As Safaricom seeks to conquer Ethiopia, its profits are taking a hit
Safaricom’s Ethiopia expansion seems to be coming at the expense of the mobile network operator’s profitability. In early October 2022, TechCabal reported that Kenya’s leading telco Safaricom officially launched its Ethiopian service following a ten-city pilot and a phased launch across the country. Today, the mobile network operator released its FY23 results, covering the period between March 2022 and March2023, which showed that its market entry into Ethiopia has yielded mixed results. While its revenue saw an increase of 4.3%, its Ethiopian operations affected profitability thanks to the costs associated with the market expansion. According to the results, Safaricom’s profits after income tax were down by -13.6%, with the group’s capital expenditure for the year surging by over 93%. The company’s Ethiopian operating costs stood at almost 20 billion Kenyan shillings (~$146 million), which represents over 27% of the group’s overall operating costs. While Safaricom’s Kenyan operations reported over 110 billion Kenyan shillings (~$804 million) in profits, Safaricom Ethiopia incurred over 21 billion Kenyan shillings (~$154 million) in losses. The company’s share price dropped by as much as 8.5% following the release of its latest results. At its lowest today, Safaricom shares traded at 14 Kenyan shillings per share on the Nairobi Stock Exchange, prices last seen in 2015. Despite weakening earnings and a persistent slide in share price, Safaricom board chair, Adil Khawaja, defended CEO Peter Ndegwa in the earnings call and swatted at rumours about a planned exit for the chief executive. State of Ethiopia operations According to Safaricom, the company now has 2 million, 1.4 million, and 700,000 voice, data and messaging customers respectively in the country since commencement of operations in October 2022. Overall, the number of customers onboarded stood at 3 million in 22 cities, a 22% penetration. Revenue from Ethiopian operations stood at 1.8 billion Kenyan shillings with service, voice, data, and messaging accounting for 600 million, 100 million, 400 million, and 3.9 million shillings respectively. A bet worth making? In the current macroeconomic environment, the majority of financial experts seem to support bottomline growth over topline growth, with profitability supposed to take precedence over revenue growth. It seems like Safaricom is taking a different approach and making what some might consider a risky bet. It is important to note that South Africa’s MTN Group pulled out of a second tender offer to purchase a telco licence in Ethiopia in 2021, citing an unwillingness to operate in conflict-ridden markets, a reference to conflict in the Tigray region. But the opportunity in the Ethiopian market is clear if costly. Together with its annual results, Safaricom also announced that it has secured the licence to operate mobile money services in the country at a cost of $150 million. It plans to launch the service this quarter. Until Safaricom’s entry, state-owned Ethio Telecom operated as a monopoly with 54 million subscribers in Ethiopia, Africa’s second most populous country with an estimated population of 118 million people. Now Safaricom’s wildly successful M-Pesa gets to compete with the Telebirr service from the government–backed mobile network operator. In June last year, Ethio-Telecom announced that it had on-boarded over 21 million customers to its mobile money offering, figures which show the immense potential of the service in Ethiopia. On the results, Safaricom puts the scaling of its Ethiopian operations, specifically its mobile money offering, as one of core FY24 focus. Only time will tell if the bet will be worth it.
Read MoreAndy Umana is improving the real estate experience with the blockchain
Andy Umana met with CrossFund’s chief editor, Luke Sheehan, to share a journey that has taken him from being a young student at the Ilorin State University, with an interest in environmental sustainability, to being the founder of a blockchain and real estate startup during the pandemic. Umana’s father was a civil servant and his mother a trader; Umana was “that guy ready to help out and try to see how to put food on the table” for his family. In his own words, he “has always sold”. As an adult, he manifested that, first, by starting a supply chain business for agricultural products (Yahgro), with a model based on finding food supply in northern Nigeria and selling in the south. Bottlenecks and a heavy presence of middlemen got in the mix, and then inflation hit, making what was a profitable company hard to scale. That’s when he discovered the blockchain. A peer-to-peer platform followed, and then he joined the team that created the first NFT collection in Nigeria. At that point, he figured there must be an untapped opportunity somewhere. He’s now founder and head of growth at Relsify, a fractional real estate platform for Africa, which was launched in 2021. Tell me how Relsify got started. I moved to Lagos during the pandemic. Somebody had a distressed property to sell and I could not afford it at the time. Yet I had a community because of my involvement with the crypto space. I thought, “With this community and technology, we can go in on this property and share the profit that will come out of it.”Even during the pandemic, real estate was growing faster than any other part of the economy. To bring people into the market who, like me, are not part of the “1% of the 1%”, new solutions were needed. I mean, it is obvious that the quality of people’s earnings is reducing day-by-day in Nigeria, but the cost of housing is going higher. To get access to the market and get a