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Startups Ecosystem Critical to the Future Of Nigeria, Says Osibanjo

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Startups Ecosystem Critical to the Future Of Nigeria Says Osibanjo, SiliconNigeria

The Vice President of Nigeria, His Excellency Professor Yemi Osibanjo, said that startup ecosystem is one of the vital tools in finding solutions to Africa’s various challenges, according to him, these challenges will determine if the continent’s future as the next frontier for economic opportunities will fully be realised.

The VP, represented by Director General, National Information Technology Development Agency (NITDA), Mallam Kashifu Inuwa Abdullahi, CCIE, said this at the Startup and Developer event organised by Google.

He stated the topic – The African Start-up Ecosystem Opportunity – is exciting because startup ecosystem is extremely critical to the future of Nigeria and Africa at large.

“Globally, the Startup ecosystem is the most viable platform for innovators and entrepreneurs to take their ideas from inception to impact. It brings relevant stakeholders together to collaborate and bring something new to the world or new to an industry. There will never be a more perfect time to strengthen the African startup ecosystem than now, on the verge of the 4th industrial revolution,” he said.

Osibanjo  noted that the 3rd industrial revolution was pivotal to unprecedented global economic growth in the 21st century, as it disrupted traditional service delivery channels and accelerated the automation of factories and manufacturing processes, using electronics and information technologies to expand the reach and create prosperity but Africa hopped along and missed out.

“The countries that captured maximum value from the 3rd industrial revolution have become more prosperous and built solutions that improved service delivery in all aspects of lives, from education, healthcare and food production to efficiency and speed in manufacturing.

“Today, Africa is presented with another opportunity, the 4th industrial revolution, which is shaping and creating economic activities. It is proving to be the catalyst for future economic activities that will bridge the divide between rich and developing countries, and remove physical borders and barriers while maximising the utilisation of digital technologies as a source of inspiration across economic sectors,” he added.

“The African startup ecosystem opportunity is hinged on two key factors, which are anchored on the 4th industrial revolution and driven primarily by digital technologies. The first factor is innovation capacity, and the second one is entrepreneurial capacity. Both capacities depend on four key indicators, Human Capital, Infrastructure, Funding and Demand. Human capital being the first indicator means that African startups must realise that they are only as strong as the value of the human resources they have. Therefore, startups like Andela, Wootlab Innovations and Decagon are vital as they are involved in producing skilled talent.

“With this, Africa can become the next hotbed for professional talent that will provide local solutions and export their skills and solutions to a global market that actively seeks such value. This is why we highly valued Google Developer Space in Lagos. It is the first in Africa and speaks to the position of Nigeria as a leader in the digital skills and startup ecosystem in Africa. The investments attracted by our startups confirm the position. Recently, Flutterwave announced new funding of $170m, and Stripe acquired Paystack for more than $200m. Other Nigerian technology companies like Interswitch have raised funding in hundreds of millions of dollars,” he noted.

The VP stated that according to startup Genome report, Lagos is the most valuable startup ecosystem on the continent, having 400 to 700 active startups valued at over $2B with Fintech being the most prominent in the Lagos technology startups ecosystem. However, other industries are emerging with startups like Flying Doctors, 54gene, Helium Health and Life Bank blazing the trail in the healthcare sector and Thrive Agric, Afex Commodities, and Probity Farms making waves in the agriculture and commodities exchange space. 

He said the opportunities for investment and disruption remain very high in the continent; same as the opportunity for hubs and other innovation centres to serve as enablers and anchors for our promising startups. 

“As Government, we are working with the relevant stakeholders in the public and private sector to ensure that startups receive every support they require to take their ideas from inception to impact. As part of our Ease of Doing Business Reforms, we instituted the Visa on Arrival Policy which allows any person outside ECOWAS to get a visa on arrival in Nigeria. This policy means all African startups and entrepreneurs seeking to expand their business into Nigeria will have a more straightforward process.

