Realising regional expansion for African startups
Next Wave: A founder’s personal assets as collateral for failure: Lessons from China’s startup ecosystem. Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner January 19, 2025 The Pan-African dream: Realising regional expansion for African startups Image | Pixbay African founders have often been criticised for their rapid pan-African expansion drives. Understandably, the African continent holds undeniable allure for entrepreneurs with a balance of lofty ambitions and business acumen to serve marginalised groups. With over 1.4 billion people and an estimated combined GDP of $3.1 trillion, the African continent presents boundless opportunities for indigenous startups. Drawing from recent successes and failures, a deeper look at local startups’ pan-African expansion reveals that a one-size-fits-all model might not always be the best for founders and VCs looking to expand across borders. From Nairobi to Lagos, Cape Town to Cairo, the vision of a single African market under the African Free Trade Area (AfCFTA) has promised to lift the trade barriers and logistical hurdles. However, the reality of pan-African expansion for startups is still far more complex. A Pan-African dream Building scale and maintaining a lower burn rate can coexist in a symbiotic relationship. Every founder aspires to scale their business, yet many—along with their investors—fail to evaluate the broader impact of every strategic decision. The consequences are often severe, leading to layoffs and shutdowns after ambitious attempts to scale. For tech startups in the logistics, fintech, and e-commerce sectors, expansions can create the network effect needed to grow and unlock new revenue streams. Success stories like M-Pesa’s, Jumia’s, and Flutterwave’s inspire founders to embrace the pan-African dream, presenting cross-border expansion as a benchmark. The catch is that these examples are exceptions, not norms. The diversity of African markets, including cultural differences, a fragmented regulatory landscape, and varying levels of infrastructure, makes expanding across the continent daunting. Too often, the pan-African dream collides with harsh realities like regulatory challenges or different consumption behaviours. However, the challenges startups face in expansion drives offer valuable lessons to founders. In 2021, Twiga Foods, a Kenyan B2B agricultural produce platform, reversed its plan to expand into Nigeria. The startup struggled to replicate its centralised distribution model. It paused its pan-African ambition to focus on deepening its footprint in Kenya. Despite M-Pesa, Jumia, and Flutterwave’s success in their respective home markets, some regional markets have been a hard nut to crack. For instance, M-Pesa struggled to gain traction in South Africa due to the high penetration of card payments and a significant proportion of the population already being banked. Flutterwave has faced delays in securing licensing in Kenya, hindered by the absence of clear regulatory frameworks. Similarly, Jumia had to shut down its operations in Tanzania due to restrictive local laws. In most cases, the barriers are due to outdated regulations, like in Kenya where payment systems and banking laws do not recognise fintechs outside the traditional mobile money and financial institutions. M-Pesa’s success in the early days was tied to its ability to reach millions of unbanked Kenyans, especially in rural areas without physical banks. It enabled people to receive and send payments, bypassing traditional banking systems. For its part, Jumia’s achievements can be attributed to good market timing and adaptability to challenges. Jumia launched in 2012 when Africa’s e-commerce was in its infancy, giving it brand recognition that has helped it build customer trust. The company’s localised approach in its expansion has helped it set shop in about 10 African countries. Bureaucratic inefficiency and corruption in key institutions like parliament slow reforms. It permits political patronage where powerful individuals and companies influence law changes. Many reforms have also been tied to external conditions from multilateral lenders like the World Bank and the International Monetary Fund (IMF). While some reform recommendations open up sectors—like the current push from the IMF to regulate crypto—others are unpopular and face resistance from industry players. African founders are exploring mergers and acquisitions to skirt challenges hampering expansion like delays in licensing. Acquiring an existing player in the target market is proving to be a shorter route to expanding across the continent. In 2024, Nigerian fintech Rise acquired Kenya’s Hisa, giving it access to the market without licensing delays from the regulators. Moniepoint’s acquisition of Kopokopo also achieved the same goal. Harmonisation of laws could ease startups’ expansion headaches across Africa. Regional trade