Episode Transcript
[00:00:00] Speaker A: Hello everyone. Welcome to the Techpoint Africa podcast. Today we'll be discussing Mastercard's investment in Momo, multi choice, rejection of Canal Plus's acquisition bid, and what the CBN is doing with or wants to do with PoS terminals in Nigeria.
Before we go into the news, I would like to inform you that Techpoint Africa has partnered with Innovation Africa, a startup accelerator. And Chimkaziri will give us the lowdown on who it is for and how you can get in on this.
[00:00:40] Speaker B: Okay, thank you for that. Very good question.
Sorry, that joke flew by you.
So innovest Africa, partnering with Tech point Africa is bringing innovest ignite Lagos accelerator. Quite a mouthful, but we are bringing a mouthful of benefits.
Yes. So first of all, Ellie state startups precede seed, but you must have an mvp. Obviously you should have some traction as well.
Any sector is encouraged. I mean, ideally no one to see anything. Tech vote, any sector is encouraged. Ten startups would be selected for this, and three of them would get an investment of $20,000. Not equity free. You shall give equity, but you get money. So applications are currently open. There'll be a link in the description for you to invest. Sorry, not invest now, but there'll be a link in the description to apply. And applications close on the 14 February. I know that's a day when people should be celebrating, but you might want to apply before then. Yes. So that.
[00:01:55] Speaker A: And apply. And that takes us to the discussion for today.
We read in the news, or we wrote, we had the news. We wrote in the news that Mastercard has invested $200 million in Momo and this will give them a 3.8% stake in the fintech product company, or whatever, of fintech arm of MTN Chico, can you tell us the implication of this for both Mastercard and Momu?
[00:02:30] Speaker B: Okay, so first, I think this deal going through is a vote of confidence on Africa's fintech potential or the potential of Africa's financial systems. And one thing that points to it is a statement by Mastercard CEO. Think about a year ago also when he mentioned that Africa's infrastructures have gotten to the point where it makes sense for them to invest. So you look back maybe 20 years ago, if you needed to send money, you had to go queue in a bank. You can do it now with your smartphone or with a USSD code. So that's significant advantage in the last 20 years. Sorry, significant growth in the last 20 years. So moneypoint. Sorry, why the hell am I saying moneypoint? Momo has been part of this true mobile money. And recently we've seen them enter into Nigeria, I think, in last two years. And I think this is a huge move. A lot of people have talked about how telcos, because of their huge distribution networks, could be very. They could be key in extending financial services to parts of Africa where it was previously unavailable. And this, I think, would help with that. So, for example, Mastercard has been making quite a few investments in Africa. Last year, they made an investment into Ethel's mobile money service. So this is just you. ETL and MTN are like two of the largest telcos on the continent. So they have sticks in both. So it gives them a lot of room to play on the continent. Right. And I think for us now or for Africa, what you can expect to see is maybe MTN going harder on mobile money, especially in Nigeria, where mobile money for them is still relatively new. Having conversations about whether mobile money has really penetrated as much as was predicted. But then it's just leds. I mean, this is barely two years since they launched, so maybe those.
[00:04:36] Speaker A: We actually expected much from them when Nigeria was going through a.
[00:04:41] Speaker B: But then it kind of coincided with when they were starting. Right. And I don't think it makes any sense to place much expectations on someone who is just starting out. Yes, you have the accumulated experience from all the other continent, all the other countries where you play in, but I think that was like less than seven months after their launch that we had the whole cash crunch. So they did not have all of those infrastructure to deliver the kind of services that people probably wanted from them. But they've had significant growth. I think they have over 2 million users. 2 million mobile money users, which is significant. Of course, we don't know whether they are just people who moved from, oh, I have an MTN line to mobile.
[00:05:22] Speaker A: Because they can tap into their current customer base.
That should work for them. And I think with the evolution that is going on, moving from card payments to own digital wallets and mobile money.
