BD Insider 171: What next for Nigerian fintechs given new FX and USD push by banks?

Last week Friday, Wema Bank announced an increase in the naira card spending limits on international transactions to $500. Similarly, two weeks ago, the news about GTCO’s—the parent company of GTBank—FX platform that helps to convert USD to naira at the unified exchange rate (which is more aligned with black market rates) went viral.

Slowly, we expect more Nigerian banks to leverage the updated CBN FX regulatory disposition to build products that help them regain many of their former customers who have sort an alternative in fintechs.

As such, many observers and residents ask what is next for fintechs—who purportedly are built on the arbitrage opportunity from FX demand and spend.

While fintech adoption might have skyrocketed via virtual dollar cards—as a product alternative to make international payments—it wasn’t born out of that.

Fintechs make traditional financial services more accessible. They leverage their nimbleness to bring innovation to an institution, banks, older than a century.

The emergence of the likes of Paystack & Flutterwave turned the average Nigerian into an e-commerce founder. With Piggyvest, Cowrywise & Risevest, we are all savers that invest in dollarised securities. Thanks to LemFi & Payday, many Nigerians can make electronic payments from multi-currency wallets. This is unlike the multi-currency structure (domiciliary accounts) of banks, that still hasn’t allowed for electronic FX bank transfers.

Beyond functional improvements, the approach to improved customer services—support and communications—via in-app chat and messaging platforms like Intercom, and Zendesk have led to a relatively higher standard of service from fintechs and banks alike.

In closing, to answer the question of what will happen to fintechs in this FX/remittance space is to account for three possibilities. One, some will be fine and continue as-is, especially as their virtual dollar cards offering was just a part of their total value proposition. Thus, they’d simply compete with what the banks are now re-offering. Plus, improved regulations and opening up in that space is beneficial to all players—although, we are aware that the CBN of Emefiele was more bias towards banks. Two, some fintechs will evolve into other areas with emerging pain points and inefficiencies. Lastly, others will seek consolidation opportunities, in the form of M&A.

Either of these outcomes seem like a win-win for the ecosystem.

Now, let’s go into today’s newsletter, where we explore:

• Netflix’s first original African animation
• Flutterwave x IATA: A possible solution for blocked aviation funds in Africa
• the launch of Kenya’s first virtual library

And other noteworthy information like:

• the latest African tech startup deals
• opportunities, interesting reads and more

The Big News

Zambia to launch Netflix’s first African anime, Supa Team 4

The scene: Netflix will release its first African original animation series, Supa Team 4 this Thursday. The eight-part series was created by Zambian writer Malenga Mulendema, and it’s co-produced by South African toon studio Triggerfish and London-based kids specialist Cake, with animation from France’s Superprod.

According to reports, African voice talent including John Kani, Pamela Nomvete, Zowa Ngwira, Namisa Mdlalose, Nancy Sekhokoane and Sparky Xulu are featured, alongside international actors John McMillan and Kimani Arthur.

The animation series was initially called Mama K’s Team 4 before it was renamed to Supa Team 4.

Dive in: The story revolves around four school girls who transform into superheroes against the backdrop of a neo-futuristic city, Lusaka. Instead of being on their way to detention “a fantastical adventure awaits them as they shed their school uniforms and transform into magnificent superheroes”, the official Netflix description for Supa Team 4 reads.

“The show, to me, is like a multi-layered cake. I want the audience to dig in and discover the flavours for themselves,” Mulendema told Semafor Africa.

Zoom in: This is coming a few weeks after another Zambian creator Tabitha Mwale launched The Super, which is widely described as Zambia’s first anime series. “

In 2022, the global animation market size was valued at $394.6 billion, and the market is projected to $528.8 billion by 2030, according to Markets N Research. Meanwhile, in Africa, the market size reached $12.3 billion last year, less than 4% of the global valuation.

“It’s an exciting time to be in African animation; the industry hasn’t been this vibrant in the last 12 years. Across the board, there is a great deal of collaboration and partnership. There is a call for indigenous stories to be told through animation,” says Damilola Solesi, Smids Animation Studios’ creative director.

