OPay and Moniepoint issue 17 million Verve cards as Nigerian fintechs dump Visa and Mastercard
A change in consumer behaviour and macroeconomic conditions are leading Nigerian banks to issue local cards like Verve to customers, dumping international card schemes like Visa and Mastercard. Before the COVID-19 pandemic, Nigerian fintechs stumbled on an easy customer acquisition strategy: issuing foreign debit cards. These cards, often issued for free or next to nothing, ensured fintech customers could withdraw money at ATMs, or pay at supermarkets. Giving customers debit cards increased spending, allowing fintechs to earn more transaction fees. “No regular Nigerian was going to spend [their] money from your bank if they did not have your card,” a former banker who asked not to be named told TechCabal. However, COVID-19-related restrictions on in-person shopping, a cash crunch in Nigeria in 2023, and cash shortages at bank ATMs have changed those assumptions and reduced the reliance on card payments. They have also led to the growing popularity of bank transfers. Fintech startups and banks are reevaluating their card operations in line with these new realities, and all Nigerian commercial banks, except Guaranty Trust Holding Company (GTCO), now issue Verve, a card scheme operated by Nigerian payments unicorn Interswitch. First Bank, Nigeria’s oldest bank, has issued Verve cards to over half of its card customers, said one person with knowledge of the matter. Chinese-backed fintech OPay has issued 13 million Verve cards, while Moniepoint has issued about 4 million. Since the Covid pandemic ended in 2021, Verve has controlled 54% of the Nigerian card market. Switching from the international card schemes — which charge in USD — has become popular following the naira’s devaluation, making FX-denominated bills more expensive. Visa and Mastercard fees vary and depend on the financial institution’s size and region. The pricing strategy of these international card schemes is also complicated; Mastercard’s pricing guide is a 300-page document, said one financial industry expert. Financial institutions must also meet requirements like a $2,000 monthly implementation charge, opening an offshore account, renewing their contracts annually, and collateral that runs into millions of dollars said three people with knowledge of card operations. International card schemes also charge Nigerian banks a fee for logging disputes on their resolution channels. They also prevent non-deposit banks from connecting directly to their card scheme, forcing fintechs and smaller banks to partner with commercial banks already on card schemes. Kuda, for instance, partnered with Zenith Bank, one of Nigeria’s largest banks, to launch its first debit cards. These complexities are driving the popularity of local alternatives like Verve and Afrigo despite heavy investment from Mastercard and Visa on the continent. Both companies have poured at least $700 million into the continent’s fintech industry to stay relevant. Visa and Mastercard did not respond to a request for comments. Besides the money, Verve and Afrigo make sense The decision to switch to local card schemes is also connected to customers’ use of cards for local payments. With spending power under pressure because of inflation, the ability to make global payments, which the big card schemes offer, is useful to only a small percentage of customers. “Majority of fintech customers use cards for POS transactions. They are not shopping on Amazon or online outside the country,” an employee at a Nigerian card scheme told TechCabal. Nigeria is also facing its worst cost of living crisis in three decades, reducing customer spend and causing a drop in interchange — the fees merchants pay for card processing — a problem for fintechs that need a high volume of transactions to break even with cards. Under Godwin Emefiele, the Central Bank launched Afrigo, a local card scheme, and said it could help banks save costs. Fintechs, now firmly in the scope of regulators after a six-week ban on onboarding new customers, are eager to get in the regulator’s good books and see this as an easy route, according to one person familiar with the talks. The rise of the online transfer payment method has also meant that Nigerian fintechs are making products that facilitate bank transfers. Stripe-owned Paystack has launched two pay-by-transfer products in recent months as bank transfers represented 58% of its transactions in Nigeria in 2023, up from 28% reported in 2022. Those transfers offer better margins than card payments as the multiple processors involved in card payments are eliminated. Fees on card payments are shared between several parties Besides the swing in customer behaviour, card operations require massive scale to become profitable due to logistics, manufacturing, technology, regulatory costs, and the risk of fraud. These international card schemes have considered collecting their fees in naira, several people familiar with the talks told TechCabal. But years of FX restrictions and $20 limits for global payments have made alternatives like virtual cards popular and may mean customers are indifferent about the switch. As long as the cards work at a store, restaurants, and POS stalls, it’s just another Monday.
