The economic effects of COVID-19 could delay Africa’s next big IPO — that of Nigerian fintech unicorn Interswitch.
If so, it wouldn’t be the first time the Lagos-based payments company’s plans for going public were postponed; the tech world has been anticipating Interswitch’s stock market debut since 2016.
For the continent’s innovation ecosystem, there’s a lot riding on the digital finance company’s IPO. After e-commerce venture Jumia, it would become only the second listing of a VC-backed African tech company on a major exchange. And Interswitch’s stock market debut — when it occurs — could bring more investor attention and less controversy to the region’s startup scene.
TechCrunch reached out to Interswitch on the window for listing, but the company declined to comment. The tech firm’s path from startup to IPO aspirant traces back to the vision of founder Mitchell Elegbe, a Nigerian electrical engineering graduate whose entire career has pretty much been Interswitch.
Africa’s tech scene is still fairly young, but it does have a timeline with several definitive points. An early one would be the success of mobile money in East Africa, with the launch of Safaricom’s M-Pesa in 2007. Another is the notable wave of VC-backed startups and founders that launched around 2010.
Interswitch CEO Mitchell Elegbe (Photo Credits: Interswitch)
With Interswtich, Elegbe pre-dated both by a number of years, founding his fintech company back in 2002 to connect Nigeria’s largely disconnected banking system. The firm became a pioneer of the infrastructure to digitize Nigeria’s economy.
Interswitch created the first electronic switch whereby Nigerian financial institutions could communicate and thereby operate ATMs and point of sales operations. The company now provides much of the rails for Nigeria’s online banking system.
Nintendo today confirmed earlier reports of account breaches dating back over the past few weeks.The gaming giant issued an update (via Nintendo Japan) noting that around 160,000 Nintendo Accounts were impacted, which found multiple being used to purchase digital items without the owner’s consent. Along with the purchasing powers, the offending parties may have also gained access to personal information, including D.O.B. and email addresses.
The issue appears frequency of account access appears to have increased in recent weeks. To address the matter, the company is shutting down log-ins via NNID (Nintendo Network ID), an older account system that dates back to the 3DS/Wii U. Nintendo is resetting passwords for those impacted and recommending that everyone (impacted or not) enable two-factor authentication for their systems.
It will also be sending out notifications for the 160,000 or so users who were targeted during the month of April. The company noted earlier this week that it was investigating the issue, which found many users seeing unexpected purchases of items including Fortnite V-Bucks, using a connected PayPal account.
Nintendo appears to still be trying to get to the bottom of how the parties gained access to the NNID info, beyond “by some means other than our service.” It has been asking for users to submit feedback in an attempt to locate the source of the breach.
Africa focused payment startup PalmPay will waive transfer fees in Nigeria and offer direct payouts to customers who have contracted COVID-19 in the West African country.
The venture — that launched in 2019 backed by China’s Transsion — has created the PalmPay Support Fund. The initiative will start with 100 million Naira (≈ $300K) and offer individual payments of 100,000 Naira (≈ $250) to PalmPay customers who have contracted the coronavirus.
The startup will expand the fund’s value by providing a matching gift per customer transaction for at least on month. PalmPay will also extend the fund to offer grants to organizations working on coronavirus mitigation and assistance efforts in Nigeria.
On the structure of the initiative — and adding a matching function — PalmPay aims to create interactivity with its clients on coronavirus relief efforts. “We want to provide relief…and get our customers feeling that they’re adding something to it as well,” PalmPay CEO Greg Reeve told TechCrunch on a call.
The company has created a page on its app for applications and funds dispersal. PalmPay is working with Nigeria’s Center for Disease Control on a verification process to confirm those who apply have tested positive for COVID-19, according to Reeve.
Image Credits: PalmPay
PalmPay’s initiative comes as COVID-19 has hit Africa’s largest economies and the continent’s fintech platforms have been mobilized as tools to stem the spread.
Early in March, Africa’s coronavirus numbers by country were in the single digits, but by mid-month those numbers had spiked, leading the World Health Organization’s Regional Director Dr Matshidiso Moeti to sound an alarm.
Countries such as South Africa, Kenya and Nigeria — which happen to be Africa’s top tech hubs — have imposed social distancing and lockdown practices.
Governments and startups on the continent have also turned to measures to shift a greater volume of financial transactions to digital payments and away from cash — which the World Health Organization flagged as a conduit for the coronavirus.
It’s an option facilitated by the boom in fintech that’s occurred in Africa over the last decade. By several estimates, the continent is home to the largest share of the world’s unbanked population and has a sizable number of underbanked consumers and SMEs.
But because of that opportunity, fintech startups now receive the majority of VC funding annually in Africa, according to recent data.
Increasingly, Nigeria has become the focal point for digital finance development on the continent, boasting Africa’s largest economy and population (200 million).
PalmPay launched in Nigeria last year on the back of one of Africa’s largest 2019 seed-rounds — $40 million led by Transsion. In addition to a lot of capital, the investment came with an additional competitive advantage for the startup. Through its Tecno brand, Transsion is the largest seller of smartphones in Africa and PalmPay now comes preinstalled on all Tecno devices.
Image Credits: Jake Bright
While PalmPay reamins in the race to capture fintech market share in Nigeria, for now the startup looks to weather the COVID-19 crisis in the country. Like most of Nigeria — and much of the world — PalmPay’s staff are on lockdown and working from home, according to the company’s CEO.
Commercial times in the country could be tough into the next year. Nigeria has already seen a reduction in economic activity as a result of COVID-19, and as a major oil producer, the country will face an additional economic blow due to the drop in demand the pandemic has dealt to petroleum markets.
A trend that could come out of the crisis that benefits fintech players, according to PalmPay CEO Greg Reeve, is greater digital finance adoption in Nigeria. In the past, the country has shown a cash-is-king reluctance by parts of the population to use mobile payments and lagged Africa’s digital finance leaders Kenya and South Africa.
The current health crisis could shift consumer habits in Nigeria, according to Reeve. “We’ve seen an increased use in our service, whilst people aren’t able to move around,” he said.
“There is a natural uptake right now for services like mobile money and I think when people start to use it, they’ll continue to use it when the COVID-19 ceases.”
Nintendo is selling a lot of Switches. The convertible console has been a lifesaver for people sheltering in place around the world. COVID-19-induced travel restrictions and the long-awaited arrival of Animal Crossing: New Horizons have proven to be a perfect storm for the three-year-old platform.
New numbers out from NPD this morning shed some light on just how good last month was for Nintendo. Switch sales more than double their numbers from March 2019, per the analyst firm. It was a March record for the console, which launched in March 2017. It was also the best first quarter unit sales for any gaming console since the company’s DS system, way back in 2010.
— Mat Piscatella (@MatPiscatella) April 21, 2020
The arrival of Animal Crossing: New Horizons was no doubt a bit part of the sales bump. The latest addition to the popular sim series was both the the best selling game on any platform for March and had the third-best -selling launch month of any title in Nintendo’s history since NPD started tracking. Only Super Smash Bros. Ultimate and Super Smash Bros. Brawl (2018 and 2008, respectively) sold more physical units in their first month.
New Horizons is already the best selling title in Animal Crossing’s history, according to the firm. Both the timing of the title and its focus on social gaming play have been a huge boost to the game. It’s also been a hit with critics, currently sporting a 91% on Metacritic.
Stores have struggled to keep Switch units in stock amid a sharp bump in sales. Nintendo is reportedly boosting production of the system up by 10% in order to keep up with demand.