[00:05:40] Speaker B: Is there even an evolution because.
Yes. Okay, so the thing is, card payments are like, common in every other part of the world. Very.
[00:05:50] Speaker A: Okay, evolution. We mean, one is facing out for the other. Okay.
It's not like card payments will face out. It's just that this will also be.
[00:05:58] Speaker B: Yeah, because we have more people with, for example, a mobile money wallet than a bank account. And to the best of my knowledge, mobile money wallets don't come with ATM cards or credit or debit cards. We do not have any of.
[00:06:14] Speaker A: So we are looking forward to how this will deepen the use or adoption of mobile money in Nigeria. And Mastercard is, I don't know if it's really truly beating Visa to it being the major player.
[00:06:36] Speaker B: So you see early days again, you.
[00:06:39] Speaker A: Can say to the two.
[00:06:44] Speaker B: Largest.
[00:06:47] Speaker A: Operators, ETL and MTN.
[00:06:49] Speaker B: So it appears that Visa has like a different strategy. They are working with fintechs. Mastercard seems to have taken the route of going with telcos, but Visa seems to be focusing on fintechs. So now they have a Visa fintech accelerator that was launched last year. About 40 startups should be accepted each year, and they aim to invest in about a third of them. So it looks like their own strategy is working with fintechs, and I won't blame them. Much of the growth we've seen in the financial space in the last, let's say, ten years has been driven by fintechs. And it just makes sense for them to try and tap into there. We also know that it's getting harder for fintechs to get funded. So this is almost.
There's a huge potential for Visa. There's also huge potential for Mastercard because at least nearly half of Africa is still unbanked. People would dispute those numbers. Right. But nearly half of Africa is still unbanked or do not have a connection to the financial system. So that's still hundreds of millions of people.
[00:07:58] Speaker A: I think it's good that they are focusing on the different ends and the product. You'll see the result, and I'm sure it accumulates to be a huge one. Moving from that, we saw that Multichoice, turned down canal pluses bid to acquire them, which we got to know around elite this month it's a $1.6 billion.
[00:08:24] Speaker C: In rands. Yeah, it's over 30 billion. But based on whatever exchange rates you are using, I've seen some people say it's a $2.5 billion bid, while some people are saying it's a $1.7 billion bid.
[00:08:38] Speaker A: Yeah. Anyway, they turned it down, saying they have been disrespected. That's not the award. But they said Carol floss actually undervalued them, and there are a lot of things around it. The question on my mind is that were they really undervalued?
Were they really undervalued?
These people are just going to it.
If you want to make an educated guess, were they really undervalued?
[00:09:11] Speaker B: Okay, so valuation is not exactly a science. Maybe for a company like multi choice, it is kind of a science because they're a publicly traded company. But canoplas is making an offer that is valuing multi choice at, let's say, more than they currently are trading in the stock market. So they undervalued. If they feel they were undervalued, maybe they were undervalued. Canoplots is an existing investor, so they already know the state of.
I'm looking at it from the end. If I'm making an investment this huge, then I believe in the potential of the market. Right. And that is probably what Multichoice is playing with or playing on when they say we are undervalued because, yes, you owned 5% of us, but you want more. If you want more, well, pay more to get more of us. So it's basically a dance or a game at this point. You've made your first bid. I respond, I don't know.
If you watch football and you follow football transfers, things like this happen a lot. So a club says a guy is valued at, we value this guy at $150,000,000 million pounds, and then the club that is buying says, no, we don't value you at this, you do hundred. And then they now go back and forth and maybe in the end they do. Hundred will be some staggered payments that maybe come close to 150 when in reality would never be 150. So, sorry, I'm using football analogy, but I think that could be something that happens here. Canal plus, you probably respond with a higher offer or a slightly higher offer and then you see how it goes.
[00:10:54] Speaker A: So evaluation apart, because it's like you're playing to depart, that this was actually a good offer that Multichoice should have taken.