Read MoreFive questions you should ask yourself as an early-stage startup
This article was contributed to TechCabal by Meike Neitz. What an incredible and wild rollercoaster ride to found your startup! You have an idea; you formulate a problem statement, validate the problem, and develop the solution. And the often bumpy, often exciting journey continues! When working with startups on pitching or storytelling, I often found that one central question word they don’t usually mention enough, especially in the early stages of the adventure — the “why?” In this article, I suggest five questions that could help you formulate a strong value proposition, convince investors or partners and steer your startup in the right direction. American author and productivity consultant David Allen writes: “To know and be clear about the purpose of any activity are prime directives for appropriate focus, creative development and cooperation.” Let’s get started: WHY do we do what we do? You probably know what it is that you do; you also know how you (want to) do it. But have you thought about the why? What is the overarching purpose of your business? What’s your vision for the future you want to be part of? Is your vision to bridge the digital divide? Ensure fair and balanced work conditions for care workers? Is your purpose of existence to achieve a decarbonised aviation sector? Create a circular economy in the shoe industry? Everyone who’s been to any of my workshops knows that I’m the biggest fan of Simon Sinek’s Start with a Why: I love the magical effect that takes place when indeed startup founders begin their intro or pitch with their purpose instead of telling people what it is they do. Try it for yourself, and you’ll see! Here’s an example: A startup that has developed an organic alternative to microplastics. When asked what they do, they could start with the what: “We’re a team of Max-Planck researchers and have developed a green alternative to microplastics by turning food waste in a unique fermentation process into sustainable bio-ingredients for chemistry.” That’s a sentence that’s not so easy to digest. Now let us turn this around: “We believe that the chemicals sector, being one of the biggest polluters on earth, can become green! We are excited to go to work every morning to stop the industry from harming our climate through microplastics. We’re a team of Max-Planck researchers and have developed a green alternative to microplastics by turning food waste in a unique fermentation process into sustainable bio-ingredients for chemistry.” Made a difference? You will see that starting with the why helps people understand what you do a lot better. Formulating your mission clearly will also help you onboard people who want to be part of the journey; they won’t follow you for the how—they will follow you for your why. A strong “why we do this” also guides you through setting priorities and not losing focus – one could say that the why is like a star that helps you steer the way towards the right destination. WHY now? One of the most underrated questions for any type of startup looking to succeed is, why now? In his widely popular Ted-Talk, Bill Gross argues that timing is the most widespread reason startups fail. Therefore, being able to answer the “why now?” question is crucial: What are market developments, societal and cultural trends, movements, new laws and regulations or other defining factors that make your business valuable at this moment in time? Investors would also be looking for examples. It could be anything from plastic bags being forbidden in your country to a new sustainability directive of the African Union, the rise of a certain technology in the agricultural sector, a new revolutionary cancer treatment method that has just been approved by the Health Ministry, or a new cybersecurity law that just passed parliament. Being able to implement the “why now” answer in your business model will unravel the most important component of success: relevance. WHY we? Especially when you pitch before investors, they’ll wonder why you should succeed over other competitors in the market. And please note, there’s not a single startup without competition! Even if no other companies are working on what you’re working on (which may not necessarily be regarded as something good), there is always the old way of doing things. Hence, with the “why we” question, you can verify that you know exactly what your value proposition is; you know the ingredients that make your startup better than the rest or simply the old, traditional customer route — they can be tech-based or other product-related features, it can be your first-mover advantage, your geographical reach, key partners or your pricing. Having an immediate answer to why clients in the future would want to solve their problems with you and not with any other company will go a long way. WHY us? When I’m doing pitch training, and we get to the team slide, I always ask the attending startups to think about superpowers: What makes your startup team stand out and equipped to succeed? Why should only your startup make it and not a competing team? Single out three superpowers for each person — at best, they’re complimentary. All too often, I see whole bios of co-founders in a deck or, even worse, a group picture of the entire team—that’s it. This won’t tell the person you’re talking to anything because they want to know what skill or experience matches precisely with your business! Why should they choose you? Thinking about the features of your team like you’re doing it with your product features is priceless! WHY you? Imagine you’re going to an interview for a new job. One of the most common questions from the interviewer would be: “Why did you apply for this particular company? What makes you think you’re a good fit?” Interestingly, though, many startups, whether they’re going into talks with potential partners or investors, do not take the time to prepare a precise answer to that question.
