Payments processing company Flutterwave plans to expand to North Africa after raising $170m in new funding, CEO Olugbenga Agboola tells The Africa Report.
The company will extend its payments network to Egypt, Morocco and Tunisia and will be live there by the middle of the second quarter, Agboola says in Lagos. Flutterwave might then set up a physical presence in those countries, he says. He also wants to expand into francophone Africa as “our network needs to be everywhere” on the continent.
Flutterwave says it has raised $170m from a Series C fundraising which values it at over $1bn, so qualifying the company for “unicorn” status. Agboola’s aim is to make it easier for Africans to build global businesses that can make and accept payments worldwide. Flutterwave will use the money, raised from investors including Avenir Growth Capital and Tiger Global, to accelerate customer acquisition and develop new products.
The digital payments market in North Africa and the Middle East is set to grow at a compound annual rate of 13.3% until 2026, driven by mobile phone and Internet penetration, according to Mordor Intelligence. It’s “crucial for the region to have an underlying real-time infrastructure in place to enable these payments”, Mordor says.
- Flutterwave has processed over 140 million transactions worth over $9bn for clients which include Jumia, Uber, Facebook and Booking.com. During lockdowns in 2020, the company created an e-commerce platform to enable businesses to trade online.
- Among new products is the Flutterwave Mobile service, which allows small merchants to convert a mobile phone into a point of sale. Flutterwave Mobile goes live this week, and initial deployment will be in Kenya, South Africa, Nigeria and Rwanda, Agboola says.
‘IPO Ready’
Start-up investors have flocked in growing numbers to African fintech since the start of the Covid-19 pandemic. According to the African Tech Startups Funding Report, fintech attracted more investment than any other African start-up sector last year, both in terms of amount invested and the number of companies which secured funding.
Founded in 2016, Flutterwave is based in San Francisco and Lagos. It has developed Application Programming Interface (APIs), or software which allows two applications to communicate. This allows clients to develop their own customised payments applications. The company has raised a total of $225m in funding, and in 2019 partnered with Alibaba’s Alipay to offer digital payments between Africa and China.
The digital payments sector has already created a Nigerian unicorn in the form of Interswitch, which sold a 20% stake to Visa in a 2019 deal that valued the company at $1bn.
Interswitch recently declined to comment of speculation of a possible initial public offering (IPO). For Flutterwave, an IPO is “one possible exit route” for investors that the company may consider, Agboola says. He has no timeframe in mind for now. “The goal is to be IPO-ready” though the priority at the moment is to concentrate on serving customers, he adds.
Meanwhile, rival fintech Paystack made waves after being purchased by US payments giant Stripe last year, in a deal that has ‘brought visibility to the ecosystem.’
Bottom Line
Digital payments is likely to be the sector that will lead Africa’s return to the IPO market.