The Next Wave: Cell money’s valuation illusion

APRIL 18, 2021

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Whenever you feel the flee to read too a lot into a determined quantity, assign in tips that “no longer all the issues that will seemingly be counted counts and no longer all the issues that counts will be counted.” 

It will no longer be an fashioned Albert Einstein quote. But it completely’s a fair technique to steer tear of the looks that numbers expose your total memoir about any topic (bookmark this Hannah Fry piece for added on what files cannot contrivance). Some metrics, enjoy what a commerce is rate in bucks, contrivance no longer exactly predict how well-known this will seemingly be to customers in due path. 

The buzz round Africa’s mobile money businesses is the reason for this Sunday soberness, as we’ll uncover in a moment.


The Flutterwave Cell app, the app that turns any smartphone into a mobile POS is now redefining commerce. The Flutterwave Cell App makes it substantial convenient for anybody to prefer their commerce with them wherever, anytime. Be taught the technique you might well presumably prefer your commerce wherever, anytime here.

Now, let’s dive in.

Twenty years up to now, an African telecoms company’s priority changed into to abet individuals originate calls and alternate short messages. 

However the upward thrust of Mpesa grew to develop into an survey-opener; why be confined to calls and SMS while you might well presumably develop on the underlying infrastructure to manufacture a financial products and services distribution network? Cyber net penetration is low however USSD is available on every telephone and doesn’t require 3G. 

And so a telco-driven mobile money commerce changed into born in Africa.

Within the decade-and-half since this revolution, MTN and Airtel (thru its various evolutions) enjoy stood out as the closest companions to Safaricom’s Mpesa. Each and every corporations’ mobile money divisions are multi-billion-dollar enterprises with thousands and thousands of customers all the arrangement in which thru tens of international locations.

[ Read: Why Airtel is selling 11.25% of its $2.65 billion mobile money business ]

Airtel Cash has received funding from Mastercard, while MTN Cash (valued at as a lot as $5bn) will be publicly listed rapidly. With these strikes, both entities cement their front row relate among Africa’s fintech elite. MTN Cash is animated previous gaze-to-gaze funds to frequently sophisticated areas enjoy insurance protection.

Boluwatife Sanwo/TC Insights

But how contrivance we give these corporations their due as innovators, without blowing their living in the enormous fintech arrangement out of percentage; without giving the impact that mobile money is the ‘pause of ancient previous’ and Africa’s golden mark to financial inclusion? 

No longer but uhuru

In a corner of LinkedIn closing week, a spell binding chat unfolded in which telco-owned mobile money businesses had been when in contrast to fintechs enjoy Interswitch and Fawry. The recommendation changed into that, in turning into billion-dollar businesses, MTN Cash et al enjoy performed factual as neatly as the continent’s unicorn fintech startups.

Commenters responded in unison: No, telco-owned mobile money businesses are no longer startups. 

They enjoyed (and mild salvage pleasure from) many privileges from their mother corporations which startups built from the bottom up enjoy little salvage entry to to.

It changed into furthermore seen that, when in contrast to other parts of the field, gaze-to-gaze money switch by the exhaust of mobile money products and services in Africa is costly.

Whereas Governments entreated services to decrease and waive prices closing Twelve months all around the pandemic to relieve cashless funds, operators reinstated these prices after three months. Ideally, these p2p transaction prices needs to be as conclude to zero as that you might well presumably think of.

After which there’s the skills ask. How for a lot longer can Africa depend on USSD for financial inclusion? 

Among other issues, the skills has accessibility complications that originate it inconvenient for visually impaired individuals. Additionally, if USSD’s emergence as a key fintech solution changed into ensuing from low cyber net penetration, what occurs as the continent turns into better wired by fibre optic cables?  

These questions – of label of salvage entry to and technical usability – are extra valuable for the manner forward for mobile money and financial inclusion. 