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👨🏿🚀TechCabal Daily: Kenya’s quantitative treasoning
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Our friends at Resilience17, a leading early-stage VC, will be in VI Lagos for an AI Builders event on Thursday. It’s the end of H1, and Resilience17 has asked us to invite you to their free event which brings together founders, investors, and operators to explore AI’s potential for the African startup ecosystem. You can network, learn, and perhaps more importantly , enjoy free food and drinks to celebrate the end of H1. RSVP now by clicking this link. In today’s edition Kenya’s “treasonous” protests amplify as Finance Bill moves forward World Bank disburses $45 million to NIMC amidst data privacy concerns 26 startups vie for $220,000 NSIA Prize for Innovation Orange SA to exit Mauritius The World Wide Web3 Job openings Regulations Protests amplify as Kenya’s Finance Bill moves forward Kenya started Tuesday with promises that the internet would not be shut down as citizens prepped for mass protests against the Finance Bill moving to the next stage. “It would be a betrayal of the constitution and could sabotage the [Kenya’s] fast-growing digital economy,” the ICT regulator claimed. So did an internet shutdown happen? By 5 PM Kenyan time, three publications confirmed internet disruptions with Netblocks noting that even X (formerly Twitter) had been affected. Safaricom blamed the disruptions on “damage to fibre optic cables”. Internet shutdowns have become a common tactic to derail protests by cutting off information during uprisings and protests in African countries. It all comes down: Tuesday’s protest was a last-gasp attempt to pressure Parliament to throw out a bill that will introduce taxes on bread, oil, and banking fees. On Tuesday, 195 Members of Parliament voted for the bill to pass the committee stage, while 104 voted against it. The protests intensified immediately after the bill was passed, with police firing live rounds resulting in at least eight deaths. Over 12 people are also reported missing. Protesters stormed Parliament and set a portion of the building on fire. Ruto speaks up and down: On Tuesday President Ruto addressed the country for the first time since the protest against the Finance Bill started. President Ruto claimed Tuesday’s protests were hijacked by “criminal elements” and called the resulting march into parliament “treasonous.” Military deployed to “help the police”: Things may be heating up! With the mention of treason, Ruto, late yesterday, authorised the deployment of the military to quell the protests. Across social media, millions have joined their voice with Kenyans who will have to wait at least 14 days to see if the President will assent to the bill and make it the law of the land. Process payments smoothly with Moniepoint And we’ll have processed almost 5,000 more by the time you’re done reading this. Your business payments can be one of them. Click here to sign up. Funding World Bank disburses $45 million to NIMC amidst data privacy concerns In 2020, a World Bank audit exposed several vulnerabilities in Nigeria’s National Identity Database, the National Identification Number (NIN) verification system. What followed was a “National Digital Identity Ecosystem Project” bundled with an investment pledge of $430 million to help strengthen the national identity and protect personal data and privacy through different projects. As part of the project, the World Bank sought to help increase the adoption of the NIN up to the tune of 150 million users by June 1, 2024. While the regulator fell short of the set target, boasting 107 million registered NIN users, the World Bank is unrelenting in its support. The bank says Nigeria has made “moderately satisfactory” progress in reaching its set goals. Yesterday, the World Bank disbursed $45 million to the National Identity Management Commission (NIMC) under the Digital Identification for Development (ID4D) project. But data privacy concerns persist: The World Bank’s new funding comes amidst a slew of data privacy concerns. Websites like AnyVerify and Xpressverify have been identified among other websites selling the personal information of Nigerian citizens. While the NIMC has debunked claims of a data breach, the vulnerabilities raise concerns about the country’s ability to protect its citizens’ personal information. The $45 million is the latest tranche of money from the World Bank’s $430 million agreement with the NIMC. The disbursement of funds which has been on since December 2021 is expected to continue. Issue USD and Euro accounts with Fincra Create and manage USD & Euro accounts from anywhere. Fincra allows you to issue accounts to your users, partners & customers to collect payments without the stress of setting up and operating a local account. Get started today. Funding 26 startups vie for $220,000 NSIA Prize for Innovation 2023 proved to be a productive year for the