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Issue 186
Dec 04 - Jan 28, 2024

Hi there,

Happy new year folks!

It’s been a while, so you’re getting a supersized edition of the newsletter focused on the top African fintech news since we’ve been away.

But before we go on, we’d like to thank you for reading and subscribing to the newsletter. In 2023, the Decode Fintech newsletter kept a keen pulse on African fintech. Beyond just curation, we were very intent on providing context and commentary to some of the biggest news stories.

This year, we’ll continue to curate and contextualize African fintech activity, explore exciting ways to engage with subscribers and provide even more value to fintech operators like yourself.

We’ll share more about our plans soon but in the meantime, we’d appreciate your feedback on the newsletter in this three-minute survey. Let us know what you enjoy most about the newsletter, what could be better, and what you’d like to see more of.

Share your thoughts in the Decode Fintech Survey 📝

I wrote this newsletter, and much of this year’s work, while listening to Olivia Dean’s amazing and not-at-all-chaotic Messy.

Have a great week!

Tochukwu Ironsi
Market Intelligence Specialist
Top News

Access Corporation obtains approval for a consumer lending subsidiary. Access Corporation has been busy. The recently structured holding company for Nigeria’s largest bank by assets has engaged in a string of acquisitions and regulatory approvals in the past few months, expanding both its presence and suite of products across Africa and beyond.

One of those approvals has been for Oxygen, a standalone consumer lending subsidiary in Nigeria. Unlike previous consumer lending attempts targeting Access Bank customers, the new entity will reportedly be available to all users and directly compete with big players like Carbon, Branch, and FairMoney.

Access has some structural advantages it can leverage to compete in digital lending. With over 42 million banking customers, Access has a large enough base to experiment and cheaply acquire users. Also, with access to a large pool of low-cost deposits, the new lending arm can offer lower interest rates in a way that most digital lenders, which have high capital costs, can’t.

That said, unsecured consumer lending, especially in emerging markets with no robust scoring and underwriting infrastructure, can be tricky and costly, especially in the early stages. Oxygen must not only invest in technology-enabled underwriting infrastructure that relies on alternative data but also be willing to stick past the early losses required to build user lending profiles. TechCabal [Nigeria]

Multigate, Flutterwave, and Chipper Cash acquired new remittance licenses. Multigate, a B2B treasury and payments fintech, received regulatory approval from the Central Bank of Kenya (CBK) to provide remittance solutions in Kenya. This follows similar approvals and licenses in countries like Nigeria, Uganda, the United States, and Canada.

Multigate is not the only fintech doubling down on cross-border payments through licensing. Both Chipper Cash and Flutterwave also announced new money transfer licenses from a couple of US states. The surge in migration, local currency depreciation, and the opportunity to earn foreign currency-denominated revenue has seen renewed interest from fintechs in remittances.

Remittances, though, are just a start. In Issue 179, we wrote: "Remittances might be just the first step of a multi-product expansion that includes consumer wallets and cross-border merchant ecommerce. This is apparent for Flutterwave, which already offers a breadth of consumer and merchant products, but can apply to other consumer remittance fintechs in the future."

Expansion is costly and even more so when VC funding is not freely flowing. So we expect most activity from well-funded fintechs that were already providing remittances as a core business or have seen non-remittance business lines stagnate and are looking for new growth levers or total pivot. IBS Intelligence. Chipper Cash. Flutterwave [Africa]

CBN suspends crypto ban and releases new guidelines for working with crypto companies. Nigeria’s apex regulator has suspended the 2020 ban that prevented licensed financial institutions from working with companies involved with cryptocurrencies. The CBN also released very stringent guidelines for how FIs can work with SEC-licensed crypto or digital asset entities and is reportedly working with commercial banks on a new stablecoin.

These developments have been met with generally positive reception by industry stakeholders. The CBN’s previously hawkish stance on crypto not only stymied formal access to an emerging foreign remittance channel but also hindered needed oversight and regulation of crypto’s more illicit corners.

In Issue 144, we compared Nigeria’s strategy to South Africa’s more relaxed crypto policies. Then we wrote: One way to manage the perceived risk associated with a financial product is to totally prevent customers and financial institutions from interacting with the product. Another way to manage that risk is to allow the financial product to carefully interact with existing risk frameworks and iterate those frameworks to minimize the risk over time.

With this guidance, the SARB has chosen the second approach. This allows banks to provide needed financial services to CASPs and maybe most importantly, enables the SARB to keep a keen eye on crypto, which has gained great organic adoption.

It seems both countries have now converged in the same direction, with providers in both countries seeking digital asset licenses and looking to work with financial institutions.

That said, the actual details of the CBN’s new guidelines still suggest that the regulator has a very conservative view of crypto. As Benjamin Dada brilliantly and rightfully points out in this thread, there are still stringent restrictions on which financial institutions can work with crypto companies and what those institutions can actually do.

Delayed settlement schedules, restricted deposit frequency (just twice a quarter), and an inability to leverage popular payment methods like virtual accounts are among the notable clauses within the new guidelines that can severely affect user experience and treasury operations for crypto companies that end up working with financial institutions. This is particularly pertinent as many crypto fintechs have evolved from just speculative trading playgrounds to crucial consumer platforms for international payments and remittances.

Thankfully, this is just a start. We expect some of these restrictions to lessen as the Nigerian regulator gains a better understanding of the space. Coindesk [Nigeria]

Other News
  • Kippa transfers KippaPay operations to Bloc. TechCabal [Nigeria]
  • BitMama acquires Payday. TechPoint [Nigeria]
  • Egypt’s sets EGP 15 million as minimum capital for Egyptian fintechs. Ahram [Egypt]
  • Are African neobanks going to survive the VC winter? Selma Ribica [Africa]

  • VC investments in African fintech declined by 56% in 2023. Partech [Africa]
  • Canza Finance completes $2.3 million fundraising round. TechCabal [Nigeria]
  • Bujeti raises $2 million in seed funding. TechPoint [Nigeria]
  • Cleva closes $1.5 million pre-seed round. TechCrunch [Nigeria]
  • UsPlus raises €2 million in debt. African Business [South Africa]
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Do you have an announcement, event, or job posting you'd like to share, or have you come across an interesting bit of African fintech news recently? Hit reply and let me know! I might be able to include it in next week's newsletter.
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