Egypt's Sawari Ventures Launches $200M Fund for African Startups, Nigeria's OmniRetail Acquires Payment Platform Traction Apps, and More
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Stablecoin is the future of Africa's Remittance & Trade with Rest of the World?
From the Desk of Zekarias Amsalu
Following the cryptocurrency crisis nearly 3 years ago, I highlighted in my editorial on Jan 27, ?2022, that ?‘cryptocurrency's future is being defined in Africa’ and the life-changing use cases and utilities in Africa are one to watch for the years to come. Fast forward to October 2024, and stablecoins are now taken as the ‘holy grail’ of cross-border trade, international remittance, and the movement of the value of money. While the realization of stablecoins as the future of global commerce is becoming apparent of late, especially at the announcement of Stripe’s acquisition of stablecoin startup Bridge this week , Africa has been ahead of the game in utilizing stablecoin as a solution in cross-border trade and value transfer for years.
For example, AFTS2020 pitch competition participant fonbnk has been enabling on/off ramping of airtime to stablecoins and power global trade since 2020. Another AFTS2019 pitch competition participant that recently raised $33M in Series C round, YellowCard , ?has been using stablecoins to enable African businesses and SMEs to participate in the global economy and manage their treasury with stablecoins since 2019. South African FiveWest has been enabling businesses to trade globally with stablecoin settlements. Africa’s highest-valued unicorn,?Flutterwave, ?has onboarded an SVP for Crypto/Stablecoin as it deploys stablecoin for its international remittance operations. Circle , the issuer of USDC, also recently announced a partnership with Onafriq at AFTSNAIROBI24 last September , while Tether , Ripple , Coinbase , Paypal , Block/TBD ?have all partnered with African Fintechs in the deployment of those digital assets in Africa for wider financial inclusion in recent years. Global payment giant Visa has also unveiled Visa Tokenized Asset Platform? ( ?VTAP) .?
The question is, why is the adoption of stablecoins booming in Africa??Simply put, real-life use cases for the masses. Other?reasons include that technology has enabled individuals & businesses in Africa to play in the global economy, which would not have been possible due to a lack of access to dollars through the banking system. With stablecoins, businesses can now manage their treasury for global operations and hedge against currency risks and local inflation. Plus, most SME transactions in Africa are smaller amounts, making stablecoin transaction costs suited to power those transactions. Hence, we are now saying that Stablecoins are the future of Africa’s remittance and cross-border trade with the rest of the world.
The wider adoption of stablecoins, however, needs regulatory oversight and support, and once again, regulators in Africa follow the Kenyan-mantra of ‘regulation after innovation’ that enabled the rise of M-PESA. The question for regulators, for example, will be:- If businesses are already using stablecoins for treasury functions and international trade, will formalizing the process and use of the technology also help national balances of payment and cooperation with businesses for regulatory compliance initiatives, including AML/CTF??Will the wider deployment of stablecoins in inward remittances help reduce the high cost of remittance costs and enable Africa to secure much of the around $60B annual remittances for economic development?
At the industry level, what does the acquisition of Stablecoin startup Bridge by Stripe mean for African blockchain startups? A full circle moment as it may seem. When Stripe acquired African Fintech Paystack, I provided the below statement in my interview with the Global Finance Magazine in October 2022 :-
“…the acquisition of Paystack is not a one-off and Africa will witness several more strategic acquisitions and investment in the months and years to come. Stripe has been ‘dating’ Paystack, as it were, for about 2 years since their Series A investment in 2018 that led to successful ‘I do’ in the form of acquisition. Several other global fintech and tech companies…..have been ‘dating’ other leading African fintech startups by participating in investment rounds and in my view the next wave of acquisition comes from those ‘dating’ expeditions as that partnership gives international investors privileged access to strategy, technology, execution and future cash flow. I expect some of these investors will start to woo the fintechs they invested in and follow Stripe’s footstep in forming other ‘I do’s.” ?
