Frontier Fintech GPS #21 - February 19th 2025
Nigeria to Tax Crypto, Ethiopia launches Digital ID with 2026 deadline, dLocal and AZA Finance announce partnership amongst other stories that matter
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Hi All, Welcome to the 21st edition of Frontier Fintech GPS where I provide key insights on the top global Fintech news items that matter to you. This newsletter will be arriving in your inboxes every Wednesday morning. The idea behind Frontier Fintech GPS is to help you navigate the endless stream of Fintech news and get smart about global Fintech as it applies to Africa. To those who are yet to subscribe, hit the subscribe button below and share with your colleagues and friends. 🚀
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🇳🇬 Nigeria to Tax Cryptocurrency Transactions as Government Tightens Digital Asset Rules
The Nigerian government is revising its digital asset regulations to include taxation of cryptocurrency transactions, aiming to boost national revenue and enhance oversight of the digital asset market. This move reflects a shift from previous restrictions, such as the 2021 Central Bank of Nigeria (CBN) ban on financial institutions facilitating cryptocurrency transactions, which was lifted in 2023. Despite earlier prohibitions, Nigeria has remained a leader in cryptocurrency adoption, with a significant portion of its population engaged in digital asset activities. The initial ban was driven by concerns over the opaque nature of cryptocurrencies and their potential use in illicit activities. The current regulatory changes aim to formalize the crypto market, ensuring better compliance and integration into the national economy.
I was at a Crypto roundtable at the recently concluded ATS and we had some interesting discussions around Pan-African crypto regulation. Across the continent, one thing is becoming clear, Central Banks are steering clear of offering any guidance on crypto regulations and instead, capital market regulators are stepping in. The emerging consensus is to regulate crypto as digital assets. If this takes hold and drives crypto regulation, then implementing digital asset taxes like the ones being proposed by the Nigerian government will give governments a captive target for collecting cash. Given that these are taxes on transactions and not Capital Gains Taxes, the most logical outcome is Crypto trading moving back to decentralised exchanges. In Kenya, there’s a 3% tax on digital asset transfers meaning that each time a Cryptocurrency is traded, a 3% tax is levied. If Stablecoins are considered Crypto, then this will be a deadly blow to the fledgling industry in the continent. The cynic in me thinks that Central Banks are deliberately pushing Crypto regulation to Capital Markets bodies so that they are categorised as assets therefore taxed heavily. This enables the Central Bank to protect the existing system whilst feigning ignorance.
🇪🇹 Ethiopia Launches Fayda Digital ID System, Mandates Usage for Banking by 2026
Ethiopia has launched the Fayda National Digital ID system, requiring all citizens to register for it to access banking services by 2026. The National Bank of Ethiopia has mandated that from January 1, 2025, new bank accounts can only be opened with a Fayda ID, while existing account holders must obtain one by December 2026 to retain access. The system, which integrates biometric data, is also being expanded into sectors like healthcare and education, with 640,000 students already enrolled in a pilot program. This initiative aims to combat identity fraud and align Ethiopia with other African nations implementing national digital ID systems.
Ethiopia is an emerging Fintech market to watch and I intend to do a detailed deep-dive on the country. With a population of over 120 million, growing at 2.5% per annum and a median age of 19 years, it has all the makings of a Fintech powerhouse. What adds to this is their recent moves to open up their exchange controls which should benefit investors. Implementing a digital ID system makes a lot of sense and with such a median age, then it will be easy to register young people on Fayda. We’ve seen across the world how digital ID systems such as Aadhar can enable the growth of digital financial services. I expect the same outcomes in India.
🌍 dLocal and AZA Finance Forge Strategic Partnership to Expand Footprint in Africa
dLocal, a leading cross-border payment platform, and AZA Finance, a prominent fintech company specializing in payments and foreign exchange in Africa, have entered into a strategic partnership to enhance their service offerings through mutual cross-selling. This collaboration combines dLocal's robust cross-border payment infrastructure with AZA Finance's foreign exchange capabilities and regional licenses, aiming to improve payment processing, expand reach, and provide enhanced financial services. The partnership will benefit customers in key African markets, including Nigeria, Kenya, South Africa, Ghana, Egypt, Cameroon, and Zambia. Both companies are regulated by the Financial Conduct Authority (FCA), ensuring adherence to high standards of compliance and operational integrity. Agustin Cerisola, General Manager for Africa, Asia & Remittances at dLocal, expressed enthusiasm about the collaboration, stating it could consolidate both companies' leadership positions and create a regional powerhouse in the African cross-border payments space.
