Technology

Why e-Payment Start-ups Fail in Nigeria

Published

7 years ago

September 20, 2017

Why e-Payment Start-ups Fail in Nigeria

For the electronic payment sub-sector of Nigeria’s Information and Communications Technology (ICT) industry to grow its start-ups, some limiting factors must be overcome completely.

Challenges currently identified as stunting the growth of payment start-ups in Nigeria, include un-scalable business model; insufficient funding; no advantage over existing solutions; skills shortage; regulation and too much competition.

Africa Payments Innovation Jury 2017, an insider’s view to the Continent’s payment and Fintech services, presented at the just concluded Interswitch organized ‘Connect Conference’ made available to The Guardian, said the electronic payments industry experiences continuous innovation on a worldwide basis, with new entrants aiming to grab a share of the market, and established players trying to defend and grow their existing business.

Africa, according to the jury, is no exception to that trend, and there is additional impetuses in the region to innovate because of the opportunity to bring large sections of the population that currently have access to electronic payment services into the digital payment world.

However, according to them, there are challenges for the industry because operating margins are always under pressure, but the payment sector remains attractive because the market continues to expand, and there is opportunity for players to participate in the transaction value.

Giving further insight, the Jury explained that un-scalable business model accounted for 27 per cent of reasons for payment start-up failures; insufficient fund 24 per cent; no advantages over existing solutions 15 per cent; skills shortage 13 per cent; regulation 12 per cent and too much competition nine per cent.

The Jury disclosed that African payments and Fintech entrepreneurs are faced by a shortage of venture capital — more acute than in other regions of the world, which is restricting their ambitions.

They stressed that the shortage of investment is marked at the angel and series level. A stage with many investors opting to wait until the business model is proven and the company is profitable.

The Chairman, Africa Payments Innovation Jury, John Chaplain, said the main reason for the failure of start-ups is that the business models are not scalable, which is attributed to a shortage of strategic and product development skills.

Chaplain advised that when introducing electronic payments into substantially under-banked markets, although breadth of service offering is critical to long term profitability. “It is important to identify the first use cases that encourage consumers to use digital payments services. Arguably when a consumer uses one electronic payment service regularly, it is easier to encourage them to use further services—but the first service is key.”

The Global Jury, which includes eight African members, rated Asia as the home to most payments innovation over the next two years, a position that it has held since inaugural 2008 jury.

The top rating for Asia comes from China now being widely seen as the global Fintech leader and other countries such as Malaysia, Singapore, and Thailand rapidly modernising their payments infrastructure. Africa is rated just behind Europe and ahead of North America and Latin America.

According to the Jury, with 81 per cent preference, Africa is seen as the best location to start payments business today.

‘Africa is at the beginning of its growth curve with significant opportunity for leapfrogging international trends. The potential is very promising and the market is still virgin. East and West Africa would be the preferred markets,” the Jury stated.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Startups

Madica Empowers African Startups with $200,000 Investments Each

Published

4 days ago

April 25, 2024

Samed Olukoya

Madica, a structured investment program dedicated to nurturing pre-seed stage startups in Africa, has announced its inaugural investments in three innovative ventures.

Each of these startups is set to receive up to $200,000 in funding from Madica and will participate in the program’s comprehensive 18-month company-building support initiative.

The investment program provides a personalized curriculum, hands-on mentorship, founder immersion trips, executive coaching, and access to Madica’s extensive global network of investors for follow-on funding.

The primary objective of this support is to drive growth and ensure the long-term success of the startups.

Emmanuel Adegboye, Head of Madica, expressed his excitement regarding the investments, highlighting the abundant talent and innovation present in the African tech ecosystem.

He said Madica is committed to supporting African founders who often face challenges in accessing necessary support due to perceptions of risk among global investors.

Madica employs an open application process, collaborating closely with local ecosystem players such as incubators, accelerators, and angel networks to identify and support promising entrepreneurs.

The selection process remains rigorous, with investments made on a rolling basis throughout the year.

With plans to invest in up to 10 additional startups this year, Madica aims to expand the reach of venture capital and founder mentorship across Africa, addressing the existing imbalances in funding availability.

The announcement of these investments marks a significant milestone for the selected startups, providing them with vital financial support as well as access to invaluable resources and networks to propel their growth and success in the competitive landscape of the African startup ecosystem.

