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How FinTech Companies Changed Africa

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FinTech Companies Changed Africa

Although Africa’s economies may be lagging behind its more developed counterparts, it seems that the continent is not immune to the global fintech revolution. Africa started witnessing a substantial surge in fintech startups in 2015. The total funding from venture capitalists spiked by 51 percent to $195 million between 2016 and 2017, with fintech funding accounting for a third of the amount. That’s a significant amount given that total global funding for seed-stage companies, early-stage venture capitalist rounds, and VC rounds was $851 million, $7.137 billion, and $6.9 billion respectively. 

Currently, there are well over 300 startups in operation all over the continent — 94 operate in South Africa, 74 in Nigeria, and 56 in Kenya. It’s not a surprise that these three countries are spearheading the fintech revolution in Africa as they are considered the top three investment destinations in Africa.

Regional comparisons in fintech adoption show that South Africa is in the lead with around 35 percent of fintech startups concentrated in the region. West Africa follows close behind with around 34 percent.

Africa’sfintech industry to a large extent owes its existence to the development of M-Pesa, a Kenyan-based mobile money transfer service that has given Kenyans the ability to access financial services away from banks. Currently, the platform supports over 25 million customers in over ten markets in Europe, Africa, and Asia. The number of M-Pesa users has grown by 32 percent from 17.12 million to 22.62 million as of June 2017. The massive success enjoyed by M-Pesa has influenced other FinTech companies to join the finance sector to develop financial solutions such as those offered by M-Pesa.

Fintech Implementation in Africa

Fintech companies in Africa are mostly focusing on two broad categories:

  • payments and transfers;
  • lending and finance.

Of the two categories, payments and transfers have recorded an influx of startup companies compared to the others. Reports show that a majority of these startups focus mainly on simplifying the process of sending and receiving money.

Some fintech companies in Africa that are taking major steps in revolutionising the finance sector in Africa include (aside from M-Pesa):

  • Flutterwave has operations in over 36 countries and is partnered with 10 African banks. It provides payment technologies and infrastructure to Africa’s largest financial institutions. Today, Flutterwave has processed over $1.2 billion in payments. The primary goal of Flutterwave is to provide solutions for enterprises, entrepreneurs, and banks alike. It presents its customers with no special, annual, or upfront project fees. Instead, Flutterwave bridges the digital payments gap that exists between users and banks. Their Nigerian customers can execute money transfers directly into several bank accounts without any hassle.
  • Pezesha, initially launched in Kenya, is a peer-to-business micro-lending marketplace made up of low-income borrowers. In Africa, formal credit services are hard to attain, and on top of that, they have incredibly high interest rates. Therefore, most Africans are unable to secure reliable credit facilities that they can safely payback. Users of Pezesha can acquire instant loans on their mobile phones via SMS provided that minimum criteria are met. Apart from low-income earners, Pezesha also extends its services to SMEs that make up 80 percent of Africa’s employment. It not only drives up the economies of the continent but ensures the continued existence of small businesses across the continent.
  • Cellulant, a digital commerce and payments service provider, is well established and operational in 11 countries. The company works with over 90 banks. The Cellulant ecosystem has support for over 100 million customers. As of January last year, the company served roughly 12 percent of Africa’s mobile consumers who utilise the platform to make payments. This year, Cellulant raised $47.5 million from a collection of investors that included Satya Capital, TPG Growth, Endeavour Catalyst, and the Rise Fund.
  • Tala, a mobile technology company that’s providing access to credit by putting mobile credit services into the hands of consumers, is operational in several countries in Africa and outside Africa. The company leverages an android app that collects data from each consumer, determines their credit score, and disburses a loan in <10 minutes. So far, the company has disbursed over a million dollars to individuals in East Africa and outside Africa.
  • Numida, a digital financial services company situated in Uganda, won the Kampala Seedstar World Competition in 2017. The company boasts of a 99 percent repayment rate and has since disbursed about 190 loans to 135 Ugandan SMEs. Other than providing small unsecured loans to small businesses, the firm helps these businesses digitise their financial records through the Numida app. Through the Numida app, Numida can assess a client’s creditworthiness and then issues an appropriately sized unsecured loan.

Potential of using Fintech in Africa 

FinTechAfrica is an immense continent with different economies supporting a total population of about 1 billion individuals residing in 54 sovereign countries. Surprisingly, only about 17 percent of the entire African population is banked. With nearly 80 percent of the total population still unbanked (and up to 95 million unbanked adults in Sub-Saharan Africa alone), Africa offers a unique breeding ground for the development of the fintech industry. A significant underbanked population ensures that fintech will most likely be an enabler of financial inclusion.    