“We are also re-convening the Technology and Creativity Advisory Council, made up of public and private sector stakeholders in the ecosystem to advise Government on policies and programs to support the ecosystem. Through the work of this council, we are currently engaging with the African Development Bank to setup a $500million US Dollar Innovation Fund, which will provide support for the ecosystem across four pillars which include Infrastructure support, Finance, Skills Development and Technical Assistance.

“In 2019, the Federal Government of Nigeria launched the National Digital Economy Policy and Strategy (NDEPS) for Digital Nigeria as a sustainable roadmap to accelerate the development of the Digital Economy in Nigeria. The policy is designed to catalyse the digital ecosystem development in Nigeria and deepen innovation quality to promote innovation-driven enterprises that target the global market. 

“We also have many initiatives to support the ecosystem through various agencies. In this regard, the National Information Technology Development Agency (NITDA) has been at the forefront of supporting Nigeria’s digital innovation ecosystem. Last year, as the COVID-19 pandemic wreaked havoc worldwide, NITDA engaged the ecosystem to devise strategies to aid business continuity for startups and developed schemes to support and sustain the ecosystem.

The engagement led to initiatives such as Technology Innovation and Entrepreneurship Support (TIES) Scheme, National Centre for Artificial Intelligence and Robotics, National Innovation and Entrepreneurship Center etc, as sustainable programmes to continuously up-skill and supports the startup ecosystem. 

“Secondly, the Nigerian Export Promotion Council introduced the Export Expansion Grant, which can be accessed by companies with a minimum annual export turnover of N5 million. This is particularly useful to Nigerian startups seeking an expansion into other African countries and those seeking to take advantage of the African Continental Free Trade Area. Other opportunities, such as the Central Bank of Nigeria’s Creative Sector Loan in collaboration with the Bankers’ Committee and the Bank of Industry’s Technology Fund, are designed to create different ways through which startups can access the value they need to keep expanding their businesses. 

“I must further re-iterate that there is no exhaustive list of approaches to make sure our Government creates an enabling environment. For example, we are working through the Federal Ministry of Communications and Digital Economy to deepen digital identity through NIN registration and build broadband infrastructure backbone across the country, this is part of our National Broadband Plan, which is designed to deliver data download speeds across Nigeria of a minimum 25Mbps in urban areas, and 10Mbps in rural areas, providing access to at least 90% of the population by 2025 at affordable prices. Broadband infrastructure and digital identity are two critical factors that accelerate the digital economy. These are all avenues aimed at inspiring our startups to disrupt the conventional ways of service delivery,” he concluded.

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Start-ups/Fintech

Facebook Opens Applications across Nigeria, South Africa and Kenya for 2021 Community Accelerator Program

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Facebook Opens Applications across Nigeria South Africa and Kenya for 2021 Community Accelerator Program, SiliconNigeria

Today, Facebook is inviting community leaders from Nigeria, South Africa and Kenya to apply for the 2021 Facebook Community Accelerator Program—a program that offers participants training, mentorship and up to $50,000 USD in funds to invest in an initiative that extends their community’s positive impact.

The aim of the Community Accelerator is to help leaders of Facebook communities to harness the power of their community to turn ideas into action. The selected leaders will spend five months learning from experts, coaches and a customised curriculum so they can strengthen their community.

Lessons include community identity foundations, leading action-oriented programmes and sustainability. Participants will also receive early access to new Facebook products aimed at helping communities better manage and activate their members.

Plan an initiative

Participants will identify an important initiative that will create a positive impact on the broader world and develop a plan to mobilise their community around their goal. Initiatives will be shared with potential partners, mentors and a panel of judges for the chance to be awarded funding and receive public recognition.

Participants will then spend three months executing their initiatives. They will collaborate with advocates and leaders in the community space and work with the Facebook team to bring their ideas to life.

