Nigeria – TeamApt eyes unicorn status, looks to become Africa’s largest digital bank

By Ruth Olurounbi
Posted on Wednesday, 1 December 2021 17:32

A woman looks at Nigerian banks apps on a smart phone in Abuja
A woman looks at Nigerian banks apps on a smart phone in Abuja, Nigeria September 21, 2020. REUTERS/Afolabi Sotunde

A Nigerian fintech startup, TeamApt, which provides financial services to the underserved mass market in Africa, is eyeing the unicorn status on the back of nearly $50bn in yearly transactions, as it seeks to raise a Series C funding round ‘at well over $1bn in valuation from some of the world's biggest investors’. TeamApt could be the fifth unicorn from the Nigerian fintech ecosystem, following Interswich, Opay, Flutterwave and most recently, Andela.

“We are in conversation with some of the world’s Tier 1 VCs, mainly in the US. We are also speaking to VCs in Europe, the Middle East and Asia. While we cannot name them until the round is closed, they include notable VCs known for investing in companies at our stage,” Tosin Eniolorunda, CEO at TeamApt tells The Africa Report.

Largest banking operator

With its 14 million monthly users and 72 million transactions carried out monthly, as well as a 100% month-on-month growth rate in transaction value from $2bn to $4bn, TeamApt is Nigeria’s largest agency banking operator, according to Shared Agent Network Expansion Facilities (SANEF), the regulatory body for agency banking in the country.

Four months ago, the fintech company raised an undisclosed amount in its Series B funding round by Novastar Ventures, which also included FMO, Global Ventures as well as local angel investors in Africa. In 2019, the company’s Series A round, led by Quantum Capital Partners, was at $5.5m.

Africa is home to more digital financial services deployments than any other region in the world, with almost half of the nearly 700 million individual users worldwide.

The next funding round, TeamApt says, will help provide digital bank services for the unbanked, as it seeks to expand to other African countries, including Cameroon, Egypt and Ghana, by the second quarter of 2022. “We have set up in Cameroon and should begin operations by Q1 next year. We should be LIVE in Egypt by Q1 as well, and Ghana by Q2,” Eniolorunda says.

“We will launch what we like to say will be Africa’s largest digital bank, offering financial services products tailored to meet the needs of the over 350 [million] underserved mass market, using technology and low-cost offline distribution models. This includes micropayments, savings, lending, insurance, pensions,” he adds.

Key to Africa’s banking sector

Digital financial services are key to the future of Africa’s banking sector, says Riadh Naouar, head of the IFC.

“Africa is home to more digital financial services deployments than any other region in the world, with almost half of the nearly 700 million individual users worldwide,” says the World Bank. It estimates that partnerships from organisations, such as the Mastercard Foundation, have resulted in “7.2 million new digital financial services users on the continent (a 250% increase from the baseline), 45,000 new banking agents, and $300m in monthly transactions” since the launch of digital financial services in Africa.

Despite these successes, about 350 million unbanked adults (17% of the global total) reside in Africa, according to the World Bank’s 2014 Global Findex Database. Drawing on this data, TeamApt says it wants to build the next generation of the African middle class.

“[…] we see our agents in Nigeria, who are essentially merchants for cash, earn millions of Naira; over 1000% of what they could have been earning. We believe we can translate this to a lot more merchants across Africa, while making it easier to access and manage money for the end consumers […],” says the company’s CEO.

The goal, it says, is to build a Pan-African company that uses tech to address financial needs of the largely underserved market, leveraging its distribution capability and technical know-how.

“To overcome the social, financial, and infrastructure barriers that limit account ownership and bank usage, banking needs to specifically address the fears of these primarily low-income cash-dependent individuals,” Eniolorunda says.

Easy transition

After a successful run with infrastructure for banks, TeamApt transitioned into agency banking. “[…] we built Nigeria’s first virtual account payment gateway that allowed businesses to receive money easily from their consumers through a means that had become more of a habit – bank transfers.

“In less than two years, we became the number one agency banking operator as stated in SANEF’s monthly report. Over 14 million cards are used on our terminals, monthly, across 80 million transactions. One key reason we’ve grown is our reliability; we’ve ensured constant network uptime. […] we built a formidable distribution network, borrowing from the NURTW model where[…] we had aggregators and […] people under them who had relationships with agents in their neighbourhood and could serve as a support system […],” Eniolorunda says.

Unicorn status

Africa is home to approximately 1000 startups, an estimated half of which are tech. Data from Disrupt Africa shows that so far, over 300 African tech startups have raised more than $1.1bn combined, in 2021, the first time the sector has broken the $1bn mark by August. If TeamApt attains the unicorn status, it will join African giants like Jumia, Wave and Fawry and Interswitch that are seeking to aid financial inclusion and digital transformation.

“Some of these economies [that TeamApt is expanding to] are similar to Nigeria as they are fast-growing, cash-dominated, with countries like Egypt undergoing critical banking infrastructure changes. We believe building a two-sided ecosystem that continues to digitise payment collections for offline and online merchants in Africa while providing modern, accessible financial services for the consumers will help with this,” Eniolorunda said.

Despite the growing number of fintech unicorns in Africa, especially important in countries like Nigeria, “the larger population has remained unexposed to financial services, partly because of many African citizens living in rural areas […] do not use any smartphones that support this product and services,” Olumide Adesina, senior market research Analyst at SA Shares, tells The Africa Report.

While there is a need for broader and more multifaceted solutions beyond person-to-person payment, new funding influx from investors could help fast-track developments in “digital banking, savings and credit products, as well as the digitisation of value chain financing and merchant payments.”

Drive digital transformation

Undoubtedly, the growth of Africa’s tech unicorns, especially those in fintech, will help drive digital transformation and expand financial inclusion, Samuel Segun says from Stellenbosch University School for Data Science and Computational Thinking.

“Given the complexity of the financial services industry and the lack of relevant tech infrastructure in many parts of the continent, many of Africa’s fintech unicorns have taken the arduous task of building the needed infrastructure to promote inclusion. […] in light of the AfCFTA, having more of these companies build payment rails and serve as IMTOs would help improve financial accessibility and opportunities among the unbanked and excluded groups across the continent,” he says.

In Nigeria, Africa’s largest economy for example, digital payments have multiplied many times, says Adesina. Companies like Interswitch, Africa’s first unicorn, Paystack, Flutterwave were partly responsible for this rise, as they provided simple payment solutions for individuals and businesses. Stripe’s $200m acquisition of Paystack in October 2020, or Tiger Global’s valuation of Flutterwave at more than $1bn in March, were hardly surprises, he says.

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