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Mastercard Invests $100 Million In Airtel Africa’s Mobile Money

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Airtel Africa today announced the signing of an agreement under which Mastercard, a leading innovator and global technology company in the payments industry, will invest $100 million in Airtel Mobile Commerce BV (AMC BV), a wholly owned subsidiary of Airtel Africa plc.

AMC BV is currently the holding company for several of Airtel Africa’s mobile money operations and is intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries.

The Transaction values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis. Mastercard will hold a minority stake in AMC BV upon completion of the Transaction, with Airtel Africa continuing to hold the majority stake.

The Transaction is subject to customary closing conditions including necessary regulatory filings and approvals, and the transfer of specified mobile money business assets and contracts into AMC BV.

Raghunath Mandava, CEO of Airtel Africa, said: “With today’s announcement we are pleased to welcome Mastercard as an investor in our mobile money business, joining The Rise Fund which we announced two weeks ago. This is a continuation of our strategy to increase the minority shareholding in our mobile money business with the further intention to list this business within four years.

“We are significantly strengthening our existing strategic relationship with Mastercard to help us both realise the full potential from the substantial opportunity to improve financial inclusion across our countries of operation. The combination of our extensive customer base and distribution platforms and Mastercard’s products and services, innovation and know how, mean we can together accelerate demand and drive growth in financial services for the benefit of all our customers and markets.”

Alongside the investment, the Group and Mastercard have extended commercial agreements and signed a new commercial framework which will deepen their partnerships across numerous geographies and areas including card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions, amongst others.

Following the announcement on 18 March 2021 of $200m investment in AMC BV by TPG’s The Rise Fund, and the sale of the Group’s telecommunication towers companies in Madagascar and Malawi on 23 March 2021, the Transaction is a continuation of the Group’s pursuit of strategic asset monetisation and investment opportunities.

As previously announced, Airtel Africa aims to continue to monetise its mobile money business with minority investments up to a total of 25% of the issued share capital of AMC BV, and to explore the potential listing of the mobile money business within four years.

The proceeds from the Transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.

 Airtel Africa mobile money services

Operating under the Airtel Money brand, Airtel Africa’s mobile money services is a leading digital mobile financial services platform catering to a large addressable market in Africa (characterised by limited access to formal financial institutions with limited banking infrastructure) and includes mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers.

Mobile money services are available across the Group’s 14 countries of operation, however in Nigeria the Group offers Airtel Money services through a partnership with a local bank and has applied for its own mobile banking licence. It is the intention that all mobile money operations will be owned and operated by AMC BV.

In our most recent reported results for Q3, the mobile money service segment (corresponding to all the businesses that are intended to be transferred to AMC BV) delivered a strong operational performance:

·      Generated revenue of $110m ($440m annualised), and underlying EBITDA of
$54m ($216m annualised) at a margin of 48.7%.

·      Year on year revenue growth for the quarter was 41.1% in constant currency, largely driven by 29% growth in the customer base to 21.5m, and 9.7% ARPU growth.

·      Growth in transaction value was 53.0% to $12.8bn ($51bn annualised).

Our mobile money business benefits from strong network effects with our core telecom business through the extensive distribution platform of kiosks and mini shops as well as dedicated Airtel Money branches supplementing our extensive agent network, to facilitate customers’ assured wallet and cash.

We have a clear strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution expansion and increased usage cases for our customers.

In this year alone, in addition to Mastercard, we have added partnerships with Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru and WorldRemit to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration.

The profits before tax in the full year ending 31 March 2020 and value of gross assets as of that date, attributable to the mobile money businesses were $143.4m and $463.2m, respectively.

 Key elements of the Transaction

·      Agreement values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis.

·      AMC BV, a wholly owned subsidiary of Airtel Africa, is currently the holding company for several of Airtel Africa’s mobile money operations; and is intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries once the inclusion of the remaining mobile money operations under AMC BV is completed.

·      Mastercard (through one of its wholly owned subsidiaries) will invest $100m through a secondary purchase of shares in AMC BV from Airtel Africa. The transaction will close in two stages. $75m will be invested at first close, once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed, with $25m to be invested at second close upon further transfers.

·      Airtel Africa aims to explore the potential listing of the mobile money business within four years. Under the terms of the Transaction, and in very limited circumstances (in the event that there is no Initial Public Offering of shares in AMC BV within four years of first close, or in the event of changes of control without Mastercard’s prior approval), Mastercard would have the option, so as to provide liquidity to them, to sell its shares in AMC BV to Airtel Africa or its affiliates at fair market value (determined by a mutually agreed merchant bank using an agreed internationally accepted valuation methodology). The option is subject to a minimum price equal to the consideration paid by Mastercard for its investment (less the value of all distributions and any proceeds of sale of its shares, and with no time value of money or minimum built in) and a maximum number of shares in AMC BV such that the consideration does not exceed $200m.

