The company could decide to enter the markets itself or by purchasing an existing license, she says. The “lack of competition for so long” in Ethiopia means high-pent up demand for corporate financial services, Rossiello says. “The market size is tremendous. We see the market booming in a big way.”
Analysts have said that further liberalisation of Ethiopian financial services will take place gradually to protect domestic stakeholders. Foreign direct investment in the country has slowed since hitting a peak of $4.1bn in 2016, and lack of rights to offer mobile financial services have delayed the country’s attempts to sell a second telecoms operator licence. The award of a second telecoms license, to include mobile financial services, is now set for January 2022.
Investment opportunities have been “diluted by a slower-than-expected transition towards a more pragmatic, market-based policy framework,” as well as conflict in Tigray, says Irmgard Erasmus, senior financial economist at Oxford Economics in South Africa.
Most African banks, Rossiello argues, prefer to look for big corporate or government clients, as well as attacking underpenetrated African retail markets. That, she says, leads to a “missing middle” of companies whose payment and currency needs are not being addressed. Many African banks shy away from offering African cross-currency transactions, but AZA can offer any global currency pair, she adds.
- AZA is exploring different ways to get its Ethiopian license, and hopes to enter in the middle of 2022. “There are ways to partner with licensed entities” in Ethiopia, Rossiello says.
- In Egypt, AZA has been working on securing a license for about a year, which requires “considerable upfront investment.” Rossiello hopes to enter the country in the course of next year.
- The company also plans a Series C fundraising for an unspecified amount next year, she adds.
Rossiello founded AZA Finance in Kenya in 2013. The company offers foreign exchange, treasury and payment services to African businesses. AZA has African offices in Nigeria, Ghana, Senegal, Uganda, South Africa and Kenya, and partners including Western Union, World Remit and Azimo. The company is authorised by the UK Financial Conduct Authority and the Bank of Spain.
In April, AZA bought Exchange4Free, the largest South African non-bank currency broker. That was part of a policy of diversifying away from Nigeria in face of a worsening regulatory environment. Nigeria’s central bank in 2020 halted diasporic transfers in naira in an attempt to encourage dollar remittances and shore up the domestic currency.
- A year ago, about 90% of the company’s business was in Nigeria. Rapid expansion into South Africa and other countries means that Nigeria now accounts for less than 20% of current business, even as AZA’s volumes and revenues continue to grow.
- The remittance crackdown has shown companies that “Africa is not all about Nigeria,” Rossiello says. Nigeria currently has a “very high-risk model” for the payments industry, she adds.
- Ethiopia and Egypt are “sleeping giants”, while South Africa is recovering, she says. AZA is also interested in expanding its presence in southern Africa and francophone West Africa. The Côte d’Ivoire is a “baby tiger”, Rossiello adds.
AZA is betting that Africa’s best corporate payments growth prospects lie outside Nigeria.
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