Africa

🇨🇩 The Democratic Republic of Congo’s president appointed former vice president Jean-Pierre Bemba as the country’s defense minister in a sweeping cabinet reshuffle. Bemba was acquitted by the International Criminal Court (ICC) in 2018 after spending 10 years in prison at The Hague for war crimes. His appointment was part of an overhaul of the 57 member-cabinet by President Felix Tshisekedi ahead of an election in December.

🇧🇫 Burkina Faso’s military government suspended France 24 broadcasts after the news channel aired an interview with the head of al Qaeda’s North African wing, AQIM. Relations between Ouagadougou and Paris have soured since the military seized power in the west African country late last year. In January, the Burkinabe government announced the expulsion of French troops who had been fighting Islamist insurgents.

🇬🇭 Ghana and four other West African countries will receive $100 million from the U.S. to aid the region’s fight against violent extremism. The other countries are Benin, Guinea, Cote d’Ivoire and Togo. Kamala Harris, the U.S. Vice President, announced the grant while in Accra on March 27, the first day of her three-nation tour in Africa.

🇪🇹 Ethiopia’s state-owned Ethio Telecom is upgrading its mobile money platform telebirr to transform it into a super app bringing multiple services to its more than 30 million customers. Users will be able to access telebirr mobile money, loans, e-commerce, utility bill payments, and social networking. The model is similar to that of super apps like WeChat in China.

🇰🇪 Google has taken down nearly 500 loan apps from the Play Store in Kenya since the introduction of its new policy requiring digital lenders in the East African country to submit proof of license, reports TechCrunch. Last month Semafor Africa reported that the policy, which came into effect in January, was part of a broader move by Google to mount a continent-wide crackdown on online loan sharks.

The stake in Belgian diamond trader HB Antwerp acquired by Botswana. The southern African country’s state gem trader will supply the trader with stones for five years as part of the deal announced by President Mokgweetsi Masisi on Monday. “The returns that come with having control to sell our diamonds with value addition are much higher than the returns on the sales of rough diamond stones alone,” he said at an event to announce the deal. The acquisition comes as Botswana seeks a better agreement with De Beers, the world’s biggest diamond company, with which it has mined most of the country’s diamonds under a 50-year partnership.

Sub-Saharan Africa’s debt accumulation rate slowed to 2% in 2021, down from 5.6% in 2020, but a closer look shows many countries actually increased their fiscal risk in the region. That’s because the external debt slowdown was distorted by a 6% decrease in South Africa’s private debt. Without South Africa, external debt in sub-Saharan Africa actually rose by 4.3% to $591 billion in 2021. It’s also worth noting, as this chart suggests, that there are some countries whose private non-guaranteed debt stock increased notably in 2021, whereas overall borrowing from private creditors did not. With the rise in the use of eurobonds over the past decade, sub-Saharan countries’ private external debt has been higher than external debt owed to official creditors, says the World Bank.

Chinese-owned apps are the big winners after Nigeria’s cash crisis

THE NEWS

The main winners in Nigeria’s banking sector after a botched currency overhaul are two Chinese-owned fintech apps.

Vendors and customers turned to upstarts OPay and PalmPay in recent weeks to send and receive money after a central bank edict to swap old banknotes for new ones, which was later overturned, created a shortage of cash in Africa’s biggest economy. Traditional banks could not handle the surge in online transactions. As of March 24, the two apps were ranked first and second in a list of Nigeria’s most downloaded finance apps on Google’s Play Store compiled by analytics company SimilarWeb — above the apps of traditional banks.

OPay, owned by Chinese billionaire Yahui Zhou through his web browser company Opera, has become the main alternative to banks for money transfer and bill payments during the cash crunch, say industry observers. It comes three years after the company shut various services on its app, including motorcycle taxis and food delivery, that were part of an initial push to be a super app. Zhou made the call to focus OPay as a digital bank.

But that early super app push and a highly coveted payments license from Nigeria’s central bank have positioned OPay as one of Nigeria’s leading financial services companies.

Opera increased its stake in OPay this year to 9.5% from 6.4%. It ultimately plans to sell its stake in the fintech startup. “OPay continued its strong growth trajectory through 2022, giving us comfort in the ultimate marketability of our increased ownership stake,” Opera wrote in a US Securities and Exchange Commission filing in February.

ALEXANDER’S VIEW

Silicon Valley venture capitalists have heavily backed Nigerian fintech players like Paystack and Flutterwave on the premise that web payments processors will accelerate digital payments in Africa. About two-thirds of the $1.2 billion in venture capital investment poured in Nigerian startups in 2022 has gone to fintech startups, according to a report by French firm Partech. But the experience of OPay and PalmPay, which have raised a combined $700 million from mainly Chinese investors in the last five years, shows there may be a different route to success. Their integration into devices that factor in the dominant use of cash on the continent have played a key role in their adoption.

