Investor curiosity in African fintech continues to seize headlines with giant fundraises. In the present day, Africa’s largest digital funds community MFS Africa joins the fray.
The corporate confirmed to FiratNews that it has raised $100 million in Collection C financing — cut up between $70 million fairness and $30 million debt.
Personal fairness fund AfricInvest FIVE co-led the Collection C spherical with present traders Goodwell Investments and LUN Companions Group.
New traders CommerzVentures, Allan Grey Ventures, Endeavor Catalyst and Endeavor Harvest additionally joined the spherical, whereas ShoreCap III returned as an present investor with different funds.
The announcement is the icing on the cake for the corporate, which has made a number of important acquisitions and investments within the final couple of years not often matched by any fintech on the continent.
In a name with FiratNews, founder and CEO Dare Okoudjou was fast to spotlight MFS Africa’s mission on the continent: to make it straightforward for Africans to ship and obtain cash simply as they do with calls.
For somebody who spent greater than a decade within the telecoms as an engineer and government, Okoudjou has been round lengthy sufficient to know the way tough it was to make a telephone name in Africa.
And although calls are nonetheless costly in Africa when in comparison with the remainder of the world, the method of constructing them has turn into fairly easy because of cell phone penetration and development in telecommunications. With MFS Africa, Okoudjou envisions the identical for funds on the continent.
“The way in which we take as a right the truth that we will talk with anyone world wide through a cell phone, my dream is that it ought to be the identical with a cellular pockets,” CEO Okoudjou advised FiratNews throughout an interview.
“In case you signal to any cellular pockets someplace on this planet, beginning with Africa, it ought to be sufficient to transact with anyone else on this planet. That’s the grand mission of the corporate.”
He began the corporate in 2009, facilitating peer-to-peer transactions from Kenya to Zambia, Uganda, Zimbabwe and the Ivory Coast, and vice versa.
However as the corporate continued to develop, it grew to become obvious that the product had use instances for small companies. The truth is, on the time, greater than half of its customers in East Africa reported utilizing the platform for enterprise causes, in line with Okoudjou.
Thus, by merging fragmented and disparate fee schemes throughout the continent into one seamless community the identical telecom networks function, MFS Africa grew to become the go-to platform for people and companies to transact throughout borders and currencies.
MFS has made a sequence of acquisitions and investments this previous 12 months
The London-based firm connects greater than 320 million cellular cash wallets throughout 35+ African international locations and 700 corridors. It additionally covers a broad vary of economic companies round financial institution accounts, pay as you go playing cards and digital debit playing cards.
Nonetheless, a presence in Africa’s largest market, Nigeria, remained elusive for the corporate. That modified final month when it acquired Baxi, an agent banking platform developed by Capricorn Digital.
Nigeria is kind of totally different from the everyday MFS market, the place cellular cash brokers run the present. Within the West African nation, agent banking networks are extra distinguished.
However as a result of they provide an analogous vary of companies in digitizing money like cellular cash brokers in East Africa, it made sense for MFS to accumulate Capricorn and have entry to its greater than 90,000 brokers.
Not solely does the acquisition give MFS Africa an entry into the Nigerian market, however it additionally opens the corporate to a classy agent community unseen in different African markets, mentioned Okoudjou.
Cellular cash brokers are primarily useful in offering prospects with money deposits and withdrawals whereas agent community platforms like Capricorn, through its Baxi packing containers, present underbanked and unbanked Nigerians with entry to transfers, withdrawals, airtime purchases, utility invoice funds, pay-TV and knowledge subscriptions.
“Agent networks are essentially the most digitalized phase of SMEs already on the continent as a result of fairly often they produce other companies promoting different issues. They’re plugged into the financial system and the material of society,” he mentioned.
“So should you’re excited about bringing digital fee and digital at giant to SMEs in Africa, this can be a fairly good place to begin. And we consider once more that what’s occurring in Nigeria might find yourself being the blueprint for the remainder of the continent.”
When the Baxi acquisition is accomplished, pending approval from the Central Financial institution of Nigeria, Okoudjou says a buyer can stroll to a Baxi agent and make cross-border funds to Benin, Cameroon or China, and vice versa.
Facilitating funds from Africa to China falls exterior the purview of MFS Africa’s holistic pan-African funds strategy. Nonetheless, it’s a chance too good to disregard: China-Africa bilateral commerce is likely one of the fastest-growing corridors globally, with a price topping $192 billion in 2019.
Okoudjou says the corporate started contemplating the hall when it kickstarted the acquisition of Beyonic, a Ugandan digital funds supplier for small and medium-sized companies. The Johannesburg-based firm had surveyed these companies to grasp their wants higher and discovered essentially the most urgent subject they confronted, asides from accessing loans, was sending and receiving funds to and from China.
MFS Africa is at present engaged on setting interoperability between fee networks within the Asian nation and Africa, ranging from Nigeria earlier than spreading to different markets. The timeline for rollout is perhaps subsequent 12 months, in line with some sources.
Final 12 months, MFS Africa totally acquired Beyonic; with Baxi, the corporate has made two consecutive acquisitions within the house of a 12 months and a few months. And matched with minority stakes in smaller fintechs akin to Julaya, Maviance and Numida; medical insurance product Inclusivity and agritech platform Akorion, MFS Africa has performed a good job utilizing funding and acquisitions — strategies Okoudjou phrases “inorganic progress” — to exert its affect throughout the continent.
In 2018, MFS Africa raised its Collection B and closed at $23 million after some extensions. With this Collection C spherical, its complete fairness increase is over $95 million whereas debt stands at $30 million (the corporate is elevating debt for the primary time). Rising markets lender Lendable and Norsad offered the debt financing.
Debt presents a chance for a lot of founders and startups to have cheaper funding as a result of they don’t have to present out fairness. In MFS Africa’s case, it raised debt financing to finance the floats wanted for real-time settlements.
“If somebody is sending cash from Kenya to Uganda in lower than a minute, somebody must be out of pocket. We handle that throughout all these international locations throughout all these companions, and also you want a bit little bit of oil to grease the system,” mentioned the CEO.
“We realized we don’t want to boost fairness since there’s a debt marketplace for that. In order that’s one of many causes we checked out debt and we consider once more, because the ecosystem matures, extra firms will even do a mix of debt and fairness.”
MFS Africa intends to make use of the brand new funding in a number of methods. First, it needs to double down on its growth efforts and add extra regional places of work throughout the continent and within the U.S. and China. It lately opened new places of work in Abidjan, Kampala, Kinshasa, Nairobi and Lagos whereas shifting its headquarters from Mauritius to London.
The 12-year-old firm has additionally earmarked some funding to strengthen its Governance, Dangers and Compliance (GRC) capabilities and treasury and liquidity pool. It additionally plans to rent extra expertise inside and out of doors the continent and proceed investing in different African tech startups.
In a press release, Julius Tichelaar, a companion at AfricInvest FIVE, mentioned his agency led the spherical as a result of MFS Africa’s broad vary of economic and funds companies resonates with AfricInvest FIVE’s monetary inclusion technique.
“Cross border funds stay an necessary problem in lots of African markets immediately and MFS Africa is uniquely positioned to confront this. We’re excited to affix MFS Africa’s world-class administration group on its mission and to help its progress journey,” he concluded.