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Flutterwave Closes USD $170m Funding

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Flutterwave, Africa’s leading payments technology company, today announces it has secured USD $170 million from a leading group of international investors as part of a successful Series C round. The round was led by growth-equity firms Avenir Growth Capital (“Avenir”) and Tiger Global Management LLC (“Tiger Global”) with participation from new and existing investors.

Founded by entrepreneur Olugbenga Agboola in 2016, the company’s valuation is considered to be valued at more than USD $1 billion. The fundraise brings the total investment in Flutterwave to USD $225 million and is one of only a very small number of African fintech companies to have raised significant funds in a period of widespread disruption and economic uncertainty.

The new funds will allow Flutterwave to execute an ambitious growth strategy to become a leading global payments company, empowering SMEs and multinational brands by connecting the highly fragmented African digital payments landscape. Flutterwave will invest the new capital to accelerate customer acquisition in existing and international markets, as well as develop complementary and innovative products such as the newly launched Flutterwave Mobile, an app to help accelerate ecommerce growth as a result of the success of the Flutterwave Stores.

This fundraise comes at a time when Covid-19 has accelerated the shift to digital payments in Africa, which has contributed to Flutterwave’s exceptional revenue growth of 226% CAGR from 2018-2020.

Olugbenga ‘GB’ Agboola, Founder and CEO of Flutterwave, said: “When Flutterwave was founded in 2016, the payments landscape in Africa was highly fragmented so the goal was to build a pan-African platform that simplified payments for everyone. However our successes would not be possible without (1) Our amazing team of 300+ employees that work tirelessly to achieve our goals (2) The trust and support we have received from our investors and customers and (3) Regulatory bodies like the Central Bank of Nigeria which – under the leadership of the current Governor, Mr Godwin Emefiele – has remained at the forefront of the significant efforts that are currently being made by African governments to create the enabling environment for technology, innovation and financial inclusion. This humbling support has created the backbone upon which companies like Flutterwave have been able to thrive.” 

As we look to the future, our focus remains the same which is to stand by our 290,000 merchants across Africa every day as they strive to build their mom-and-pop stores into global businesses. We look forward to increasing our investments across the continent and deepening the impact our platform has on lives and livelihoods as we take more businesses in Africa to the World, and at the same time continue to bring more of the World to Africa.”

Jamie Reynolds, Partner at Avenir Growth Capital, commented: “Flutterwave is at the forefront of innovation in payments technology, and we are excited to support the team as they build the last available payments infrastructure frontier in the world – connecting merchants and consumers intra-Africa and globally.”

Scott Shleifer, Partner at Tiger Global Management LLC, added: “We are excited to partner with Flutterwave as they continue building a world-class payments platform. We were impressed by Flutterwave’s focus on customer success and believe the company is well-positioned for sustainable long-term growth.” 

This latest funding round was led by Avenir and Tiger Global with participation from DST Global, Early Capital Berrywood, Green Visor Capital, Greycroft Capital, Insight Ventures, Salesforce Ventures, Tiger Management, WorldpayFIS, and 9yards Capital. Avenir and Tiger Global have funded some of the brightest tech start-ups in the world including Current, Latch, Savage x Fenty, and JD.com.

Flutterwave was founded with the mission to create endless possibilities for customers and businesses in Africa and the emerging markets. It enables its customers to build customisable payment applications through its APIs. Flutterwave’s Series C fundraise comes on the back of an impressive run of 4 years in which Flutterwave reached over 290,000 merchants and over 500,000 registered Barter users, launched a range of new products and partnerships and expanded its infrastructure into over 33 countries.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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West Africa Launches New Payments Digitization Agenda

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In Senegal, 8 out of 10 workers are paid in cash. Most are temporary workers and excluded from health insurance. A survey revealed that 77% of temporary workers would be willing to receive their wages digitally if this gave them access to health insurance. These are some of the major findings of the publication that the Senegalese government has launched today, with support from the Better Than Cash Alliance (United Nations), the World Bank and the National Agency of Statistics and Demography of Senegal. Combining digital payments with health insurance benefits offers an excellent opportunity for social inclusion, formalization, and financial innovation.