The Transaction is expected to reach first close over next three to four months. From first close, Mastercard will be entitled to certain customary information and minority protection rights.

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Mobile Money

KongaPay and UK’s Bibimoney To Ink Mobile Money Deal To Promote Financial Inclusion

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KongaPay, a frontline mobile money platform and a member of the Konga Group, has signed a deal with Bibimoney, a UK-based industry leader to onbard 65 million Nigerians to access financial inclusion.

The partnership between both trusted platforms will promote person to person (P2P) transfers, bill payments with quality and trusted payment solutions to mobile money agents, merchants, businesses, donor agencies, government and individual consumers, among others.

KongaPay will leverage Bibimoney’s status as the world’s first interoperable mobile wallet to roll out an exciting solution for Nigerian users. The partnership will also raising standards in the fintech ecosystem in Nigeria and beyond.

The iconic partnership was signed at the prestigious House of Lords, London last week by Mr. Shiraz Jassa, CEO of Bibimoney and Dr. Leo Stan Ekeh, chairman of Konga Group and witnessed by Lord Anthony St. John of Bletso, chairman of Bibimoney, and many other distinguished guests.

In his pre-signing speech, Lord Anthony, said the world has so much confidence in Africa and the Middle East because of infinite possibilities that could emerge with companies like Konga with great credentials.

“We believe in the pedigree of ownership of such home-grown companies out of Africa and shall do our best to support KongaPay become a globally respected financial services company with the way technology is simplifying transactions borderlessly. Dr. Ekeh, we have many reasons to trust Konga,” he stated.

Also speaking, Mr. Shiraz, a highly respected fintech genius and CEO of Bibimoney, congratulated the chairman and management of the Konga Group for elevating governance and trust in the mobile money business.

‘‘I must tell you that a lot of companies had approached us for partnership, but your history and the profile of your investors distinguished you from the rest and that is why we are signing an exclusive partnership with KongaPay. I can assure you that a in few months, you will become a very exemplary company out of Africa in the Fintech world after we have implemented the tech backbone that shall drive your different platforms seamlessly,’’ he said.

On his part, chairman, Konga Group, Leo Stan Ekeh while appreciating Lord Anthony, the management of Bibimoney and other distinguished guests present, assured them that the vision of KongaPay remains very clear and that is to lead in Africa.

‘‘Our target is to onboard a minimum of 65m active Nigerians and Africans by the year 2025. As you are aware, we have complimentary benefits to extend to our customers unlike our competitors and that is, leveraging on our many verticals – Konga Marketplace, Konga Travel, Konga Health, Konga Food, Konga retail stores and many more to come. Most importantly, you can trust us. Thank you for the partnership,’’ he affirmed.    

Also, vice president, KongaPay, Isa Aliyushata, said, “This strategic alliance is coming at a time that technology is changing the way financial services are performed. In the next few months, users will be thrilled with a unique simple solution that is network-provider interoperable and accommodates any type of phone in the world.”

Continuing, he stated: ‘‘KongaPay will also be rolling out lots of payment solutions that will facilitate cross-border payments, promote branchless and borderless trading across the world.  This, of course, keys in with the Federal Government’s bid to promote the benefits of the African Continental Free Trade Area (AFCFTA).

“As we grow our customer base which currently stands at two million, we would be expanding the range of services we provide in the next few months with lots of product offerings and benefits that are too great to ignore. KongaPay will continue to promote payment with trust,’’ he concluded.

The epoch-making partnership places KongaPay in a stronger position to grow its market share, while offering its growing customer base more exciting options and changing the narrative of financial inclusivity in Nigeria.

Licensed by the Central Bank of Nigeria (CBN) and insured by the Nigeria Deposit Insurance Corporation (NDIC), KongaPay has, since inception, played a key role as a leading provider of digital payment services for e-commerce transactions and other mobile money services in Nigeria. Likewise, Bibimoney is an award-winning mobile money platform, with global recognition and partnerships in Botswana, Mozambique, Malawi and the Solomon Islands, among others.

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Mobile Money

IFC Invests €90 million in Wave to Boost Access to Digital Financial Services in West Africa

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To spur financial inclusion and support economic growth in Senegal and Côte d’Ivoire, IFC announced €90 million investment in Wave Mobile Money S.A. (Senegal) and Wave Côte d’Ivoire S.A., mobile money firms that are helping lower prices and expand services in the region.

