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Issue 82
Mar 01 - Mar 07, 2021

Hi there,

Bolaji and Simi refused my application to be their hand luggage on their Nairobi work-cation so I am writing this newsletter from a small, joyless room in Maryland, Lagos.

Talking about Lagos, the vaccines are here and while they might not be available to everyone yet, it is still really hopeful news!

Till then though, stay safe and wear a mask.

Tochukwu Ironsi
Product Specialist, Paystack
AfricaFlutterwave raises $170m in series C round. This latest round values the African fintech company at roughly $1B. The new funding, which was led by Tiger Global and Avenir Growth Capital, will enable Flutterwave to develop new products and launch in even more markets.  TechCrunch

This is really great news and speaks to the massive African fintech opportunity. A key theme in this week's newsletter is fintechs enabling financial services for non-fintechs and unlocking immense value for millions of users on the continent. Flutterwave and Paystack have been instrumental in building and simplifying fundamental fintech blocks like payments, issuing and verification. As technology continues to mature both in adoption and innovation, we expect even more value to be unlocked at higher levels of the fintech stack.

Also important to note that this is reportedly Tiger Global's first African fintech investment and Avenir's first African investment ever. This is a really positive signal of the potential value, velocity, and source of future funding for start-ups across Africa - More mega funding rounds from international investors as these capital allocators either recognise the very real African opportunity or 'spray and pray' for fear of missing out. In the end, whether you decide to bet on the future of the continent or not, the house still wins. 
NigeriaImali Pay completes undisclosed pre-seed round. Imali Pay, a fintech company headquartered in Nigeria with operations in Kenya and South Africa, has raised undisclosed pre-seed funding. The funding round was led by Australian VC firm, TEN13 and will allow the fintech which is focused on gig workers to expand their customer base. Disrupt Africa

Imali's strategy is particularly interesting as they are not directly acquiring these gig workers but partnering with gig platforms like Bolt and Glovo to provide embedded financial services via APIs. This is yet another example of fintechs enabling non-fintechs to provide financial services to their users.
NigeriaOkra partners with Autochek to offer car loans. Autochek, a digital marketplace, has partnered with Okra and other financial institutions to provide auto financing options to customers looking to purchase cars on credit. The Okra integration will allow customers applying for car financing to easily provide transaction history to the financing partners on the Autochek platform. Disrupt Africa

To provide credit in formal financial systems, you typically need capital, borrower demand, and customer financial information. With capital and demand being relatively ubiquitous, it's getting easier to access credit albeit at varying costs. However information regarding an individual or business' credit-worthiness is still largely guarded by banks and legacy financial institutions. Unfortunately, these legacy institutions have typically directed available capital to institutional borrowers and high net-worth individuals, neglecting the average consumer.

Fintechs like Okra, Mono and Stitch are democratising access to this data which has largely been guarded by the banks. This enables non-fintechs like Autochek to provide additional services and provide more value to their customers. This is a trend that I expect to continue as a combination of rising inflation and income stagnation will require more businesses to adopt new ways for customers to affordably pay for their products.
TwitterIdeas are cookin' in the SA's fintech sandbox. Ububele (@_ubsta) shares a list of companies testing products using South Africa's Intergovernmental Fintech Working Group (IFWG) fintech sandbox in this tweet.

In Issue 50, we reported on the launch of IFWG's sandbox which was designed to allow startups and incumbents to test ideas and ascertain potential regulatory risks. The variance of products ideas, from P2P crowdfunding to private blockchain-enabled remittance, seems very promising and might encourage other players and even African governments to adopt this model.
KenyaCentral Bank of Kenya proposes new digital lending regulations. The key changes to the existing CBK Act will require digital lenders to register with the CBK and also disclose all fees and interest payments on their loans. This comes after increased reports of predatory lending practices which included vague loan terms with high interest rates and hidden penalties for late payments. Kenyan Wall Street

There has been a significant spike in digital retail lending in Kenya as a result of increased smartphone use and internet penetration. According to a 2019 report by the Centre for Financial Inclusion, 86% of all loans issued to Kenyans in 2016-2018 were issued digitally. Non-traditional lenders are leveraging the low distribution costs native to the internet and access to more user data to issue micro loans to millions of consumers. However, the lowered barrier of entry combined with nascent digital lending regulation has also led to a glut of bad-faith actors exploiting customers with shady loan terms and trapping people in debt.

In issue 64, we did mention some of these outrageous interest rates offered to borrowers are due to the risk profile of the market and the fact that these loans are largely unsecured. However, these shady actors still need to be curbed and these proposed changes should lead to better consumer protection. We also expect this level of digital lending regulation to be adopted by other regions as more people across the continent continue to access digital lending. 
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