Says Kiran Yoliswa, Partner Management Lead, Middle East and Africa Community Partnerships at Facebook: “Facebook communities and their leaders are helping to resolve social challenges, sharing knowledge and information, while connecting with others that share their interests or passion for a cause. We’ve seen so many incredible communities from across South Africa, Kenya and Nigeria using our platform to drive change and provide support and encouragement for thousands of people, we’re excited to offer their Facebook Community leaders this program to help amplify their impact even more.”

How to apply

This program is open to communities that have a presence in Facebook Groups with leaders who are 18 years or older. Communities must have existed for over one year and must have a minimum size of 1,000 members.  Applications open today, May 4 – 31, 2021.

The Community Accelerator is part of our Facebook Community Leadership Program, a global initiative that invests in people building communities. Learn more and apply here .

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Start-ups/Fintech

USSD: Banks Owe MTN Nigeria N40.3bn As Digital Revenue Up 101% in Q1

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USSD: Banks Owe MTN Nigeria N40.3bn As Digital Revenue Up 101%, SiliconNigeria
  • Revenue up 17.2 per cent to N385.2 billion
  • Fintech revenue rose by 28.5%
  • Subscribers down by 5 million to 71.5m

MTN Nigeria said banks are owing it N40.3 billion as at the end of first quarter 2021 even as it reported its digital revenue grew by 101.0% and fintech revenue by 28.5% as customers continued to adopt more digital products and services, a trend accelerated by the pandemic.

According to its financial reports for the first quarter ended March 31, 2021, sent to SiliconNigeria, it had 449,100 registered mobile money (MoMo) agents and 4.6 million fintech customers.

MTN Nigeria CEO, Karl Toriola said, “As at the end of Q1, N40.3 billion was due to MTN Nigeria. In the meantime, we continue to account for USSD revenue on a cash basis.

“We continue to engage with the NCC, Central Bank of Nigeria (CBN) and deposit money banks (DMBs) to conclude the operational modalities for the new pricing framework that has been agreed upon for USSD services. The mechanism for and timing of the recovery of the industry-wide outstanding debts that exist for USSD services provided to the DMBs form part of this process,” he said.

Toriola said the enterprise business continued its recovery from the impacts of the COVID-19 lockdown as economic activity improved. However, service revenue for enterprise was largely flat YoY, mainly due to the non-recognition of USSD revenue in Q1. Normalised growth (excluding USSD revenue) was 2.6%.

“Our digital business continued to gain traction with the uptake of our products and services and the structural turnaround in the business. As a result, digital revenue rose by 101.0%, supported by our rich media and value-added services, while our active user base was largely flat at 2.8 million,” he said.  

Fintech revenue rose by 28.5%, driven by increased adoption of Xtratime and our core fintech services. We continue to expand our MoMo agent network and broaden our service offerings to include assisted withdrawal irrespective of the bank where the account is domiciled. Our registered MoMo agents increased by 54,000 to 449,146. The volume of transactions processed was over 24 million in the quarter, up more than four times YoY, from an active base of 4.6 million subscribers.

MTN reported that its service revenue increased by 17.2 per cent to N385.2 billion while earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 19.1 per cent to N204.5 billion. However, mobile subscribers declined by five million to 71.5 million in the first quarter of this year due to customer churn and the regulatory restrictions on new SIM sales and activations.

 MTN’s ability to drive service revenue growth while managing the growth in expenses resulted in an acceleration in EBITDA growth to 19.1% and EBITDA margin expansion of 0.9pp to 53.1% YoY. This enabled profit before tax (PBT) and profit after tax (PAT) growth of 33.9% and 42.5% respectively.

MTN’s voice revenue grew by 8.0%, supported by an 8.7% increase in traffic and our customer value management initiatives. The impact on voice revenue of the industry-wide suspension of new SIM registration in mid-December was partly offset by increased usage by active SIMs in our base and migration to a higher quality of experience.