[00:11:03] Speaker B: Okay, no, I'm not saying they should take it. I'm just saying I feel it's a decent offer, doesn't mean it's the best. So we don't know if there's another person that is interested in acquiring MultiChoice right now, if there's someone else. But the tone right now looks like MultiChoice is willing to sell, which kind of looks good for a can upload that wants to acquire MultiChoice wants to sell. If they want to sell, then it makes it a lot more easy for you. If they don't want to sell. That's why you have some difficulties. But now they are telling you, look, your bid is not up to what we expect or what we want. So it's just you up in your bid.
I think it's a decent offer. Really? You're giving me more money than I'm currently trading at.
[00:11:49] Speaker A: Yeah, but we know that multichoice is huge, big in the south african market and a french company coming to acquire them. I think valuation are passed. Are you positive? Like, okay, if you want to. It's positive. Are you positive that this would even go through given how SA is with foreign companies owning their.
[00:12:16] Speaker C: Yeah, very, very valid question. And a lot of people have actually been. I think that's one area a lot of people have been focusing on. Because if you look at the Electronic Communications act in South Africa, it limits south african broadcasters like foreign ownership to 20%. So if you are a foreign owner and you want to own a broadcasting company in South Africa, you can't own more than 20% in terms of voting rights. Right. Your economic stake can be more. So canal plus, like Tim Grazim said, they are already an investor in the company. They own 30%, but that 30% does not translate. It's not equivalent to the voting rights they have. So they have lower voting rights. Right. So based on this, you can see that there is going to be a lot of regulatory oops. To go through if they actually wants this deal to pull through. And we've seen that when regulators do not want something to happen.
We saw that with Adobe and Figma, that deal did not go through, which for some reason I'm happy.
Yes, because we know Adobe and out there, Figma is a breath of fresh air.
So we saw what regulators in the EU also did to Microsoft when they tried to get activision. So South Africa is also really big on not allowing foreign owners to infiltrate their company.
[00:13:55] Speaker A: About foreign ownership, multitudes already operates like something that's similar to a monopoly.
[00:14:03] Speaker C: Yes, exactly. That's another point to look at.
[00:14:06] Speaker B: Okay, so monopoly. Monopoly. That's one question because there are other businesses. Right. And the biggest problem you have is in South Africa and you have seen it is if you woke up one morning and made this bid, you've thought through the potential loopholes that are there. There could be something that they are hoping would help and for more. Teacher is true to say we are undervalued.
There's probably something that they want to do. But the question of whether they are monopoly. Yes, a monopoly in South Africa, but on the rest of the african continent, they are still competing with Netflix. Yes. Showmarks.
[00:14:54] Speaker A: I'm talking about pay tv.
[00:14:56] Speaker B: Now, when it comes to pay tv.
[00:14:59] Speaker A: Can you watch Premier League without DStv?
[00:15:07] Speaker C: So even in the markets that they are in, they are a monopoly. Because think about it, Nigeria, which is Nigeria and South Africa. I'm not sure if Nigeria is one of their top three markets also.
[00:15:21] Speaker B: Who else will be the top at.
[00:15:24] Speaker C: If you look at South Africa, look at Nigeria, top markets. Who is competing with them in those markets? Pay tv. Nobody comes to mind.
Nobody comes to mind. Nobody comes to mind. So Kanaplas injecting billions of dollars into that company makes them even stronger. Something broadcasting regulators are trying to control already. But then go Zim said something that made me remember. He said, Kanaplas is probably looking at something that will make this go through. And there's actually a proposed legislation that wants to increase foreign ownership from that 20% to 49%.
So Canoplas is probably banking on the fact that that legislation will put you. I'm sure it's a very big company. It's not their first rodeo when it comes to acquisitions. So they have a lot of lawyers who are these people that lobbyists.
[00:16:25] Speaker B: And then for something like this, it's not going to happen in three months. That is, you're hoping that even.
