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Issue 83
Mar 08 - Mar 21, 2021

Hi there,

Bolaji and I are still in Nairobi living our best lives. I'm definitely not looking forward to coming back to Lagos and the stress that comes with living there.

In other news, the COVID vaccine is now in Nigeria and some of my friends and colleagues have gotten their first dose of the vaccine. I would encourage you to take the vaccine if you can. Feel free to watch this video from Vox which breaks down the efficacy of each vaccine.

Enjoy the rest of your week and remember to stay masked up.

Simileoluwa Afolabi-Jombo
Product Specialist, Paystack
NigeriaNIBSS launches NQR Code payment system in Nigeria. Nigeria Inter-Bank Settlement System (NIBSS) has announced the launch of the New Quick Response (NQR), a payment solution that allows users to complete a purchase at the point of sale by scanning a QR code. Each code will have unique details containing the information relating to the transaction and would link with a customer’s Banking App, already enabled on their smartphone. Financial Technology Africa

Previously in issue 78, we talked about CBN finalising the framework for QR code payments in Nigeria. This announcement looks like a move in the direction of adopting QR payments in the country.
NigeriaFlutterwave teams up with Paypal to facilitate payments within Africa. The newly minted unicorn will now allow merchants in select African countries receive payments via PayPal on the Flutterwave Checkout. TechCrunch

Prior to now, PayPal had maintained a one-sided relationship with most countries on the continent, allowing customers to send money to other PayPal customers. And according to their website, only 12 African countries - Algeria, Botswana, Egypt, Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Senegal, Seychelles, and South Africa can send and receive money on the platform, but with varying levels of restriction. A big player missing from the list of countries is Nigeria due to their history with internet fraud.
NigeriaNigerian customers to pay N6.98 per USSD transaction. The Central Bank of Nigeria (CBN) has introduced a new billing structure to pass down USSD charges to customers. The new charge was part of the agreement reached when banks and telecommunication operators met on Monday, the 22nd of March to discuss the N42bn debt owed mobile operators by banks. This will mean that customers are charged a flat fee of N6.98 per transaction replacing the current N4 per session billing structure. Mobile Money Africa

The Unstructured Supplementary Service Data (USSD) system is a machine-to-machine (M2M) communication protocol that was initially designed to allow devices to send and receive information within a mobile network. This feature - the ability to transmit information over a network without the internet - expanded the scope of the service and has been pivotal to the growth of digital financial services on the continent.

As of 2017, Africa has a 17% internet penetration but a much higher mobile phone penetration at 80%, a gap that has since become USSD's gain. USSD has been touted as one of the strategic drivers for financial inclusion. Africans, have mostly been using shortcodes on low-cost devices to access multiple financial services (money transfer, lending and bill payments, etc) without having to go to the bank. In the first half of 2020, GTB customers processed over 355 million USSD transactions.

However, while USSD does not require an internet connection, there are still network and infrastructure costs incurred to make this available to customers (as is with voice and data). And given the rate of adoption and economic incentives, the mobile networks and financial institutions must have spent billions of dollars on infrastructure and marketing. It is now clear that there was never any proper consideration among these parties on who would bear those up-front capital costs in the future.

Adoption of financial services typically follows the path of least resistance - assured value and low transaction costs. With customers now having to pay USSD network fees in addition to banking fees, there might be less incentive to continue to use the platform. In the end, this loss might turn out this time to be the internet's gain as users might have no option but to stick or totally even switch to mobile apps and internet banking for their financial needs. 
South AfricaHuawei partners with MTN South Africa to launch a new payment solution. The service called Direct Carrier Billing (DCB) payment solution will allow users to make purchases from Huawei Mobile Services using their airtime. DCB will first be available to MTN users who own Huawei devices and then will be rolled out later to other networks. Afrikan Heroes

DCB is very similar to mobile money as users are able to pay for services from a wallet-like system. The difference here is that instead of using actual money to pay for services, post-paid customers will now have the amount spent added to their monthly mobile phone bill, while prepaid customers will have the amount deducted directly from their available airtime.
NigeriaKuda secures $25m Series A round to fund growth strategy. The Nigerian digital banking startup who previously raised $10m seed funding in November 2020 has received funding from Valar Ventures, Target Global, which is an international venture capital firm headquartered in Berlin, and several other existing investors. The company plans to speed up customer acquisition, expand leadership roles, and build out new features. Disrupt Africa