Nigeria Sovereign Investment Authority (NSIA) with the completion of the Second Niger Bridge, a project that cost over $76 million. A more impressive feat is that the wealth management agency made $768 million last year alone—with extra income generated from Nigeria’s crude oil sales. We’ve now gotten word that some of that money might be going to the hands of startups. The prize for innovation is…In February the Investment Authority turned its attention to the the second edition. The maiden edition awarded a total prize value of $255,000 and received 2,000 applications. This year’s prize is $35,000 short but it hasn’t stopped 7,000 early-stage businesses from registering for the competition. At the initial stage, 100 startups reached the preselection stage, but only 26 startups including Sycamore, Jump n Pass, One Health, and VPD, were shortlisted to advance to the Accelerator Stage (physical bootcamp) of the NPI 2.0. During the week-long boot camp, these startups will engage in interactive training sessions, network with other innovators, and participate in workshops. The boot camp will end in a mini demo day, where start-ups will pitch their solutions to a panel of judges for a chance to proceed to the Demo Day. The top start-ups will compete for a combined prize value of
Read MoreBreaking: President Ruto denounces “treasonous events” after protest over tax bill left eight dead
Hours after eight people died protesting the passage of Kenya’s 2024 Finance bill, President William Ruto addressed the public, talking tough and denouncing “today’s treasonous events.” It is the President’s first address to the nation since protests began against a tax bill that proposed a second round of taxes in just under a year. Despite the opposition to the bill, it passed the committee stage today and will be sent to Ruto for assent. The vote to move the bill forward incensed an already angry crowd, leading to the breach of police lines and the parliament. Police fired live rounds at protesters, killing eight. “I hereby put on notice the planners, orchestrators, and financiers of anarchy that the security established to secure our sovereignty will be deployed to restore normalcy,” Ruto said. In a speech that denounced the attacks as sponsored by elements of terror, Ruto said repeatedly that all security organs had been deployed to restore calm. It felt like a missed moment for the Ruto presidency which has largely been accused of being tone deaf. It has missed the opportunity to engage with a young population driving the protest and gas turned deaf eyes to concerns over an increasing tax burden. By doubling down on regime security instead of engaging, Ruto will further alienate Kenyans who are adamant that the Finance bill should not be passed.
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OccupyParliament protesters overpower police, enter Kenyan Parliament
3:28 PM (Kenyan Time) OccupyParliament protesters have overpowered police and gained access to the Parliament after live rounds were fired. Eight people have been confirmed dead, per two publications. Live rounds were fired at protesters on Tuesday afternoon minutes after Parliament passed the controversial 2024 Finance Bill. Three persons claimed the rounds were fired by Kenyan police. Eight people have now been confirmed dead, per Kenyan news outlet KTN. The protesters overpowered the police who had barricaded sections of City Hall Way, one of the many streets occupied by tens of thousands of Kenyans who came out to pressure lawmakers to withdraw the controversial bill. Protesters have now taken over major streets in Nairobi with two publications reporting that one of the gates to Parliament has been overcome by demonstrators. A section of the Parliament building is on fire, per the same reports. Despite the protests, the bill sailed through the committee stage and will now be sent to President William Ruto who will assent to the bill as early as Thursday. *This is a developing story
Read MoreKenyan Parliament passes bill to hike taxes despite protests
On Tuesday, Kenya’s parliament passed the 2024 Finance Bill despite opposition from thousands of Kenyans. A total of 195 MPs voted in favour of the bill, 104 voted against, and there were 3 void votes. The bill was criticised for introducing a raft of new tax proposals, the second in two years, despite an increase in the country’s cost of living. OccupyParliament protesters on the streets of Nairobi asked lawmakers to reject the proposals. More people used social media platforms, X and TikTok, to oppose the bill. The Finance Bill will now be sent to William Ruto for presidential assent. Ruto’s administration insists the new taxes will help with debt repayment and economic stability. However, protesters, opposition parties, and civil society groups asked the government to cut the budget in non-key areas to reduce the tax burden. Rather than reduce expenditures, lawmakers introduced amendments to compensate for