Digital payments stimulate domestic production and consumption. If 50% of temporary workers in Senegal received payments digitally, 45 billion CFA francs would be added to GDP per year (around $80 million USD). Paying workers digitally, speeds up the financial inclusion for the population, boosts business competitiveness and increases financial system liquidity. To tap into this potential, the SME Development Agency (ADEPME) plans to bolster its SME support fund with $20 million USD (around 11 billion CFA francs) from the World Bank. This will be used to strengthen SME digitization initiatives and support digital payment projects for workers.

High-level leadership speaks out in support of digital payments for workers

Senegalese President Macky Sall and H.M. Queen Máxima of the Netherlands, who serves as UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), have launched an appeal to fellow leaders, the private sector and civil society, inviting them to: “use this report to ensure digital payments are at the center of a sustainable and fair economic recovery. We look forward to jointly providing leadership on this agenda to achieve an inclusive and digitally enabled recovery,” the two leaders added.

To set an example, the President of Burkina Faso, Roch Marc Christian Kaboré, also decreed, in late 2020, the digitization of payments for workers in the administration of Burkina Faso. When the COVID crisis emerged, the West African Economic and Monetary Union (WAEMU) and the Central Bank of West African States (BCEAO) took decisions aimed at reducing the circulation of cash in the 8 countries. These actions have had tangible impacts which are beginning to change the lives of workers and companies.

Digitizing payments and advancing universal health care coverage

While receiving a salary is often linked to health care contributions, globally at least 61% of workers operate in the informal sector without adequate coverage, according to the International Labour Organization (ILO). Indeed, in some countries, there is not always a legal obligation for employers to contribute to any kind of coverage for their informal/self-employed workers, which affects women more than men.

To meet this challenge of inclusion, the National Agency for Universal Health Coverage in Senegal has launched an ambitious digital payments platform. It has partnered with fintechs and private companies to link access to universal health coverage and digital payments – specifically targeting women. Flagship national enterprises such as the agricultural giant SODAGRI or SMEs such as QUALIOCEAN and Kossam SDE are setting an example by providing temporary workers with universal health coverage. More than 200,000 workers will now have access to quality, government-subsidized health care.

While 81% of national companies have fewer than 20 employees, on average hundreds or even thousands of temporary workers are employed in their supply chains. Employees are generally banked, but 93% of employees on temporary contracts are paid in cash. The latter are systematically excluded from the formal health system.

The successful transition towards digital payments

Three obstacles have limited the growth of payment digitization in Africa: the size of the informal sector, sometimes up to 90% of the economy; the historically low financial inclusion rate; and most importantly, 21% of African workers receive a wage keeping them below the poverty line.

This has all changed dramatically. Financial inclusion has surged since 2010 with the arrival of electronic money issuers and fintech.

The country’s largest employer, Compagnie Sucrière Sénégalaise, has successfully digitized payment for around 8,000 workers via a partnership with local fintech. “We wanted to digitize payments without using the banking system, which isn’t suited to some populations,” noted Claude Fizaine, the company’s Secretary General, in an interview with an African media outlet. “For employers, the benefits of digitizing payments include avoiding the constraints of managing large amounts of cash, and all the risks that distribution can involve. It also makes it possible to offer employees tools tailored to their financial and family situations, which can only have a positive impact on their personal and professional lives,” he added.

WAEMU’s innovations should continue to inspire the rest of Africa. Since 2012, it has been the continent’s engine for economic growth and stability. The examples of Senegal and its neighbours reinforce the ILO’s global agenda that could well make digital payments for workers a new global standard for promoting decent work.

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Global Investments into Fintech Companies Plunged by Almost 40% amid Pandemic

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The year 2020 was a challenging year for many fintechs. The global slowdown in funding caused by the COVID-19 led to a significant drop in the number of venture capital deals and brought uncertainty for many companies operating in this market.

According to data presented by AksjeBloggen.com, global investments into fintech companies hit $105.3bn in 2020, almost a 40% plunge amid pandemic.