blocs like EAC, ECOWAS and SADC should adopt a unified regulation approach. For instance, as EAC works on a monetary and customs union, they should adopt a single licensing regime for startups and companies. Movement across Africa is still more expensive than on other continents. Increased investments in roads, rail and air transport could cut travel costs for talent and goods. In addition, massive investment in digital infrastructure like fibre optic cables is required to increase connectivity and bring down internet costs. Next Wave continues after this ad. Join millions of Nigerians earning 20% interest on their savings with zero risk. Trusted by 35 million users and 1.2 million businesses, PalmPay empowers your money to do more. Start saving today! Why one-size-fits-all doesn’t work Even with six regional trade blocs, each country on the continent has its regulatory frameworks, consumer behaviour, and infrastructure challenges. These complexities are often underestimated by startups, leading to costly missteps. Take Sendy and Copia, for example. Both Kenyan startups expanded across borders prematurely, before consolidating their presence in their home market. Copia, a B2C e-commerce platform, ventured into Uganda in 2022 while still grappling with order fulfilment issues in Kenya TechCabal. Such rushed expansions can stretch resources thin and jeopardise long-term growth, which is why it’s important to master the home market before venturing into new territories. Consumer spending habits, for instance, are one behaviour that startups often overlook. Southern African consumers have a higher spending power and prefer formal retail stores and e-commerce platforms. In East and Central Africa, informal markets play a bigger role. A strategy that works in Kenya may fail in Uganda or Ghana, and
Read MoreGlobacom CEO Ahmad Farroukh resigns after one month amid governance challenges
Ahmad Farroukh, who was appointed CEO of Nigerian telecom giant Globacom in October 2024, resigned after just one month in the role, multiple sources close to the matter confirmed. While Globacom has not issued an official statement or communicated the resignation internally, several industry insiders suggest the decision was linked to significant challenges within the company’s organisational structure. A mid-level manager at Globacom, speaking on the condition of anonymity, speculated Farroukh’s departure was tied to problems with the organisational setup. A top-level executive at the Nigerian Communications Commission (NCC) who asked not to be named confirmed Farroukh’s exit but declined to share specifics. Globacom did not respond to multiple requests for comments. Farroukh’s abrupt resignation highlights significant internal challenges at the company, which has long been criticised for its centralised decision-making process. According to a former Globacom executive, the company’s founder, Mike Adenuga, is key to most decisions within the company. Adenuga has managed the telecom giant alongside his other business interests, including oil and gas, financial services, and real estate, with minimal structural separation between his other ventures and Globacom’s operations. This approach has historically worked for the company but may have presented obstacles for Farroukh, whose experience at more structured organizations like MTN and Airtel might have led him to expect a different level of operational autonomy. Farroukh’s departure also comes when Globacom is facing heightened regulatory scrutiny. In late 2024, the NCC’s sector audit revealed that over 40 million subscribers were not properly registered with their National Identification Numbers (NIN), violating government regulations. This led to a significant loss of market share, with Globacom’s share of the Nigerian mobile market shrinking by approximately 60%, leaving it with just 12%. Globacom has also faced ongoing cybersecurity issues, including a high-profile hack in 2023 that exposed the personal data of millions of its subscribers. These issues may have created an environment where Farroukh’s leadership efforts could not make a meaningful impact quickly. “A CEO leaving in one month is unprecedented in the industry. The NCC can investigate the reason for his exit. The commission can seek an explanation from the CEO, who is not obligated to respond, or from the company because this is about corporate governance, which the NCC Act covers,” said Ayoola Oke, a former Special Adviser to the former Executive Vice-Chairman of NCC, Ernest Ndukwe. Globacom’s leadership void following Farroukh’s departure will raise questions about the company’s ability to navigate its ongoing internal challenges and regain its competitive edge. Without significant structural changes, it is unclear how Globacom can address the organizational weaknesses that led to Farroukh’s exit.
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TechCabal Daily – No shaking!
