Safaricom, the largest telecom company in East Africa, has paid $150 million for a license to offer its M-Pesa mobile money service in Ethiopia. This move allows Safaricom to compete with Telebirr, the state-owned mobile money service. Despite the challenges and a drop in earnings, Safaricom aims to replicate the success of M-Pesa in Kenya in the Ethiopian market, which has a population of 120 million.
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Nigeria: Telcos to suspend USSD services for banks
Mobile operators in Nigeria, including MTN Group and Airtel Africa, will disconnect text message services for banks until $259 million in debt is paid. The dispute over pricing and unremitted fees has been ongoing for two years, with the operators hoping that the withdrawal of services will prompt a resolution. Banks argue they do not owe arrears to mobile-phone companies.
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Kenya: Flutterwave selects Nairobi for East Africa hub
Flutterwave, the San Francisco-based African fintech company, has selected Nairobi, Kenya as its regional headquarters for East Africa, citing the country’s business-friendly environment and digital capabilities. The announcement follows the receipt of two additional licenses to operate in Rwanda, allowing Flutterwave to expand its operations in the East African nation. The company’s chief regulatory and government relations officer, Oluwabankole Falade, made the announcement during the third American Chamber of Commerce Business Summit held in Nairobi.
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Kenya: Digital lenders raise ethics questions
The number of digital lenders and loans disbursed through mobile phone apps in Kenya have grown substantially since the launch of M-Shwari in 2012. However, concerns have been raised about the largely unregulated fintech industry, with the possibility of leading to a credit crisis, particularly since debt-collecting methods like debt shaming and incessant calls are frequently used by creditors. Kenya’s Central Bank (KCB) reported that, as of November 2022, about 14 million accounts had been listed for defaulting on digital lending apps. Industry experts fear the 14 million defaulted accounts could create a bubble in the economy, leading to a credit crunch and eventually an economic recession.
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Google now prevents credit apps from accessing user data
Google has updated its Personal Loans policy for apps on Play Store, prohibiting apps offering personal loans from accessing sensitive data, such as photos, contacts, and call logs. The new policy applies to apps offering financial services and aims to comply with emerging regulations meant to take on predatory Digital Credit Providers (DCPs) particularly in Kenya, India, Indonesia, the Philippines, Nigeria, and Pakistan. Nonbanking financial companies in these countries must have only one digital lending app on the Google Play Store, and must comply with specific terms and conditions for financial apps to be allowed on the platform.
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Kenya: Branch Microfinance remains branchless
Branch Microfinance, which acquired Century Microfinance Bank in 2020, will continue to operate as a branchless lender, despite being a micro-bank. The neobank, which closed two of its three branches following the acquisition, will maintain a single branch to serve as its headquarters, as required by law. According to Branch International Managing Director for East Africa Rose Muturi, the neobank has over four and a half million users, who rely on its digital platform and do not need physical branches.
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Nigeria: CBN will keep open banking ‘open’
Nigeria’s central bank has changed its decision to centralise Open Banking with the National Inter-Bank Settlement System (NIBSS) and will now align with an “Open” aggregation model. NIBSS will support the central bank to develop an Open Banking Registry, but the operations of the registry will be the sole responsibility of the regulator. The decision to centralise access to Open Banking APIs with NIBSS was hotly contested by banking and fintech professionals, and the central bank has listened to feedback and hopes to receive further feedback to make Open Banking guidelines operational.
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South Africa: Nedbank launches Roblox game
Nedbank has become the first African bank to launch a game on Roblox, aimed at teaching children money management skills. Developed by Sea Monster Entertainment, the game Chow Town is a tycoon-style game that allows players to set up and expand a restaurant through incremental investment. The move comes as the gaming market in Africa is expected to grow at a compound annual rate of 12.65% between 2023 and 2028. Nedbank’s Chow Town aims to teach entrepreneurial skills and offer an educational experience for tweens.