return requires innovation. The opportunity to get in on real estate investment is becoming slimmer and slimmer. The space is highly cash-based, and in Nigeria—and Africa as a whole—there is little infrastructure to allow people to access mortgages and become owners. So we thought of a way to scale a platform to allow people to take profit out of the real estate market that they are actively involved in. We did a proper market analysis and we found out that the best way to go about it is to build something that uses a transparent system that allows people to crowdfund and own bits and pieces of properties in highbrow areas. That’s the basic story of how Relsify was born—hopefully the start of a revolution in housing. We have made a lot of progress so far, in terms of regulatory compliance and definitely the building of the product. You say on your LinkedIn that you’re hiring. Can you tell me about how you’re expanding your team? Is it hard to find and keep talent?We are definitely facing this struggle. “Japa Syndrome” [the brain drain of young Nigerians] is real. A lot of talents are relocating to other countries. Two or three of our team members, just before product launch, left the country. To solve this, we’re trying to build a culture around solving pain points for talents, not just hiring people to get the job done. We are building a community around the product, so they feel that sense of belonging and ownership of it. We’re shaping minds to ensure they are genuinely concerned and interested in revolutionising the way people invest in real estate. That’s basically how we’re going about finding and retaining the right talent now. If you were in charge of Nigeria, what would you change?We are building a highly-regulated product; we have to work with the government of the day. One of the challenges that we face—and why we’ve not broken into the market with full strength from day one—is that we have had to wait and talk to the SEC in Nigeria to secure a provisional licence for us to carry out what we’re trying to do. Despite numerous challenges, we were able to follow up until they recently crafted one that suits us. But now we await approvals to pull it through. They are telling us that they are waiting for the new government to come through before they [the SEC] start issuing this licence, because they want to understand [the new government’s tone and approach to policy first]. The representatives of the new government were explaining to us during their campaign that they would be pro-blockchain; that Nigeria would no longer be among the crypto-agnostic countries. There are a lot of different things that the government has to do, with regard to accepting and working with innovation. I think that regulation can catch up with innovation, eventually, and we will see paths to market for the solutions and products we are building. I think the new government should create a better playing field for startups like mine. There are positive signs from the president-elect around the real estate and startup sectors, going back to his time as governor of Lagos state. Are you optimistic about getting enough funding in the near future?Surely. I’m super excited about what funding is looking like in Africa. We’ve seen big funding rounds and acquisitions in recent times. I think exciting times lie ahead when people see the work coming out of Africa. Mostly, I have raised from friends and family to start and build this business, and I’m trying to build up traction towards a proper seed round. In all, I’m really optimistic about where we are going. We are moving into using our skills for building, and the government is joining the race. When people see this from the outside world, they will definitely see the changes in our market and more funding will be accessible. We
Read MoreAfrica’s funding winter means smaller budgets for marketing campaigns
Marketing is a crucial part of a startup’s growth, but for every company the process is different. How do tech companies and startups approach marketing, especially in an economic downturn? Growth and marketing have had a significant impact on the startup boom in Africa. While there are critical keys to a startup’s success like access to funding and product-market fit, marketing is also a strong area and can be seen in the way that startups and companies across the continent heavily invest in marketing and advertising. We’ve seen startups launch campaigns with celebrities and sponsor major reality shows like Big Brother in a bid to reach a wider audience. In 2021, startups like Kuda spent over $1 million on marketing efforts to deepen their market penetration. Opeyemi Odusola led marketing in Nigeria for accessories company, Oraimo. One of the things he enjoyed the most about marketing with Oraimo was the fact that he wasn’t constrained by budgets. At Oraimo, he had the liberty to experiment with various ideas and collaborations, with his favourite being the campaign they created for the Freepods 3. It involved collaborating with Grammy-award-winning producer Telz and other major artistes. “We wanted an ad that showed our users that we listened to them and we understood them. Being an artiste myself, I also wanted something that resonated with music-loving users and we felt like bringing a couple of artistes together to talk about their relationship with music would be great,” he shared. For Ebuka who works in marketing for Piggyvest, an interesting metric that he uses to judge the success of ad campaigns is how well he is able to do with a small budget. Although the team at Piggyvest has a larger budget to execute with— unlike his previous workplace —, he shares that paying attention to budgets is a critical part of a