BD Insider, Letter 136: One fintech, three licenses

BD Insider, Letter 136 examines how Elon Musk's Twitter takeover will affect Africa and Uber's decison to lower commission fees in Kenya to 18%

BD Insider, Letter 136: One fintech, three licenses
Dare Okoudjou is the Founder and CEO of MFS Africa

For letter 136, we examine:

  • How Elon Musk's Twitter takeover will affect Africa
  • Uber agrees to lower commission fee in Kenya to 18%
  • MFS Africa's Ugandan payment licenses

and other noteworthy information like:

  • the latest African Tech Startup Deals
  • opportunities, interesting reads and more

The Big Three!

How Elon Musk's Twitter takeover will affect Africa

The News: Some employees at Twitter's first African office in Ghana have been affected by the ongoing layoffs at the social media company, since its $44 billion acquisition by Elon Musk.

Two members of the 20-person Twitter Africa team—Senior Partner Manager, Bernard Kafui Sokpe, and Program Manager, Gabriel Quarshie—have since announced their departure.

Benjamindada.com is yet to ascertain the exact number of employees at the 18-months-old African office that has been affected by the layoff. The Twitter purge would affect up to 3,700 employees, about half its global workforce.

Why it matters: Prior to its acquisition, Africa was a priority of the social media company. In 2019, its founder and ex-CEO, Jack Dorsey toured four African countries including Nigeria. Thereafter, he declared his intention to spend six months in Africa but was interrupted by the 2020 COVID-19 pandemic lockdown.

Later in 2021, the Nigerian government banned Twitter citing the persistent use of the platform for activities that are capable of undermining the country's corporate existence. One of the six conditions that led to lifting the ban in January 2022 was that Twitter will establish an office in Nigeria.

Twitter has never confirmed nor denied it had an agreement with the Nigerian government. However, the company has since registered with Nigeria's Corporate Affairs Commission—one of the conditions. Per BusinessDay, the company's spokesperson said "there were no plans by the company for an office in Nigeria".

Some of the Twitter Africa team

Zoom in: Although the employees laid off in the US team will be on the company's payroll until January 2023, it is unclear if the African team will have similar benefits.


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Uber agrees to lower commission fee in Kenya to 18%

The News: Global mobility company, Uber has applied to withdraw its petition against the new ride-hailing regulations by Kenya’s National Transport and Safety Authority (NTSA) that introduced a national cap of 18% per trip for the commission paid by drivers to digital taxi operators.

Uber has lowered its commission from 25% and obtained a license to operate in Kenya. Estonia's Bolt, Kenya's Little and Rwanda-based Yego have also received approval to operate in East Africa's biggest economy.

"We remain committed to Kenya and to creating economic opportunities for drivers and providing enhanced mobility for riders, as we have done since our launch in the market in 2015," Uber said.

Why it matters:  In September 2022, Uber appealed to Kenya's Supreme court to annul the new digital taxi-hailing regulations claiming that some aspects are unconstitutional, discriminatory, discouraging to foreign investments and infringing on its rights and those of its riders and partners.

"The introduction of 18% as the ceiling for the allowable commission has the potential to stifle innovation and reduce the petitioner’s economic feasibility of investing in the market," said documents filed by Coulson Harney LLP, the law firm representing Uber. Uber also faulted the condition that all ride-hailing companies must obtain a transport network license from NTSA to operate.

In the same month, Kenyan drivers at Uber and Bolt protested both companies' unwillingness to implement the latest regulation. As of the time of their protest, Uber charged a 25% commission per ride, while Bolt charged 20% contrary to the 18% national cap.


Bank of Uganda grants three payment licenses to MFS Africa

The News: Pan-African fintech company, MFS Africa has obtained three licenses–PSP (Payment Service Provider), PSO (Payment Systems Operator), and IPI (Issuer of a Payment Instrument)—from the Bank of Uganda (BoU).

Recall that, in 2020, MFS Africa acquired Beyonic, a Ugandan-based digital payments services provider for enterprises operating in Ghana, Tanzania, Kenya and Rwanda.

📢
It was a 100% acquisition paid for in cash and shares. Although the company was renamed MFS Africa, Beyonic's core product retains its name.

Why it matters: Beyonic, MFS Africa's flagship SME product, is a new offering from the group and will be launching in Uganda now that the company holds a PSP license. Beyonic will also leverage the IPI license for its virtual card offering.

"Small businesses are the engine of the African economy and the lifeblood of communities. Beyonic's primary goal is to promote the growth of these businesses, and by providing a centralised financial tool, Beyonic improves the way these businesses pay and get paid," Daniel Maison, Head of SME Growth for Beyonic, said.

Zoom out: The company has reportedly acquired two key payment licences (PDF)—PSSP, and PTSP—in Nigeria. Recall that, in April 2022, MFS Africa completed its acquisition of Nigerian super-agent Capricorn Digital Limited, Baxi's parent company, following approval of the transaction by the Central Bank of Nigeria.

Later in June, MFS raised a Series C extension round of $100 million comprising both equity and debt financing. This extension round brings its total Series C to $200 million. According to TechCrunch, they connect 320 million mobile money wallets across 35+ African countries and 700 corridors.


🧩 BD Trivia: Find the African Techstars

Hey! Spot the African startups that are part of the Techstars Toronto 2022 Winter Cohort.


💰 State of funding in Africa

Last week, African tech startups jointly raised $16 million. Egypt-based Money Fellows' $13 million Series B was the highest disclosed amount that was raised in the week.

Find more insights in the table below:

African startup deals from October 27 - November 6, 2022.

Get free access to our carefully-curated, real-time updated Funding Database for 2022.

Acquisitions & Mergers


📚 Noteworthy

Here are other important stories in the media:


💼 Opportunities

Jobs

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

Product & Design

Data & Engineering

Admin & Growth

Other opportunities

  • For blockchain enthusiasts in Nigeria: NITDA in partnership with Domineum has launched the NITDA Blockchain Scholarship programme that will train 30,000 Nigerians to become blockchain developers.
  • For young Africans: Applications are open for the Binance Charity Tech Scholarship, the programme aims to educate over 53,000 Africans with various skills including data science, UX/UI science, product management and software development.

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