Happy Children’s Day to all children and adults who’ve not lost their childlike sense of wonder! Cheers to asking questions and questioning what’s possible.
Talking about what’s possible, tech giant Google isn’t relenting in ensuring Africa’s connected to the internet with, Umoja, its latest subsea fibre optic cable project that’ll directly connect Africa and Australia.
Named after the Swahili word for “unity,” Umoja is Google’s proposed solution to widespread internet outages in Africa triggered by subsea cable damage
In this letter, we explore:
- Opay, Kuda to commence address verification
- CBN revamps BDC operations in Nigeria
- Microsoft invests $70 million in South Africa
We also curated updates on the state of funding in Africa, other noteworthy information, and several opportunities.
The big three!
#1 Opay, Kuda to commence physical address verification for users
Nigerian Merchants using neobanks and mobile money operators expect an August visitor soon.
The News: In a move to comply with the Central Bank of Nigeria’s (CBN) recent regulations, fintech companies Opay and Kuda announced they will soon begin verifying the physical addresses of existing users on their platforms. This development follows the CBN’s announcement at its 295th Monetary Policy Committee (MPC) meeting that mobile money operators, including Opay, Palmpay, Kuda Bank, and Moniepoint, can resume onboarding new customers “in another couple of months.”
Context: Earlier in April 2024, the CBN raised concerns about the KYC processes of mobile money operators. The apex bank suspected that these processes might be vulnerable to exploitation for money laundering and terrorist financing activities. This led to a directive halting new customer onboarding for fintech firms like Opay, Palmpay, Kuda Bank, and Moniepoint.
Zoom In: Verification Process: To comply with the CBN’s new requirements, Opay and Kuda will deploy staff to physically verify the addresses of existing merchants registered on their platform.
CBN’s Regulatory Measures: CBN Governor Olayemi Cardoso highlighted the importance of implementing “remedial measures” to strengthen the onboarding procedures for both new and existing customers within the mobile money sector
CBN’s Easing of Restrictions: Governor Cardoso reassured the public that the CBN’s actions were not intended to stifle the growth of fintech companies. He clarified that the temporary pause on new customer onboarding was a strategic measure to allow for collaboration on strengthening regulations within the rapidly expanding fintech sector. The recent announcement suggests the CBN is prepared to ease restrictions soon, allowing the resumption of new customer registration for mobile money operators “in another couple of months.”
#2 CBN Revamps BDC Regulations in Nigeria
The News: The Central Bank of Nigeria (CBN) has significantly overhauled the regulatory framework governing Bureau de Change (BDC) operators. These revised guidelines, effective June 3rd, 2024, represent a comprehensive effort to streamline BDC operations, strengthen regulatory oversight, and ensure better alignment with the evolving needs of Nigeria’s foreign exchange market.
Context: Bureau de Change operators provide a vital service by allowing individuals and small businesses to buy and sell foreign currency. However, the BDC sector has come under scrutiny in recent years due to concerns about its potential involvement in money laundering and manipulation of exchange rates. In 2021, the CBN lifted a two-year ban on forex sales to BDCs, followed by a swift crackdown just a few months later, revoking licenses of over 4,000 operators deemed to be non-compliant.
Rewind: The CBN’s relationship with BDCs has been marked by volatility. The 2021 lifting of the forex sales ban was seen as a positive step for BDC operators. However, the subsequent revocation of licenses for a large number of operators just months later highlighted the CBN’s ongoing concerns about irregularities within the sector.
Zoom In: The key changes introduced by the CBN include:
Tiered Licensing System: BDCs are now classified into two tiers based on operational scope. Tier-1 BDCs have a nationwide presence and require a minimum capital base of ₦2 billion, while Tier-2 BDCs operate within a single state or the Federal Capital Territory (FCT) with a minimum capital of ₦500 million.
Simplified Application Process: The CBN has waived previously required caution deposits for both tiers, reducing financial barriers for new entrants.
Enhanced Oversight: BDCs are subject to stricter anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. All transactions exceeding $500 must now be conducted digitally.