Flutterwave partners with IATA to facilitate flight payments in sub-Saharan Africa

The news: Pan-African fintech Flutterwave is now on the International Air Transport Association’s (IATA) payment orchestration platform. With this integration, airlines across the world are able to process payments from customers through cards, bank transfers, mobile money, alternative payment methods and other payment modes available on Flutterwave.

“The IATA Financial Gateway supports the availability of new payment options in many markets. We welcome Flutterwave’s participation to bring secure and innovative payment methods to airlines, travel resellers and the travelling public in Africa,” according to Muhammad Albakri, IATA’s Senior VP, Financial Settlement and Distribution Services.

Why it matters: Globally, governments are withholding over $2.2 billion in aviation funds, as of March 2023, Africa accounts for 67% of that sum. “Airlines can’t be expected to fly if they can’t realize revenue from ticket sales,” IATA tweeted. “Loss of connectivity harms the economy, hurts investor confidence, and impacts jobs and people’s lives. The Government of Nigeria needs to prioritise releasing funds before more damage is done.”

Kenya launches its first virtual library

The news: Kenya National Library Services (KNLS) has launched the country’s first virtual library worth $1.7 million. The library named Vtabu contains over 200,000 digitised books, periodicals, research papers, and government publications.

Know more: The virtual library can be accessed through a daily membership fee of Sh20 ($0.141) fee payable via wireless payment platforms. One can also pay weekly at Sh100 ($0.707), monthly at Sh500 ($3.53), bi-annual at Sh1,500 ($10.60) and an annual membership fee is set at Sh2500 ($17.67).

“The Virtual Library with its Competency Based Curriculum (CBC) materials will greatly support young learners to easily identify their talents and work to nurture these skills as their future career opportunities,” says Ababu Namwamba, Kenya’s cabinet secretary for youth affairs.

Last week during the launch of Vtabu, Namwamba also unveiled a tier-two data centre that state agencies and other public institutions can lease cloud storage services and a digitisation hub where Kenyans can seek to upload their books, records, newspapers or photographs for a 70%-30% revenue sharing model.

State of Funding in Africa

Nigeria loses its spot as the top destination for African tech funding

Out of the three disclosed funding announcements last week, two were made by Egyptian startups. However, this is not just about last week. In the first three months of this year, tech VC funding in Nigeria plummeted by 92.1%, compared to the corresponding period in 2022.

This decline continued throughout the first half of the year. Although Nigeria is one of the “The Big Four” countries when it comes to tech investments, it has lost its number one spot to Egypt and has dropped down to the fourth based on the value of deals; it accounted for only 13% (~$157 million) of the funds raised by the “Big Four” countries.

Will Nigeria regain its position by December? We’ll be on the look out.

Latest African startup funding deals

Find below a summary of some of the investment deals from last week.

Noteworthy

Here are other important stories in the media:

• Flutterwave responds to growing FX demand for international school fees: African fintech Flutterwave has launched Tuition to allow African users to pay various fees to educational institutions within Africa and overseas using their local currencies.
• Nigerian Banks lose ₦472 million to POS and mobile fraud in Q1: According to NDIC, the number of POS and mobile fraud cases increased by 19.51% in the first quarter of 2023.
• Africans will pay more for UK visa fees and health surcharge: UK Prime Minister Rishi Sunak has increased visa application fees and health surcharge paid by immigrants, including Africans to enable the country to fund its public sector.
• Should African startups hire task-oriented or mission-oriented talents? Tech companies can build high-performing teams that consistently meet objectives, drive innovation, and fuel organizational growth but they will need to get the right mix of talents to achieve that.
• Review of Geegpay’s virtual dollar card: Geegpay’s virtual dollar card works for online spending like Amazon and Ali Express. Here is what Dara observed from creating, funding, and using the card.

Opportunities

Jobs

We carefully curate open opportunities in Product & Design, Data & Engineering, and Admin & Growth every week.

Product & Design

• Vendease — Head of Product, Nigeria
• Dayra — Graphic Designer, Egypt
• Branch — Product Manager, Nigeria

Data & Engineering

• PalmPay — Senior DevOps Engineer, Nigeria
• PWC — Snr Associate Data and Analytics, Nigeria
• Reliance Health — Director of Data Science, Remote

Admin & Growth

• Bolt — Regional Manager, North & West Africa
• Zipline — Head of Sales, Africa
• LemFi — Social Media Lead, Remote

Have a great week!

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