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Ethiopia: Awash Bank partners with Ugandan fintech to offer microloans
Ugandan fintech firm, Service Cops, has partnered with Ethiopia’s Awash Bank to enable about 12 million customers to access digital microloans. The deal will see the roll-out of instant microloans initially offered to Awash Bank customers and gradually extended to non-bank customers. Service Cops is the first Ugandan-based fintech to operate in Ethiopia and is one of a few Ugandan fintechs operating outside Uganda.
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Bank of Africa UK moves core banking to Oracle Cloud
Bank of Africa UK has moved its core banking systems to Oracle Cloud Infrastructure, in a bid to improve the flexibility, performance and cost efficiencies of its critical applications and services, including trading and payments processing. The bank is also using Oracle Fusion Cloud Enterprise Resource Planning and Temenos Transact to improve its financial performance and digital core-banking system. The platform, hosted on Oracle’s London cloud region powered by 100% renewable energy, is planned to go live in 2023.
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South Africa: Fin aquires Thuthukani Housing Finance
African neobank Fin has acquired Thuthukani Housing Finance, renaming the firm’s incremental housing finance product as Fin Home Loans and integrating it into its South African portfolio. Fin’s co-CEO said the acquisition was part of its efforts to identify partners in different areas with this requirement, while the acquisition will help scale the business and bring its offering to more people.
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Nigeria: Opera increases its investment in OPay
Norwegian consumer internet brand, Opera, has increased its share in Africa-focused neo-bank OPay from 6.4% to 9.5%, after selling Nanobank for $127 million in 2022. Opera chose to take OPay shares instead of cash, gaining $35.9 million less than what its investment in Nanobank was worth on paper. The company believes that OPay’s strong growth trajectory makes its investment marketable in the future.
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South Africa: Banks sign onto low-fee transaction platform
BankservAfrica has launched PayShap, a new rapid low-fee payment system that allows consumers to send small-sum transactions with just a phone number. The system is expected to bring more people towards a cashless society and has been positively received by commercial banks. Currently, the system is available in Standard Bank, Absa, Nedbank and FNB. However, more banks, including Capitec, Investec, Discovery, TymeBank and Standard Chartered, are expected to integrate the new system in the future.
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Nigeria: MTN proposes merging its finance subsidiaries
MTN Nigeria Communications is proposing to merge its two finance subsidiaries, Momo Payment Service Bank and Yello Digital Financial Services, subject to regulatory approval. The merger will combine the subsidiaries and hold the Payment Service Bank license granted by the Central Bank of Nigeria, while offering super-agent services and other permissible activities. The move is in line with the federal government’s drive towards financial inclusion in Nigeria, said MTN Nigeria’s CEO Karl Toriola.
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Nigeria: Chipper Cash weighing its options
African fintech company, Chipper Cash, is reportedly considering selling the business or bringing in new investors, following a turbulent 2022 that saw the collapse of crypto exchange FTX and lead investor, Silicon Valley Bank. Despite rumours that Chipper Cash would be hard hit by SVB’s demise, the company has stated that it had “insignificant exposure” to the bank and that the owners had never considered selling the business. The fintech unicorn’s valuation dropped from $2bn to $1.25bn in 2022, and it trimmed its workforce due to rising costs.
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African startups’ exposure to SVB collapse becoming clearer
The collapse of Silicon Valley Bank (SVB) impacted millions of dollars held by African startups and venture capital funds. Affected entities are exploring safeguards with Nala, Jumba, and others reviewing banking options to cushion their startups from such eventualities. African fintech unicorn Chipper Cash was also among several startups that could not access a portion of their funds, and a Dutch wealth manager offered investment banking and corporate services, including opening an SVB account to mainly Egyptian startups. The bank’s collapse also reinforces the need to build homegrown solutions.
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South Africa: Standard Bank CEO voices cautious optimism about CBDCs
The CEO of Standard Bank, Sim Tshabalala, has expressed cautious support for central bank digital currencies (CBDCs) at the Standard Bank African Central Bank Conference. Tshabalala called CBDCs “potentially useful” for interbank clearing and serving a social purpose in increasing participation in the formal financial system while reducing tax evasion and financial crime. However, he expressed skepticism about privately-generated crypto assets, saying they make it easier to hide or launder money and posed risks to banks. South African Reserve Bank (SARB) has embarked on a study investigating the feasibility of CBDC.
