African payment company makes rare purchases of American fintech

MFS Africa, a digital payment company, will buy Oklahoma-based Global Technology Partners in what it described as a rare case of an African group making a technology deal in the United States.

The acquisition, which will allow MFS to issue prepaid cards to customers, marks a further development 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 phones or in digital mobile wallets. However, many international companies, including Netflix and Amazon, do not accept digital cash payments from Africa, according to Dare Okoudjou, founder and CEO of MFS, who said the bond with GTP would solve this problem.

“It’s mostly for international e-commerce platforms, which are unable or unwilling to create the user experience that will accept mobile,” he said. MFS had recently made an agreement with Spotify, he added, where the power company would accept mobile payments from customers in Kenya, Uganda and South Africa.

$ 5 billion

The amount of investment attracted by African fintech companies last year, according to the African Private Equity and Venture Capital Association

Aubrey Hruby, co-founder of 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 in mobile money partly owned by Vodacom, and Visa. It will allow users of Safaricom’s M-Pesa mobile money to receive virtual credit cards.

African fintech companies attracted investments totaling around $ 5 billion last year, according to the African Private Equity and Venture Capital Association. Although a fraction of the money was collected worldwide, it was a big leap in previous years for Africa.

“A lot has happened in the last couple of years,” said Adesoji Solanke, a fintech analyst at Renaissance Capital, who said low interest rates had forced investors to seek higher-yield investments. “Finally, Africa is starting to get attention, and people see it as the last frontier.”

Solanke said the turning point came in 2020 when Stripe, the provider of online payments in Silicon Valley, acquired Nigerian payment startup Paystack in a deal believed to be worth $ 200 million. “It drew a lot of attention to Africa and the wheels began to spin much faster,” he said.

At least four African start-ups have become unicorns with Flutterwave, a Nigerian payment processor, which reached a value of $ 3 billion after raising $ 250 million in a financing round led by Tiger Global in February.

MFS Africa, which mainly started as a money transfer company, raised $ 100 million in 2021 in a mix of debt and equity. The company has diversified largely through acquisitions, including the acquisition in October last year of Baxi, a Nigerian digital payment service, for an undisclosed sum.

Robert Merrick, Founder and Chairman of GTP, said: “MFS Africa is an ideal home for GTP, and we are focused on adding new features and functions to our platform… And making a significant contribution to growing MFS Africa’s business. . » GTP has customers in 34 countries and cooperates with around 80 banks, including UBA, Ecobank, Stanbic and Zenith.

Okoudjou from MFS Africa said that GTP prepaid cards were actively used by around 500,000 customers, but that the potential size of the market was many times as much. Around 400 million people use mobile money in Africa, he said.

Okoudjou added that MFS had paid $ 34 million for GTP in a combination of cash and shares, and that the acquisition would help MFS expand its operations in the United States.