campaign’s success. “When I find myself going above the budget, it means that I have to go and tweak something. Either your content is not good enough, your creative direction is not the right one or your landing page experience is incomplete. There has to be a reason why your ad is not getting the desired results and it’s up to you to fix it,” Ebuka stated. Ads are beyond money to Ebuka, who believes that while bigger budgets can help you execute bigger ideas, they don’t always translate to better results. “It’s not just about having money, it’s very difficult to get people’s attention online these days and your ads have to resonate with your audience to work,” he shared. View this post on Instagram A post shared by Piggyvest (@piggybankng) Navigating marketing in a downturn Marketing Specialist Ebunoluwa Ade-Taiwo shares the same sentiments with Ebuka on marketing going beyond money. Ade-Taiwo, who works at Quidax— a startup that has had to lay off 20% of its workforce due to the downturn—, shares that there are a lot of ways to be creative when you don’t have access to a large budget. 2023 has seen a decline in startup funding across the continent, and a byproduct of this is that startups are being more prudent with resources which extend to marketing budgets. “Companies are utilising more creative, cost-effective ways to reach potential users and drive growth. Unlike previous years when we could easily sponsor big events and sign celebrities as ambassadors; we now try to explore other options like using your employees as ambassadors and tasking them to help promote the company. We also do a whole lot more digital and content marketing now, as these are cheaper alternatives.” For fintechs, Ade-Taiwo believes that marketing is a lot more complex due to the trust factor. “You need to build trust and credibility if you’re asking people to trust you with their money. In Nigeria today, before somebody can part with as little as ₦5,000, they have to trust you, and so you need to pay extra attention to the kind of ads you are putting out and what your reputation is,” he noted. Despite not having a large budget, the Quidax team is using their social media to tell stories and one of Ade-Taiwo’s favourite ad campaigns was one for International Women’s Day titled “How Qbabes are saving smarter.” For that campaign, they made a compilation of stories from women on how they were making smarter financial decisions. However, she wished they had a bigger budget for the campaign to do better than it did. View this post on Instagram A post shared by Quidax (@quidaxglobal) Nigeria’s tech ecosystem has witnessed rapid growth over the years and marketing has been a fundamental part of it. A huge part of marketing, however, is budgets and although bigger budgets are not always markers of success for campaigns, companies with bigger budgets typically have more reach as we’ve seen in the case of companies like OPay and Kuda, among others. As funding for the Nigerian tech ecosystem falls — and consequently the marketing budgets, will the growth in the coming years be slower, or will smaller companies find a way to make up for smaller budgets?
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Check 2023 NECO result online easily
The National Examinations Council (NECO) is a Nigerian examination body that conducts the Senior Secondary Certificate Examination (SSCE) for students in their final year of secondary school. After taking the NECO exams, students can check their results online, which is a convenient and easy process like checking your waec results too. In this article, we will provide a step-by-step guide on how to check your 2023 NECO result online. Step 1: Obtain your NECO Result Checking Token Before you can check your 2023 NECO result online, you will need to obtain a NECO Result Checking Token. This token serves as a unique code that enables you to check your result online. You can obtain a Result Checking Token from any NECO office, NECO portal or an authorised online dealer. You will need to provide your exam registration number and a small fee to get the token. Step 2: Visit the NECO result checking website Once you have obtained your Result Checking Token, you can proceed to the NECO result checking website at https://results.neco.gov.ng/. On the page, you’ll find 4 fields needing you to fill them. They include “Examination Year”, “Examination Type”, “Token”, and “Registration Number”. Step 3: Select the Exam Type Choose the appropriate exam type from the drop-down list. For instance, if you took your NECO with the secondary school you finished from, you’re picking “NECO internal” exams. Step 4: Select the Exam Year After selecting the exam type, the next step to check your NECO result is to choose the exam year. You can choose any year from 2000 to the current year. Step 5: Enter your Result Checking Token and Exam Registration Number to check your NECO results In the next step, enter your Result Checking Token and Exam Registration Number in the spaces provided. Ensure that you enter the correct details, including your examination number and year of examination. Step 6: Click on the “Check Result” to see NECO scores After entering your details, click on the “Check Result” button to proceed to see your NECO scores. If you have entered the correct details, your result will be displayed on the screen. You can print out your result or save it for future reference. And that’s it about how to check your NECO results online. Final thoughts on how to check NECO results Checking your NECO result online is a seamless process with the above steps. But should you face any difficulty, ensure to reach out to the NECO support line – support@neco.gov.ng. Good luck!