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Kenya: Digital lending tops $4bn since 2015
Digital lenders in Kenya have disbursed a total of KES 500bn ($4.4bn) in mobile loans to households and small businesses over the past eight years, with eight million of them receiving the funds. The Digital Lenders Association of Kenya has rebranded as the Digital Financial Services Association of Kenya to attract more players in the digital lending space to deepen financial inclusion. DFSAK is looking to develop new digital financial services, such as digital insurance, digital savings plans and digital investment platforms.
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SVB fallout has limited impact on African startup scene
Silicon Valley Bank’s collapse has sent shockwaves through the global tech industry, with fears of contagion and billions of dollars potentially lost for more than 37,000 small businesses and investment firms. While the impact of the crisis on African tech is still unclear, at least two African start-ups – NALA and Chipper Cash – emerged largely unscathed, while reports from Egypt suggest almost 50 local companies are said to be affected. There is a feeling among local industry stakeholders that the direct impact of the crisis on African tech could be minimal as SVB wasn’t exactly popular with clients operating out of Africa.
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Nigeria: Central bank adopts open banking regulations
Nigeria has become the first African country to adopt open banking regulations, allowing for the sharing of customer data between banks and third-party service providers to create innovative solutions that benefit consumers. The guidelines provide a framework for handling customer data while ensuring consistency and security, with minimum requirements set for all participants. The regulation will pave the way for a more streamlined and interoperable financial system and expand financial inclusion, but its potential impact will take time to bear fruit.
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Nigeria: Equity Bank shuts down its instant loan service
Equity Bank has suspended its instant loan service, EazzyLoan, offered through online platforms without prior notice, leaving customers stranded and unhappy. Some customers who had repaid their loans in anticipation of renewal have been affected. The bank is investigating a possible breach and system compromise by suspected fraudsters. There have been previous cases of customers losing money through the bank’s online platforms.
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Kenya: Nigerian fintech Umba starts offering digital banking services
Umba, a Nigerian fintech company, has launched its digital banking services in Kenya following the acquisition of a controlling stake in Daraja Microfinance Bank. Umba is now the second licensed digital bank in Kenya and is offering complete banking solutions including opening and operating current, interest-bearing savings, and fixed deposit accounts, as well as lending and payments services. The company sees Kenya as a significant untapped market due to the more rigorous licensing regulations in place, and has raised $18m in funding to date.
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Nigeria: PremiumTrust Bank vies to become top digital bank
PremiumTrust Bank plans to expand its services to customers and become the top digital bank in Nigeria by the end of 2023. The bank’s CEO, Emmanuel Emefienim, announced this during the opening of its eighth branch in Redemption City, Mowe, Ogun State. The bank is building a serious app that will transform the industry, providing solutions and answers to banking needs in this cashless period. The bank is also partnering with the Athletic Federation of Nigeria to develop sports in the country.
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Kenya: KCB continues partnership with Sopra to drive digital offering
KCB Bank Kenya has teamed up with Sopra Banking Software to enhance its digital banking offering. Sopra will design, build and support the bank’s lending and savings product portfolio, via its KCB Vooma platform. Since 2020, the bank and fintech provider have been developing and launching digital products together, including savings and loan offerings for customers. KCB Bank Kenya claims to have distributed loans worth $3bn to 11 million customers since October 2018.
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Nigeria: CBN in talks with US tech firms to boost CBDC uptake
The Central Bank of Nigeria is in talks with new technology partners to develop a new and improved system to manage its central bank digital currency (CBDC), the eNaira. It is believed that the Nigerian financial authority has discussed these plans with the New York-based technology firm R3. The effort to create the eNaira began in 2021 with the help of financial software company Bitt, which still works closely with the CBN and is “currently developing additional features and enhancements”. However, only 0.5% of Nigerians use the CBDC.