[00:16:36] Speaker A: Say the valuation is still.
Say the legislation is still.
I add, Canoplos is known for hostile takeovers.
[00:16:50] Speaker C: Yes.
[00:16:50] Speaker B: You can't do style takeover in this case because the regulator, yes. Like, you're basically fighting two people. You're fighting the company. You want to take over. You're fighting the regulator. You will not win if you fight with the regulator just to look for.
[00:17:03] Speaker A: A loophole to exploit.
[00:17:06] Speaker B: I don't know how you want to do it.
A regulator that was already looking at the person you wanted to acquire.
I don't know how you want to do it.
It's going to be hard for them to actually do it without the legislation is talking about.
[00:17:24] Speaker C: And that won't go through for even a year.
[00:17:28] Speaker B: Really? Why?
[00:17:30] Speaker C: That is what some experts are thinking because it has actually been on the table for a long time.
[00:17:34] Speaker A: For a long time. So it's a playoff time. We'll see how this we go. And we keep you abreast of any updates we find on this news. Moving from that, we come to Nigeria. The apex bank, CBN has come up with another thing that they want to do with PoS terminals in Nigeria. So the issue of frauds keep coming up and like, okay, there's this thing we can do.
We introduce a few features and also work towards recertifying PoS terminals. There's a lot of things to do there. And they are putting a timeline of six months. Now my question is, first of all, what does this recertification even entail? What does it entail and what else is the plan?
Who is going?
[00:18:31] Speaker C: All right, let me take it. So one thing is all PoS terminals will not get something called a terminal identification number, not to be confused with.
[00:18:44] Speaker B: Your tax identification number.
[00:18:46] Speaker C: Yes.
[00:18:47] Speaker A: This is TiD.
[00:18:49] Speaker C: Yes. Tid. This means your terminal basically has his own identity. Yes. His own unique code. So if your terminal has been used for something, people should have names so that when they commit crime, they can know. So you can liken it to something like that. Another thing that they will have is those Pos terminals also have something called. A feature called geofencing. Right. So once posified, gets the tid.
It cannot operate outside the vicinity it was registered. So if you register to work in.
[00:19:36] Speaker A: Like, what is it called? Your prepaid meter?
[00:19:38] Speaker C: Something like that. Right.
[00:19:40] Speaker B: That's how it works.
[00:19:41] Speaker A: Yes. You cannot take prepaid meter to another place.
[00:19:45] Speaker B: I didn't know that.
[00:19:45] Speaker A: If you are a tenant in the house and you buy the prepaid meter staying there.
[00:19:50] Speaker B: Okay.
[00:19:51] Speaker C: So a ton of registrations to be done by the agents that will be using those terminals. So they will be required to provide an address, BVN, tax identification numbers, and a lot of things like that. So that's basically what the certification means.
[00:20:04] Speaker A: We have a reputation in Nigeria back in 2019 2020, when everyone was told to register their scene because one person is not allowed to have more than three sins. I remember that then in 2022, everyone was told to revalidate or register their.
[00:20:26] Speaker B: NIN, which they are currently doing.
[00:20:28] Speaker A: Again, we understand how stressful that was and the long queues that it created in those offices, as opposed to go to do it. Now, the fintech reports showed the number of Pos terminals we have in Nigeria, which was released last year, and it's a lot.
So I'm just thinking of all the logistics around it.
How do you want to do this? Now, the possibility there is that if you want to, maybe biometrics will be involved. So you might need these people to leave where they are to go to a particular place. That means you are stalling. You are stalling their operations.
I'm just looking at how they want to do this, and they say they want to do it in six months.
Say we want to have faith. What is the possibility?
What's the possibility of this happening?
[00:21:29] Speaker C: Okay, should I take that?
[00:21:37] Speaker B: When I swayed initially, I was like hamburger. Sorry. If you can't understand, you will look.
[00:21:43] Speaker A: For a translator, translate it.
Basically, they've come again. Okay.