In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning Let’s dive right in. Tariff hikes have come to Nigeria A big step forward for payments in Kenya Kobo360 cut jobs in November 2024 Nigeria’s cloud players say they’re more than just pricing World Wide Web 3 Events Telecoms NCC approves 50% tariff hike for Nigerian telcos GIF Source: Tenor While the December holidays were in full swing, TechCabal’s Frank Eleanya reported that the proposal to raise Telco tariffs (a.k.a. the amount you pay for calls, texts and data) was a done deal. Here’s what Frank wrote at the time: “The Nigerian Communications Commission (NCC) will approve a long-pending proposal for telecom tariff hikes…in January 2025. This marks the end of over a decade of lobbying by telecom giants like MTN Nigeria, Airtel, and 9Mobile.” At the time, one person with direct knowledge of the talks shared that the conversations began in October 2024, with telcos asking for 100% increases. Reality was a little disappointing, with the NCC capping the increase at 50%. While it will still prove deeply unpopular, some will argue that telco prices should not be regulated in the first place. Companies in other sectors have raised (and continue to raise) prices in response to inflation, yet telcos have been forced to sit there and eat the losses. After billions in losses in 2023 and 2024, something had to give—50% to be precise. Will it be sufficient for the long term? That appears doubtful. But for now, the telcos get a bit of relief. Now imagine if you had bought telco shares when we broke the news in December (this is not financial advice!) Collect payments Fincra anytime anywhere Are you dealing with the complexities of collecting payments in NGN, GHS or KES? Fincra’s payment gateway makes it easy to accept payments via cards, bank transfers, virtual accounts and mobile money. Get started now. Fintech A big step forward for payments in Kenya Image: Reuters/Noor Khamis Last week, Safaricom, Kenya’s largest Telco, published a joint report with the Kenya Bankers Association (KBA) where it estimated that building a new fast payment system (FPS) could cost $200 million and require four years to complete. In that report, the telco argued that upgrading the Pesalink, which facilitates interbank transfers between 39 banks in Kenya, will save the Central Bank of Kenya (CBK) money compared to building the FPS. Following that report, Safaricom’s mobile money platform, M-Pesa is now set to join Pesalink. Pesalink’s current infrastructure doesn’t support mobile money platforms. As a result, sending money from M-Pesa to a bank account is more expensive than bank-to-bank transfers via Pesalink. Also, M-Pesa users cannot receive money from bank transfers, revealing the flaw in Kenya’s fragmented payment system. If M-Pesa joins Pesalink, it will make transfers between the mobile money platform and banks cheaper and seamless, helping the country achieve interoperability. The move will also usher in other Kenyan mobile money platforms like Airtel Money into the network. Importantly, M-Pesa’s proposal could be a strategic move to convince the CBK to upgrade Pesalink instead of building a new FPS. M-Pesa is a widely popular payment service for Kenyans, with users processing more than 61 million transactions daily. Compared to banks, 69% of Kenyan adults do not have bank accounts. This popularity will give fintech a vote of confidence and help fast-track its proposal as banks and other financial service players in the ecosystem see the advantages of onboarding M-Pesa. With M-Pesa as part of the network, a huge pool of Pesalink adopters will instantly be created. Companies Goldman Sachs-backed Kobo360 cut jobs in November as part of restructuring Image source: Kobo360 It feels like ancient history when technology-enabled logistics was the sexiest sector in Africa. Companies raised money hand over fist with the assumption that an Uber-type (on-demand) model could bring order to the chaos of haulage. Kobo360 was at the forefront of that charge, promising to match manufacturers and trading houses to truck owners. Yet, using technology to solve that problem was a real Gordian knot. Here’s Kobo360’s founder in a 2022 conversation: “How do you derisk a truck driver to a bank or financial institution? They don’t want to touch drivers.” “The banks wanted us to ensure we charge the financing costs before they could touch them. They wanted us to structure something where we provide the first loss tranche — that is, if a service isn’t completed, Kobo bears the first loss.” The understanding of the haulage business model remains in flux. And for Kobo360, that has meant leadership changes and in November 2024, some business restructuring. Here’s Ngozi Chukwu in a Monday news story: “Kobo360, a Nigerian truck-hailing startup backed by Goldman Sachs, implemented a company-wide layoff across its seven markets in November 2024. The job cuts followed the exit of immediate ex-CEO Cikü Mugambi who cited difficulty with fundraising as one of the reasons for her departure. In its largest market, Nigeria, Kobo360 cut at least 30 roles from its 50-person team, according to four employees affected by the layoffs. It is unclear how many roles were cut in other