Anthropic released a new AI model that can control your PC. The firm released an upgraded version of its Claude 3.5 Sonnet model that can understand and interact with any desktop app. The new “Computer User” AI model—still in its beta stage—will be able to perform research, answer emails, and handle other back-office jobs independently. How cool is that? MainOne completes integration with Equinix What went wrong with GT’s core banking migration? Ethiopia’s historic IPO The World Wide Web3 Opportunities M&A MainOne completes integration with Equinix Image Source: The Gazette NGR Mergers and acquisitions are big deals (pun intended). So, when MainOne, the first private company to land a submarine cable and build a tier III data centre, was acquired by Equinix on April 5, 2022, for $320 million, it hogged the headlines. An exit for an infrastructure business proved that Nigeria’s tech ecosystem was finally getting the attention it deserved. For competitors, it was a wake-up call—Equinix, with an $84 billion market capitalisation and 260 data centres globally, was now in Nigeria. For MainOne employees, there may have been some anxiety about their jobs initially—redundancies are common in mergers and acquisitions. But two years on, with the post-merger integration completed, employees will receive pay bumps in March 2025 after signing new contracts. Equinix is also expanding its operations in Nigeria, increasing the number of data centres from two to five. Three new data centres are currently under construction, and the company plans to grow its fibre cable network in Nigeria’s South-South region. Some changes came with the integration. MDXi, the unit that manages data centres, will now be called Equinix, while MainOne, which handles submarine cables and connectivity, will be rebranded as MainOne, Solutions by Equinix. Equinix is already expanding into other African countries, such as South Africa. How far is the company willing to go in its African foray? 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. Banking What went wrong with GT’s core banking migration? Image Source: TechCabal On Monday, October 14, GTBank told its customers that they could resume banking services after its tech team and an engineering team from Infosys spent the previous weekend migrating data from Basis, its previous core banking application, to Finacle, its new application built by Infosys. Yet, life is what happens when you’re busy making other plans. If you have spent time online, you’ll know GTBank customers could not complete transactions, received wrong credit and debit alerts, and incorrect account balances. The core of the problem was a problem integrating its channels with its new core banking application Finacle. Core banking applications (CBAs) manage transactions, customer accounts, regulatory compliance, fraud detection, and generate reports for the bank so any issues with the CBA directly affect customers. “Nobody can perform a banking transaction without channels,” a consultant for Temenos, a leading CBA, told me. Think of the CBA as an island and channels are like bridges that connect customers to that island. Customers received erroneous alerts due to a data migration issue at GTBank. The bank switched systems from Basis to Finacle on Friday, but transactions continued over the weekend. This created a backlog of alerts that were processed the following week, leading to the errors. Read more about the switch. Issue USD and Euro accounts with Fincra Whether you run an online marketplace, a remittance fintech, a payroll, a freelance platform or a cross-border payment app, Fincra’s multicurrency account API allows you to instantly create accounts in USD and EUR for customers without the stress of setting up a local account. Get started today. Economy Ethiopia’s historic IPO Image Source: TechCabal Since coming to power in 2018, Ethiopian Prime Minister Abiy Ahmed has pushed ambitious economic reforms to open up the Horn of Africa, often considered one of the last closed economies on the African continent. In July, the country floated its currency and entered a $3.4 billion IMF programme, which Ahmed described as “the pain of surgery, endured for healing.” Part of Ahmed’s financial sector reforms have been to open the country’s financial sector to the entry of foreign banks and the launch of a securities exchange. After almost five years of planning, the Ethiopian Securities Exchange (ESX) is expected to go live, with Ethio Telecom as the first company to list. The planned IPO has fallen short of the promise to allow the flow of foreign capital after the government limited the participation of diaspora residents and foreign nationals. The government plans to raise $255 million by selling 10% of the telco giant through Ethiopian Investment Holdings (EIH). However, the decision to restrict diaspora and foreign investors from Ethio Telecom’s IPO could slow the country’s development of open capital markets. EIH, the Ethiopian sovereign wealth fund, also plans to list 10 of its biggest investments, including the Ethiopian Shipping and Logistics Services and Ethiopian Insurance Corporation. It is unclear if the regulators will allow foreigners to buy a stake in the subsequent sale of state-owned firms. Introducing Pay with Pocket on Paystack Checkout Paystack merchants in Nigeria can now accept payments from PocketApp’s 2 million+ customers. Learn more → CRYPTO TRACKER The World Wide Web3 Source: Coin Name Current Value Day Month Bitcoin $67,149.02 – 0.33% + 5.17% Ether $2,614.62 – 0-87% – 1.70% AI Companions $0.101 + 6.27% + 8.59% Solana $165.59 – 0.74% + 12.87% * Data as of 06:00 AM WAT, October 23, 2024. Opportunities Nearly 200 startups, including those from Nigeria, are vying for top honours in the world’s largest pitch competition, Supernova Challenge 2.0. With a $200,000 prize