Data revenue maintained the positive momentum from Q4 2020, rising by 42.6% YoY. This was led by increased usage and traffic, supported by 4G penetration and increased network capacity following the acquisition and activation of an additional 800MHz spectrum in March 2021. In line with its 4G acceleration, the 4G network now covers 61.8% of the population, up from 60.1% in December 2020.

MTN Nigeria added approximately 1.2 million new smartphones to the network, bringing smartphone penetration to 47.5% of its base, up from 45.9% in 2020.

On SIM card registration,more than 35 million subscribers have submitted their NINs as at 30 April 2021, representing approximately 50 per cent of our subscriber base and 63 per cent of service revenue, MTN said. It is also actively supporting the Government’s NIN enrolment programme, with 182 points of enrolment active across the country.

“We continue to collaborate with the Nigerian Communications Commission (NCC) and the Nigerian Identity Management Commission (NIMC) to update subscriber records with the National Identity Number (NIN). We are working with NIMC to increase the enrolment centres to provide an access point for as many Nigerian as possible,” added Toriola.

Capital expenditure in the quarter was N89.9 billion, up 19.3% mainly due to site rollouts, while free cash flow increased by 18.9% to N114.7 billion. MTN’s core capex excluding right of use assets was up 27.8% to N31.6 billion. Depreciation and amortisation rose by 16.8% due to the impacts of Naira depreciation and a 2.5pp increase in value added tax in February 2020.

MTN recorded a 10.5pp reduction in our overall cost of funding, despite higher borrowings, leading to a 10.6% decline in net finance costs. This was enabled by a 95% reduction in the reference benchmark rate to 0.6%.  Overall, it recorded a PBT growth of 33.9%, while PAT rose by 42.5% due to the release of an overprovision in deferred tax in the prior year.

Covid-19 Support

 “We made good progress in the first quarter of 2021 despite the continued impact of the COVID-19 pandemic. We continue to prioritise the safeguards put in place to protect the health and well-being of our people, customers and stakeholders and to control the spread of the virus while ensuring network resilience and efficiency. As part of our Y’ello Hope initiatives, we continue to support Government’s efforts in combatting the COVID-19 pandemic.

“We supported the most vulnerable in our communities, providing them with free-to-access services (including SMS and data) as well as essential medical supplies (tests and personal protective equipment). We continue to support the Coalition Against COVID-19 (CACOVID) that has driven multiple initiatives, such as building isolation centres across the country. MTN Nigeria also paid taxes early in support of Government’s ongoing efforts. In addition, our REVV support programme for Micro, Small and Medium Enterprises (MSME) helps them navigate the new digital reality,” said the MTN CEO.  

Outlook

MTN’s 2021 priorities remain unchanged, with a clear focus on sustaining double-digit revenue growth, driving 4G network expansion and positioning our fintech business for accelerated growth in order to unlock its full value. “The acquisition of additional 800MHz spectrum positions us to deliver improved service speeds to Nigerians in support of the Government’s broadband initiative.

“We will continue to sustain our expense efficiency programme to strengthen our financial position and support margins. We remain in dialogue with the DMBs on a pricing option for airtime sales commission while diversifying our airtime recharge channels to offer our subscribers more options to purchase airtime and stay connected.

He said MTN will pursue stronger and deeper stakeholder relationship and enhanced shared value across its stakeholder ecosystem while ensuring that the operator’s activities align with the Government’s development agenda. “Environmental, social and governance (ESG) principles remain at the core of everything we do, with a focus on aligning our priorities to drive eco-responsibility, sustainable society, sound governance and economic value for all in Nigeria,” Toriola concluded.

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Strengthening Fintech Ecosystem through Partnerships

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Strengthening Fintech Ecosystem through Partnerships, SiliconNigeria

“Alone we can do so little; together we can do so much.” This statement aptly describes the success achieved in the financial and payment landscape in Nigeria through the strategic partnership between fintechs and banks in the financial services industry.