The investment from IFC and other lenders will help Wave substantially grow its operations in Côte d’Ivoire and Senegal, deepen its product offering, and expand its customer base for mobile money accounts and quality payment services.

IFC package comprise a €25 million loan from IFC’s own account, B Loans of a combined €41 million from SymbioticsBlue OrchardresponsAbility, and Lendable, as well as parallel loans of €24 million from Finnfund and Norfund.

IFC’s partnership with Wave will help meet the soaring growth in demand for digital payments and mobile money in West Africa in part spurred by the COVID-19 crisis. Access to digital financial services remains limited in the region with only 24 percent of active mobile money accounts compared to 34 percent in East Africa in 2020.

“Wave’s vision of making Africa the first cashless continent, by building affordable and user-centric solutions, matches IFC’s ambitions of universal financial inclusion,” said Coura Sene, Wave Mobile Money’s Regional Director for the West African Economic and Monetary Union (WAEMU). “This investment by IFC and other lenders helps us offer a diversity of financial products, encouraging users to stay within the formal financial sector, deepening financial inclusion in the region.”

“Supporting access to financial services for low-income, unbanked populations is a key priority for IFC,” said Aliou Maiga, IFC’s Regional Director for West and Central Africa. “Our investment in Wave will not only promote inclusive finance, but it will also significantly contribute to further advance digital economy solutions in West Africa.” 

In addition to helping to finance the companies’ operations, IFC’s support will help establish a mobile money environment where customers are able to transact more often thanks to a simple fee structure and lower transaction costs. This will foster higher frequency of transactions, new payment methods and growing overall value of payments processed by the users, particularly among lower income customers.

In September 2021, IFC invested $5 million as a co-investment with Partech Africa as part of the Series A funding round in Wave Mobile Money Holdings Inc.

IFC has invested or mobilized more than $1.25 billion in the African technology ecosystem over the past six years.

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Mobile Money

CBN Approves Mobile Money Licence for PocketApp in Nigeria

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The Central Bank of Nigeria (CBN) has granted an Approval In Principle (AIP) to Abeg Technologies Limited, a product of Piggytech Global Limited, as a Mobile Money Operator (MMO) in Nigeria. With the platform becoming Nigeria’s first social commerce platform to secure the CBN’s AIP for an MMO license, the announcement marks a crucial development in the company’s bid to support seamless payments and online commerce throughout the country. 

Additionally, in a move to underline its evolution from a money transfer app to a social commerce platform, Abeg is rebranding completely to “Pocket by Piggyvest” (PocketApp). 

The platform’s new name references its added functionalities for users to buy and sell items via virtual pocket shops and reinforces its push into a social commerce market estimated to reach US$23.8 billion by 2028 in Nigeria alone. 

PocketApp received an AIP dated April 25, 2022, from the Central Bank of Nigeria (CBN) for a license application to operate as a Mobile Money company. For the Piggytech subsidiary, this is the first step towards final approval, subject to the fulfilment of certain conditions as stipulated by the CBN. 

Commenting on the approval, Odunayo Eweniyi, Co-Founder and COO of Piggytech Global Limited, stated, “We’re incredibly pleased that PocketApp has been granted an approval in principle as a Mobile Money Operator in Nigeria. We will now work closely with the Central Bank to meet all its conditions to receive the full operating license, enabling us to continue growing and expanding the scope of our social payments, social commerce and other digital financial products to reach millions of Nigerian micro-entrepreneurs.”

PocketApp affirms its commitment to the financial inclusion agenda of the CBN and the Federal Republic of Nigeria and will continue to make it easier for our teeming young population to seamlessly carry out their transactions, while saving them costs and giving them more access to get paid.

The Mobile Money Operator license will enable the company to carry out activities around: Wallet Creation and Management, E-money issuing, USSD, agent recruitment and management, pool account management, non-bank acquiring as stipulated in the regulatory requirements for non-bank merchant acquiring in Nigeria, card acquiring, and any other activities that may be permitted by the CBN.

Speaking on the company’s evolution, Patricia Adoga, COO of PocketApp, states, “For the last 18 months, we have been focused on building the core infrastructure that will enable secure social commerce and payments at scale. We believe that social commerce will thrive better in a more trusted environment. So we added escrow to our payment infrastructure, protecting buyers and sellers and many other features, ensuring a smooth shopping experience on the app.”

The app was launched as Abeg App in 2021. New as PocketApp, the payments app has about 2 million users to date. The company initially started its journey as a payment platform for sending and receiving money. It has since ventured into a full social commerce app, connecting buyers and sellers across Nigeria and soon Africa.

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