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What African founders think about the recent funding downturn
Funding for African startups has waned in recent months, with 2023 being one of the slowest years since the pandemic for deals both in volume and amount. Founders tell TechCabal what they think about the downturn. The heady days when the African (read as Nigeria, Egypt, Kenya, and South Africa) tech ecosystem announced funding deals every week now seem like a distant past. Today, African startups are faced with a new reality where investor appetite has dropped. Some founders told TechCabal that in response to this, there has been a shift towards forgoing venture capital and instead focusing on attaining profitability. They also shared that other steps such as adjusting valuations, pivoting, and bootstrapping have been resourceful ways of navigating what has been a difficult period to raise capital. According to data from The Big Deal, African startups have raised $536 million in 2023. For context, African startups had raised over $950 million by April last year, representing a 68% decline in 2023. Adjusting valuations Considering the waning investor appetite, it is now highly recommended that founders approach investors with lower valuations for their startups. Bashir Aminu, the founder of Coinprofile, a YC-backed crypto startup, shares this opinion. “Companies might want to think about adjusting their valuations to better match the current downturn.” Aminu says this could help startups connect with investors and get funding more easily. “A more down-to-earth valuation can show investors that a company is being realistic and willing to adapt,” he added. Axel Peyriere, an angel investor and the founder of AUTO24.Africa, an Abidjan-based startup, told TechCabal that he has noticed “more humility in founders’ mindsets”. He shared that startups in the big African markets are reducing their valuations. Peter Oriaifo, a partner at Oui Capital, a venture capital firm, agrees with Aminu. He told TechCabal that startups “need to compromise on valuations”. Aminu, however, added a note of caution for startup founders: “Of course, we still need to be careful not to give away too much control of a company in the process,” he said. Peyriere added that the current funding climate will allow the ecosystem to mature faster and become more trustworthy. “Founders will [have to] rely more on clear metrics, economics, and KPIs. It’s not by how much you raise but by what you do with the money that you raise.” He added, “this will bring back trust and transparency with investors in general.” Can acquisitions and pivots save companies? Aminu said that the funding downturn might make things a bit tougher for companies trying to raise funds. He added that “startups might need to focus on making money and using their resources wisely, which could lead to stronger businesses in the long run. But it could also slow down growth and innovation for a bit. Plus, we might see more companies joining forces.” Romain Poirot-Lellig, the founder of Kwik, a Lagos-based logistics startup, told TechCabal that the effect of the funding downturn on startups could see an increase in acquisitions. “So what we can expect is that startups that [have managed to scale up reasonably] are going to play a leading role in their verticals. They’re going to take about 20 of the startups that have not been able to scale up but may present some interest in terms of technology, market share, and staff,” he said. Acquisitions and pivots have been a significant theme this year. Fluidcoins, Instadeep, Qualified, and AutoTager are some of the acquisitions that have happened this year. Some startups are also pivoting their business model. Treepz, a mobility startup with a pan-African presence, recently pivoted its business model to a car-sharing marketplace from a ride-hailing company that allowed users to rent buses, SUVs, and trucks. Johnny Enagwolor, a co-founder of Treepz, told TechCabal that his company pivoted to focus on the best margins of profit. “Eventually, we took a hard look at the business to find out what model was giving us the best margins and could scale better. Then we decided to take a full pivot toward car-sharing,” he said. Samuel Eze, the founder of OurPass, a fintech that recently pivoted from a one-click checkout to business banking, gave the same reasons for his company’s pivot. He told TechCabal that “when we decided to start scaling the product, it was already post-COVID, and the dynamics of the market had changed. [A one-click checkout solution] didn’t matter to businesses anymore.” He added that the company already has a path to profitability with its new offering. A focus on due diligence Peyriere told TechCabal that he hoped the funding downturn could help shine a brighter light on corporate governance practices for startups. In agreement, Yunus Ibrahim, an analyst at Future Africa, a venture capital firm, told TechCabal that for investors, the downturn meant an uptick in the intensity of due diligence processes and valuation deliberations. “We are seeing more VCs conduct extensive due diligence to mitigate investment risks and increase the likelihood of portfolio companies returning the fund. Also, VCs are taking a more meticulous approach to valuations by negotiating better terms with founders and paying closer attention to unit economics and fundamentals,” Ibrahim said. Yunus anticipates that in the long run, VC firms will likely reduce the number of companies they back while increasing ticket prices. Based on their convictions, some VCs may even prioritise specific sectors, he says. Eghosa Omoigui, general partner at EchoVC, a VC firm, described a situation where VC firms now intentionally drag out the investment process by sending money in tranches and paying closer attention to the startups. He added that some VCs are also divesting themselves of some portfolio companies as they seek to keep tabs on the promising ones. “All of this points to a trying market putting founders and investors to the test. But the interesting thing is this could also be the best time for VCs to invest. There are great deals on the table at better terms, and founders are swifter to take advice,” he said.