the scrapped taxes. The fuel levy has been increased by 39% to KES25. Currently, taxes account for 40% of a litre of petrol. Other amendments include an increase in the import declaration levy from 1.5% to 2.5% of all imports, including raw materials. The lawmakers have also increased the railway development levy from 1.5% to 2.5% of import value. “All the three amendments have a significant impact on the cost of living and the competitiveness of our products (goods manufactured in Kenya,” said Billow Kerrow, an ex-member of parliament and economist. The passage of the bill will escalate the mass protests that have crippled business in major cities and towns, including the capital Nairobi, the port city of Mombasa, and Kisumu, a city in western Kenya. While Ruto’s administration scrapped some tax proposals to appease the public, they came too little, too late. The removed proposals include a 16% VAT on bread, motor vehicle tax, and additional levies on cooking oil. Despite this, many Kenyans say the new taxes will exacerbate a cost of living crisis.
Read MoreNigeria’s Central Bank to sell forex directly to IMTOs as naira finds stability in recent weeks
Nigeria’s Central Bank will sell forex directly to International Money Transfer Operators (IMTOs) on the official window as the naira maintains relative stability. Eligible IMTOS will access the CBN window directly or through authorised dealer banks, the CBN said in a circular on Monday. The transactions will be based on prevailing NAFEM rates. “All licensed IMTOs are reminded that all diaspora remittances are expected to terminate in Naira and match with the corresponding foreign currency inflows,” the circular added. This is the regulator’s latest move to encourage remittance flows through formal channels and reduce the role of the parallel market. In May, the regulator banned street trading of dollars and sharply increased capital requirements for Bureau de Change operators. The CBN has taken tough reforms allowing the naira to trade freely against the dollar and unifying the exchange windows. It also cleared a $7 billion FX backlog. The moves produced some immediate gains for the naira but were reversed. However, the naira has been relatively stable in recent weeks due to increased inflows. The naira traded at 1,488 per dollar on Monday, according to the latest available data on the NAFEM window. It changed hands at around 1,500 naira per dollar on the same day in the parallel market, according to reports. A $2.25 billion financial support package from the World Bank is also expected to boost FX liquidity.
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Starlink grows Kenya’s satellite internet users 10x in a year
Less than a year after Starlink launched in Kenya in July 2023, the number of users has multiplied more than tenfold, signalling fast adoption of the Elon Musk-owned internet service. Three months before the launch, the country had only 405 satellite internet users; that number grew to 1,354 two months after Starlink’s arrival and more than tripled to 4,808 in March 2024, per data from Kenya’s ICT watchdog, the Communications Authority (CA). Starlink’s high speeds of over 100 megabits per second (Mbps) have contributed to a growth in satellite internet use. Satellite internet services are particularly attractive to customers not served by traditional broadband providers such as Safaricom, and Telkom Kenya. These customers include niche corporate clients with needs beyond standard fibre or fixed broadband and residents in remote, “upcountry” locations where traditional infrastructure is lacking. “The launch of Starlink’s internet services in the country played a major role in driving the uptake of broadband services. Generally, the sector is expected to keep growing following the rollout of new technologies and services,” the report stated. The data shows a shift in Kenyan satellite internet usage. Over 93% of users now use high-speed internet plans, ranging from 100 Mbps to 1 gigabit per second (Gbps), which only Starlink provides. This is a significant change compared to traditional options, although most broadband users still use local internet service providers with lower speeds. Only Starlink offers speeds above 100 Mbps, which implies that it has contributed to the sharp growth in satellite internet subscriptions in Kenya. Chart by Stephen Agwaibor, TC Insights Starlink’s popularity has been accelerated by its ability to serve customers unsatisfied with the offerings of established players who prefer serving customers in urban areas. The company promised to provide broadband services beyond the reach of these traditional providers, and it has become a popular choice for this niche market. While Starlink is Kenya’s latest major satellite service provider, there are other players, including Skynet and NTvsat, in the market. Safaricom, Kenya’s biggest telco, announced plans for a satellite service a year ago but hasn’t launched it yet.