Read MoreWhy GTBank has struggled with its switch to Finacle
On the morning of October 14, GTBank, a Nigerian bank with a market cap of ₦ 1.5 trillion, completed its switch to Finacle, its new core banking platform, a move that was a year in the making. A key part of the process of moving from its previous platform Basis involved GTBank’s tech team and engineers from Infosys, the Indian IT company that built Finacle, spending the previous weekend migrating customer data. While the bank told its 32.8 million retail customers that they could now make transactions on October 14, the reality for customers was failed transfers and erroneous debit and credit alerts. Many customers complained on social media—those complaints have continued this week—even as the bank failed to share further updates since Wednesday. Switching a core banking application takes several steps, but moving data and integrating channels are the most difficult. While the data migration was successful, integrating the bank’s channels (cards, online banking, and APIs) into Finacle was more difficult than the bank anticipated, one person with direct knowledge of the process said. this country is actually making me go crazy. It’s been FIVE entire days & GTBank still hasn’t addressed/resolved this issue or even bothered to communicate with their customers. This level of negligence is beyond frustrating & completely unacceptable. — BAD. (@lohiii_) October 18, 2024 Despite round-the-clock efforts, the teams have not fully integrated all the channels into Finacle. An engineer at GTBank told TechCabal that the integration would be completed in the coming weeks but failed to give a definite timeline. funny how gtbank’s online victory laps about the “successful” core banking update is very much divorced from the reality of its customers. — Ezra ‘God’ Olubi (@0x) October 15, 2024 GTBank did not respond to a request for comments. “Integrating channels into a new core banking platform is one of the trickiest parts of a core banking switch, especially for a bank like GT with many channels. Nobody can perform a banking transaction without channels,” a consultant for Temenos, one of the world’s largest core banking applications, told TechCabal. “Some banks turn off all channels [during a core banking switch] for a seamless migration, but I guess GTBank could not afford to stop working,” the consultant added. GTBank finalising change to new core banking platform That theory may explain why GTBank did not restrict customer access to its banking services during the process. Instead, the bank allowed customers to transact without receiving debit or credit alerts during the data migration, which used data from the evening of Friday, October 11, a person with direct knowledge of the process told TechCabal. Customers who processed transactions received the alerts only after the migration to Finacle was completed. Many GTBank users on X posted about erroneous transaction alerts the week after the migration. This GTBank randomly crediting people is crazy because I saw 64k credit alert but it didn’t reflect in my balance. — Tobussy (@_jhadiin) October 16, 2024 GTBank’s struggles highlight the complexities of massive technological changes and show how expensive and time-consuming they can get. The planning before an actual switch begins can take up to one year, and banks can pay as much as ₦25 billion annually for software licenses. Core banking consultants and engineers like the Infosys team typically get paid $50 daily besides accommodation, plane tickets, feeding, and the switching fee. “No cost was spared,” one person involved in the process told TechCabal. Since the weekend of October 11, GTBank has accommodated its core banking team and Infosys engineers in hotels close to its Victoria Island headquarters. These teams are still in the process of integrating the bank’s various channels, even after working through the weekend and into the following week. In one instance of exhaustion, an engineer left his team for a nap during the migration process, only to be woken up within 20 minutes by his colleagues who urgently needed his assistance. Given the unknown timeline for successful integration, GTBank customers may need to brace for more frustration, especially as salary week approaches, when transaction volumes typically spike.