Read MoreSafaricom Ethiopia gets mobile money licence 7 months after Ethiopia entry
Ethiopia’s mobile money market is heating up as Safaricom Ethiopia secures a mobile money licence from the National Bank of Ethiopia. Safaricom looks to replicate its Kenyan success as Telebirr is finally facing the competition it dreaded. In early October 2022, TechCabal reported that Kenya’s leading telco Safaricom officially launched its Ethiopian service following a ten-city pilot and a phased launch across the country. Now it has received permission (officially termed “payment instrument issuer licence”) from the central government to roll out M-Pesa in Ethiopia. At the elaborate ceremony to celebrate the launch of Safaricom Ethiopia last year, Ethiopia’s minister of finance, Ahmed Shide, announced that his government had awarded Safaricom permission to roll out M-Pesa, its widely successful mobile money product, in Ethiopia. The announcement followed President Ruto’s speech where he expressed confidence that Ethiopia would grant Safaricom’s mobile money licence request in a deal that was reportedly finalised by President Ruto and Ethiopia’s Prime Minister Abiy Ahmed in Addis Ababa. But it took little over eight months for the actual licence to be issued. “The issuance of the mobile money licence reflects the NBE’s on-going objective of fostering innovation and financial inclusion in the Ethiopian market,” part of the statement from the National Bank of Ethiopia, Ethiopia’s central bank read. Ethiopia gets serious about opening up Prior to this licensing, talks about awarding mobile money licences were slow-walked by Ethiopia’s bureaucracy which sought to protect the government–majority-owned Ethio-Telecom and its then-recently launched mobile money service, Telebirr. Eventually in April 2022, Ethiopia’s central bank announced a draft bill which, upon being made law, permitted foreign–owned telecom operators like Safaricom to launch mobile money services. In December 2020, the Ethiopian government invited telecom companies to bid for two licences to compete against Ethio Telecom. Only two consortia placed bids. One from South Africa’s MTN Group in partnership with China’s Silk Road Fund. And the second was from the Global Partnership for Ethiopia Consortium, led by Kenya’s Safaricom and including Vodafone, Vodacom, CDC Group (now British International Investments and Japan’s Sumimoto. The Safaricom-led consortium won after the government rejected the MTN Group’s bid. MTN refused to participate in a second tender following this loss to Safaricom. Until Safaricom’s entry, state-owned Ethio Telecom operated as a monopoly with 54 million subscribers in Ethiopia, Africa’s second most populous country with an estimated population of 118 million people. Now Safaricom’s near monopoly M-Pesa gets to compete with the Telebirr service from government–backed Ethio-Telecom. It is worth noting, however, that the Ethiopian government is looking to sell 45% of Ethio-Telecom.
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How to check 2023 JAMB admission status online
One of the most important things for JAMB candidates is to check their admission status after writing the UTME (Unified Tertiary Matriculation Examination) and Post-UTME exams. Here are the steps to follow to check your JAMB admission status. Step 1: Visit the JAMB website The first step to check your UTME admission status is to visit their website at https://www.jamb.gov.ng/Efacility. Once you have accessed your portal, navigate to the top of the page. Step 2: Select your examination year At the top, you’ll be able to select the year of the examination you took. Ensure that you select the correct year, which is the year you wrote your UTME. Then click “Check Admission Status”. Step 3: Enter your JAMB registration number to check JAMB admission status After clicking on the “Check Admission Status” option, you will be required to enter your UTME registration number. Ensure that you enter your registration number correctly to avoid any errors. Step 4: Click on “Check Admission Status” to check JAMB admission status After entering your JAMB registration number and selecting your examination year, click on the “Check Admission Status” button. This will display your UTME admission status. Step 5: Accept or reject admission offer If you have been offered admission, you will see a message that says “Congratulations! You have been offered admission.” You will also be provided with details of the institution you have been admitted to and the course you have been admitted to study. At this point, you have the option to either accept or reject the admission offer. If you choose to accept the offer, you will be required to proceed to the institution to complete the admission process. If you have not been offered admission, you will see a message that says “Sorry, no admission is given yet.” This means that you have not been offered admission yet, and you should keep checking the website for updates. Step 6: Check admission status with JAMB CAPS In addition to checking your UTME admission status, it is also important to check the JAMB Central Admission Processing System (CAPS) portal. This portal provides more detailed information about your admission status, such as whether you have been recommended for admission, whether you have been admitted, or whether your admission is still in progress. To check your JAMB CAPS, visit the JAMB website and click on the “CAPS” option under the “Admissions” tab. Please ensure your Chrome browser is on desktop view before trying to access CAPS. In fact, if possible, have it on desktop mode from the onset. Enter your JAMB registration number, select your examination year, and click on “Access my CAPS.” This will display your JAMB CAPS dashboard. Here, you can view your admission status, accept or reject admission offers, and view details of the institution and course you have been admitted to study. Last thoughts on how to check JAMB admission status Checking your UTME admission status is a crucial step in the admission process. By following the steps outlined above, you can easily check this status and take the necessary steps to accept or reject the admission offer. Remember to keep checking the website and JAMB CAPS portal for updates, as admission statuses can change at any time. Meanwhile, are you having issues with checking your JAMB results? These steps can help. Good luck with your admission process!
