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Issue 100
Jul 26 - Aug 01, 2021

Hi there,

This is the 100th issue of the Decode Fintech Newsletter! For over two years, we've kept a keen eye on African fintech and shared relevant news and insights with you every week.

To celebrate the 100th issue, we'd like to meet you! We're organizing the first-ever Decode Fintech Community Roundtable. This hour-long virtual event is a chance to put faces to names, share notes, and learn how peers within African fintech are figuring things out. You can follow this link to sign up for the event →

We're also doing a quick survey to understand how Decode Fintech can better serve you. Please share your feedback by answering this short Decode Fintech Survey

Thank you for sticking with us; we hope to see you in the next 100!

Kharis Lawson
Product Specialist, Paystack
NigeriaPiggyVest acquires Launched in 2018, is a wealth management app that allows users to save and earn interest on multiple assets. Although the acquisition fee wasn't disclosed, PiggyVest has stated that all existing users will be migrated to the platform. Disrupt Africa

Joshua Chibueze, PiggyVest co-founder stated that the acquisition was primarily an acquihire of the team. PiggyVest offers users high-interest saving options (10 - 13%) and makes revenue (at a 3-5% margin as reported here) from re-investing these deposits in assets with higher returns. It's very important to PiggyVest's margins that they increase deposits, but also that they are properly allocating these deposits into assets that yield returns above the cost of their capital.

Therefore, it makes sense that PiggyVest is seeking financial expertise that can help with efficiently managing deposits and increasing returns. As many local investment options like treasury bills and mutual funds have seen reduced returns in the past year, PiggyVest will be looking to sustain high returns for themselves and their 3 million users. 
UgandaSafeBoda applies for Uganda’s new fintech license. The bike-hailing startup, which already added services like airtime purchase and food delivery, has also begun piloting a lending product. These loans will be working capital loans directed at SMEs and women-led businesses. Within the next year, SafeBoda plans to expand into a host of other services, including savings, among other features. Afrikan Heroes

In Africa, we're seeing a trend where mobile apps gain distribution by offering one utility and then expanding the number of services available to users. The goal is to lock-in customers with various services and extract as much value as possible. We've seen this trend with M-Pesa, Gozem, OPay, and now SafeBoda. We expect even more existing products to follow this route. But this brings us to an interesting question...
TwitterAre there too many fintech apps? Michael Kimani (@pesa_africa) explains the need for Kenyan fintechs to rethink their user acquisition and retention strategy due to increased competition among fintech apps offering the same services. in this Twitter thread

Driven by increasing mobile penetration, low financial participation and an influx of venture capital, the number of mobile apps focused on fintech in Africa has increased. Most of these apps, which start with a single financial utility (usually lending or savings) now seem to converge on the same set of services.

Given that these apps all provide the same financial services they then have to differentiate themselves by offering many of these services at a cheap fee or even for free. These apps also have to spend more in marketing to put themselves in front of the same set of users. The combination of both points above implies that the cost in acquiring and servicing a customer should theoretically increase over time.

As an operator or investor in African fintech, what are you seeing on the ground and what do you think is the long-term implication of this trend? We would love to hear from you. 
PodcastOn consumer lending in Africa. In a recent episode of the Afrobility podcast, Olumide Ogunsanwo and Bankole Makanju break down the African consumer lending sector, with brilliant comparisons to similar ventures in other regions about the Africa consumer lending landscape. The podcast analyses different players and gives an opinion on the overall outlook of consumer lending in Africa. Afrobility
SubstackAre the exits in African tech coming? In this article, Juan Gabriel makes a case for an emerging trend of investment exits in African tech. The Next Billion
NigeriaCentral Bank of Nigeria to commence digital currency pilot on October 1. According to Godwin Emefiele, the CBN Governor, the “e-Naira” will be a digital representation of the Naira and built on a private blockchain controlled by the apex financial regulator. This comes after the CBN enforced policies that limited the participation of regulated financial institutions in certain cryptocurrency-related activities. Reuters

We first wrote about the CBN's plans to introduce a digital currency in Issue 94. Like we mentioned then, there are potential benefits with this plan from tighter monetary control and reduced cost of printing cash. We however remain curious on how the digital currency will be implemented and the implication of current decentralised cryptocurrency efforts by startups in the country. 
South AfricaYoco raises $83m Series C funding. The payments and software startup secured the funding to develop more tools for SMEs, and expand its services beyond South Africa. This new round of funding was led by Dragoneer Investment Group and marks the investor's first investment in an African fintech. This brings the total funds raised to date by Yoco to $107 million after previously raising $16 million in Series B funding. TechCrunch

The raise is the largest single investment raised by a payments company in South Africa, and the third-largest in Africa, next to Flutterwave, and Chipper Cash. Also Dragoneer leading the round continues the trend of established global investors making first time investments into the continent, a trend we expect to continue as fintech activity on the continent continues to ramp up.

In SA, card penetration among adults is estimated at 70% but only about 20% of SMEs have solutions to accept card payments. Yoco realised this opportunity and started off by offering affordable POS card readers to these SMBs. As more SMBs continue to transition to a cashless strategy, Yoco is hoping to expand beyond in-store payments into an entire financial ecosystem that can suite their needs. 
South AfricaPineapple completes $5.4 million Series A funding round. Pineapple allows people purchase and manage insurance products via a mobile app. This funding round is to help Pineapple increase their market share in the car insurance industry. The participants in this round included Lireas Holdings, the ASISA ESD Fund, E4E, amongst others. WeeTracker

According to a McKinsey report, the African insurance market is valued at $68 billion in gross written premiums (GWP). South Africa alone accounts for 70% of these premiums but the market is still dominated by legacy players with offline-optimised processes. Pineapple is looking to leverage mobile and internet distribution and offer a more seamless process. This is a trend that has been observed with insurance technology companies and we expect this to continue. 
AfricaAirtel Africa receives $200 million for its mobile money operations at a $2.65 billion valuation The mobile money arm of the telco giant has secured a $200m investment from the QIA, the State of Qatar's sovereign wealth fund. The investment will be used to reduce debt and invest in network and sales infrastructure in operating countries.  TechCrunch

This investment comes barely four months after Mastercard invested $100 million in Airtel Mobile Commerce BV (AMC BV), and the Rise Fund, the global impact investing platform of investment firm TPG, also invested $200 million in Airtel mobile money arm. This brings total outside investment so far to about $500 million in 2021 alone.
Côte d'IvoireJulaya raises $2 million in pre-series A funding. The startup, whose online platform is used by businesses and institutions to disburse payments into mobile money and mobile banking wallets, had raised $250,000 in 2018 and $550,000 in 2019/2020. The funding is intended to drive market penetration in Cote d'Ivoire and to expand to other parts of West Africa. Participating investors include Orange Ventures and MFS Africa. TechCabal
EgyptCreditFins raises undisclosed pre-seed round. The Cairo-based fintech startup that helps people save money and pay off their credit card debt, has just raised an undisclosed pre-seed sum. The funding round was led by Flat6Labs, AUC Angels, TA Telecom Holding, and other strategic angel investors. The raise will be used to launch new products.  WeeTracker
The Yoco story

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