Innovation takes time and is often a collection of economies and nations that have the financial capability to invest, research, and develop on a broader scale. African nations, not having the same capabilities as developed nations, are provided with a unique opportunity that they can leverage. They can ‘jump’ inferior and redundant stages of technology advancement and go straight to adopting innovations. For example, currently, millions of Africans are in possession of mobile phone devices without ever going through the hassle of owning a landline at all. A phase that already-developed nations could not have skipped.

Technology is a crucial driver of businesses and entrepreneurship today. Due to this, financial procedures have been developing extremely fast, and there is an immense transformation in many aspects of financial processes. The Internet penetration rate in Africa recently stood at around 35.2 percent while the mobile penetration rate in the continent stands at 44 percent. Out of these two, Kenya emerges as the strongest African country, as it has an internet penetration rate of 85 percent and a mobile penetration rate of 95.1 percent.

According to GSMA, mobile money accounts in Africa have surpassed traditional bank accounts. Mobile money accounts have been on the rise, with statistics showing a steady growth in numbers from 0.2 million to 277 million between 2007 and 2016. The number of active bank accounts in Africa was 178 million as of December 2015. This huge difference in numbers indicates the potential that Africa offers to fintech startups focused on providing payment solutions. Technology innovation coupled with increasing Internet and mobile penetration rates have made the growth of African fintech companies a possibility. Subsequently, this has substantially increased investor interest in the sector even further.    

Africa Welcoming Innovation

The fintech revolution in Africa is not a PR stunt. Fintech companies are attracting a previously unbanked population while at the same time retaining already existing traditional bank customers. Digitisation is helping financial institutions deliver digital financial products and services to a greater number of customers across the continent.

Increased dependence on these innovative fintech companies is projected to reduce demand for bank services. Subsequently, this could lead to bank branches shut down, with only a few remaining as destinations for problem resolution, advice, etc. For example, Kenya’s M-Pesa mobile payment services have made it possible for P2P mobile payments to be made both locally and internationally.

These startups are redefining the industry’s perception of what it means to be called a bank. Not only do they offer bank-like services, but they also avail loans, process financial transactions, and innovate much faster than banks.

Africa is hopping onto the fintech bandwagon, learning from the experiences of developed economies such as Asia, America, and Europe, and even leapfrogging past unnecessary steps, straight to modern innovation. 

This guest post was contributed by Paweł Tomczyk, founder of the blockchain-focused content marketing agency Cyberius

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What Happened to “Bitconnect Guy” Carlos Matos?

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Carlos Matos

You might recognise Carlos Matos from the famous meme in which he screams “Bitconneeeeecct” with plenty of gusto. Matos was an “investor” in the now-defunct Bitconnect Coin.

Bitconnect was a cryptocurrency scam that went from obscure in 2016 at about US$ 0.17 to a high of $436 in 2017. It screamed of potential, becoming a top 20 cryptocurrency token. This couldn’t last, as the price came crashing to $0.40. Regulators came cracking down on the project, forcing its cessation in 2018.

Investor Frenzy in Bitconnect

If you logged in to the website, you’d find no whitepaper or clear team identification, but a promise of unusual profit. Through four phases of the project’s rollout, investors got a guarantee unlike any other in traditional investments such as stocks.

Phase one was the giveaway of 4.8 million Bitconnect coins to investors and the community. The second phase (first quarter of 2017) entailed the launch of BCC wallet and the desktop client to enable staking and mining BCC (Bitconnect coins). Phase three (second quarter of 2017) would be the launch of staking and mining. This meant 120% returns for investors per year! The fourth phase targeted introduction of the “Smart Card” and wider merchant adoption.

A Massive Cryptocurrency Scam

Bitconnect

Bitconnect is an excellent use case for newcomers to learn how crypto scams can operate.

  • Firstly, BitConnect had no traction until the lending platform was announced. For a profitable business, it’s mandatory to have a working product, a product-market fit and a clear revenue model, among other fundamental aspects of valuation. BitConnect had a new product with a supposed market (since adoption had to be pushed) and a complicated revenue model. It simply didn’t make business sense.
  • Secondly, BitConnect guaranteed profits of over 91% and promised returns of over 480% per year. No basis for the guarantee came out clearly from the promises of this once-in-a-lifetime deal with no financial risk. All investors needed to trust was an “undefeatable” trading bot – it couldn’t lose! Assumptions cemented in the flow of money from all over the world – US$2.6 billion – at the peak! For many, the profits were irresistible.
  • The third red flag was an extended capital holding period. This was explained away as a preference/ incentivisation toward staking. After all, it made more sense to profit more as you held your money longer in the system – but even traditional finance allows for clear/rapid cash out should you need your money. It’s yours, right?