Read MoreNigeria’s cash crunch winners show that distribution is a moat
A policy driven cash crunch produced winners in OPay and Palmpay. What lessons can other neobanks learn from the Chinese-backed duo? Despite the controversial nature of Nigeria’s recent currency redesign, it produced a few fintech winners like the Chinese-backed startups, OPay and Palmpay. OPay, for instance, now claims to have 30 million registered users. Moniepoint—formerly TeamApt—also saw its transactions rise. It claimed to have processed about $43 billion in transactions in the first three months of the year. Similarly, Kuda bank recorded an increase in its volume of transactions during this period, according to the company’s VP, Product Innovation & Strategy, Nosakhare Oyegun. “March was an outstanding month for us in terms of payments across cashless channels. We’ve seen significant growth that we can easily attribute to the cash scarcity, with observed consumer behaviour confirming a shift to cashless payments,” Oyegun said in an email response to TechCabal, although he declined to share transaction or user numbers. Kuda saw growth during the cash crunch, but so did Nigerian banks. The difference is that OPay and Palmpay are now at the last mile. The previously underserved or unbanked now use these platforms and trust them and all it comes down to the distribution that allowed this happen. Distribution is everything For Ibrahim Toyeeb Ibitade, CEO of Leatherback, a cross-border payments platform, both OPay and Palmpay have been intentional about building solutions that don’t rely on internet connectivity or online platforms like NIBSS Instant Payments (NIP). “What they [OPay and Palmpay] have been able to do is letting customers create banking portals with their mobile numbers and leveraging offline-based solutions that allow ease in carrying out transactions,” he told TechCabal over a call. Ayoola Kosoko, a fintech expert, also attributed Opay and Palmpay’s win to their solid agent networks— which he likened to brick-and-mortar buildings of traditional banks—who were physically present to aid financial services for their customers. “The agents were already in existence, it was just more like increased banking transactions for them, as it were,” he said. “Some of the other neobanks don’t even have an agent network, no physical presence.” Opportunity meets preparedness “There would never be a better time for you to be ready,” Kosoko says as he attributes OPay and Palmpay’s win to their preparedness before the cash crunch began. “OPay was able to optimise its infrastructure to accommodate as much traffic.” He believes that other neobanks’ infrastructure had not really been put to the test until people started turning to them as alternatives. He adds that the neobanks should be able to handle the punches thrown at them during tough periods of increased demand. “They [neobanks] need to ensure that their infrastructure and platforms are optimised enough to take as many hits as possible when it comes to an increased volume of transactions. So they don’t have a situation where transactions are failing, transactions are hanging, reversals are happening for some people and not happening for others,” he said. Charles Odogwu, a digital payment expert, shares a similar view, citing that OPpay and Palmpay’s payment solutions being excellent and transactions carried out on these platforms were “almost instant”. He added that other neobanks should “try not to be a traditional bank in the digital space”. What does this mean for financial inclusion in Nigeria? Per KPMG’s financial inclusion report [pdf], more than one in three Nigerian adults are financially excluded – with no access to useful, relevant, and affordable formal financial services such as payment, savings, and credit. According to a World Bank report, Nigeria is among the seven countries in the world with half of the world’s unbanked. For Odogwu, the cash crunch has had a positive impact on financial inclusion in Nigeria. “Before the cash crunch, a lot of vendors and merchants don’t want to hear anything about transfers, it’s either POS or cash. The number of transfers now is even more than POS transactions, because the vendors trust the transfers. And a lot of these transfers come from OPay and Palmpay,” he said. Ibitade, however, argues that there is still a long way to go in achieving financial inclusion in Nigeria, albeit it comes with a good side. “This situation means a lot of opportunities for other startups to come up with unique solutions that can make payments easier for everyone. Reorientating people and building trust are most important. The question is, “How do people know that their money won’t be stolen from that solution you’ve created?” he quipped. Post-cash crunch, who are Nigerians trusting with their transactions? Now that cash is back in circulation, who are Nigerians turning to for transactions? Misturat Arike, a trader in the Ikorodu area of Lagos, says she has become accustomed to receiving payments from customers via her OPay account—which she primarily uses for her business. But like the other traders who spoke to TechCabal, she expressed concerns about the digital bank’s lack of physical branches. “While it [OPay] is good for us traders because it is fast, my problem is that we don’t know where to go if any issue arises. I heard they have an office in Ikeja but I don’t even know where the place is, unlike regular banks that have branches everywhere,” she said. Alabi Balogun, who manages a grocery shop in Surulere, echoes the same sentiment, adding that he now uses his OPay and traditional bank accounts at the same time. “Trust is the main thing here. As someone who was once duped by a fake digital platform, I have been struggling to trust them again,” he told TechCabal.