It is important to highlight the short time between pre-seed and series A raise might signal that the Kuda team is doing something right and we are looking forward to more news from them.
EthiopiaEthSwitch secures $2.33 million grant from AfDB. African Development Bank (AfDB) has approved a $2.33 million grant for EthSwitch to improve their payments infrastructure. EthSwitch is the official backbone for e-payments providers and end-users in Ethiopia. EthSwitch runs Ethiopay, the card scheme that helps Ethiopian banks issue payment cards. As the country’s national payment switch, the company also handles dispute resolution for financial institutions. TechCabal

There is a lot currently going on in Ethiopia's e-payment industry with Visa's recent announcement of partnering with various companies such as Ethiopian Airlines, Kifiya FinTech, Bank of Abyssinia, Oromia International Bank, amongst others to improve their financial ecosystem. It'll be interesting to see the products that will be created as a result of these multiple partnerships.
AfricaThe Rise Fund to invest $200 million in Airtel money. Telecommunications company, Airtel Africa, has signed an agreement with The Rise Fund, a global impact investment platform, to invest $200 million in its mobile money business at a $2.65 billion valuation. The transaction will give The Rise Fund a minority stake in the company and is pending customary closing conditions, including regulatory filings and approvals. Mobile Money Africa

This announcement does not come as a shock, in issue 79, we spoke about Airtel Africa selling a stake in its business to raise cash. According to the statement released, the parent company will use the funds to reduce debt and invest in network and sales infrastructure in the operating countries.
EgyptEgyptian Fintech, NowPay, joins Y Combinator, secures new funding. The startup who previously raised $2.1 million in a seed round last year, has raised new undisclosed funding in a Pre-Series A round and is a part of Y Combinator’s ongoing Winter 2021 batch. The new funding will further assist the fintech startup towards their expansion into international markets. Founded by Mostafa Ashour and Ahmed Sabry, NowPay, is a financial wellness platform that enables corporates to offer salary advances to their employees. Afrikan Heroes
EthiopiaEthiopian Fintech Startup, ArifPay, raises $3.5million. Barely one month after launch, the startup has raised $1 million paid capital and $2.5 million subscribed capital in a private placement round from 31 investors. The National Bank of Ethiopia is currently processing ArifPay’s application for a Payment System Operator License and the company plans to have their services up and running by the end of May 2021. ArifPay is a mobile point of sale system which will allow ATM cardholders to make electronic transactions via their smartphones. Afrikan Heroes

It's important to note that all investors are Ethiopians or Ethiopian-born foreign nationals which is because Ethiopia continues to place a bar on foreigners owning stakes in banking, insurance, brokerage services, and legal consultancy businesses.

For those who don't know this, Paid-up capital is the amount of money a company has received from shareholders in exchange for shares of stock usually through an initial public offering (IPO) while Subscribed share capital is that part of issued share capital which investors have promised to buy once it's available for purchase.
NigeriaRemittance Platform, Cowrie, raises $750k investment. The Nigerian fintech company which facilitates crypto remittance transfers in Nigeria has raised funding from Stellar Development Foundation to continue their expansion across Africa. Cowrie allows Nigerians in other countries to send money to their families by converting their funds to NGNT, a token backed by Nigeria’s native Naira currency. The funds are transferred directly to the local bank accounts of recipients. Afrikan Heroes
EgyptDayra joins Y Combinator, raises $3 million in a pre-seed round. The Egyptian fintech startup is a part of Y Combinator’s ongoing Winter 2021 batch and has raised funding that includes a mix of equity and debt financing from Tanmiya Capital Ventures, EFG EV, EFG Hermes, and different angel investors. Dayra enables companies of different sizes to provide financial services to their workforce through APIs and their mobile app. Financial Technology Africa
South AfricaSouth African fintech, Adumo, raises $15 million from IFC. The payments processing startup raised $15 million in preferred shares via the IFC Financial Institutions Growth Fund to expand their product offerings. Disrupt Africa

Preferred shares are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued. If the company enters bankruptcy, preferred stockholders are entitled to be paid from company assets before common stockholders.
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