[00:21:48] Speaker B: Ghanaian, please.
Anyway, I don't know how likely it is to do something like that in six months. So we have about a million, 800,000, or 1.8 million Pos terminals or Pos agents. I think across the country there are also businesses that use them. And if you're familiar with it, you know that some of them, in fact, in the last one year now, it has become a very important way of taking payments for businesses. I can't remember the last time I went to an ATM. It's been a while. I probably go to an ATM like maybe once in a month or. It's not about like, I don't go to atms very frequently. So most people only use Pos machines right now. So I don't know what the logistics would look like. But I think it's highly unlikely that they would finish in six months because first you have to recall Pos that is already in the market. If you are recalling the Pos, let me just go by what Nigerians typically do. The people you're telling to recall it, they will not just come on FSD and submit to the PoS because all.
[00:23:02] Speaker A: It means is give them a deadline, it's going to stop working. You cannot do that before. That is low.
[00:23:12] Speaker B: This is different from your nin, right?
[00:23:13] Speaker A: Unless you make it useless for them, then they will come and reactivate it.
[00:23:17] Speaker B: If not, here's the problem. You cannot take that risk because it's not them that would suffer.
Like I said, purest agents, purest machines are deeply entrenched in Nigeria's financial system. If you recall a thought of that, I don't know how you want to do it. Maybe. I don't know. Maybe. Do you want to do locations by location? But regardless of how you do it, that recall process is going to be a very serious problem. Assuming you want to do that. But let's say they are not going to recall it. Let's say it's just something as simple as pushing a software update. Again, this is because the CBN is kind of light on details on how this would work. But if it's just a software update, it's easier.
All they have to do on their end is just push the update and then what do you call it?
The agents have to go online, put in all those details. Hopefully it doesn't mean that they have to be good replaced fiscally because if they have to go to a place fiscally, it now adds extra work for them and they may not be very keen on doing that. So that's the problem. How would this be rolled out? Last week we were talking about the fraud flagging feature that they plan to release. The CBN has been on a row with regards to regulation. They've been releasing quite a few or a lot of regulations in the last two or three months. So without those details, right. We can't really see how this would work. But hopefully they do not have to recall pos in order to do this because I don't know how it's going to play out for most nigerians if PoS terminals are so you mentioned something the other time.
[00:24:58] Speaker A: The reason CBN is doing all this at all is because of the cases of fraud that happened with Pos.
And I'm wondering that many of these things you are saying are supposed to stop fraud. One, the implementation is going to take long and within that time you can believe and expect these people that commit this fraud to find loopholes around it already even before you finish implementing it. That said, I'm wondering what is geofencing doing with reducing fraud? Okay, I understand that it helps to know the location of that person, but the limitations it brings to it is more than the benefits for me.
[00:25:45] Speaker C: So before we look at the limitations, let's look at the benefits first. Right? Maybe jingle, I think is big on the limitations.
[00:25:55] Speaker B: I am not opposition of the CBN.
[00:25:59] Speaker C: Interesting.
[00:26:00] Speaker B: No, I am not. Okay, so it has benefits. It has limitations. The benefits are so you can in a way triangulate where a PoS is. And if going by the literal idea about how geofencing works, you can turn it off remotely. You can turn the Pos off remotely. So assuming a particular Pos machine has been flagged repeatedly, I don't know how that works. Especially because they're using it for fraud. If this is for businesses, I know how easy it can be for maybe someone that maybe you check your screen or whatever and you see that the Pos machine that was supposed to be in yaba is now in Ikeja. You just turn it off immediately and then figure that out later. But for something as simple as fraud, you are now dependent on people reporting a fraud incident immediately. It happens and hopefully they can give you accurate details of that PoS machine. And I still don't know how that work because it's a very difficult thing. So I'm trying to walk through it. I go to pos, to a pos in front of me, I am defrauded. And maybe I discovered it two days ago. I was talking to someone now, today, and she said when her own happened, it took her two days before complain? No, not before she complained. But she used the Pos today. Two days later she's seen withdrawals from her account. So between that period, hopefully I've not done too many financial transactions. I'm now wondering, okay, where did the problem start with? So that could also mean that your fencing may not fix the problem. To be clear, I don't think that anybody is going to eliminate fraud.
