Visa has prioritized growth in Africa, and partnering with startups is central to its strategy.
This became obvious in 2019 after the global financial services giant entered a series of collaborations on the continent, but Visa confirmed it in their 2020 Investor Day presentation.
On the company’s annual call, participants mentioned Africa 28 times and featured regional startups prominently in the accompanying deck. Visa’s regional president for Central and Eastern Europe, Middle East and Africa (CEMEA), Andrew Torre, detailed the region’s payments potential and his company’s plans to tap it. “We’re partnering with non-conventional players to realize this potential — fintechs, neobanks and digital wallets — to reach the one billion consumer opportunity,” he said.
TechCrunch has covered a number of Visa’s Africa collaborations and spoke to two execs driving the company’s engagement with startups from Nigeria to South Africa.
Visa’s head of Strategic Partnerships, Fintech and Ventures for Africa, Otto Williams, has been out front, traveling the continent and engaging fintech founders.
Located in Cape Town, Visa’s group general manager for Sub-Saharan Africa, Aida Diarra, oversees the company’s operations in 48 countries. Visa has a long track record working with the region’s large banking entities, but that’s shifted to smaller ventures.
Image Credits: Visa
Africa is using digital finance as a means to stem the spread of COVID-19.
Governments and startups on the continent are implementing measures to shift a greater volume of payment transactions toward mobile money and away from cash — which the World Health Organization flagged as a conduit for the spread of 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, fintech — and startups focused on financial inclusion — now receive the majority of VC funding annually in Africa, according to recent data.
As COVID-19 cases began to grow in the continent’s major economies last week, the continent’s leader in digital payment adoption — Kenya — turned to mobile-money as a public-health tool.
Image Credits: Flickr
The company announced that all person-to-person (P2P) transactions under 1,000 Kenyan Schillings (≈ $10) would be free for three months.
The move came after Safaricom met with the country’s Central Bank and per a directive from Kenya’s President Uhuru Kenyatta “to explore ways of deepening mobile-money usage to reduce risk of spreading the virus through physical handling of cash,” according to a release provided to TechCrunch from Safaricom.
Kenya has one of the highest rates of mobile-money adoption in the world, largely due to the dominance of M-Pesa in the country, which stands as Africa’s 6th largest economy. Across Kenya’s population of 53 million, M-Pesa has 20.5 million customers and a network of 176,000 agents.
M-PESA Sector Stats 4Q 2019 per Kenya’s Communications Authority
With all major providers in Kenya there are 32 million subscribers, which means roughly 60% of the country’s population has access to mobile-money.
Ghana is also using digital finance as a monetary policy lever to reduce the spread of COVID-19
On March 20, the West African country’s central bank directed mobile money providers to waive fees on transactions of GH₵100 (≈ $18), with restrictions on transactions to withdraw cash from mobile-wallets.
Ghana’s monetary body also eased KYC requirements on mobile-money, allowing citizens to use existing mobile phone registrations to open accounts with the major digital payment providers, according to a March 18 Bank of Ghana release.
The trajectory of the coronavirus in Africa is prompting more countries and tech companies to include mobile finance as part of a broader response. The continent’s COVID-19 cases by country were in the single digits until recently, but those numbers spiked last week leading the World Health Organization to sound an alarm.
“About 10 days ago we had 5 countries affected, now we’ve got 30,” WHO Regional Director Dr Matshidiso Moeti said at a press conference Thursday. “It’s has been an extremely rapid…evolution.”
Source; World Health Organization
By the World Health Organization’s stats Monday there were 1321 COVID-19 cases in Sub-Saharan Africa and 34 confirmed deaths related to the virus — up from 463 cases and 10 deaths last Wednesday.
The country with 40% of the region’s cases is South Africa, which declared a national disaster last week, banned public gatherings and announced travel restrictions on the U.S.
Unlike Ghana and Kenya, the government in Africa’s second largest economy hasn’t issued directives toward mobile payments, but the situation with COVID-19 is pushing fintech startups to act, according to Yoco CEO Katlego Maphai.
The Series B stage venture develops and sells digital payment hardware and services for small businesses on a network of 80,000 clients that processes roughly $500 million annually.
Image Credits: Jake Bright
With the growth in coronavirus cases in South Africa, Yoco has issued a directive to clients to encourage customers to use the contactless payment option on its point of sale machines. The startup has also accelerated its development of a remote payment product, that would enable transfers on its client network via a weblink.
“This is an opportunity to start driving contactless adoption,” Maphai told TechCrunch on a call from Cape Town.
In Nigeria — home to Africa’s largest economy and population of 200 million — the growth of COVID-19 cases has shifted the country toward electronic payments and prompted one of the country’s largest digital payments startups to act.