Given our expectation of Stablecoin’s place being the future of Africa’s global trade and remittance, the above sentiment now also applies to those that proved the use-cases & utilities of stablecoins in trenches of Africa for years - African crypto exchanges, orchestration startups, on/off ramp solution providers, global payroll solution startups and blockchain payment infrastructure startups - ?that will see their valuation appreciated and be in the purview of global fintechs as?potential targets of acquisition, partnerships, and investments. ??
Happy Reading!
Zekarias Amsalu,
Co-Founder & MD -?Africa Fintech Summit Founder & CEO - Ibex Frontier
Making the News?
Thunes Integrates with Swift, Enables Banks to Access 3 Billion Mobile Wallets Globally
Singapore-based global Fintech Giant Thunes announced integration with SWIFT, enabling banks to connect to over 3 billion mobile wallets across 130 countries and over 120 mobile wallet brands globally, including popular names like GCash, M-Pesa, and WeChat Pay - Fintech Industry Examiner .
JPMorgan Expects South Africa IPO Surge
JP Morgan, which opened offices in Nairobi and Abidjan last week, says as SA's equity market performance and valuations return to more appropriate levels, the incentive and the ability to issue equity or IPO a business becomes a viable option. South African Supermarket Pick n Pay, that added Cryptocurrency as one of its payment option in thousands of stores, is expected to complete its IPO before end of the year - Bloomberg .
Ivory Coast joins Botswana & Mauritius as Top-rated Sovereign Market?
Ivory Coast became one of sub-Saharan Africa’s top-rated sovereigns alongside Botswana and Mauritius after S&P Global raised its credit rating, giving its bonds room to narrow their extra spread over South Africa - Bloomberg .
Merger & Acquisition Activity
USA - Stripe , which acquired African Fintech success story Paystack in 2020 , has this week completed yet another significant move by acquiring stablecoin platform Bridge at $1.1B, the biggest M&A for the stablecoin universe to date - Cointelegraph .
Nigeria - OmniRetail , a Nigeria-based B2B e-commerce platform, has acquired Traction Apps , a payment solutions provider to enhance financial services and trade solutions for SMEs - Business Day .
Banking & Telecom Activity
Nigeria - IHS Towers , Africa’s largest telecom tower company, has secured a new $439 million loan to manage currency risks and support its operations across multiple regions. Almost half of the loan is in South African Rand, while the other half is in USD ($255 million) - Techcabal .
Nigeria - The Nigerian government has entered a strategic partnership with Ericsson via an MOU signed last week to explore the potential of 5G technology in the country. The MoU establishes?a framework for cooperation between the Nigerian government and Ericsson Nigeria, focusing on the development, deployment, and innovation of 5G technology - Techpoint.Africa
Nigeria - Nigerian banks race to raise capital after order to bolster balance sheets. The Central Bank of Nigeria has given Nigerian commercial banks until March 2026 to meet the capital requirement - FT. ?
Startup Activity?
South Africa -?South African e-commerce logistics company Pargo has raised $4 million in funding to support its expansion into Egypt, where it has launched with over 500 tech-enabled “Pargo Points” - Disrupt Africa. ?
Ghana -?Aya Data , a Ghanaian artificial intelligence (AI) startup, has successfully raised $900,000 in a seed funding round led by 54 Collective, with additional contributions from several angel investors - Empower Africa.
Nigeria -?Earthbond , a climate tech startup unlocking affordable, reliable solar energy for Nigerian SMEs via an integrated clean energy marketplace, has secured investment from Madica, a structured investment program designed for pre-seed stage startups in Africa - Techlabari .
Kenya -?BasiGo , a Kenya-based electric bus startup founded in 2021, has closed a $24 million Series A equity round and an additional $17.5 million in debt funding. The round was led by Africa50, a pan-African infrastructure investor, the British International Investment (BII), and the U.S. Development Finance Corporation (DFC) - Techcabal.