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👨🏿🚀TechCabal Daily – Fintechs fight fraud
Lire en français Read this email in French. 11 MAY, 2023 IN PARTNERSHIP WITH Happy pre-Friday Chief Twit Elon Musk is bringing voice and video chat to Twitter. Yesterday, the CEO announced that the platform will, in coming months, allow people to connect over voice and video in the DMs. Soon, users won’t have to worry about getting ratioed over several days when they can simply get ratioed live and move on. In today’s edition Fintechs fight chargebacks with decline fees Airtel Uganda launches API MTN wants to sell its West African assets NBC can no longer fine stations The World Wide Web3 Report: The State of Tech in Africa Opportunities FINTECHS FIGHT FRAUD In April, Nigerian fintechs like Payday and Eversend disabled their virtual dollar cards. The reason? Well, service provider Mastercard isn’t too happy with the increase in chargebacks in Nigeria. This comes about 10 months after several other fintechs, including Flutterwave’s Barter, also shut down their virtual USD cards. At the time, the problem was with Union54, a Zambian startup with an API that lets other fintechs issue virtual cards. In March 2023, Union54 revealed to TechCrunch that it had shut down its API because it had detected over $1.2 billion worth of attempted chargeback fraud. Side bar: Chargeback is where customers contact banks for refunds for items they claim they didn’t buy, transactions that failed, or transactions they didn’t make. Several bad agents use chargebacks to defraud financial companies. Customers will pay: In the past, many African fintechs have borne the cost of chargebacks instead of charging the users, like many in other regions. Since Mastercard’s latest hassle, though, some fintechs are now instituting decline fees to reduce chargeback fraud. Chipper Cash, for example, recently introduced a ₦500 ($1.09) fee for transactions declined due to insufficient funds while Bitmob will charge $0.5. Not everyone is happy: Since Chipper’s announcement, several users have taken to social media to express their displeasure with the new decline fees being adopted by fintechs, with many stating that all the new policy will deter is adoption of fintech apps and not fraud. MONIEPOINT RANKED 2ND FASTEST-GROWING AFRICAN COMPANY Moniepoint is Africa’s second-fastest growing company, as shown in FTs latest report. We also processed 1 billion transactions worth $43 billion in Q1 alone. Read all about it here. This is partner content. AIRTEL LAUNCHES ITS API IN UGANDA Airtel wants to cash in on the growing cashless economy in Uganda. According to Techweez, Airtel Uganda officially launched its Open Application Programming Interface (API) for its payment products in Uganda, yesterday. In March last year, Monitor reported that the value of the internet and mobile banking rose by 82.8% and 146.1%, respectively, while mobile money rose by 46.5% to UGX145.6 trillion ($31.9 billion) Side bar: An API—application programming interface—is an intermediary between two software applications that allows them to talk to each other. Merchants will be able to use Airtel Money as a payment or remittance option on apps that have integrated the API. Airtel is not the only one: There are other telcos that are also in the API business. This includes MTN, which has previously launched an API marketplace called Chenosis. It offers a range of APIs for telecommunications, e-health, e-government, Internet of Things, fintech, e-commerce, identity and authentication, payments and collections, and locations. Well, if you are a developer or business interested in Airtel’s API, you can access it here. MTN IN TALKS TO SELL WEST AFRICAN ASSETS Telecom MTN might be reducing its portfolio size. According to TechCentral, the company is in talks to sell some of its West African assets to Axian Group, a pan-African investor in telecoms. Both companies are reportedly negotiating on MTN’s assets in Liberia, Guinea-Bissau, and Guinea-Conakry. The deal is yet to be finalised and sources close to the case report that it’s still too early to conclude if it will go through. Zoom out: It’s not certain what MTN is planning in each of these countries. In 2021, though, it ignited an exit from Afghanistan: in a bid to simplify its structure, it exited Afghanistan by selling off its assets there for $35 million. ATTEND THE AFRICA SOFT POWER SUMMIT The Africa Soft Power Summit—the premier convening for Africa’s creative and tech industries, as well as women’s leadership, hosted in Africa but focused on growth for the whole world—is returning to Kigali, Rwanda from May 23–27! Learn more. This is partner content. NBC LOSES RIGHT TO FINE STATIONS The Nigerian Broadcast Commission (NBC) is in a bit of a pickle. Yesterday, a Nigerian Federal High Court ruled that the NBC doesn’t actually have the power to punish broadcast stations with sanctions. For years, the NBC has been slapping hefty fines on broadcast stations left and right, based on the Nigeria Broadcasting Code, a set of subsidiary laws. On March 1, 2019, they imposed a ₦500,000 ($1,086) fine on 45 broadcast stations, (across TV and radio). According to the NBC, they violated the broadcasting codes during the 2019 general election. However, the Incorporated Trustees of Media Rights Agenda took the NBC to court, demanding that the fine be invalidated. They argued that the fine was a violation of natural justice. Was it truly a violation? In a dramatic twist, Justice James Omotosho, the judge, denounced the actions of the National Broadcasting Commission (NBC) as a display of oppressive and excessive power. He went even further, asserting that the NBC Code, which grants the commission the authority to impose sanctions, directly conflicted with Section 6 of the Constitution. As the judge emphasised, this section vests judicial power solely in the court of law. Not stopping there, Omotosho made it clear that the NBC, being neither the police nor a judicial body, had no business launching investigations and doling out criminal penalties to the accused. So what happens now? We can’t speak for the NBC, but the judge has declared that none of the 45 sanctioned media houses need to pay a dime of the
Read MoreSA’s fintech ecosystem has potential. What role can an association play?
