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MTN Nigeria’s 2020 earnings, Ghana’s fintech sandbox, Foreign investors in 2020

March 02, 2021 · 4 min read
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Good day,

Oluwanifemi and Emmanuel here

Today we are discussing:

  • MTN Nigeria releases 2020 earnings
  • Opera’s Q4 2020 earnings
  • Bank of Ghana launches regulatory sandbox
  • Nigeria owes 71% of startup funding in 2020 to foreign investors

MTN Nigeria releases 2020 earnings

Photo Credit: USAID Digital Development Flickr via Compfight cc

MTN Nigeria, the public subsidiary of South Africa’s MTN Group has released its earnings for the year 2020. Despite the tough economic challenges that telcos faced in 2020, MTN enjoyed a pretty successful year.

Revenue and Profit: MTN recorded revenue of ₦1.35 trillion (~$3.3 billion) compared to ₦1.17 trillion (~$2.8 billion) in 2019. The company made a profit after tax of ₦205.21 billion (~$497.9 million) up from ₦203.28 billion (~$493.2 million) in 2019.

Data over voice? If you followed our report on MTN’s and Airtel’s quarterly earnings last year, you would notice that voice revenue has remained king over data for both telcos. However, data witnessed steady growth while voice, though dominant, recorded slower growth.

  • Voice revenue hit ₦897 million (~$2.2 million), a mere 5.9% increase from 2019
  • Data revenue hit ₦332 million (~$805k), a 51.2% year-on-year growth rate

Financial services: MTN grew its mobile money agent network to 298,000 agents, as the company continued to convert its airtime agents to financial services agents.

MTN’s report brings some interesting implications, and we’ll delve into that more later this week. In the meantime, you can ruminate on this:

Nigeria’s addressable market on the Internet is probably smaller than you think.

NIN registrations: MTN reports that as of March 2021, over 37.2 million subscribers have submitted their National Identification Numbers (NINs), representing approximately 48.7% of its subscriber base. This means over 50% of MTN’s subscribers are yet to link their NINs.

In other reports

More eye-catching numbers from Opera’s Opay 

Opera, the Norwegian Internet company behind the popular Opera browser, has released its earnings for Q4 2020. While Opera has a large presence through its browser and Opera News platform, the company has a 13.1% stake in Opay, Nigeria’s financial services company.

Opera claims OPay crunched $2 billion worth of transactions in December 2020. The exact nature of these transactions is, however, not clear.

Full disclosure: Nigeria processed ~$1.4 billion worth of PoS transactions in December 2020. This figure includes both merchant and non-merchant PoS transactions.

NIP transactions — ATM, USSD, Internet banking, among others stood at almost $50 billion in December 2020. Have fun.

Bank of Ghana launches regulatory sandbox

Photo by: Satsiatorme

The story: The Bank of Ghana has launched a regulatory and innovation sandbox pilot for financial sector innovators. The apex bank launched this in partnership with EMTECH Service LLC on Thursday, February 25, 2021.

The sandbox is meant to be a supportive and controlled policy environment that enables financial services companies to test innovative products, services, and business models. With regulators closely supervising, there should be an understanding between the innovator and the regulator before the products hit the market.

The BoG states that the sandbox will be available to banks, specialised deposit-taking institutions, payment service providers, and even unregulated entities and persons that meet the sandbox requirements.

The BoG says it would give preference to products and services leveraging blockchain technology, remittance products, crowdfunding products, products and services targeting women financial inclusion among others.

Why this matters: The financial services sector has been experiencing innovation, but it has a high entry barrier. The sandbox presents an opportunity for young fintech companies to test new products under the supervision of the regulator.

As we’ve seen before, innovators operating within a regulatory grey area could witness unexpected clampdowns, but this sandbox creates room for engagement and understanding.

Read: The good and the bad sides of policies chasing after innovation. Read.

The big picture: While there’s talk of more inclusive innovation, and financial inclusion, sandboxes may not always be the best option for the intended goal.

You should check this out: Could Sandboxes and Open Banking be the key to financial inclusion in Nigeria? Read.

Nigeria owes 71% of 2020 startup funding to foreign investors

Photo Credit: majjed2008 Flickr via Compfight cc

In 2020, most of the investments in Nigerian startups came from foreign investors according to Techpoint Africa’s annual startup funding report. Of the total $120.6 million raised, 71.2% came from outside the country. But, overall investments paled in contrast to the large rounds recorded in 2019.

It is not only Nigeria: Going back ten years before 2020, the situation isn’t any different in West Africa. Techpoint Africa’s West Africa Startup Decade Report revealed that 81.3% of all investment received by startups that have raised at least $1 million can be attributed to foreign investors.

But something (not so) interesting has been going on. In 2018 and 2019, the number of local investment deals was more than foreign ones. Still, foreign investments made up the bulk of the total amount.

Meaning only little is contributed locally. Should we blame this on existing systemic issues like inadequate funds, investors interest or scary policies lurking to pounce and snuff life out of startups?

My guesses are, exits like Paystack’s may keep startups craving for foreign investments beyond now. On the other hand, local high net-worth individuals (HNIs) may also be encouraged to do more while hoping for profitable cash-outs in the future. Since that’s the biggest win the ecosystem has seen, it isn’t out of place to expect it to cause major shifts in the nation’s startup space.

I made some projections earlier: Why Paystack’s acquisition should be a policy turning point in Nigeria

Expect more on this analysis today on Techpoint Africa. While you wait, get a copy of the Nigerian Startup Funding Report 2020 and also look out for quarterly reports on intelligence.techpoint.africa

What else we are following

  • Apparently, Nigeria’s broadcasting commission will soon have the power to determine DStv and Paytv tarrifs. Read.
  • Kenya’s Powered by People Raises $1.5m Seed Capital to Scale its e-Commerce Solution. Read.
  • Keep in mind: Register for the Digital Currency Summit with this link.

Have a great day!
Oluwanifemi Kolawole & Emmanuel Paul for Techpoint Africa.

Featured image source: Photo Credit: USAID Digital Development Flickr via Compfight cc

Techpoint Africa

Techpoint Africa

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