Years ago, daring criminals would unleash mayhem on unsuspecting victims coming from banking halls and dispossess them of their valuables.  This was because consumers had to move around with cash.

At the time, majority of the people living in both urban and rural areas were unbanked and did not have access to financial products and services.

But as technology evolved and digitalization of businesses became imperative to fit current realities, banks had to re-evaluate their service model and operational strategies. The need to transition into a digital wholesale banking system was inevitable.

Adoption of technology in service delivery such as banking, e-commerce, logistics etc. has contributed to the growth of the fintech companies. With collaboration, fintechs have increasingly developed solutions that have been deployed across industries to enhance payment collection, efficiency and fund security. These partnerships between the fintechs and industry players have helped to accelerate product innovation, drive growth and provide topnotch solutions across board.

The partnership between the fintech and the banking community has brought about innovative solutions such as funds transfer, on-demand bank statement, instant transaction alerts, payment authorization, loan request and disbursement, etc. Thanks to this innovative payment solutions, bank customers and account holders do not have to visit the banks often as they can initiate and complete transactions from the comfort of their homes.

Also, fintechs have leveraged partnerships with other service providers, such as power distribution companies (DISCOs), telecoms companies, ride-hailing services and utility companies to strengthen the payment ecosystem. These partnerships have further deepened financial inclusion and increased adoption of digital payment solutions, enhanced access to loans and other financial services such as funds transfer, bill payments, DSTV subscription, airtime recharge, and so on. These partnerships have helped the service providers collect payment seamlessly as well as allowed the customers to pay with ease.

Following these partnerships, Nigeria has witnessed an increase in the adoption of electronic payments over the last few years. Data shows the value of transactions via digital payment platforms, Nigeria Interbank Settlement System Instant Payment System (NIP) and Point of Sales (PoS) terminals rose to N60.34 trillion in the first quarter of 2021. That was a 12.55% increase when compared to the N53.61 trillion achieved in the fourth quarter of 2020.

Taking into cognizance that strategic partnerships help to strengthen payment solutions and are pivotal to economic growth, Africa’s leading digital payment and e-commerce company, Interswitch Group, has collaborated with several companies across industries to provide the broadest set of financial solutions to financial institutions across Africa.

Since its inception, Interswitch has been providing the switching infrastructure that connects different banks in Nigeria to reconcile inter-bank payments and settlements. Its solutions are also used to deliver the technology used for Automated Teller Machines (ATM) and PoS.

Following the acquisition of a minority stake by Visa in Interswitch in 2019, Interswitch is today the most valuable African Fintech business with a valuation in excess of $1 billion hence its recognition as a Unicorn. The partnership with Visa, allowed the Fintech Unicorn to expand its digital payment solutions across the continent.

Beyond partnerships with brands, Interswitch has also partnered governments across the continent to integrate its digital payment solutions to expand their inter-bank settlement capacities. These partnerships have enhanced the digital payment ecosystem, helped shape the much-needed financial transformation as well as boosted the African economy.

According to Tomi Ogunlesi, Group Head, Corporate Marketing, “Over the years, we have been making major strides in delivering world-class financial solutions to customers across the world. Through strategic partnerships, Interswitch has also reached major milestones and deepened access to financial services.” 

In furtherance of its commitment to help strengthen the financial services industry, Interswitch recently revamped its developer console to improve the experiences of partners, developers and merchants who seek to integrate with their solutions.

Essentially, this platform enables developers to try out their products before going to the market. The new Interswitch APIs enable developers create innovative tools and products, and provides self-service integration, giving developers the ability to access Interswitch’s product APIs, authentication parameters, sandbox, production keys, documentation and seamless project management.

Indeed, the fusion between Fintechs, banks, and other service providers as strategic partners would not only enable them deliver satisfactory services to their numerous customers, it will help grow the payment ecosystem and also contribute immensely to the growth of the Nigerian economy.

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