Read MoreMadica backs Nigerian clean energy startup Earthbond with $200,000
Earthbond, a Nigerian startup that connects small businesses that want to buy solar solutions to solution providers, has raised a $200,000 pre-seed funding from Madica, an Africa-focused early-stage investment firm. This funding will help Earthbond onboard more small and medium businesses (SMBs), the company said in a statement. The startup claims it has audited the solar power needs of over 100 businesses in Lagos in deals that could be worth $1 million. Over 1,800 SMBs have joined Earthbond’s waitlist, showing demand for energy transition as fuel prices rose 40% in September. Founded in 2023 by Chidalu Onyenso, Earthbond helps businesses determine how much solar power they need and provides financing options to go solar. It connects these businesses with solar solution providers, such as solar panel installers, loan providers, and available loan payment options. Business owners only need to fill in details of their registered businesses and operating hours on a form on the startup’s website. Earthbond claims it has partnered with four microfinance banks to provide businesses with flexible repayment plans of up to 48 months. Small businesses are the backbone of Nigeria’s economy, but they are heavily burdened by unreliable power supply and the high costs of running diesel and petrol generators. While solar power offers cleaner energy solutions, the high installation costs have deterred many businesses from adopting it. Earthbond’s financing option will be useful for business owners keen to adopt clean energy without pressuring their pockets. “Leading the charge of energy transition is no easy feat and we are glad to be joined by renowned investors who share our passion and drive,” said Chidalu Onyenso, Earthbond’s CEO. The startup also plans to tap into the climate tech industry by helping businesses track their carbon emissions, offering them discounts based on how much carbon they save. This will incentivise businesses to choose the provider. Earthbond will enter Nigeria’s renewable energy market, joining players like Rensource Energy, M-KOPA and Arnegy in the race to boost Nigeria’s installed solar capacity from 3.13 gigawatts (GW) to 5.01 gigawatts (GW) by 2029. Madica will provide a structured program to help Earthbond revamp its marketing, onboard more businesses, provide loans in partnership with more banks, and build payment tools for its customers. “Earthbond has tremendous potential to drive an equitable clean energy future and positively impact Africa. We remain devoted in our quest to support underrepresented founders,” said Emmanuel Adegboye, head of Madica.
Read MoreEquinix finalizes MainOne integration, employees get new contracts and pay bump
Equinix, the world’s largest global data center and colocation provider, has completed the post-acquisition integration of Nigeria’s MainOne following a $320 million acquisition in 2022. Post-merger integrations combine and rearrange two entities’ assets, resources, and people to ensure that the efficiencies that motivated the merger/acquisition can be realized. “Equinix is a 25-year-old business and publicly quoted. So there is a process they work with that we don’t apply here,” said a MainOne employee who asked not to be named so they could speak freely. As part of that integration, employees received new employment contracts. While those contracts saw employees receive a pay bump, it was not as significant as they expected, two people with direct knowledge of the matter said. “What they are paying us is fair,” one of the employees said, noting that the salaries remained in naira but not sharing other specifics. Another person familiar with the matter said the integration took nearly two years because of workload migration-the process of moving applications, data, and IT processes from across environments. This can involve shifting resources between physical servers, virtual machines, or even across different infrastructures, such as from on-premise data centers to cloud platforms. “Sometimes it takes that long to integrate systems. There are many factors to consider: the size of organisations, the difference between their product portfolio, pricing, operation support system, and business support system that they run,” one telecom industry executive who asked not to be named told TechCabal. MainOne declined to comment on any part of this article. GTBank increases staff salaries by 40% but still has the lowest personnel cost among Tier-1 banks Integration is usually the next necessary step after an acquisition. This often requires a post-merger integration team from both companies to determine what needs integration – like corporate culture and people, operations and processes, technology and IT systems – and how to do it. A post-acquisition integration can take as long as one to three years, depending on when the team determines how to execute the integration blueprint without disrupting operational efficiency. This has been the story of most acquisitions involving companies such as Econet, which was sold to Vodacom and struggled with corporate alignment until it was sold to Celtel which later sold it to Zain, and finally to Airtel. 