November 2019 is marked as Nigeria’s coronation as Africa’s unofficial capital for fintech investment and digital finance startups. Last month, $360 million invested in Nigerian fintech. According to Partech, the amount equals to approximately one-third of all the startup VC gained for entire Africa in 2018.
A remarkable trend shows that more than half of the funding to Nigerian fintech ventures in November were from Chinese investors (about $170 million). This makes it a pivot in tech in China’s engagement with the continent.
Before the major rounds backed by Chinese, one of Nigeria’s earliest fintech companies, Interswitch, confirmed its $1-billion valuation after Visa took a minority stake in the company for an undisclosed amount. However, based on reports by Sky News, the investment is given at $200 million for 20%.
Founded by Mitchell Elegbe in 2020, Interswitch pioneered the infrastructure to digitize Nigeria’s then conservative economy practices. Now, the company provides a lot of the tech-wiring for Nigeria’s online banking system. It ultimately serves Africa’s largest economy and population. Interswitch offers a number of personal and business finance products, including its Verve payment cards and Quickteller payment app.
The financial services venture has expanded its physical presence to Uganda, Gambia, and Kenya. The Nigerian company also markets its products in 23 African countries and collaborated in August for Verve cardholders to make payments on Discover’s global network.
Visa and Interswitch boasted equity investment as a strategic partnership between the two companies. However, the companies did not disclose a lot of detail on the statement. One thing for sure is Interswitch’s IPO according to a source that said the company will list on a major exchange by mid-2020.
Interswitch could rise as Africa’s only tech-unicorn, for the near to medium-term, as Africa’s major e-commerce venture Jumia’s volatile share-price and declining market-cap have dropped the company’s valuation below $1 billion.
These moves signal the next chapter in China’s engagement in Africa. It could also raise some new issues. Hereby, China’s interaction with Africa’s tech ecosystem is a relatively light one compared to China’s deal-making on infrastructure and commodities.
There is still much debate about the role of China in Africa. Nevertheless, this new digital phase will certainly refresh the atmosphere.