Lagos based venture Paga made fee adjustments, allowing merchants to accept payments from Paga customers for free — a measure “aimed to help slow the spread of the coronavirus by reducing cash handling in Nigeria,” according to a company release.
Parts of Lagos — which is connected to Nigeria’s largest commercial hub of Lagos State — have begun to require digital payments in response to COVID-19, according to Paga’s CEO Tayo Oviosu .
“We’re seeing some stores that are saying they are not accepting cash anymore,” he told TechCrunch on a call from Lagos.
Image Credits: Paga
Paga already offers free P2P transfers on its multi-channel network of 24,840 agents and 14 million customers. The startup, that recently expanded to Mexico and partnered with Visa, will also allow free transfers up to roughly 5000 Naira (≈ $15) from customer accounts to bank accounts, to encourage more digital payments use in Nigeria.
Paga’s CEO believes the current COVID-19 crisis will encourage more digital finance adoption in Nigeria, which has shown a cash-is-king reluctance by parts of the population to use mobile payments.
“I think it will help move the needle, but it won’t be the final straw that breaks the camel’s back,” he said.
Time and research will determine if efforts of African governments and tech companies to encourage digital payments over physical currency yield results in halting the spread of COVID-19 on the continent.
It is a unique case-study of mobile finance in Africa being employed to impact human behavior during a public health emergency.
South African fintech startup Jumo closed a $55 million round from a diverse group of investors, the company confirmed.
Founded in 2015 and based in Cape Town, the venture offers a full tech stack for partners to build savings, lending, and insurance products for customers in emerging markets.
This week’s funding follows a $52 million raise by Jumo in 2018, led by U.S. investment bank Goldman Sachs, that saw the startup expand to Asia.
“This fresh investment comes from new and existing…investors including Goldman Sachs, Odey Asset Management and LeapFrog Investments,” Jumo said in a statement — though Goldman told TechCrunch its participation in this week’s round isn’t confirmed.
After the latest haul, Jumo has raised $146 million in capital, according to Crunchbase.
With its latest raise, the company plans to move into new markets and launch new products in Asia and Africa.
“I’m excited for our next phase. This backing will help us build a better business and break new ground,” Jumo founder Andrew Watkins-Ball said.
The company’s products have disbursed over $1 billion loans and served over 15 million people and small businesses, according to Jumo data.
Jumo is active in six markets and plans to expand to two new countries in Africa (Nigeria and Ivory Coast) and two in Asia (Bangladesh and India).
Nigeria, in particular, has become Africa’s unofficial capital for fintech development, surpassing Kenya in 2019 for drawing the most fintech specific and overall VC on the continent, according to WeeTracker.
Jumo joins a growing list of African digital-finance startups raising big money from outside investors and expanding abroad. A $200 million investment by Visa in 2019 catapulted Nigerian payments firm Interswitch to unicorn status, the same year the company launched its Verge card product on Discover’s global network.
Jumo’s funding also tracks Goldman Sachs’ growing investment in African startups. The U.S. bank has put several hundred million dollars into ventures on the continent — from Pan-African e-commerce company Jumia to Nigerian trucking-logistics firm Kobo360.
The first month of the new year saw Africa enter the fray of U.S. politics. The Trump administration announced last week it would halt immigration from Nigeria — Africa’s most populous nation with the continent’s largest economy and leading tech sector.
The presidential proclamation stops short of a full travel ban on the country of 200 million, but it suspends immigrant visas for Nigerians seeking citizenship and permanent resident status in the U.S.
The latest regulations are said not to apply to non-immigrant, temporary visas for tourist, business and medical visits.
The new policy follows Trump’s 2017 travel ban on predominantly Muslim countries. The primary reason for the latest restrictions, according to the Department of Homeland Security, was that the countries did not “meet the Department’s stronger security standards.”
Nigeria’s population is roughly 45 percent Muslim and the country has faced problems with terrorism, largely related to Boko Haram in its northeastern territory.
Restricting immigration to the U.S. from Nigeria, in particular, could impact commercial tech relations between the two countries.
Nigeria is the U.S.’s second largest African trading partner and the U.S. is the largest foreign investor in Nigeria.
Increasingly, the nature of the business relationship between the two countries is shifting to tech. Nigeria is steadily becoming Africa’s capital for VC, startups, rising founders and the entry of Silicon Valley companies.
Recent reporting by VC firm Partech shows Nigeria has become the number one country in Africa for venture investment. Much of that funding comes from American sources. The U.S. is arguably Nigeria’s strongest partner on tech and Nigeria, Silicon Valley’s chosen gateway for entering Africa. Examples include Visa’s 2019 investment in Nigerian fintech companies Flutterwave and Interswitch and Facebook and Google’s expansion in Nigeria.
