With large-scale fundraises, investor interest in African fintech continues. MFS Africa, Africa's biggest digital payments network joins the fray.
TechCrunch was informed by the company that it raised $100 million in Series C financing. This funding consisted of $70 million equity and $30 millions debt.
AfricInvest FIVE, a private equity fund, co-led Series C round together with existing investors Goodwell Investments Group and LUN Partners Group.
The round also included new investors CommerzVentures and Allan Gray Ventures. Endeavor Harvest, Endeavor Catalyst, Endeavor Harvest, Endeavor Harvest, Endeavor Harvest, Endeavor Harvest, and Endeavor Catalyst. ShoreCap III was an existing investor in other funds.
This announcement is the cherry on top for the company. It has made several important acquisitions and invested in investments over the past few years that are rarely matched by any other fintech on the continent.
Dare Okoudjou, the founder and CEO of MFS Africa, spoke candidly to TechCrunch. He stated that MFS Africa's mission is to make it as easy for Africans to send money and receive it just like they do with phone calls.
Okoudjou, a telecoms executive and engineer who has worked in the industry for more than a decade, knows how difficult it is to make a call in Africa.
Although calls in Africa are still quite expensive compared to other parts of the world, it is now easy to make them thanks to the widespread penetration of mobile phones and advances in telecommunications. Okoudjou sees MFS Africa as a way to make payments across the continent.
CEO Okoudjou stated that he takes for granted that anyone can contact them via mobile phones. He also said that he hopes that mobile wallets will be as easy to use as a mobile phone.
"It should be possible to transact with anyone in the world if you sign up to any mobile wallet anywhere in the world starting with Africa. This is the great mission of the company.
The company was founded by him in 2009. It facilitates peer-to-peer transactions between Kenya, Zambia, Zimbabwe, Uganda, Zimbabwe, and the Ivory Coast.
As the company grew, it became clear that the product could be used by small businesses. Okoudjou claims that more than half the users reported using the platform to run their businesses at the time.
MFS Africa was created by combining disparate payment systems across Africa into one seamless network that operates the same telecom networks. This made it the preferred platform for individuals as well as businesses to transact across currencies and borders.
MFS has made several acquisitions and investments in the past year.
This London-based company connects over 320 million mobile money wallets in 35+ African countries. It offers a wide range of financial services, including bank accounts, virtual debit cards, and prepaid cards.
The company has yet to establish a presence in Nigeria, Africa's largest country. Capricorn Digital acquired Baxi, an agent-banking platform that was purchased by the company.
Nigeria is very different from the traditional MFS market where mobile money agents are the stars. Agent banking networks are more prominent in West Africa.
MFS was able to acquire Capricorn because it offers a similar range in services for digitizing cash, like East African mobile money agents.
Okoudjou said that MFS Africa's acquisition gives them access to the Nigerian market. It also allows the company to build a network of highly skilled agents not available in other African markets.
Agents who are mobile money can help customers withdraw cash and deposit it. However, agent networks like Capricorn provide access to transfer, withdrawals, airtime, bill payments, pay TV and data subscriptions for the underbanked and unbanked Nigerians through its Baxi boxes.
"Agent networks" are the most digitalized sector of SMEs on the continent. They often have other businesses that sell other products. He said that they are connected to the economy and the fabric society."
This is a good place to begin if you are interested in bringing digital payments and digital at large to SMEs across Africa. We believe that Nigeria's success could be a model for the rest of Africa.
Okoudjou states that once the Baxi acquisition is complete, subject to approval by the Central Bank of Nigeria (CBN), a customer will be able to walk to a Baxi agent to make cross-border payments to Benin Cameroon, China and vice versa.
MFS Africa's comprehensive pan-African payment approach does not cover payments from Africa to China. It's a great opportunity to seize: China-Africa bilateral commerce is one of the fastest growing corridors in the world, accounting for $192 billion in 2019.
Okoudjou claims that the company started to consider the corridor after it acquired Beyonic, a Ugandan provider of digital payments for small and medium-sized companies. To better understand the needs of these businesses, Okoudjou, a Johannesburg-based company, had conducted surveys and discovered that sending and receiving money to China was their most pressing problem.
MFS Africa is currently working to establish interoperability among payment networks in Asia and Africa. This will be done starting with Nigeria, before expanding to other markets. According to sources, the timeline for rollout could be next year.
MFS Africa acquired Beyonic in full last year; the company also purchased Baxi with which it has made two acquisitions in a short time span of one year and a few months. MFS Africa also holds minority stakes in small fintechs like Julaya, Maviance, and Numida, as well as health insurance product Inlusivity, and agritech platform Akorion. This has allowed it to do a good job of using acquisitions and investment -- which Okoudjou calls "inorganic growth" -- and exert its influence on the continent.
MFS Africa closed its Series B round at $23 million in 2018, after some extensions. The company's total equity raise was over $95million, while its debt is $30 million. This is the first time that it has raised debt. The debt financing was provided by Norsad and Lendable, an emerging markets lender.
Many founders and startups have the opportunity to get cheaper funding through debt, as they don't have to share equity. MFS Africa raised debt financing in order to finance the floats required for real-time settlements.
"If someone sends money from Kenya to Uganda in under a minute, it is a sign that someone is out of their pocket." The CEO stated that we manage this across all these countries and all these partners. However, it takes a little oil to grease the system.
"We realized that we don't have to raise equity because there is a market for debt. That's why we looked at debt. We believe that as the ecosystem matures more companies will combine equity and debt.
MFS Africa plans to make use of the new investment in a number of ways. It plans to increase its expansion efforts, and open more regional offices on the continent as well as in the U.S.A and China. It has recently opened offices in Abidjan Kampala Kinshasa, Nairobi, Kinshasa and Lagos, while moving its headquarters from Mauritius, London.
The company, which is 12 years old, has also set aside some funds to improve its Governance, Risks and Compliance functions, treasury, and liquidity pool. It plans to continue investing in African startups and hire more talent from Africa.
Julius Tichelaar (a partner at AfricInvest FIVE) stated that his firm was the one who led the round due to MFS Africa's wide range of financial services and payments services which align with AfricInvest FIVE’s financial inclusion strategy.
MFS Africa is well-positioned to address the issue of cross-border payments. He concluded that MFS Africa's top-notch management team is excited to welcome him and support his growth journey.