OPay’s motorcycle taxi service, which did 10 million rides a week across 18 cities at its peak according to a former employee familiar with the vertical, was crucial to the success OPay has today. The taxis broke into the market through an aggressive use of discounts for drivers and passengers that competing services struggled to match. But not every OPay product was appealing. In Kenya and Nigeria, it floated a loan app that became controversial for recovery tactics that shamed borrowers who made late repayments.

PalmPay’s app is preinstalled on Android phones produced by Transsion, the Chinese manufacturer whose brands Tecno, Itel, and Infinix are among the most popular smartphones in Africa. Transsion co-owns PalmPay with another Chinese company, NetEase, and was the lead investor in a $40 million raise which the startup used to break into the Nigeria market, laying the foundation for other Chinese investors to splash more cash on the startup.

A PalmPay spokesperson said the company’s strategy has been built around “exciting discounts, freebies, cash-back rewards, and earning opportunities,” in a statement to Semafor Africa. An OPay representative said its app has been downloaded 23 million times and that the company has made significant investments in its systems to withstand a cashless environment.

But OPay and PalmPay, with devices that factor in the dominant use of cash in Nigeria, have forced their competitors to pay heed — Paystack has launched its own point of sale devices for vendors to receive card payments, a step towards entering the world of business banking.

ROOM FOR DISAGREEMENT

While Nigerians are becoming more comfortable sending and receiving money online, digital banks’ lack of physical branches could constrain their adoption in a society where trust in financial service providers has sometimes been undermined by ponzi schemes masquerading as digital companies.

Clementina Agwudosi, who sells bread on the streets of Lagos, downloaded OPay five years ago but only started using it this year. Agwudosi said she asks customers to pay into her OPay account because she receives the money instantly. But she never leaves the money in there, making sure to transfer her balance into an account at Guaranty Trust, a traditional bank, at the end of each day.

“If a GT branch in my area is closed, I can go to their branch in another part of town and collect my money. Not like OPay; their only office in the whole of Lagos is in Ikeja,” said Agwudosi. “You have to play safe.”

THE VIEW FROM LONDON

Mobile network operators should also be benefitting from Nigeria’s cash crunch, said Adesoji Solanke, lead fintech and banking analyst at emerging markets focused investment bank Renaissance Capital, in London.

MTN and Airtel, two of Africa’s largest telecoms companies, were awarded licenses to provide mobile money services in Nigeria last year. They are well placed to reach unbanked customers who already use their phone services, solving “last mile problems that banks have historically been inept at solving,” Adesoji said.

NOTABLE

• Nigeria’s central bank last week clarified that it does not plan to suspend OPay and PalmPay after reports of an imminent suspension went viral on social media, leaving users anxious.

Fatima Tambajang is the Africa head of developer relations and startups at Nvidia, the US graphics chip maker for large-scale AI applications.

• “If we want to be able to operate like McDonald’s we need to make sure that we systematize every process, every tool, everything we do.” This is a quote attributed to Shannon May, a co-founder of the controversial Bridge International Academies, which operates low-cost for-profit private schools in Kenya, Uganda, Nigeria, Liberia, and India. An investigation by The Intercept — based on interviews with parents, former Bridge teachers and police officers among others — corroborated sexual abuse allegations involving several young girls in one of the schools in Kenya. This scandal was on top of long-running complaints about under-qualified teachers and poor conditions at its schools. One of Bridge International’s powerful investors, the World Bank, had also been investigating these problems but The Intercept reported that the bank has since quietly divested its ownership stake.
• An alleged gold smuggler implicated in a scandal 32 years ago that robbed Kenya of 10% of its GDP — some $600 million — has set up a money laundering operation in Zimbabwe, an investigation by Al Jazeera claims. Kamlesh Pattni, who was acquitted of involvement in the Goldenberg scam of the 1990s, allegedly offered undercover reporters options to launder more than $100 million by effectively turning the dirty money into gold that would be exported from Zimbabwe to Dubai where he reportedly owns gold trading companies. Pattni denied any involvement in money laundering when confronted about the undercover investigation.

Jazz lovers are celebrating the life of South African maestro and distinguished singer-songwriter Gloria Bosman, who passed away on March 14, aged 50. The award-winning singer had more than six albums including her debut ‘Tranquillity’ (1999). Her unique singing style defined her as a multi-genre performer who composed and moved between jazz, pop, rock, opera, classical, cabaret and gospel with ease. ‘Her technical understanding let her bring surprising vocal textures — bird-chirps, cat-growls and more — and challenging, socially and personally aware lyrics to songs old and new,” writes Gwen Ansell for The Conversation.

If you’re enjoying the Semafor Africa newsletter and finding it useful, please share with your family, friends, chat bots, and Gloria Bosman fans. We’d love to have them aboard, too.

Let’s make sure  this email doesn’t end up in your junk folder by adding yinka.adegoke@semafor.com to your contacts. In Gmail you should drag this newsletter over to your ‘Primary’ tab.

You can reply to this email and send us your news tips, gossip, and good vibes.

— Yinka, Alexis, Alexander, and Muchira