markets.” Read more here. What’s it like to work as an engineer at Paystack? Paystack’s engineering team builds simple, powerful tools to connect African businesses to customers. Learn more → Cloud Computing Nigeria’s cloud players say they’re more than just pricing Image Source: LitsLink Smaller competitors often feel the heat when major players expand in a market. But for Nigerian cloud providers, AWS’s decision to accept naira payments isn’t a game-changer. Last week, AWS announced it would now accept naira payments, signalling a potential shakeup in Nigeria’s $1.03 billion cloud market (projected for 2025). For startups earning mostly in naira, the move offers relief from dollar-denominated pricing, which has doubled cloud costs following a 2023 naira devaluation. Local cloud providers, however, say the move isn’t a game changer. Their naira-based billing—designed to shield businesses from exchange rate volatility—has been their core pitch for
Read MoreNCC approves 50% tariff increase for Nigerian telcos
The Nigerian Communications Commission (NCC) has approved a 50% tariff increase for telecoms companies, the first such increase in the sector in almost eleven years. Despite quickening inflation, the NCC remained resolute on holding voice and data costs stable, but mounting losses in the sector after a naira devaluation forced the regulator’s hands. The telcos began speaking with regulators in October 2024, one telecom executive who asked not to be named discussing private conversations told TechCabal. The telcos asked for 100% tariff increases for voice and data at the time. The NCC was concerned that approving that increase would be deeply unpopular. The NCC claimed it wanted to strike a balance between protecting telecom consumers and ensuring the industry’s sustainability, including the thousands of indigenous vendors and suppliers who form a critical part of the telecommunications ecosystem. “The adjustment, capped at a maximum of 50 percent of current tariffs, though lower than the over 100 percent requested by some network operators, was arrived at taking into account ongoing industry reforms that will positively influence sustainability,” a statement from the NCC read. *This is a developing story.
Read MoreSafaricom’s M-Pesa to join Pesalink as Central Bank plans new payment system
Safaricom’s M-Pesa is set to join the Pesalink network, which could significantly reshape Kenya’s digital payments landscape. In a proposal submitted jointly with the Kenya Bankers Association (KBA) to the Central Bank of Kenya (CBK), Safaricom wants to integrate M-Pesa, Kenya’s largest mobile money platform, into the national interbank payment system, Pesalink, which already connects 39 banks across the country. This integration is expected to break down the barriers between mobile wallets and traditional bank accounts, creating a more unified payments ecosystem in Kenya. It could make transferring money between mobile wallets and bank accounts faster and more seamless for millions of Kenyans, bridging the gap between mobile money and the formal banking sector. Currently, Pesalink, operated by Integrated Payment Services Limited (IPSL), facilitates instant bank-to-bank transfers but does not include mobile money services like M-Pesa. By joining the network, Safaricom would allow M-Pesa users to transact with any bank without the need for separate agreements between banks and mobile money providers. It aligns with the CBK’s broader goal of streamlining payments and fostering financial inclusion through a new Fast Payment System (FPS), which aims to allow smooth cross-platform transactions. “The majority of the industry is already connected to the IPSL switch with Safaricom M-Pesa set to join the switch soon,” Safaricom and KBA said in their report. The announcement signals the push towards a more integrated payments infrastructure supporting a wider range of financial products and services across Kenya. Safaricom did not immediately respond to requests for comments. The integration of M-Pesa into the Pesalink network could also be a key component of the CBK’s planned FPS initiative, which will allow instant, low-cost transactions between various financial institutions, including commercial banks, SACCOs (Savings and Credit Cooperative Organizations), and microfinance institutions. One key benefit of this integration is the potential to reduce transaction costs. Sending money via M-Pesa costs significantly more than transferring funds through traditional banks. For example, sending KES 10,000 (USD $77.22) via M-Pesa costs approximately KES 100 (USD $0.77), while bank transfers via Pesalink can be significantly cheaper, with charges ranging from KES 30 (USD $0.23) to KES 50 (USD $0.39). “Integrating M-Pesa with PesaLink would create a more seamless and interconnected financial ecosystem. This would allow users to easily move money between mobile wallets and bank accounts, breaking down the current silos between these systems,” said Ali Hussein Kassim, Association of FinTechs in Kenya chairman. An integrated payments network could make it easier for small businesses to accept payments across different platforms without operating multiple wallets, a huge step forward for payments in Kenya.
