The acquisition, which will allow MFS to issue prepaid cards
to clients, marks a further evolution of Africa’s rapidly growing fintech
scene.
Hundreds of millions of people in Africa who do not have
bank accounts store their money on their mobile phone or in digital mobile
wallets. But many international companies, including Netflix and Amazon, do not
accept digital money payments from Africa, according to Dare Okoudjou, founder
and chief executive of MFS, who said the tie-up with GTP would solve this
problem.
“It’s mostly for international ecommerce platforms, which
are not able or willing to create the user experience that will accept mobile,”
he said. MFS had recently done a deal with Spotify, he added, in which the
streaming company would accept mobile payments from customers in Kenya, Uganda
and South Africa.
Aubrey Hruby, co-founder of the Africa Expert Network, said:
“There is more pent-up demand for things like Netflix on the continent than
people think.”
The GTP acquisition follows a partnership this month between
Kenya’s Safaricom, the pioneer of mobile money that is part-owned by Vodacom,
and Visa. That will allow users of Safaricom’s M-Pesa mobile money to obtain
virtual credit cards.
African fintech companies attracted investments totalling
about $5bn last year, according to the African Private Equity and Venture
Capital Association. Although that was a fraction of the money raised
worldwide, it was a big leap on previous years for Africa.
“There’s a lot that’s been happening in the last couple of
years,” said Adesoji Solanke, fintech analyst at Renaissance Capital, who said
low interest rates had pushed investors to search for higher-yielding
investments. “Finally Africa is starting to get attention and people are seeing
it as the last frontier.”
Solanke said the turning point came in 2020 when Stripe, the
Silicon Valley online payments provider, acquired Nigerian payments start-up
Paystack in a deal thought to be worth $200mn. “That drove a lot of attention
towards Africa and the wheels started spinning much faster,” he said.
At least four African start-ups have become unicorns with
Flutterwave, a Nigerian payments processor, reaching a valuation of $3bn after
it raised $250mn in a funding round co-led by Tiger Global this February.
MFS Africa, which started principally as a remittance
company, raised $100mn in 2021 in a mixture of debt and equity. The company has
diversified largely through acquisition including the purchase last October of
Baxi, a Nigerian digital payments service, for an undisclosed sum.
Robert Merrick, founder and chair of GTP, said: “MFS Africa
is an ideal home for GTP, and we are focused on adding new features and
functionalities to our platform . . . and making a significant contribution to
growing MFS Africa’s business.” GTP has clients in 34 countries and works with
some 80 banks including UBA, Ecobank, Stanbic and Zenith.
Okoudjou of MFS Africa said GTP prepaid cards were being
actively used by around 500,000 clients, but that the potential size of the
market was many times that amount. Around 400mn people use mobile money in
Africa, he said.
Okoudjou added that MFS had paid $34mn for GTP in a
combination of cash and shares and that the acquisition would help MFS to
expand its activities in the US.