Read MoreOccupyParliament protesters hit the streets today as Kenya denies rumours of an internet shutdown
Ahead of Tuesday’s #OccupyParliament protests, Kenya has denied rumors of an internet shutdown. Tuesday’s protests, the third in two weeks, is a final push to get parliament to reject the 2024 Finance Bill, which is now in the committee stage. Members of parliament (MPs) look set to pass the bill despite public opposition and a protest that has caught global attention. Images of Kenyan police teargassing protesters and using water canons have gone viral as social media has played a part in amplifying the message of the protesters: reject the finance bill. The scale of the protests surprised the government and authorities considered shuttering internet access to derail Tuesday’s protests, one person familiar with the talks told TechCabal. Internet shutdowns are common in African countries to suppress opposition during protests or polls. In 2022, seven African countries, including Uganda and Ethiopia, shut down the internet nine times. However, Kenya has never shut down the internet to quell protests. The country’s Communications Authority has “no intention whatsoever to shut down internet traffic or interfere with the quality of connectivity,” it said in a Monday statement. An internet shutdown would be “a betrayal of the constitution” and could “sabotage the fast-growing digital economy,” the statement said. Civil society groups like the Law Society of Kenya argued that an internet shutdown would undermine citizens’ rights to demonstrate and participate in policymaking. Parliament will deliberate on the 2024 Finance Bill on Tuesday after it passed a second reading on Thursday. If the bill is ratified at the committee stage—a likely outcome given broad support from MPs in the ruling coalition— President William Ruto is expected to sign it into law on Thursday. Millions of Kenyans, led by young people, have opposed the 2024 Finance Bill. This discontent has spilled into the digital space, with Kenyans using internet platforms to protest the bill. To spread awareness and visibility of the protests beyond the physical locations in tens of Kenyan towns, social media networks like TikTok and X have become platforms for Kenyans to livestream demonstrations against the proposed tax hikes. The hashtag #RejectTheFinanceBill2024, has gained traction on X, with over 4 million impressions on Tuesday morning. It has also drawn the attention of Kenyans in the diaspora, who have organised demonstrations abroad. “I am so angry about this Finance Bill. Although they have removed the tax on bread, we know they have sneaked in other taxes, including a 16% VAT on remittances,” Purity Mwamoyo said while demonstrating with other Kenyans in Washington, DC. The demonstrations began on June 18 and intensified two days later when parliament members voted to advance the bill to the committee stage.
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👨🏿🚀TechCabal Daily – Takelot loses a lot
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning In 2023, Moonshot by TechCabal sparked a global conversation, tackling the continent’s most pressing challenges with innovative solutions. This documentary dives into the heart of Moonshot 2023 and gives a glimpse of what’s to come in Moonshot 2024. Watch the full documentary and see how Moonshot is changing Africa. In today’s edition Banks have started paying their ₦200 billion debt to telcos Ghana’s debt restructuring will finally secure $360 million in funding Takealot Group records $14 million loss Flutterwave lays off 30 employees The World Wide Web3 Job openings Banking Banks have started paying their ₦200 billion debt to telcos Since 2019, the debate between banks and telcos on who should pay the debt incurred from Unstructured Supplementary Services Data (USSD) banking has raged on. Banks say telcos are not transparent enough about their pricing and the accruing interest on the principal sum; telcos, sensing opportunity, have blown hot about shutting down USSD services. In another turn of events, banks have begun paying the ₦200 billion ($132,000,000) debt they owe telco companies—however, payments have been slow. USSD banking remains an important payment channel, as it accounted for ₦4.494 trillion ($2.9 billion) in transaction value from over 516 million transfers made in 2022, according to data from the Central Bank of Nigeria (CBN). This underpins its utility among Nigerians, still. But there’s still a kicker: With smartphone penetration billed to reach 143 million Nigerians by 2025, and mobile internet penetration reaching 42.19% by the end of 2024, the reports have spawned