Restricted Activities: BDCs are prohibited from engaging in street trading, international outward transfers, political financing, dealing in precious metals or crypto assets, and certain other activities.
Re-application for Existing BDCs: All existing BDCs must reapply for licenses under the new framework within six months and comply with the minimum capital requirements for their chosen tier.
#3 Microsoft invests $70 million in South Africa towards job creation and AI advancement
News: Microsoft South Africa (SA) has signed a landmark 10-year agreement valued at R1.3 billion ($70 million) with the Department of Trade, Industry, and Competition (DTIC). This collaborative effort aims to empower Small, Medium, and Micro Enterprises (SMMEs), create new job opportunities, and equip South Africa for the rapidly evolving landscape of Artificial Intelligence (AI).
Context: SMMEs are the backbone of South Africa’s economy, contributing nearly 40% of the country’s Gross Domestic Product (GDP) and employing roughly half of the workforce. However, for these businesses to thrive in the face of global technological advancements, particularly AI, they require access to the necessary tools and resources. This partnership between Microsoft SA and the DTIC addresses this critical need by providing SMMEs with a platform for growth through digital transformation and AI integration.
Rewind: South Africa has consistently demonstrated its commitment to AI adoption. In 2022, the country established the AI Institute of South Africa (AIISA) to spearhead AI research and development. Building upon this foundation, the launch of the Centre for Artificial Intelligence Research (CAIR) in 2011 further solidified South Africa’s dedication to harnessing the transformative potential of AI.
Zoom In: The R1.3 billion investment is strategically divided into three key initiatives:
Enterprise Development (R663 million): This initiative, valued at R663 million ($34.6 million), focuses on empowering black-owned technology startups. It aims to foster innovation and competitiveness by providing these businesses with the resources and support needed to develop cutting-edge solutions in the field of disruptive technologies.
Skills Development (R347 million): R347 million ($18.9 million) has been allocated towards equipping young South Africans with the necessary skillsets. This initiative will provide intensive training programs, certifications, and leadership development opportunities.
Research & Development Initiative (R160 million): R160 million ($18.7 million) will be channelled towards research and development (R&D) programs. This investment aims to accelerate South Africa’s AI transformation and economic growth by funding research projects focused on emerging technologies and their potential applications.
State of Funding in Africa
Here’s a roundup of African startups that secured funding last week:
- OpenseedVC, a newly launched, operator-led venture capital firm, has reached the first close of its $10 million early-stage fund.
- Egyptian food service startup OneOrder raised a $16 million Series A round to expand into the GCC region. Delivery Hero Ventures led the seed round, which included Norrsken22 and existing investors Nclude and A15.
- South African 4-month-old startup Orca Fraud has secured $550,000 in its pre-seed round led by Norrsken22.
Noteworthy
Here are other important stories in the media:
- The dog who inspired DogeCoin has died: The Japanese dog who was the face of the famous Dogecoin has died at the age of 18.
- PawaPass CEO Sylvia Brune doesn’t want compliance to be seen as a growth killer: In an interview with Bendada.com, Sylvia Brune, CEO of PawaPass, discusses the role of compliance on high-performing teams and its shared responsibility in the team’s workflows and decision-making processes.
- CcHUB announces market expansion program for growth-stage startups in Africa: CcHUB, a prominent African tech hub, has launched “Let’s Build, Africa” to support growth-stage startups in expanding across the continent.
- Techstars CEO Maëlle Gavet steps down citing “health reasons”: Maëlle Gavet, who has led Techstars as CEO for three and a half years, has announced her resignation due to health concerns.
Opportunities
Jobs
We carefully curate open opportunities in Product & Design, Data & Engineering, and Admin & Growth every week.
Product & Design
- Smartcat — Product Designer, Remote
- Halo — Product Designer, Remote
- Remote — Senior Product Manager, Remote
Data & Engineering
- Bumpa — Senior Mobile Engineer – Ecommerce, Nigeria
- beehiiv – Lead Software Engineer, Remote
- BuyPower — Senior Fullstack Engineer, Abuja
Admin & Growth
- Black Pen — Head of Sales, Lagos
Thanks for reading this edition.
Have a great week!