Perhaps the telco-owned products and services will chart us in opposition to discovering answers – they’ve executed scale, tapping into the energy of right winning businesses. One hopes they are pressed extra on these key questions, rather than the minor topic of what inventory alternate they hope to list on.


Samurai Incubate Inc, a endeavor capital firm primarily based totally in Tokyo, presented the conclude of its devoted Africa fund after raising 2.06 billion yen (~ $18 million). The fund will focus on startups in Nigeria, Kenya, South Africa and Egypt. A transient about Samurai’s plans here.

Quro Clinical, a South African startup pioneering scientific institution-at-dwelling products and services, has raised a $1.1m seed round. This files caused a lot pleasure as soon as we tweeted all of it over the week; what’s Quro Clinical as a lot as?

Quiz: A mobility startup in Rwanda raised $3.5m, the biggest by a startup engaged on electrical automobile alternate choices. What’s the name of the startup? Solution.


Policies enjoy penalties

The Nigerian Communications Fee has lifted a four-month ban on the registration of new SIM cards. Whereas that is simply files, the ban had a damaging impact on entrepreneurs and customers.

With out a doubt one of such entrepreneurs is Femi, the owner of a closing-mile provide carrier who changed into unable to originate bigger his commerce to Abuja, the Nigerian capital because he would possibly well no longer salvage SIM cards.

Boluwatife Sanwo/TC Insights

Femi is seemingly one of many many entrepreneurs that changed into plagued by the give an explanation for from the Nigerian Communications Fee issued in December 2020.

The give an explanation for asked telecoms operators in the nation to remain selling or registering SIM cards. This changed into after an initial directive to the operators to suspend the mobile numbers of Nigerians who had no longer registered for the Nationwide Identification Quantity (NIN).  

The ban changed into speculated to closing till the registration deadline which changed into before all the issues relate to 30th December 2020, 2 weeks from the announcement.

Alternatively, it changed into prolonged no longer lower than three instances earlier than the executive in the kill lifted the ban. The first extension changed into by three weeks to 19th January 2021, then by eight weeks to April sixth, 2021 and at the moment by four weeks to May well additionally fair sixth, 2021. These extensions resulted in enormous losses for telcos and young entrepreneurs.

Telcos suffered the highest losses. They misplaced 11.8 million subscribers between November 2020 and February 2021. This introduced the total quantity of mobile subscribers in Nigeria to 195.7 million, dropping below 200 million for the first time because it reached this quantity in August 2020. 

By multiplying this quantity with the moderate earnings per user (ARPU) for the telecoms commerce in 2020 (₦1,420/$3.66), this technique that operators misplaced ₦16.8bn ($41m) in earnings. Because the telecoms commerce contributed a median of 10.3% per quarter to Nigeria’s GDP in 2019 (totalling $46bn), operators enjoy misplaced 0.09% of this.

Customers and young entrepreneurs enjoy furthermore borne the brunt of the ban. Over seven million Nigerians who originate a residing as SIM registration agents had been out of labor while the ban lasted. Industry house owners enjoy Femi enjoy furthermore been unable to procure SIM cards for their operations making communication, a valuable pillar of running a commerce, sophisticated.

Despite the indisputable truth that the executive’s causes for the ban had been tear, it changed into sophisticated to make clear them given the industrial charges.

The telco commerce is seemingly one of many predominant drivers of the Nigerian financial system. It contributed 12.45% to the financial system in the fourth quarter of 2020, lifting it out of recession. So the ban did no longer originate sense specifically in the mild of Nigeria’s rising unemployment numbers.

Whereas the executive scores aspects for re-tracing its steps, the hope is that policymakers enjoy taken the lessons from the penalties of the ban. Policy cannot exist in isolation, without assessing the functionality penalties.

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Written by Boluwatife Sanwo

Obtain a abundant week ahead!

Thanks for reading on the present time’s edition of The Next Wave. Preserve safe while you are out in public locations – defend others by carrying your hide and sanitizing your fingers.

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