9mobile, acquired by LH Telecom, is also undergoing post-acquisition integration, and data centre operator Medallion was acquired by Digital Reality in 2021. MainOne will keep its brand as “MainOne, Solutions by Equinix,” while its data center division, formerly MDXi, will now operate under the Equinix name. Funke Opeke remains the company’s overall managing director, and the MDXi leaders will continue to lead the data center business. A gradual integration of Equinix’s global culture is expected. The changes establish Equinix as one of the prominent operators in the Nigerian cable and data centre markets, a position the company occupied since it entered the market in January 2010 when it landed its submarine cable in Lagos. MainOne, Solutions by Equinix will continue to focus on the internet service provision and cable business as a department under the Equinix group. Equinix will launch three major data center projectsm, including an interconnection hub in Victoria Island, scheduled for completion in 2025, a 1000+ rack capacity data center in Lekki slated for 2026, and a data centre in Port Harcourt, where construction has already begun following the landing of Meta’s 2Africa submarine cable. This expansion is timely, as Nigeria is seeing growing demand for data centers to utilize the capacity of its eight submarine cables. The country has 14 data centers with a combined capacity of under 70 megawatts. Other operators, including Rack Centre, Medallion, and Open Access Data Centre (OADC), are also building larger data centres. Telecom giants like MTN and Airtel have announced plans to enter the data center market, creating a more competitive environment for hosting services. “I think it is a good buy for Equinix – safe entry into a large market where their global customers already have a presence so makes it easier to serve them,” the telecom industry executive said. Equinix is enhancing its fiber network in Nigeria, with metro fiber already in place in Akwa Ibom. The company is now extending this fiber capacity through the 2Africa cable to Port Harcourt in Rivers State, where it will connect to the newly planned data center. There are plans to connect the entire South-South region using fibre cables. MDXi operated two data centers in Lagos, which are now fully controlled by Equinix. These centers will be interconnected with Equinix’s global network of 260 data centers across 71 cities in 33 countries. This interconnectivity enables seamless data sharing, content delivery, and backup redundancy through Data Center Interconnect (DCI) technology, allowing for the movement of data across distances, whether within Nigeria or over long transoceanic routes like the Pacific or Atlantic. Nigeria marked Equinix’s first venture into the African market in 2022, and the company has since expanded to South Africa, where it will launch a new data center in Johannesburg on October 23, 2024.
Read MoreEthiopia bars diaspora and foreign investors from first-ever IPO
Ethiopia has excluded diaspora citizens and foreign nationals from its initial public offering (IPO) for Ethio Telecom, a state-owned telco with a 95% market share. The country’s first-ever bourse, the Ethiopian Securities Exchange (ESX), is expected to start operations this month. The government plans to raise $255 million by selling 10% of the telco giant through Ethiopian Investment Holdings (EIH). However, the decision to restrict diaspora and foreign investors from Ethio Telecom’s IPO could slow the country’s development of open capital markets, which has been part of Prime Minister Abiy Ahmed’s plan to liberalise the financial sector and modernise the economy. “The offer is being made only to Ethiopian citizens who are physically present in Ethiopia. The offer is not available to any other jurisdiction outside of Ethiopia,” Ethio Telecom said in its investor prospectus. Ethio Telecom did not immediately respond to a request for comment. A capital markets expert told TechCabal that Ethiopia could limit foreigners’ involvement in telco, which it still considers critical and strategic, even as it opens for foreign capital. For decades, Ethio Telecom enjoyed a monopoly in the country’s telco market before the entry of a Safaricom-led consortium that started operations in 2022. The move was meant to open the country’s telecommunication sectors and increase access to services in remote regions. “Despite the entry of Safaricom, Ethio Telecom remains the dominant player in the Ethiopian telecommunications market, with an estimated market share of subscribers of 94.5% as at 30 June 2024, attributable to the strong customer satisfaction and high-quality services and products offered nationwide,” Ethio Telecom said. EIH, the Ethiopian sovereign wealth fund, also plans to list 10 of its biggest investments, including the Ethiopian Shipping and Logistics Services and Ethiopian Insurance Corporation. In April 2024, ESX announced it raised $26.6 million from investors to launch the bourse, which is expected to list over 10 companies by the end of 2025. The bourse is projected to attract foreign investments in sectors controlled by the state, such as insurance, banking, and telecoms. The Nigerian Exchange Group (NGX), with a 5% stake, is one of the top institutional investors in the bourse. Others are FSD Africa, a UK-backed non-profit financial institution, and Trade and Development Bank Group (TDB), the financial arm of the COMESA trade bloc.
