|Africa||AfDB approves $525,000 grant to build an African fintech information hub. The African Development Bank (AfDB) has pledged a $525,000 grant to support Africa Fintech Network’s (AFN) Hub project. This grant, backed by AfDB's Africa Digital Financial Inclusion Facility (ADFI) and additional investors, will help create an online hub that serves as a comprehensive information resource for African fintechs. Business AM|
|Global||Google to restrict lending apps from accessing sensitive user data. Google will no longer allow lending apps listed on the Google Play Store to access user contacts, location, call logs and media. This new policy will take effect on May 31, 2023. TechCrunch|
|EDITOR'S NOTE||This new policy comes after a wave of aggressive regulation of digital lending in Kenya and Nigeria, following reports of predatory and unethical practices by certain lending companies.|
Insufficient credit data collection and limited access to credit have historically placed digital lenders in emerging markets, such as Nigeria and Kenya, at an information disadvantage when onboarding and underwriting users. To address this issue, they have relied on user contacts, location, and other user data gathered from users’ phones during the signup process. This information played a crucial role in determining a borrower’s ability to pay and proved useful in identifying potential fraudsters and malicious actors.
Most digital lenders choose to list on the app store due to Google's Android OS dominance in Africa and its more lenient user permissions compared to iOS. Unfortunately, certain digital lending apps exploited this access to harass not only borrowers in default but also their contacts. This questionable conduct led to a crackdown by regulators and now Google.
Google’s new policy will curtail the predatory practices mentioned earlier, but it may also significantly affect the ability of legitimate and ethical digital lenders to acquire new users, underwrite loans and collect debts. While we anticipate that major lenders will lobby for exemptions, the industry will ultimately need to adapt to this sudden shift in their operating model.
|Ghana||BezoMoney acquires Tigerforce Microfinance. BezoMoney, a Ghanaian savings and financial education fintech, has acquired Tigerforce Microfinance Ltd. This acquisition will enable BezoMoney to leverage Tigerforce’s microfinance license to launch compliant savings and lending products. This comes after BezoMoney’s acceptance into Techstars Oakland’s accelerator program. Tech Nova|
|EDITOR'S NOTE||In Issue 154, we wrote about PayHippo’s acquisition of Maritime Microfinance Bank and the strategic motivations and considerations for fintechs to acquire licensed microfinance entities. Pending any regulatory changes, we expect this trend to continue. |
|Africa||Paxful suspends operations in Africa. Paxful, a P2P crypto marketplace with significant operations in Africa, has suspended their operations. CEO, Ray Youssef, cited key staff departures and worsening regulatory challenges for the industry as reasons for the shutdown. Paxful|
|EDITOR'S NOTE||Paxful joins the list of Africa-focused P2P crypto exchanges - Localbitcoins and Localcryptos included - that have shut down recently. In the past year, the industry has been hit with reputational and regulatory headwinds as the prices of key digital assets have fallen from their frothy highs.|
As the industry shifts from speculative, gambling-like consumer behavior to practical applications such as remittances, payments, and credit, it’ll be interesting to observe how African crypto firms weather this transition.
|South Africa||Peach Payments raises $31 million Series A round. Peach Payments, a payment processor based in South Africa, has raised $31 million in Series A funding. The funding was led by Apis Partners and will be used to fund product development and geographic expansion. Disrupt Africa|
|South Africa||Paymenow secures $14 million in debt funding. South Africa’s Paymenow, a fintech that offers employees early access to their wages, has secured a $14 million debt facility from Rand Merchant Bank (RMB). The debt funding will be used to accelerate Paymenow’s growth. Disrupt Africa|
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