Read MoreGoldman Sachs-backed Kobo360 cut jobs in November as part of restructuring
Kobo360, a Nigerian truck-hailing startup backed by Goldman Sachs, implemented a company-wide layoff across its seven markets in November 2024. The job cuts followed the exit of immediate ex-CEO Cikü Mugambi who cited difficulty with fundraising as one of the reasons for her departure. In its largest market, Nigeria, Kobo360 cut at least 30 roles from its 50-person team, according to four employees affected by the layoffs. It is unclear how many roles were cut in other markets. Employees were sent an email containing a “separation agreement” in November 2024, which many interpreted as the company avoiding calling the event a layoff, said two former employees who declined to be named because of confidentiality clauses in those agreements. “Pension obligations dating back six months remain unpaid,” those people claimed. In an email to TechCabal, Kobo360 blamed the delay on a third-party HR company. “This matter is currently the subject of an active investigation at a federal law enforcement agency,” said a company spokesperson. The layoffs follow other leadership departures at Kobo360. At least three executives also resigned in November. One of those executives, Tosin Fadipe, who left to launch his startup, told TechCabal the timing of his exit was coincidental. Kobo360’s board is currently in the process of appointing new executives, a critical step in determining the company’s future trajectory. Kobo360 is no stranger to leadership changes or job cuts. In 2021, co-founder Ife Oyedele left to pursue other interests. Two years later, co-founder and ex-CEO Obi Ozor accepted a position as transportation commissioner in Enugu State. “We often joke that Kobo360 is a tsunami as you can lose your job in a shake-up at any time,” an ex-employee who declined to be named because of confidentiality clauses in his separation agreement told TechCabal. Another ex-employee who left the company in 2021 also described the company as a ‘tsunami’ on Glassdoor, a site where employees can publish anonymous reviews about their workplaces. Beyond the layoffs and exits, Kobo360 is restructuring its business, leading to a slowdown. Kobo360 paused most logistics operations except for a handful of clients to which it provides fleet management services. “We’re just keeping the lights on, handling tasks like invoicing and reconciling past trips,” an employee who asked not to be named discussing private company issues told TechCabal. “Kobo360’s internal restructuring, financial arrangements, and personnel changes are strictly confidential,” the company said in an email to TechCabal, declining to comment on layoffs or restructuring plans. A smaller workforce will reduce operating costs and extend the runway for a company which last raised $48 million in a Series B round in 2021. Raising money may be an uphill battle for the startup as investor interest in the sector is shrinking in Nigeria. Only three logistics startups raised venture capital in 2024—-Renda, Fez Delivery, and Cargo Plus, and they raised $2.1 million between them—-$200,000 raised by Fez Delivery was a grant. Eghosa Omoghui of EchoVC, an early-stage VC firm, believes most of the founders backed so far lack the crucial market insight necessary for disruption and product market fit. “This is why giants [in their target market] like Dangote still invest in their trucking fleets,” he notes. Many B2B trucking startups have launched since 2018, promising to provide cost efficiency to cargo owners by increasing the visibility of trips and using well-vetted third-party truck drivers. However, these startups have ironically fallen prey to the very issues they aimed to solve, especially cargo theft which costs can cause liabilities running into hundreds of millions per trip.