US Fintechs Raised 75% of Total Investments

Fintech companies apply modern tech solutions in the financial services industry to offer digitally enhanced products and allow widespread access to financial products at a lower cost than traditional players. Over the years, these innovative startups transformed how people and businesses spend, invest, save, or borrow money.

Even before the pandemic, many fintechs found it difficult to access funding, as investors focused on established companies instead of early-stage businesses. Nevertheless, the total value of investments into fintech companies increased dramatically in the last decade.

In 2010, fintechs raised $9bn in funding, revealed the KPMG’s 2020 Pulse of Fintech report. By 2015, this figure grew more than seven times to $67.1bn. In 2018, the total investment value jumped to $145.9bn and continued rising to $168bn in 2019, as the record year for fintech investments.

After the COVID-19 pandemic brought many deals to a halt in the first half of 2020, H2’20 reversed the trend as investors and fintechs learned to do business in a new normal. Nevertheless, statistics show that last year witnessed 2,861 deals worth $105.3bn, almost $63bn less than before the pandemic.

The Americas were the region attracting the most investments in the sector, accounting for 75% of the total, or $79.2bn. Fintechs from the EMEA region raised $14.4bn last year. Asian fintechs followed with $11.2bn worth of investments.

The Number of Fintech Startups Doubled Since 2019

Although the COVID-19 affected the investment activity in the fintech sector, it also triggered a surge in the use of fintech solutions, creating a huge space for new companies.

The BCG data revealed the number of fintech startups worldwide more than doubled since the pandemic struck, rising from over 12,200 in 2019 to almost 26,500 this month.

As of April 2021, there were 10,738 fintech startups in North America as the leading region, up from 5,800 in 2019.

However, statistics show Europe, the Middle East, and Africa have witnessed even more impressive growth in the number of fintechs. In 2019, almost 3,600 companies were operating in this sector. Since then, the number of fintech startups in the EMEA region surged by 160% to more than 9,300.

Asia and the Pacific ranked third with nearly 6,200 fintech startups as of April, up from 2,850 in 2019.

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Specta Records N100bn Consumer Lending Milestone

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Online instant lending platform, Specta and PaywithSpecta, a digital credit solution introduced by Sterling Bank has disclosed that it has disbursed over N100 billion in digital loans and about N5 billion digital credits, respectively.

Both solutions make loans and digital credits available in less than five minutes to banked Nigerians, irrespective of their bank, without paperwork and collateral.

But above all, they are also the best in the segment for providing the best lending rates and interest free funding up to 90 days for online and offline purchases.

Divisional Head, Retail and Consumer Banking at Sterling Bank, Mr. Shina Atilola, in a statement made available to the press explained: “Specta has disbursed about N100 billion in digital loans in three years. It is an important milestone worth celebrating by a platform that revolutionised and opened digital lending space in Nigeria.

“PaywithSpecta, the digital credit solution extension of Specta has also exceeded expectations. In a few months, it has provided over N5 billion in digital credits to Nigerians.

“We are proud to be at the forefront of deploying innovative solutions that meet the needs of everyday Nigerians and small businesses. Our profound gratitude to our esteemed retail customers and business owners for their loyalty that has made Specta and PaywithSpecta the country’s undisputed market leaders in digital lending and credit solution segments.”

Specta, an instant lending platform that offers up to five million naira consumer loans in five minutes, was unveiled in 2018 by Sterling Bank Plc.

The lending platform uses proprietary data and analytics to process and disburse consumer loans to borrowers who belong to pre-approved communities in less than five minutes without paperwork and collateral.

The types of loans offered include personal, payday, wedding finance, rent, education, and medical finance loans, among others, to salary earners and business owners.

Following the success of Specta, Sterling Bank recently creed another variant of it known as PaywithSpecta to enable customers to pay for goods in instalments. At the same time, Merchants are credited instantly, thereby helping businesses to increase sales.

PaywithSpecta offers digital credit limits to customers to purchase items in-store at Merchant locations or Merchant online platforms. It also allows Merchants to access credit for their business activities.

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