Nigerian entrepreneur Iyinoluwa Aboyeji, who co-founded two tech companies — Flutterwave and Andela — with operations in the U.S. and Lagos, posted his thoughts on the latest restrictions on social media.
“Just had an interesting dinner convo about this visa ban with Nigerian tech professionals in the U.S. Sad… but silver lining is all the amazing and experienced Nigerian talent in U.S. tech companies who will now head on home,” he tweeted.
Notable market moves in African tech last month included an acquisition, global expansion and a couple big raises.
Nigerian digital payments startup Paga acquired Apposit, a software development company based in Ethiopia, for an undisclosed amount.
The Lagos-based venture also announced it would launch its payment products in Mexico this year and in Ethiopia imminently, CEO Tayo Oviosu told TechCrunch
The moves come a little over a year after Paga raised a $10 million Series B round and Oviosu announced the company’s intent to expand globally while speaking at Disrupt San Francisco.
Paga will leverage Apposit — which is U.S. incorporated but operates in Addis Ababa — to support that expansion into East Africa and Latin America.
Paga has created a multi-channel network to transfer money, pay bills, and buy goods digitally. The company has 14 million customers in Nigeria who can transfer funds from one of Paga’s 24,411 agents or through the startup’s mobile apps.
With the acquisition, Paga absorbs Apposit’s tech capabilities and team of 63 engineers. The company will direct its boosted capabilities and total workforce of 530 to support its expansion.
On the raise side, San Francisco and Lagos-based fintech startup Flutterwave (previously mentioned) raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.
The company will use the funding to expand capabilities to provide more solutions around the broader needs of its clients. Uber, Booking.com and Jumia are among the big names that use Flutterwave to process payments.
Last month, Africa’s logistics startup space gained another multi-million-dollar round with global backing. Kenyan company Sendy, an on-demand platform that connects clients to drivers and vehicles for goods delivery, raised a $20 million Series B led by Atlantica Ventures. Toyota Tsusho Corporation, a trade and investment arm of Japanese automotive company Toyota, also joined the round.
Sendy’s raise came within six months of Nigerian trucking logistics startup Kobo360’s $20 million Series A backed by Goldman Sachs. In November, East African on-demand delivery venture Lori Systems hauled in $30 million supported by Chinese investors.
The company plans to use its raise for new developer hires, to improve the tech of its platform, and toward expansion in West Africa in 2020.
Sendy’s $20 million round also includes an R&D arrangement with Toyota Tsusho Corporation to optimize trucks for the West African market, Sendy CEO Mesh Alloys told TechCrunch.
More Africa-related stories @TechCrunch
African tech around the ‘net
The moves come a little over a year after Paga raised a $10 million Series B round and Oviosu announced the company’s intent to expand globally, while speaking at Disrupt San Francisco.
Paga will leverage Apposit — which is U.S. incorporated but operates in Addis Ababa — to support that expansion into East Africa and Latin America.
Behind the acquisition is a story threaded with serendipity, return, and collaboration.
Both Paga and Apposit were founded by repatriate entrepreneurs. Oviosu did his MBA at Stanford University and worked at Cisco Systems before returning to Nigeria.
Apposit CEO Adam Abate moved back to Ethiopia 17 years ago for an assignment in the country’s Ministry of Finance, after studying at Brown University and working in fintech in New York.
“I put together a team…to build…public financial management systems for the country. And during the process…brought in my best friend Eric Chijioke…to be a technical engineer,” said Abate.
The two teamed up with Simon Solomon in 2007 to co-found Apposit, with a focus on building large-scale enterprise software for Africa.
Apposit partners (L-R) Adam Abate, Simon Solomon, Eric Chijioke, Gideon Abate
A year later, Oviosu met Chijioke when he crashed at his house while visiting Ethiopia for a wedding. It just so happened Chijioke’s brother was his roommate at Stanford.
That meeting began an extended conversation between the two on digital-finance innovation in Africa and eventually led to a Paga partnership with Apposit in 2010.
Apposit dedicated an engineering team to build Paga’s payment platform, Eric Chijioke became Paga’s CTO (while maintaining his Apposit role) and Apposit backed Paga.
“We aligned ourselves as African entrepreneurs…which then developed into a close relationship where we became…investors in Paga and strategically aligned,” said Abate.
Fast forward a decade, and the two companies have come pretty far. Apposit has grown its business into a team of 63 engineers and technicians and has racked up a list of client partnerships. The company helped digitize the Ethiopian Commodities Exchange and has contracted on IT and software solutions with banks non-profits and brick and mortar companies.