This partnership makes sense, as a global company operating in Africa, dLocal has definitely come across FX challenges. AZA has been in the space for close to a decade and has built the relationships and expertise to manage multi-currency treasury across the continent. Key to note is that most global Fintechs are partnering with Fintech 2.0 treasury providers and we aren’t yet seeing Stablecoin based partnerships being announced. Maybe it’s only a matter of time.
🇿🇦 Kazang and TymeBank Partner to Bring Easy Cash Withdrawals to the Informal Market
Kazang, a prepaid value-added services provider under Lesaka Technologies, has partnered with TymeBank to enhance cash withdrawal accessibility in underserved South African communities. TymeBank customers can now withdraw cash using their bank cards at spaza shops and traders equipped with Kazang Pay-enabled terminals, eliminating the need for travel to ATMs. This collaboration aims to support local merchants by increasing foot traffic and reducing cash-handling risks, while offering consumers convenient access to cash within their communities.
These are two companies I like and this partnership makes sense on many different levels. Tymebank needs to solve last mile cash challenges for its low-income customers. Kazang on the other hand benefits when it can offer more revenue generating services for its merchants. The two companies are both sophisticated enough to figure out the marketing and route to market which requires coordination. One of the key challenges to be solved is agent cash availability, TymeBank’s customers may demand significant amounts of cash thereby depleting the Kazang merchant’s cash levels. This is an area that requires joint investment to ensure that cash is always available. From my experience, it can’t be taken for granted.
Flutterwave has expanded its digital foreign exchange service, Swap, to be accessible through its Send App, providing Nigerians with a secure and instant way to obtain foreign currencies at competitive rates. Initially launched in partnership with Wema Bank and Kadavra BDC, Swap aims to address the challenges Nigerians face in accessing foreign currencies for international transactions. The integration into the Send App enhances user convenience, enabling seamless global payments and financial inclusion.
I don’t completely understand why this needs to be marketed as a separate product within the Send App. If a customer is sending money cross-border, he/she will automatically convert currency so the main value here is around obtaining currency at competitive rates. It’s in essence an FX capability that is available to Flutterwave’s customers and not a separate product. That being said, I’ve been impressed by Flutterwave’s product velocity and the rate at which they’re securing new licenses across the continent.
🇳🇬 GTBank Waives Processing Fees on POS Terminals to Boost Merchant Adoption
Guaranty Trust Bank (GTBank) has eliminated processing fees for businesses using its Point of Sale (POS) terminals, allowing merchants to accept payments at no cost. This initiative, effective from February 11, 2025, aims to alleviate financial burdens on merchants and enhance the competitiveness of GTBank's POS services in a market increasingly dominated by fintech companies like OPay, Moniepoint, and PalmPay. By removing the Merchant Service Charges (MSC), GTBank positions itself as a cost-effective alternative, potentially attracting more small and medium-sized enterprises to its platform.
POS Merchant transactions have shown hockey curve growth in Nigeria and this has in a large part been down to Fintechs such as Moniepoint, OPay and Palmpay. External factors such as cash scarcity have also played a part. Total transaction value in 2024 was worth US$ 10 trillion with over 7.8 million terminals in circulation. Whilst costs matter, agent and merchant management in my view matter more. In this domain, an entity has to develop Route to Market skills like those seen in FMCG and I think Moniepoint, Opay and Palmpay have invested heavily in this. It reminds me of the idea of an Innovation Stack by Jim McKelvey. Price is one thing but it's not the only thing.
🇸🇦 Alipay Partners with Barq to Boost Cross-Border Payments in Saudi Arabia
Saudi fintech Barq has partnered with Alipay+ to enhance cross-border payment services in the region. This collaboration integrates Barq into Alipay+'s international network, which encompasses over 35 digital wallets and banking apps worldwide. The partnership aims to facilitate seamless travel and shopping experiences, thereby contributing to Saudi Arabia's Vision 2030 objectives of financial sector development and tourism enhancement. By offering faster and more secure cross-border payment solutions, Barq seeks to provide its clients with improved financial transaction options.
