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Issue 178
Jul 24 - Aug 06, 2023

Hi there,

I’ve been having conversations with friends, colleagues, and industry insiders who agree that fintechs and African businesses are facing a more challenging operational climate. The reasons range from rising inflation and currency devaluations to hiring and fundraising difficulties.

If you’re a fintech startup currently navigating these challenges, you can reach out to our Startup Programs team – they’re happy to explore ways to help.

If you’ve got some ideas or strategies that are working for your fintech, we’d love for you to share them with us via email. We’ll be sure to spotlight some of them in an upcoming issue.

Today's newsletter was written to Mick Jenkins’ The Patience and Hozier’s Unreal Unearth.

Have a great week ahead!

Tochukwu Ironsi
Market Intelligence Specialist
Grow your business with Paystack Catalyst

AfricaMastercard to acquire stake in MTN's fintech unit. Global payments giant Mastercard has agreed to acquire a minority stake in MTN’s fintech subsidiary. With this investment, MTN will leverage Mastercard’s infrastructure for payments and remittances in Africa. BNN Bloomberg

MTN is not the only telco looking to separate and sell portions of their fintech business. In recent years, telcos like Airtel and M-PESA have announced plans to create separate arms for their financial service businesses. As reported in Issue 116, Airtel has already gone ahead with this separation of Airtel Money and has received more than $500m from investors like The Rise Fund, QPG, and Mastercard as well.

These corporate restructurings have been driven by new regulatory requirements in some markets and an opportunity to capture needed liquidity from fintech-focused investors. For most of these telcos, mobile money revenue has outstripped growth from core voice and data services. And with these investments, telcos can cash in on that growth to pay off long-term debt or just generally improve cash flow. 
EthiopiaM-PESA officially launches in Ethiopia. Safaricom’s M-PESA has officially gone live with its mobile money service in Ethiopia. This follows final regulatory approval from the National Bank of Ethiopia (NBE). Reuters

As we noted in Issue 150, there’s a potential opportunity for M-PESA to capture a significant user base from Ethiopia’s 120 million population. But the mobile money provider faces stiff competition from Ethio Telecom’s TeleBIRR which has government support and more than a year’s head-start. 
NigeriaMoniepoint launches consumer banking product Moniepoint, a leading provider of merchant payments and agency banking solutions in Nigeria, has launched a consumer banking product. The product comes with access to a bank account and a debit card and will allow customers to resolve disputes quickly. Business Day

In Issue 166, we wrote about Moniepoint’s investment in Payday and how market and regulatory changes have driven an urgent need for a consumer strategy:

Our earlier analysis of Moniepoint’s pivot to business banking over- indexed the importance of focusing on just the merchants. In a world where these fintechs aggressively compete on product, payment experience, and pricing, differentiation might come from owning a wide base of consumers.

Beyond funding and regulatory cover for Payday, there are other product synergies that Moniepoint could explore with Payday even if the cash scarcity didn’t happen. A deeper integration between both companies could allow Payday to leverage Moniepoint’s wide surface area of agents and businesses for last-mile remittances and faster and cheaper merchant payments.

Ultimately, this investment into Payday is both a hedge and a complement to the future of Moniepoint’s merchant and agency banking businesses. It’ll be interesting to observe how this changes the trajectory of both companies. 

From the new update, it seems that Moniepoint has chosen to build rather than just buy. The strategic dynamics and market opportunities noted above still exist today. Warding off competition, cost savings, and leveraging owned agents and businesses to provide better payment experiences for customers are very valid reasons for Moniepoint to move into payments.

We expect even more players to follow this trend as the space for retail payments becomes even more competitive. 
AfricaAI use-cases in fintech. Ngozi Dozie, co-founder of Carbon, highlighted the interesting ways he’s used ChatGPT to perform tasks like reconciliation and user operations. Substack
EthiopiaKacha obtains final approval to commence operations. Kacha, an Ethiopian fintech licensed as a Payment Instrument Issuer in Ethiopia, has been granted final approval to commence operations. The approval was granted by the NBE and comes after a pilot phase and a direct integration to Ethiopia’s central payment switch. TechMoran
KenyaThe Central Bank of Kenya (CBK) approves increase in account limits for M-PESA and Airtel Money. The CBK has approved an increase in account balance limits for M-PESA and Airtel Money from Ksh 300,000 to Ksh 500,000. The new limit takes effect from August 15. Per-transaction amounts are still limited to Ksh 150,000, but users can transact up to Ksh 500,000 daily. Kenyan Wall Street

SMEs typically receive and hold more money than individuals. Increased account balance limits raise the ceiling for how much businesses can hold and how many transactions they can process in a day. This could potentially drive up M-PESA’s merchant payments revenue after the limits are raised. 
KenyaMoniepoint set to acquire Kopo Kopo. Moniepoint, a Nigerian payments and banking company, has received approval from the Competition Authority of Kenya for the 100% acquisition of Kopo Kopo. Kopo Kopo, like Moniepoint, serves Kenyan businesses with loans and tools for collecting payments. WeeTracker
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AfricaLemFi completes $33 million Series A round. LemFi, a consumer remittance company, has raised $33 million in Series A funding. The round was led by Left Lane Capital and also followed LemFi’s launch in the United States. TechCabal
KenyaZanifu raises $11.2 million in Pre-Series A funding. Zanifu, a Kenyan fintech providing inventory financing to MSMEs, has completed a $11.2 million funding round. The funding - a mix of debt and equity - was led by Beyond Capital Ventures and Variant Investments. WeeTracker
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