For a decade, Apposit has also supported Paga’s payment product development.
Over that period, Oviosu and team went to work building Paga’s platform and driving digital payment adoption in Nigeria, home to Africa’s largest economy and population of 200 million.
That’s been no small task considering Nigeria’s percentage of unbanked was pegged as high as at 70% in 2011 and still lingers around 60% in 2017 by, according to The Global Findex database.
Paga has created a multi-channel network to transfer money, pay-bills, and buy things digitally. The company has 14 million customers in Nigeria who can transfer funds from one of Paga’s 24,411 agents or through the startup’s mobile apps.
Paga products work on iOS, Android, and basic USSD phones using a star, hashtag option. The company has remittance partnerships with the likes of Western Union and allows for third-party integration of its app.
Since inception, the startup has processed 104 million transactions worth $6.6 billion, according to Oviosu.
With the acquisition, Paga absorbs Apposit’s tech capabilities and team of 63 engineers. The company will direct its boosted capabilities and total workforce of 530 to support expansion.
Paga plans its Mexico launch in 2020, according to Oviosu.
Adam Abate is now CEO of Paga Ethiopia, where Paga plans to go live as soon as it gains a local banking license. The East African nation of 100 million, with the continent’s seventh largest economy, is bidding to become Africa’s next startup hub, though it still lags the continent’s tech standouts — like Nigeria and Kenya — in startup formation, ISP options and VC.
Ethiopia has also been slow to adopt digital finance, with less than 1% of the population using mobile-money, compared to 73% for Kenya, Africa’s mobile-payments leader.
Paga aims to shift the financial needle in the country. “The goal is straight-forward. We want Ethiopians to use the Paga wallet as their payment account. So it’s about digitizing cash transactions and driving financial services,” said Oviosu.
Paga CEO Tayo Oviosu
With the Apposit acquisition and country expansion, he also looks to grow Paga’s model in Africa and beyond, as an emerging markets fintech solution.
“There are several very large countries around the world in Africa, Latin America, Asia where these [financial inclusion] problems still exist. So our strategy is not an African strategy…We want to go where these problems exist in a large way and build a global payments business,” Oviosu said.
As it grows abroad, Paga faces greater competition in Nigeria. For the last decade, South Africa and Kenya — with the success of Safaricom’s M-Pesa product — have been Africa’s standouts in digital payments.
But over the last several years, Nigeria has become a magnet for VC and fintech startups. This trend reached a high-point in 2019 when Chinese investors put $220 million into Opera owned OPay and Transsion backed PalmPay — two fledgling startups with plans to scale in Nigeria and broader Africa.
That’s a hefty war chest compared to Paga’s total VC haul of $34 million, according to Crunchbase.
Oviosu names product market fit and benefits from the company’s expansion as factors that will keep it ahead of these well-funded new entrants.
“That’s where the world-class technology comes in,” he said.
“We also take a perspective that we cannot build every use-case,” he said — contrasting Paga’s model to Opera in Africa, which has launched multiple startup verticals around its OPay product, from ride-hailing to food-delivery.
Oviosu compares Paga’s approach to PayPal, which allows third-party developers to shape businesses around PayPal as the payment solution.
With its Apposit acquisition and plans for continued expansion, PayPal may become more than a model for Paga.
With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — told TechCrunch.
The company will also expand capabilities to offer more services around its payment products.
“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,” said GB.
That means Flutterwave will provide more solutions around the broader needs of its clients.
The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.
Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.
In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.
Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.
“We want to scale in all those markets and be the payment processor of choice,” GB said.
The company will hire more business development staff and expand its developer team to create more sector expertise, according to GB.
“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said. And Fluterwave aims to offer more capabilities toward what those clients want to do in Africa.
Olugbenga Agboola, aka GB
“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” GB explained.
That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.
The new round makes Flutterwave the payment provider for Worldpay in Africa.
In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.
Therein lies the benefit of collaborating with Flutterwave.
FIS’s Head of Ventures Joon Cho confirmed the partnership with TechCrunch. FIS also backed Flutterwave’s $35 million Series B. US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor and African fund CRE Venture Capital.
Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech venture announced a series of weighty partnerships.
In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.
Flutterwave’s $35 million round and latest partnership are among the reasons the startup has become a standout in Africa’s digital-finance landscape.
As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.
While a number of payment startups and products have scaled — see Paga in Nigeria and M-Pesa in Kenya — the majority of the continent’s fintech companies are P2P in focus and segregated to one or two markets.
Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.
The value the startup has created is underscored not just by transactional volume the company generates, but the partnerships it has attracted.
A growing list of the masters of the payment universe — Visa, Alipay, Worldpay — have shown they need Flutterwave to do finance in Africa.