Social Media

Meta’s Revenue Woes Shake Tech Industry Confidence

Published

4 days ago

April 25, 2024

Samed Olukoya

The tech industry faced a wave of uncertainty as Meta Platforms Inc., formerly known as Facebook, delivered a disappointing earnings report that sent shockwaves through the market and dented investor confidence.

Meta’s forecast of weaker-than-expected sales for the current quarter, coupled with plans for higher capital expenditures, rattled investors who were eagerly anticipating robust results.

Shares of Meta plummeted by as much as 19% in after-hours trading to trigger a cascade effect across the tech sector.

The tech-heavy Nasdaq 100 Index experienced a decline of up to 1%, reflecting broader concerns about the health of the industry.

Analysts and investors alike expressed dismay at Meta’s inability to meet revenue expectations, citing uncertainties surrounding the company’s adoption and monetization of artificial intelligence (AI) technologies.

Jack Ablin, Chief Investment Officer at Cresset Wealth Advisors, highlighted the disappointment on the revenue front, overshadowing any optimism about AI adoption.

Questions lingered regarding the efficacy of AI investments and their potential benefits to users, leading to increased skepticism among stakeholders.

The repercussions of Meta’s earnings miss extended beyond its own stock, impacting other tech giants slated to report earnings in the coming days.

Alphabet Inc., Amazon.com Inc., and social media companies like Snap Inc. and Pinterest Inc. all witnessed notable declines, signaling a broader sentiment shift within the industry.

The fallout from Meta’s revenue woes reverberated across the tech landscape, affecting chipmakers, server manufacturers, and software firms. Nvidia Corp., Micron Technology Inc., and International Business Machines Corp. were among the companies affected, as investor concerns over AI investment and revenue growth cast a shadow over the sector’s outlook.

As the tech industry grapples with Meta’s disappointing results, stakeholders are left to ponder the implications for future investments and strategic decisions.

The episode serves as a stark reminder of the inherent volatility and uncertainty within the tech sector, underscoring the importance of diligent risk management and strategic foresight in navigating turbulent markets.

Social Media

TikTok Vows Legal Battle Amid Threat of US Ban

Published

7 days ago

April 22, 2024

Samed Olukoya

As the specter of a US ban looms large over TikTok, the popular social media platform has declared its intention to wage a legal battle against potential legislation that could force its Chinese-owned parent company, ByteDance Ltd., to divest its ownership stake in the app.

In what amounts to a fight for its very existence in one of its most crucial markets, TikTok is gearing up for a high-stakes showdown in the courts.

The alarm bells were sounded within TikTok’s ranks as Michael Beckerman, the company’s head of public policy for the Americas, issued a rallying cry to its US staff.

In a memo obtained by Bloomberg News, Beckerman characterized the proposed legislation as an “unprecedented deal” brokered between Republican Speaker and President Biden, signaling TikTok’s readiness to challenge it legally once signed into law.

“This is an unprecedented deal worked out between the Republican Speaker and President Biden,” Beckerman stated in the memo. “At the stage that the bill is signed, we will move to the courts for a legal challenge.”

The urgency of TikTok’s response stems from recent developments in the US Congress, where lawmakers have fast-tracked legislation mandating ByteDance’s divestment from TikTok.

The bill, intricately linked to a vital aid package for Ukraine and Israel, has garnered significant bipartisan support and is expected to swiftly pass through the Senate before landing on President Biden’s desk.

Beckerman minced no words in his critique of the proposed legislation, labeling it a “clear violation” of TikTok users’ First Amendment rights and warning of “devastating consequences” for the millions of small businesses that rely on the platform for their livelihoods.

TikTok’s defiant stance reflects the gravity of the situation facing the tech giant, which has spent years grappling with concerns from US officials regarding potential national security risks associated with its Chinese ownership.

Despite extensive lobbying efforts led by TikTok CEO Shou Chew to allay these fears, the company now finds itself at a critical juncture, where legal action appears to be its last line of defense.

ByteDance, TikTok’s Beijing-based parent company, has also signaled its intent to challenge any US ban in court, signaling a united front in the face of mounting pressure.

However, navigating the legal landscape will not be without its challenges, as ByteDance must contend with both US legislative measures and potential obstacles posed by the Chinese government, which has reiterated its opposition to a forced sale of TikTok.

As TikTok prepares to embark on what promises to be a protracted legal battle, the outcome remains uncertain.

For the millions of users and businesses that call TikTok home, the stakes have never been higher, as the platform fights to preserve its presence in the fiercely competitive landscape of social media.