Last October, Nigeria-based Fintech Mony Point became Africa's latest “unicorn” after raising $110 million in a Series C funding round that valued the company at over $1 billion. While stricter financial conditions since 2022 have reduced venture capital funding flowing into the African technology and fintech industry, Mony Point, which achieved unicorn status, has been read by many as a sign of increasing market maturity.
Looking back on last year's groundbreaking funding round, Moniepoint Chief Operating Officer Pawel Swiatek said that African businesses show “we are in a great moment of opportunity” in the African fintech space.
“There are a lot of people ready, interested and enthusiastic to join the latest financial services, which is driven by a combination of cloud-based infrastructure, meaning there is no need to build a data center.
“The fact that even if you can't afford a mobile phone at all, you can still access agency banking using a mobile broadband network, the way Mony Point works. This combination of infrastructure elements is innovative.”
Moniepoint works through both an online banking app and a portable device that allows small businesses to carry out transactions. POS machines are also carried by hundreds of thousands of Mony Point agents across Nigeria to promote cash withdrawals and other financial activities for individuals who have no access to internet banking. Moniepoint currently serves more than 10 million businesses and individuals in Nigeria, processing more than 800 million transactions per month.
These services have proven particularly valuable to small businesses as they ensure a digital track record of transactions through Moniepoint's POS. Swiatek explains that it means this “robust data set.” “There is a perspective on the stability of their business.
Growth Plan
Following last year's Series C round, Mony Point is looking at further growth in Nigeria before expanding to other African markets.
“Nigeria's growth is likely to continue. It's a very large market and there's a lot to cover. We're planning to expand our product portfolio. We recently deployed Moniebook, which provides business management and bookkeeping tools,” Swiatek tells African businesses.
“This is an additional product that will make us a one-stop shop for small business owners. We look for ways to add something that will help these customers.”
However, Swiatek notes that Moniepoint faces several challenges in achieving this higher growth in Nigeria. Especially regarding identity management. Lack of formal national documentation, especially in areas with more remote or inadequate services, it is difficult for financial institutions to identify and verify their own individuals, meaning that providing financial services is at high risk.
Is the biometric ID the future?
Swiatek is encouraged to grow biometric identification that is currently accessible to more than 115 million Nigerians. He says the technology could be “revolutionary.”
“In countries where people are not sure what their names are, it's difficult to confidently identify each unique individual, not to mention other things like their date of birth,” he explains.
“If we can get where we can, we'll really change the game from a financial services and fund flow perspective, as we have enough knowledge to approve the transaction to certain limits,” adds Swiatek. “This will help us provide remote, mobile-based financial services with a much lower rate of identity theft and fraud.”
“Of course, climbing over 200 million people into the system is quite a mountain to climb. There are real questions too. In some parts, how do you refer to your fingerprints in remote areas of the country that are not completely safe?”
“But 100% coverage is not required to achieve these objectives,” he says. “It's a noble cycle. The more people are covered, the more value the digital economy offers and more people wanting to sign up and participate.”
Beyond Nigeria
Moniepoint is also looking to expand to other markets, and Swiatek hopes this will happen in the next few years. He says it's likely that Mony Point will start doing this through inorganic growth, and with the view of completing some acquisitions, they're already “looking for companies that do the same thing we do.”
Swiatek says “there is no specific yet” about the African markets specifically planning on expanding Moniepoint, but there are several candidates.
“Kenya and Tanzania tended to be at the top of the list. In general, East Africa. Egypt is always big and interesting. But other West African countries also have great stories.”
An important part of the decision depends on foreign exchange risk. Mony Point is resident in the US and is primarily supported by Western investors. In other words, the company's accounting currency is US dollars.
This means that the company's profits are highly exposed to fluctuations in the Naira market. Even if the company continues to grow strongly in Nigeria, the decline in value of Naira could mean that the US dollar's profits will decline despite this growth.
Swiatek says, “Naira is thankfully stable now, but one of the challenges we are constantly facing is the risk of exchange rates.”
“Our aims for international expansion are driven at least in part by our desire to diversify and bring forex exposure not only to Nigeria but also to other countries.”