The low daily return rate hooked on the old and young. Unsecured lending among traditional financial sector players had after all paved the way for the daily return concept not to seem too foreign. These numbers made far more sense if you put in more than US$ 10,000. You can see why Matos’ profit of $140,000 from an initial principal of $25,000 had many addicted to “the future of investing”. 2017’s cryptocurrency boom of bitcoin and other tokens further served to cement this thought with all manner of possibilities.

If the returns weren’t sufficient or attractive for you, Bitconnect provided a lucrative referral program with seven levels of earning commissions. It was an extra assurance of the profit structure. The bot would have to work overtime and compound profits to ensure everybody won. Put these together, and you have a catastrophe – a true castle in the clouds!

The Tragic Ending

The charade collapsed when the law came calling. 2018 saw victims of the scam lose 30%, then 90% of their value to the insider cashouts with the closure of the Bitconnect exchange.

The Ponzi scheme came full circle with its promoters and their aggressive propaganda disappearing from any reasonable trace. Other exchanges delisted BCC, but the damage had been done. Bitconnect cited excuses on bad press, the Texas State Securities Board Cease and Desist order and DDos (distributed denial of service) attacks, yet the truth was out in the open: scammers won.

Matos disappeared, only to resurface recently taking a lot about weight loss through intermittent fasting. He’s trying to build repute in a different field, which is definitely better than the scam that made him famous.

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What is Crypto Advocate John McAfee’s Net Worth?

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John McAfee

John McAfee has emerged as one of the most influential individuals in the cryptoverse. Learn about this one-of-a-kind crypto advocate, including how much his net worth is estimated to be.  

Who is John McAfee?

You’ve likely used or at least heard about the McAfee antivirus software. It ranks among the top cybersecurity tools to use in ensuring protection from attacks. 

John McAfee is the British-American entrepreneur and computer programmer who founded McAfee Associates in 1987. Prior, he worked at NASA (National Aeronautics and Space Administration) and Lockheed. McAfee Associates produces enterprise security software, even though John resigned in 1994. He has founded other companies such as QuorumEx, Tribal Voice, Luxcore, and Everykey, among others.

A known political activist, his interests also stretch into cryptocurrency, smartphone apps, and yoga. 

Timely Cryptocurrency Boom

In 2017, the ICO (Initial Coin Offering) boom saw hundreds of companies release projects for funding from investors globally without limits on international securities regulations. Riding on the price boom of bitcoin and Ethereum, it was as though a separate economy was spurring overnight. Token prices went from zero to one in hours, with profits surging exponentially in hours or days.

One would call it a craze, but McAfee positioned his profile to benefit from the boom. 

Initially, those who opened up their projects for funding this way simply followed the promise of Bitcoin (financial system independence) and built on Ethereum. Legitimate companies and scammers alike put their proposals for the world to decide, therefore, the battle for legitimacy created high stakes. It wasn’t enough to have a good project; the team /company needed to show who endorsed them or their project.

This is the space in which McAfee could thrive as an industry titan trusted globally.

The Crypto Advocate

John McAfee Net Worth

Gage Skidmore from Surprise, AZ, United States of America, CC BY-SA 2.0 via Wikimedia Commons

Imagine taking in about 8 BTC per tweet in a boom; that’s exactly what he did.

The highest prediction he made about the price of bitcoin was between $ 500,000 and 1 million per bitcoin. The admission he made later was that these predictions were to excite and draw new users on board.

An estimated 50 ICOs were promoted on his public Twitter profile. Each promotion cost $100,000. This would bring the number of bitcoin he owns to about 400 if we take an average number of 8 bitcoin according to the price fluctuations in 2017, but the total amount, along with the ownership of other cryptocurrencies remains undisclosed. Assuming a holding of 400 bitcoin at today’s price of US$ 32,478, McAfee’s 400 bitcoins would be worth 12.9 million dollars. 

John McAfee Net Worth: So, How Much Is It Now?

John McAfee lost a significant portion of his net worth due to the 2008 financial crisis that crippled economies around the world. From a valuation of $100 million, his assets hit a low of $4 million in 2009, according to the New York Times.

