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Issue 84
Mar 21 - Apr 04, 2021

Hi there,

We are currently recruiting for the role of a Managing Editor at Paystack to help build Africa's largest business media network and lead our editorial efforts. If you are interested in wielding data and media to provide insight and narrative for some of the most ambitious businesses in Africa, please apply for this here.

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

Tochukwu Ironsi
Product Specialist, Paystack
South AfricaApple Pay launches in South Africa. Customers with select banks - Absa, Discovery, and Nedbank - will be able to add their cards to their Apple Pay wallets and make contactless payments with retailers. The service is available to just Visa cards for Absa and Discovery and all major issuers on Nedbank. TechCabal

Apple's iOS reportedly only has a 15.29% market share in South Africa compared to Android's 84.26%. However, it is counting on a boom in contactless payments in South Africa to gain more ground in the market. According to a 2020 Mastercard study, 75% of South African consumers say they use contactless forms of payments and the volume of contactless payments at grocery and pharmacy stores increased almost 13x from the previous year. This study was done at the start of the COVID-19 pandemic in March 2020 so we should expect an even more positive consumer trend towards contactless payments.

Despite the obvious opportunity, payments is still a two-sided network involving both customers and merchants. Adoption of this new payment method will rely just as much on customer preference as it will on retailers enabling Apple Pay functionality at the points of sale.
KenyaKenyan banks resume charges on in-house mobile money wallet transactions above Ksh 100. The Central Bank of Kenya has instructed commercial banks to resume the collection of charges for transactions above KSh 100 done through in-house MoMo wallets. In-house mobile money wallets are owned by banks to provide a wider range of financial services to customers. A large set of these customers are Savings and Credit Co-Operative Societies (SACCOs). SACCOs are critical players in the Kenyan financial system and rely very critically on these in-house MoMo wallets for their operations. The resumed charges will allow the banks viably cover the cost of servicing the SACCOs. Kenyan Wall Street

In December 2020, the CBK suspended transaction fee waivers for all mobile money P2P transfers below KSh 1000 but also shared new guidelines on pricing that focuses on affordability and frames mobile money as a public good. The thing however with transaction fees and associated costs is that they are enforced by the regulator and enjoyed by the customers but borne by the banks and PSPs. This downward revision of charges might encourage consumer adoption but can affect direct costs incurred in providing these financial services.

As the economy recovers, it will be interesting to see how the different players optimise revenue and operations in this new low-fee regime that has come to outlast the pandemic that kickstarted it.
AfricaMastercard to invest $100m in Airtel mobile money operations. The global payments company will commit $100m in exchange for a minority stake in Airtel Money, Airtel's mobile money venture. The new Mastercard investment values the subsidiary at ~ $2.65b and follows an earlier $200m investment by TPG's The Rise Fund for a minority stake in the company. As reported in the previous issue, Airtel Money is looking to raise some cash to drive sales and infrastructure as well as pay off some of their debt (which stood at almost $3b at March 2020). Financial Technology Africa

According to financial statements for the year ended March 2020, Airtel Africa's mobile money revenue grew by almost 29.4%, from $170m in 2019 to $220m in 2020. Compare this to the 9.9% growth in revenues from mobile services (data + voice) and you can see the clear opportunity for digital payments and why operators like Mastercard would be interested.

Mobile money is first-generation fintech built on the back of pre-internet mobile penetration. With the rise of smartphones and the internet on the continent, we will definitely see similar level of economic value unlocked from new fintechs operating with lower marginal costs and more user-friendly applications. 
EgyptSawari Ventures raises EGP 1b fund (~ $69m) to invest in Egyptian tech startups. Sawari Ventures, an Egyptian venture capital (VC) firm has raised EGP 440m (~$28m) to invest in Egyptian technology companies. The new fundraising round included investments from Misr Insurance Group, the National Bank of Egypt, and other local banks and firms. The VC firm had initially completed the first round of EGP 650m (~$41m) fundraising round led by the European Investment Bank and other foreign development institutions. This brings the total fund amount to about EGP 1b (~ $69m). Menabytes

The participation of both local and foreign capital is particularly interesting and as Derin Adebayo writes, might be a positive signal of increasing ecosystem maturity. Egypt has already seen its first tech unicorn in Fawry which is currently valued at over $2bn. We should expect more of this high-growth companies and possible exits as dedicated funds continue to provided much needed capital to the startups that need them. 
KenyaTanda secures undisclosed funding to drive regional expansion. The Kenyan fintech, which provides inventory financing and agency banking services to offline storefronts, has raised new undisclosed funding from HAVAÍC, Zedcrest Capital, DFS Lab, and some angel investors. The new funding will be invested in driving regional expansion in Kenya and then into international markets like Rwanda and Uganda. Disrupt Africa
NigeriaBankly completes $2m seed round. Bankly, which offers agency banking services to underbanked customers, has completed a $2m funding round led by Vault and Chrysalis Capital. The Nigerian fintech which is trying to digitise the process of offline savings and collections process will use the funding to expand their agent base and develop new consumer products. TechCrunch
GlobalVisa pilots USDC settlements on its network. The card networks giant has announced that transactions can be settled using USD Coin (USDC), a stablecoin powered by the Ethereum blockchain. is the first company to test the new capability and will be allowed to settle some of its transactions directly in USDC into Anchorage, a digital asset bank, and another Visa partner. Financial Technology Africa

This is yet another significant step in bringing crypto to the mainstream. Visa is the world's second-largest card payment network. Before now, crypto companies could issue cards tied to a crypto wallet but it required complex and costly fiat conversions for backend settlements. With Visa building crypto-native settlement rails potentially into their extensive global network, this will reduce treasury complexity and will allow merchants the option of an end-to-end crypto process.

At this point in the crypto story though, one cannot help but question the future of crypto as a purely decentralised digital value system. Satoshi Nakamoto's original vision for Bitcoin as a "truly peer-to-peer version of electronic cash..."was to remove the need for intermediaries in doing financial transactions. However, it seems this vision which is also shared by many DeFi purists might not be entirely possible if crypto is to ever go mainstream.

In modern society, multi-party value systems have always required mediators to efficiently match and align the interests of economic actors. These mediators have achieved distribution and cost advantages over time that are hard to dismantle. The better long-term strategy might be to partner with existing players to recognise shared advantages and double down on that instead.

Ultimately, it might be too early in the journey to predict the future - Fiat money dates back to the 11th century but Satoshi's white paper was published in 2008. However, if this future is one that trades decentralisation for an instant, borderless money network, then that is still a great way for the story to end. 
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