I wrote about Alipay+ last week and why everyone needs to pay attention to what they’re doing. Simply, they’re building an equivalent to Visa for global wallets and their global expansion closely mirrors the Digital Silk Road. After achieving a lot of traction in South East Asia, their Middle East expansion is underway and this partnership with Barq closely follows their partnership with Network International. Soon, we should hear partnerships with the likes of TymeBank, M-Pesa, MTN MoMo and others.
🇿🇦 EFTCorp Delivers Africa's First Open-loop Payment Solution for Rubicon Charging Stations
EFTCorp, in partnership with Rubicon Group, has launched Africa’s first open-loop payment system for EV charging stations, allowing users to pay with debit/credit cards, mobile wallets, and other standard methods. Powered by Verifone UX700 devices, this system eliminates the need for closed-loop subscriptions, making EV charging more accessible and convenient. By integrating seamless, real-time payments, EFTCorp aims to accelerate EV adoption across South Africa and beyond. This initiative aligns with global trends in sustainable mobility, providing a scalable, user-friendly payment infrastructure to support Africa’s growing EV ecosystem.
EFTCorp is a storied payments company that traces its history all the way to the 80s and what’s impressive is their ability to continue to innovate and remain relevant. This could be partly due to Ukheshe’s acquisition of EFT Corp back in 2024. The partnership with Rubicon brings their payments expertise to an emerging but growing industry. EFTCorp will enable people to pay for their EV charging using their debit or credit cards. EV payments will be an interesting vector for growth.
🇪🇹 Ethio Telecom Reports $491M Revenue Surge, Expands into EV Charging
Ethio Telecom reported 61.9 billion birr ($491.57 million) in revenue over six months, a 40% increase from the previous year, driven largely by the success of its mobile money service, Telebirr, which now has 51 million users and has processed US$ 10 billion in transaction value. The company’s EBITDA rose 60% to US$ 257 million, outperforming struggling regional competitors like MTN and Airtel Africa. Expanding beyond telecom, Ethio Telecom has launched an AI-powered EV charging station in Addis Ababa capable of charging 32 vehicles simultaneously, with payments integrated into the Telebirr SuperApp. This move aligns with Ethiopia’s broader push for EV adoption, including a newly established factory producing 1,000 electric cars annually, aimed at reducing fuel imports, cutting emissions, and boosting local employment.
Ethio Telecom is definitely a company to watch. As discussed earlier, Ethiopia offers significant promise for Fintech. Telebirr’s results validate this. Total transaction value shot up to US$ 10 billion and their user base grew up by 25%. Moreover, they are expanding their network across both 4G and 5G stations. It will be tough for Safaricom’s M-Pesa product in that market. It will still grow and do well but MoMo in a competitive market has totally different economics than when you’re the only game in town. Vodafone in Tanzania only has a 6% profit margin.
🇰🇪 Vesti Expands to Kenya to Support Global Migrants
Vesti, a fintech company providing legal and financial services for global migrants, has expanded to Kenya as part of its broader African growth strategy. Already operating in Ghana, Zambia, and the UK, Vesti aims to simplify migration processes by offering AI-powered support, remittances, and foreign exchange solutions. The company, co-founded by Olusola and Abimbola Amusan, plans further expansion into Bangladesh, India, and Pakistan in 2025 and is preparing for a Series A funding round. With this move, Vesti hopes to serve an additional one million customers, fostering cross-border financial inclusion and talent exchange.
Vesti is an interesting business, they offer a comprehensive “Japa Package” from sorting out your documents to enabling you to have access to financial services before and after landing. I’ve realised that a lot of Nigerian tech companies are simply democratising what were previously services only available to elites. Think of companies like Raenest and off-shore accounts. In the 90s, Off-shore accounts were either set-up in Switzerland or the Cayman Islands and accessible to the super-wealthy. There’s a lot of latent demand for Vesti’s services across the continent given that the growth prospects of the continent don’t match up to the expectations of an increasingly educated populace. It will be interesting to see how they execute.