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Piggyvest paid out ₦835 billion in 2024 as it crosses ₦2 trillion in total payouts
Piggyvest, a nine-year-old Nigerian savings platform, paid ₦835 billion to its customers and crossed 5 million in 2024. Since its launch in 2016, customers have withdrawn over ₦2 trillion, a fraction of the total deposits held by Piggyvest. “2024 was our most profitable year, one of the years we achieved the most growth, and our most focused year as a company,” said Somto Ifezue, the CEO and co-founder of Piggytech Global Limited, Piggyvest’s parent company. Piggytech also owns PocketApp, a consumer payments app that crossed ₦1 trillion in transaction volume in the same year. Across Piggyvest, Piggyvest business and Pocket App, Piggytech processed over ₦2 trillion. Ifezue links the growth to focusing on customer service and meeting user needs. “We adjusted our interest rates to align with market trends and worked diligently to offer our users even greater value for every naira. Every milestone…stems directly from our focus on serving our users better,” he said. Piggyvest said it grew its assets under management by 76% in 2024. The fintech also claims that its users were saving ₦44,000 every second on its platform towards the end of 2024, which suggests an annualised savings total of ₦1.39 trillion. The startup will launch a budgeting product in 2025, according to Ifezue, its CEO. “[Our customers] have complained that their salaries no longer last until the end of the month. This year, we plan to roll out an additional feature on Piggyvest to help you manage your day-to-day expenses and ensure your salary lasts until the next payday,” he said. Piggyvest has since evolved its business model several times since it was founded. It initially allowed users to deposit funds into savings accounts and earn interest. Withdrawals are restricted to four times a year, with a penalty fee for early access. But it has since added Pocket, through the acquisition of Abeg, and Piggyvest Business, a point-of-sales product that allows retail stores to accept payments offline. In August 2023, Josh Chibueze, co-founder and CMO of Piggyvest, told TechCabal that the company planned to leverage its three licenses—a fund manager license from the SEC, a mobile money license from the Central Bank of Nigeria, and a microfinance bank license—to expand into money management and offer credit to Nigerians. Exclusive: How Piggyvest paid out ₦1.1 trillion in six years
Read MoreNigerian cloud providers undeterred by AWS naira payments move as competition intensifies
Amazon Web Services (AWS) has stirred the Nigerian cloud market by allowing naira payments, but local providers like Okra and Nobus Cloud believe the move is more a formality than a game-changer. For them, AWS’s shift is just another move from a global giant, offering no real competitive advantage in a market increasingly concerned with currency fluctuations. “I don’t necessarily think it’s anything more than that [a move by from a big player],” said Fara Ashiru, CEO of Okra which launched Nebula, a cloud infrastructure product in 2024. “You are exchanging your USD bill at the going rate of naira. It’s the same thing, just in a different packaging.” Ashiru’s comments underline the crux of the local providers’ argument: While AWS now accepts naira payments, the cost structure remains unchanged— pegged to the USD and converted to naira at the prevailing exchange rate. They argue that local providers’ pricing mitigates the risks of exchange rate volatility. “Our cost is still about 30-35% lower than what AWS charges,” said Stephen Okoye, COO of Nobus Cloud, which offers its services to Nigerian businesses without the concern of foreign exchange swings. In 2023, after a sharp naira devaluation, many Nigerian businesses saw their cloud service costs skyrocket, priced in dollars. As a result, local cloud providers saw a surge in demand, offering naira-based billing at more affordable rates—appealing to Nigerian companies that earn revenue in local currency but previously had to pay in dollars. Local players like Okra and Nobus Cloud argue that while cost remains a key factor, it’s not their only differentiator. According to Ashiru, what truly differentiates them from global giants is their tailored approach to the Nigerian market. “Why are we building products that are hosted in countries that are so far away from the customers who are using our products? It’s about building a solution that’s geared towards African businesses,” she said. Another key argument for choosing local providers is data sovereignty. The 2019 National Cloud Computing Policy recommends that Nigerian businesses and government agencies prioritise local cloud services, and Nigeria’s Central Bank has also mandated that commercial banks host a portion of customer data locally. This regulatory environment is providing a significant boost to local providers, who are well-positioned to cater to this growing demand for data hosting within Nigeria’s borders. In 2024, local cloud providers began engaging with government agencies to become their preferred cloud service providers for sensitive data hosting. These talks have already begun to bear fruit, with some agencies making the switch to local providers, according to sources familiar with the matter. However, they declined to share further details, citing the confidential nature of the discussions. The local competition for AWS is not limited to other global players like Microsoft Azure. Chinese tech giant Huawei has recently entered the fray, launching its local cloud service in Nigeria in December 2024. Huawei, which has established a strong presence in Nigeria’s banking sector, offering cloud storage and computing services to institutions like UBA, is quickly becoming a formidable contender. In September 2024, TechCabal reported that UBA purchased 200 petabytes of cloud storage from Huawei in a deal valued at $3 million. Huawei’s entry is only adding to the pressure on local providers, who must now compete not just with AWS and Azure but also with a company that has deep relationships within the Nigerian market.