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👨🏿🚀TechCabal Daily – Glo hit hard
In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning! We hope our Kenyan readers enjoyed the Mashujaa day celebration yesterday. We celebrate the hero in you! Hackers hit Nigeria’s third largest telco GTBank increases salaries by 40% but still spends way less than its peers OmniRetail acquires Traction Apps IHS secures $439 million loan The World Wide Web3 Opportunities Cybersecurity Hackers hit Nigeria’s third largest telco Image Source: Adaeze Chukwu/TechCabal Some of the biggest technology stories this year have been around cybersecurity. In May, a First Bank employee diverted over ₦40 billion ($24.4 million) to 98 bank accounts he controlled. In July, Hope PSB, a Nigerian microfinance bank, was hit by a ₦6.5 billion ($3.9 million) cyberattack. Several Nigerian fintechs were also hit by attacks this year. Nigeria cloud providers were not spared from the onslaught. In July, a Nigerian cloud provider was hit with a ransomware attack. And now, in what might be one of the most significant cybersecurity stories this year, Nigeria’s third-biggest mobile network provider Globacom was hacked, with staff members denied access to emails and other internal communication tools for months. In a year-long investigation, a scenario emerged showing hackers likely gained access to Globacom’s Domain Name System (DNS) in July 2023. Read about it here. 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. Banking GT increases salaries by 40% but still spends way less than its peers Image Source: Google In his 2023 letter to shareholders, Segun Agbaje, the CEO of GTCO, boasted about the bank’s cost-effectiveness. After raising staff salaries by 40% across the board in September, the bank will still spend less on salaries than its other Tier-1 peers. If we apply a 40% increase to the bank’s 2023 personnel expenses, GTBank’s new wage will be around ₦63.1 billion ($38.7 million) annually. That is still at least ₦100 billion ($61 million) less than First Bank, Access Bank, and UBA spent on salaries last year. Much of this cost efficiency is due to GT’s fewer employees—3,300—which is less than half of First Bank and Zenith Bank’s employees. An assistant banking officer (ABO), only one level above entry-level, now earns ₦720,000 ($442), ten times the country’s new minimum wage. I spoke to four GT employees for this story, and while they were surprised about the raise, they were all happy to tell me about the increase. One even promised me a round of drinks at any bar. GTBank’s recent salary raise could spark a ripple effect across Nigeria’s banking sector, prompting other Tier-1 banks to consider similar raises. In an industry where employees often move between banks for better pay, competitors may feel pressured to adjust their compensation packages to retain top talent and remain competitive. Issue USD and Euro accounts with Fincra Whether you run an online marketplace, a remittance fintech, a payroll, a freelance platform or a cross-border payment app, Fincra’s multicurrency account API allows you to instantly create accounts in USD and EUR for customers without the stress of setting up a local account. Get started today. M&A OmniRetail acquires Traction Apps Image Source: TechCabal OmniRetail, a B2B e-commerce startup, has acquired Traction Apps, a payment provider for small businesses. Both parties did not disclose the terms of the acquisition. Traction co-founders Mayowa Alli and Dolapo Adejuyigbe will stay on as Director of Technology for Payments and Director of Operations for Payments respectively. The integration of both companies is expected to be completed by 2025. OmniRetail offers informal retailers access to cheaper inventory through its partnerships with fast-moving consumer goods (FMCG) manufacturers and collecting bulk orders from retailers. With the acquisition of Traction Apps, OmniRetail will be eyeing a soft expansion into more SME markets. Traction Apps provides business management services for SMEs. Retailers that want to accept cashless payments can use the company’s software point-of-sale (softPOS) technology or order a hardware POS. By integrating Traction Apps’ softPOS technology with its own embedded finance app, OmniPay, OmniRetail can better serve the SME market by offering cashless payment solutions while upselling its e-commerce platform to help retailers manage inventory and get loans. Traction Apps has over 19,000 users and charges about 4–8% on transactions that customers make across its payments, lending, and software products. Acquiring Traction will also provide OmniRetail with another source of revenue. While issuing hardware POS could lead to an overlap with Moniepoint, OmniRetail will likely consider pushing Traction Apps’ softPOS technology, which could give it an edge to reach more SME markets. However, this will require customer education to ensure adoption. Introducing Pay with Pocket on Paystack Checkout Paystack merchants in Nigeria can now accept payments from PocketApp’s 2 million+ customers. Learn more → Telco IHS Towers secures $439 million loan Image Source: Google IHS Towers, which keeps over 16,000 cell towers buzzing across Africa, has secured a $439 million loan to refinance its debt and expand operations across key markets. 58% of the funding is in US dollars while the rest is in South African Rand. The cell tower operator will use the cash to pay off a $430 million IOU from October 2022 which is not due until 2025. But by refinancing early, IHS is hoping to snag a better deal and dodge higher interest rates down the line when it goes looking for another loan. IHS is also reworking deals with MTN Nigeria, getting the telco to pay for its tower contracts in local currencies and US dollars. IHS is safeguarding itself against further financial hits that have seen the company lay off employees this year. This is part of IHS’s ongoing effort to reduce its reliance on dollar-denominated debt, a key move considering how Nigeria’s currency devaluation tanked their profits in 2023. Yet, the IHS is still walking a
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