He certainly worked his way back into profitability through his subsequent ventures in QuorumEx, Future Tense Central, and his tenure at MGT Capital Investments.

MGT is supposedly his gateway into crypto because in 2016 its focus was shifted first from social gaming to cybersecurity. MGT also moved into mining bitcoin and other cryptocurrencies to make money and increase its blockchain expertise. McAfee deemed this strategy vital for cybersecurity, holding it even into his subsequent resignation in 2018.

According to publicly available data, John McAfee’s net worth could range from US$ 7.2 to 20 million.

His run-ins with the law have had him living as a fugitive; for in 2019 he lived on his boat, running from U.S. authorities. He was arrested in October 2020 in Spain at the request of the U.S. Department of Justice for tax evasion charges. 

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Weekly Roundup: Swahili Blockchain Book Now Available, Binance P2P Volumes Hit $280 Million in Africa

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blockchain book

After experiencing raging swings this year, Bitcoin hit a new all-time high this week. On Monday, bitcoin recorded a price of $19,850, breaking the 2017 record. In other news, the Swahili blockchain book is now available for purchase, and Binance P2P trading in Africa is flourishing.

Read these and other stories in our news roundup this week.

Swahili Blockchain Book Now Available

Swahili Blockchain BookThe Swahili blockchain book is now available for purchase. The goal of this book, Jielimishe Kuhusu Blockchain, is to educate Swahili readers about blockchain technology. As a result, readers can contribute to regulatory conversations in their countries to help policymakers make the best decisions.

The Governor of the Central Bank of Tanzania (BoT), Professor Florens Luoga, is one of the first people to read the book. Sandra Chogo, the author, handed him the blockchain book during a conference held in the country.

According to Chogo, the Governor’s interest in the book could indicate that the regulator is warming up to the blockchain and cryptocurrencies. The book has already received a positive reception from the Tanzanian government.

Binance P2P Volumes Hit $280 Million in Africa

Binance P2P trading in Africa has grown significantly because the exchange is supporting six local currencies. So far, the exchange has processed a total volume of $280 million P2P trades in Africa.

In March 2020, Binance started supporting the Nigerian naira. Currently, African users can use Binance P2P to buy and sell BTC, USDT, DAI, BNB, ETH, and BUSD using the Kenyan shilling, the South African rand, the Nigerian naira, the Moroccan dirham, the Ghanaian cedi, and the Egyptian pound.

According to Binance, P2P traders on the platform are making an income between $30 and $350 each day.

“I solely rely on P2P trading as the main source of my income. With P2P trading, I can sufficiently meet my needs and bills. The best thing is that I can trade at my own time and any place,” said Robacoin, a P2P merchant.

P2P trading on the continent could continue the upward trend as more and more Africans turn to crypto to make an income and to remit money.

Nigeria Could Develop a Crypto and Blockchain Framework

Nigerian SEC to Regulate CryptoThe Securities and Exchange Commission in Nigeria classified digital assets as securities a few months ago. Now, the regulator and the Ministry of Finance are discussing the creation of a crypto and blockchain framework.

According to recent news, the two bodies want to create a regulatory environment for blockchain. Also, the Nigeria SEC is keen to facilitate the adoption of the technology.

“The general objective of regulation is not to hinder technology or stifle innovation, but to create standards that encourage ethical practices that ultimately make for a fair and efficient market,” the SEC Nigeria stated.

Furthermore, the country is hoping to obtain $10 billion in revenue from blockchain technology by 2030.

Sarafu Network Beneficiaries Soar 40,000

One of Africa’s community currencies project, Sarafu Network, now has 40,000 beneficiaries. The Grassroots Economics initiative is helping communities in rural Kenya to access basic needs like food. To date, users have traded more than 100 million community tokens. In October 2020, for instance, the beneficiaries traded more than 8 million Sarafu tokens for food. During a global pandemic and a declining economy, the Sarafu Network is helping the needy to stay afloat.

Grassroots Economics uses the power of the blockchain to create community inclusion currencies (CICs).

“In a typical community dependent on injections of the national currency – trade will often slow to a crawl and stop due to lack of a national currency as commodity prices increase. As we have seen in Kenya where Sarafu has been distributed to over 40,000 people, in communities with a Community Inclusion Currency trade can continue,” Grassroots Economics Founder Will Ruddick says.

To learn more about Bitcoin, download the Bitcoin Beginner’s Handbook for free.

Bitcoin Beginner's Handbook

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