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The burgeoning market opportunities for cross-border payments in Africa
This article was contributed by Osideinde Adewale. COO, Bitnob, Oluwaseyi Otunla, COO OneKard and Nika Naghavi, Deals and Strategic Partnerships Director, Zeps (WorldRemit and Sendwave) as part of the Emerging Trends in Cross-Border Payments: A Growth Guide for Stakeholders report authored by Aroghene Favour Ndulu and Paschal Okeke. E-commerce and digital marketplaces top the list of sectors with the most significant potential for growth in cross-border payments. With more people shopping internationally for better deals, platforms like AliExpress, Shein, and the latest Temu are thriving. They’ve simplified cross-border payments, breaking down barriers for buyers globally, including in Africa. Next is freelancing and remote work, which have reshaped global hiring. US and European companies hire from Africa’s talent pools, driving demand for effective cross border payroll systems. Travel and tourism are also booming. Tourists want payment options that work seamlessly across borders as travel rebounds, avoiding currency conversion headaches. This demand continues to grow as travel becomes more accessible. International Trade. Small and medium-sized enterprises (SMEs) are a major driver of cross-border payments. SMEs sourcing goods internationally rely on cheaper solutions to pay suppliers, especially in China and other global hubs. Addressing the high cost of remittance fees in Africa Remittance fees in Africa often exceed 8-10% of transaction values, far above the global average of 6%. These high costs burden millions who rely on remittances for daily expenses, education, and investments. Companies can address this challenge by focusing on technology, partnerships, and government collaboration. For instance, blockchain-based digital assets such as Bitcoin and stablecoins provide a more cost-effective way to transfer money by reducing traditional processing fees. Platforms like Bitnob enable users to send and receive funds at little to no cost by leveraging digital assets in the background. These platforms offer competitive exchange rates and instantly settle funds to mobile money wallets or bank accounts in the recipient’s local currency. Similarly, digital wallets and mobile money platforms like M-Pesa in Kenya and Paga in Nigeria reduce dependency on banks, allowing funds to be sent directly to recipients. This reduces costs and improves accessibility. Regulatory bottlenecks and high taxes contribute a lot to remittance costs. Companies can work with governments to advocate for reduced transaction taxes, streamlined licensing for money transfer operators, and policies that encourage open financial ecosystems. Serving the underbanked with cross-border solutions Underbanked and rural populations represent a largely untapped market for cross-border payment solutions, especially in emerging regions like Africa. Despite limited access to traditional banking, these communities are becoming active participants in the global economy through remittances, e-commerce, and small-scale trade. To capitalise on their growing economic role, solutions designed for small-scale transactions and local currencies can help reduce barriers, making international payments more accessible and less intimidating with features like dynamic currency conversion and real-time, affordable exchange rates. In regions with limited smartphone penetration, cross-border payments that function via SMS, USSD, or offline modes can further accelerate adoption. Providers can provide uninterrupted service by ensuring transactions auto-complete once connectivity is restored, even in low-tech environments. Complementing these with educational initiatives on currency exchange, digital wallets, and secure transactions builds trust and loyalty. Providers who educate users with knowledge alongside financial services will stand out and drive meaningful financial inclusion in these underserved markets. Infrastructure and cross-border payments Domestic payment rails form the backbone of any cross-border payment journey. Globally, systems like NIBSS (Nigeria Inter-Bank Settlement System) in Nigeria, PIX in Brazil, and UPI in India enable instant local transfers. When these domestic systems are optimised and connected to cross-border networks, they reduce friction, improve speed, and improve reliability. To make cross-border payments accessible for SMEs and underserved populations, domestic rails must support different financial institutions, including banks, fintechs, and mobile money operators. Small businesses risk being excluded from global markets without this foundation, stifling growth. Platforms like Paystack and Flutterwave exemplify