questions about the place of USSD banking in Nigeria’s payments landscape—given the country’s younger, tech-savvy population who prefer e-payment methods. Few experts have argued USSD’s relevance to banking; prominently so, Seun Agbaje, Group CEO of Guaranty Trust Holding Company (GTCO), said, “USSD is a clumsy technology. It’s not state-of-the-art. The best way to have financial inclusion is to reduce the cost of data so that data becomes more affordable. Then we can use what is a superior technology.” There might be one argument for USSD though. As unreliable mobile internet threatens online payments, USSD banking’s simplicity could be a valuable backup. This standoff is a lose-lose situation, potentially blockading financial inclusion efforts and innovation in mobile banking. It’s a cautionary tale for regulators: Stay ahead of technological trends or risk presiding over expensive, drawn-out conflicts. Process payments smoothly with Moniepoint And we’ll have processed almost 5,000 more by the time you’re done reading this. Your business payments can be one of them. Click here to sign up. Economy Ghana’s debt restructuring will finally secure $360 million in funding After extensive talks, Ghana’s institutional bondholders have agreed to a 37% reduction on their principal and extend bond maturities until March 2027. Ghana’s story has been one of grit as the country continues to rebound from its economic slump in 2022 where it defaulted on most of its $30 billion external debt. The country’s progress with creditors now paves the way for securing the $360 million tranche in International Monetary Fund (IMF) funding. Zooming in on the deal: Ghana eurobond-holders are presented with two options: one is the “DISCO” bond option, where investors receive 5% interest rate on new bonds from January this year until July 2028, then 6% thereafter. The other is the “PAR” option, where investors will get 1.5% interest on bonds without any haircut. Side bar: Eurobonds are external bond instruments denominated in a currency other than the local currency of the country or market in which the bonds are issued. This agreement comes after the IMF rejected an earlier proposal in April for not meeting debt sustainability requirements. The current deal is expected to provide $4.4 billion in cash flow relief for Ghana during the IMF loan programme. The deal follows a similar agreement between Zambia and its creditors in March to restructure $3 billion in eurobonds. Since 2022, Ghana has rallied to improve its economic situation. The country’s economy grew by 2.9% in 2023, surpassing the IMF’s 1.5% estimate. This growth, coupled with the debt restructuring, aims to reduce Ghana’s debt-to-GDP ratio from 109% to 55% by 2028. Issue USD and Euro accounts with Fincra Create and manage USD & Euro accounts from anywhere. Fincra allows you to issue accounts to your users, partners & customers to collect payments without the stress of setting up and operating a local account. Get started today. Companies Takealot Group records $14 million loss South Africa’s e-commerce giant, Naspers, has released Takealot Group’s annual results for the year-end, March 31, 2024. The Takealot group which includes Takealot.com (an online retail store), Mr D (a food delivery and logistics operation), and Superbalist (fashion), recorded a loss of R252 million ( $14 million). However, Mr D, the food delivery and logistics service, recorded a profit of R56 million ($3 million) for the first time with its gross merchandise value (GMV) increasing by 16%. Takealot.com saw a reduction in trading losses by R75 million ($4 million) and an increased gross merchandise value increased by 3% during the year. The Takealot group’s combined sales revenue dropped slightly by 2% to $792 million compared to last year when its revenue dropped by 3%. It also recorded a drop in trading losses by $8 million, signalling it is getting closer to being profitable. Naspers attributes the losses to higher operation costs as it opened new warehouses, installed diesel tanks to reduce the effects of the high cost of fuel, and tougher competition noting heavy investment into online shopping. Additionally, it noted Superbalist, which it acquired in 2014, was struggling due to global competitors from China, like Temu and Shein, that are offering really good prices. The number of businesses selling products on their platform Takealot has reached over 10,000, yet it hasn’t been profitable since it was founded 15 years ago. Despite the former CEO stating the e-commerce giant will record profits in 2021, it has only reduced its losses significantly
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