An interview with Darren Franks, interim CEO of the Fintech Association of South Africa. Over the course of the last few months, a couple of interesting developments have been happening in the South Africa fintech ecosystem. Payshap was launched, purporting to revolutionise real time payments in South Africa. The Financial Sector Conduct Authority (FSCA) also decided to recognise crypto assets as financial instruments, paving the way for their regulation. Other developments in the sector include the reserve bank ordering banks to be more friendly to crypto asset service providers as well as mobile network providers like MTN, doubling down on their fintech value propositions. Amidst all this activity, TechCabal caught up with Darren Franks, interim CEO of the recently formed Fintech Association of South Africa, to get a more in depth idea on not only the mandate of the association but also the fintech landscape in South Africa. TechCabal: Please share more about the Fintech Association of South Africa and its mandate Darren Franks: The association serves to engage with the regulators and other associations within the South Africa fintech ecosystem. These include the payments Association, the Banking Association, the Reserve Bank, FSCA, and have a conversation about the state of fintech in South Africa. We are a non-profit organisation and officially opened calls for membership about five weeks ago and so far, the response has been very positive. We have onboarded a couple of fintech startups, as well as banks. TC: What was the reason for setting up the association? DF: I think there’s a couple. One is that fintech is quite a broad category. You have payments, lending, cryptocurrency, and others, and the consensus was that there wasn’t a representation or a central voice for all of these entities together. I mean we had the banking association, which obviously represents the banks in South Africa, the payments association, which again, represents the payment players, and there was really this void of representation which we felt had to be filled. When we spoke to the reserve bank, one of the biggest challenges that they stated was that they get lobbied and get asked questions all the time from fintechs either domestically or those coming into South Africa, and they simply didn’t have the people power to get back to everyone and answer these questions. So, from a lobbying and advocacy perspective, that’s the value that the association will be adding, creating one unified voice of the sector. TC: Relative to the continent’s major hubs, fintech in South Africa has been falling behind over the years, especially with regard to attracting venture capital. What role will the association play in remedying this situation? DF: Unfortunately in recent months, the downturn has been due to global macroeconomic conditions which no one in the ecosystem has control over. But what we can certainly do as an association and what we’ve been working hard on, is promoting South Africa’s fintech scene internationally. This can be through helping startups secure investors and scaling beyond SA’s borders. I was in London last week, meeting with a number of different associations and stakeholders within the fintech ecosystem, and talking about what’s happening in South Africa. Even despite the downturn, we are still seeing some South African startups like Lulalend raising some pretty significant rounds so that’s a welcome development. All in all, our role is to ensure that viable businesses who demonstrate a clear path to profitability are able to secure decent funding rounds which will put some wind in their sails. TC: In terms of what’s happening in the fintech scene in South Africa at the moment, what are the standout developments to look out for? DF: I think that there is a lot that’s happening behind the scenes with things like open banking, real-time payments, and regulations around crypto. Over the next few months, I think we’ll see quite a bit of consolidation in the market through M&A activity. Also, I think we will see a lot of activity around challenger banks like neobanks like TymeBank and Discovery who have done exceptionally well. With the traditional banks or the incumbent bank, we’re also seeing a big move there towards digitising their processes banks, not just from a technology perspective, but really, from a mindset perspective. We are finding that a number of the key banks here in South Africa are developing API platforms to effectively offer banking as a service which is a welcome development. TC: What would you say are the main challenges facing fintech in South Africa at the moment? DF: I think for those pushing boundaries when it comes to either alternative payment methods, or it comes to different sorts of KYC or AML requirements, regulation is a bit of a challenge. This does not necessarily prove that regulators are throttling innovation because, in whatever market you are, if you’re trying to disrupt, the regulator has to ensure that you are not doing so at the expense of the consumer. I think the second area that is a bit of a challenge would be talent. Now, there’s a lot of extremely talented people in South Africa but what we’ve seen over the last few years is that big tech companies setting up shop here tend sucking up a lot of the talent, which means that there’s a lot of inflation when it comes to salaries in South Africa and that’s sometimes very difficult for local fintechs. The other challenge, which I think is starting to become perhaps slightly less so, is around that sort of integration where fintechs can work with banks without both parties seeing each other as competitors. The reason I’m saying we are starting to see less of this is because I think the adoption and the integration of banks within fintechs is really starting to become more positive, which is a good thing for the whole sector. Thirdly, perhaps this is more of an opportunity than a challenge, is the rise of mobile network operators like
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