Morocco -?Colis.ma , a Moroccan startup specializing in cross-border logistics, has successfully closed its pre-seed funding round , raising $300,000 from Moroccan private backed venture capital firm Witamax to strengthen its coverage of the five largest regions of Morocco, as well as six European countries, with plans to further expand to West Africa.
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Founder Resources?
Bloomberg News is working on their inaugural Africa Startups to Watch list. and are looking for the continent's most innovative startups to be featured. Startups selected will be profiled on Bloomberg platforms in 2025.? Deadline to apply is November 8, 2024 and please read and apply HERE .?
Featured Read
Remittance has proven to be one unfailing source of national revenues and economic power engine to Africa and the global south, even when other sources of capital inflows - including philanthropy, FDI, ODA - are failing. In fact, in 2023, Diaspora Remittance to the Global South has surpassed Foreign Direct Investment (FDI) & Official Development Assistance (ODA) flows combined.
Out of the $656B diaspora remittance, $54B was to Sub-Saharan Africa, with an average cost of 7.9%, compared to the global average of 6.4% and well above the SDG target of 3%. Will the increased use cases of Stablecoins in remittance and cross-border trade in & with Africa bring this cost down? Eyes on the future! In the meantime, here is our visualization of the week compiled by the AFTS Research team and the World Bank Report: - Remittances Slowed in 2023, Expected to Grow Faster in 2024, issued on 26 June 2024 .
AFTS community in the news
#AFTSCairo2021 partner & sponsor Sawari Ventures to back more African startups with new $200 million fund
The new fund will consist of two components — an Egypt-focused fund to mobilize local capital and an international fund targeting foreign investors and development finance institutions to support startups across Egypt, Tunisia, Morocco, Kenya, and West Africa.?Of the total $200 million, approximately 70%, or $140 million, will be allocated to Egyptian startups over the next four to five years.?
#AFTSLusaka2023 sponsor and Ecosystem Tour partner?eShandi has inked a $10M financing facility with Yango to drive financial inclusion across Africa
The financing will support Yango’s fleet expansion, providing resources for businesses and drivers to grow. This partnership empowers users with access to financial services, credit, and asset-building opportunities, fostering economic growth and financial independence across Zambia, Namibia, Angola, DR Congo, and Ethiopia.
#AFTSNairobi2024 sponsor, Workshop Thought Leader &?Early-stage venture fund, and seed accelerator 500 Global is planning to beef up its physical presence in Africa
The venture capital firm which has so far made 156 investments in Africa since 2012, is looking to better support its portfolio companies through a much more established presence on the continent. Disrupt Africa conducted an interview with the lead for Africa at 500 Global and #AFTSNairobi2024 speaker Mereme Dieng. Read the full interview HERE .?
SAVE THE DATE!
The 13th Africa Fintech Summit will take place in Washington, D.C.,?on?April 24, 2025,?during the WB/IMF Spring meeting week. Interested in sponsoring and partnering? Contact the team at [email protected] .?
Visualization of the Week
Stablecoins have become the preferred conduits of cross-border trade and remittance transactions globally, and even more so in Africa and emerging markets. What are the main use cases of Stablecoins in emerging markets, and which stablecoins dominate the market? Dive into the global stablecoin world with the visualization taken from the report?entitled 'The Difference a Year Makes: The State of Digital Assets and Stablecoins', courtesy of Pitchbook as presented during the DC Fintech Week in Washington DC this week.?
Video of the Week
AFTSNairob24 Panel "Blockchain Use Cases & Utility across All Industries" Video?
In line with our 2022 editorial , we shared that Africa has proven the use cases of blockchain technology and to an extent, the future of cryptocurrency. The AFTSNAIROBI24 in Nairobi,?on Sept 05,2024, brought industry heavyweights and subject matter experts around blockchain technology, stablecoins and Africa. Enjoy rewatching!