African payments company makes rare purchase of US fintech

MFS Africa, a digital payments company, is to acquire Oklahoma-based Global Technology Partners in what it described as a rare case of an African group doing a tech deal in the US.

The acquisition, which will allow MFS to issue prepaid cards to clients, marks a further evolution 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 phone or in digital mobile wallets. But many international companies, including Netflix and Amazon, do not accept digital money payments from Africa, according to Dare Okoudjou, founder and chief executive of MFS, who said the tie-up with GTP would solve this problem.

“It’s mostly for international ecommerce platforms, which are not able or willing to create the user experience that will accept mobile,” he said. MFS had recently done a deal with Spotify, he added, in which the streaming company would accept mobile payments from customers in Kenya, Uganda and South Africa.

$5bn


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 the 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 of mobile money that is part-owned by Vodacom, and Visa. That will allow users of Safaricom’s M-Pesa mobile money to obtain virtual credit cards.

African fintech companies attracted investments totalling about $5bn last year, according to the African Private Equity and Venture Capital Association. Although that was a fraction of the money raised worldwide, it was a big leap on previous years for Africa.

“There’s a lot that’s been happening in the last couple of years,” said Adesoji Solanke, fintech analyst at Renaissance Capital, who said low interest rates had pushed investors to search for higher-yielding investments. “Finally Africa is starting to get attention and people are seeing it as the last frontier.”

Solanke said the turning point came in 2020 when Stripe, the Silicon Valley online payments provider, acquired Nigerian payments start-up Paystack in a deal thought to be worth $200mn. “That drove a lot of attention towards Africa and the wheels started spinning much faster,” he said.

At least four African start-ups have become unicorns with Flutterwave, a Nigerian payments processor, reaching a valuation of $3bn after it raised $250mn in a funding round co-led by Tiger Global this February.

MFS Africa, which started principally as a remittance company, raised $100mn in 2021 in a mixture of debt and equity. The company has diversified largely through acquisition including the purchase last October of Baxi, a Nigerian digital payments service, for an undisclosed sum.

Robert Merrick, founder and chair of GTP, said: “MFS Africa is an ideal home for GTP, and we are focused on adding new features and functionalities to our platform . . . and making a significant contribution to growing MFS Africa’s business.” GTP has clients in 34 countries and works with some 80 banks including UBA, Ecobank, Stanbic and Zenith.

Okoudjou of MFS Africa said GTP prepaid cards were being actively used by around 500,000 clients, but that the potential size of the market was many times that amount. Around 400mn people use mobile money in Africa, he said.

Okoudjou added that MFS had paid $34mn for GTP in a combination of cash and shares and that the acquisition would help MFS to expand its activities in the US.