how solid domestic systems can connect local merchants to international buyers, unlocking opportunities and bridging gaps between domestic and global economies. This demonstrates that a solid domestic infrastructure is essential for building a thriving cross-border payment ecosystem. The role of partnerships in expanding cross-border payment networks Cross-border payments span different markets, each with unique regulations, cultures, and technologies. In Africa alone, 54 countries use 42 different currencies. Strategic collaborations allow companies to leverage local expertise and infrastructure, helping them efficiently scale their offerings to new markets while navigating complex regulatory ecosystems like anti-money laundering (AML) and Know Your Customer (KYC) requirements. Partnerships also fuel innovation. Banks contribute regulatory knowledge and trust, while fintech brings agility and advanced technology, creating solutions like real-time payments and multi-currency wallets. Moreover, collaborations with global e-commerce platforms improve customer experiences, delivering faster, cheaper, and more transparent payment options. You can read the full report here. __________________ Osideinde Adebisi Adewale is the Chief Operating Officer (COO) at Bitnob, a pioneering fintech company that transforms financial services and cross-border payments across Africa and beyond. With over a decade of experience, Adewale is a dynamic business leader specialising in scaling businesses through strategic planning, innovative product development, operational excellence, and market expansion. Oluwaseyi Otunla, COO OneKard. Seyi is a finance professional with over 3 years of experience in consulting at PwC. BSc in Economics and Management from The University of Kent. Skilled in optimizing processes and delivering impactful results in dynamic, fast-paced environments. Nika Naghavi. Nika is an experienced fintech professional with background in mobile money, digital financial inclusion, and remittances. She has recently joined Zepz to lead strategic partnerships and complex commercial partnerships. Before Zepz, she was at Onafriq (formerly MFS Africa), where she held various roles, including providing strategic advisory support to the Founder and CEO, leading network expansion, and managing the remittances portfolio.
Read MoreSeamlessHR raises $9 million Series-A extension from Gates Foundation and Helios Venture
SeamlessHR, a Nigerian company that helps businesses manage HR functions, has raised a $9 million Series-A extension round, according to three people with knowledge of the conversation. SeamlessHR raised a new round from the Gates Foundation and Helios Digital Ventures. The company raised its $10 million series A in 2022. According to two sources familiar with the company’s operations, the company plans to use the new funding to drive its expansion across Africa, which may include acquisitions. Last year, the company reportedly held talks to acquire one HR tech startup in Nigeria. The company set out to raise $10 million but eventually raised $9 million, according to one person familiar with the conversation who could not named as they were not authorized to speak on the matter. The new round of funding brings SeamlessHR’s total fund raised to about $25 million. The startup raised a $10 million Series A round in 2022 from TLCom, Capria, Lateral Frontiers, Ingressive Capital and Enza Capital. It raised an undisclosed seed round from the same investors and Consonance Investment Managers in 2020. SeamlessHR raised a $150,000 pre-seed round from Tofino Capital and Ventures platform in 2019 “Over the last 5 years, we have expanded across the continent to become the dominant HR and Payroll Software for medium to large enterprises in Africa. While we continue to accelerate our work to optimize workforce productivity in both the public and private sectors across the continent, much of our attention will also be on empowering hardworking Africans with responsible credit products that will help them use their employment as collateral to enjoy a better life,” wrote Emmanuel Okeleji, SeamlessHR’s Co-founder and CEO, in a statement announcing the raise. Founded in 2018, SeamlessHR provides a cloud-based HR software solution that simplifies human resources management. Their comprehensive suite of tools covers everything from core HR functions and performance management to payroll and recruitment. In 2024, they added an e-procurement platform to their product offerings. The company has quickly become one of the leading HR tech providers in Africa, with customers in Nigeria, Ghana, and Tunisia, including renowned brands like PwC, Sterling Bank, and Lagos Business School.
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