[00:27:39] Speaker C: Actually, don't think you can eliminate that.
[00:27:41] Speaker A: Particular because you know, most of the Pos terminals you find outside now are Android and they carry Sim cards. Yes, they are connected to the Internet. For it to be usable, you get. So the way you can track phones, you can also do that with Android Pos.
[00:28:06] Speaker B: Well, I don't know if you can.
[00:28:08] Speaker C: Make it a lot more.
[00:28:12] Speaker A: Because your fancy with like.
[00:28:15] Speaker B: Yes, that's a half problem. Because it restricts where those fierce machines can be used for them. It now means that if you were living in Lagos and you move to Abiokuda, you cannot like, you have to do something else.
No, that's how it works. Now, if you move out of location that you work with, are you disagreeing on how it works?
[00:28:43] Speaker C: Disagreeing on how it works.
[00:28:44] Speaker B: Okay, go ahead.
[00:28:45] Speaker C: I'm disagreeing on. Okay, so like you said, one common form of pos fraud is you use your pos somewhere and then they're able to get your details and authorized transactions on your behalf. Right? And then you start seeing debits when you get to them. So what most of those people do is because they can't do it at the same place for a long time, they have to move around. So geofencing stops them from doing that for someone who is not a fraudulent POS agent. Right. And then there's a need for you to move. I'm sure that there's a possibility that you can talk to the company that has issued you that Pos terminal and tell them, okay, you need to move. And then they register you. Okay, you used to be in surul and now you need to move to a new state. Right.
We'll recalibrate the old geomapping or geofencing thing and then calibrate it for that particular location. And then you can go work there. Right? Unlike those that use it for fraud, those ones need to move around very often. But why would somebody that is not doing anything fraudulent want to move from working?
Do agents in sri laureate today and tomorrow they are going to another you.
[00:30:02] Speaker B: Assuming that it takes them a short period of time to move. That's one. Two. A POS agent today has at least two. Not all, but most of them have up to two. So if they have two, what stops them? If someone really wants to defraud you, right? I have to invest in my business. And what stops me from getting ten pos machines and spreading them across? Now I don't believe that fraud networks are just one person acting alone. It's probably going to be a network. So they are going to be in several locations. You deactivate them, they get a new one. Right. So what it probably would do is just knowing that, okay, this happened within this location, but the exact pos I don't know how they want to do it, but except you can pinpoint the exact pos that did this because here's what happens. I come to this shop and I don't see you tomorrow. Like I come here today, I see you, tomorrow I come, I do not see you.
It's not going to be like one house that you stay in. Don't forget that it's not one house you can be. Okay. What if they say oh, ikeja keja is so big that one day I'm in Gre, the next day I'm in Ireland, the next day I'm wherever. So the person has like room and yes, it will restrict, it would put a little barrier, but I think that largely it won't do much because, okay, first of all, how many? We don't know the proportion of Pos fraud that is committed by people who have to move around a lot. We know that what some of these people do is they clone your card and your details. We also know that another part of PoS fraud is just where someone uses your card to make a withdrawal. Someone that has your details, probably a family member or something, uses your card to make a withdrawal. Some of them may not even be fraud. Fraud like what I just described. Let's say you have a sibling, the person picks up your card, they don't tell you.
[00:32:06] Speaker A: Is it fraud?
[00:32:12] Speaker B: Fraud has levels, but the person does that. Then we also have where someone actually gets your details fraudulently. Maybe your phone is stolen or something. And then they get your details and then they go ahead to do that. So except the majority of the fraud is done by people cloning your bank, your card details. If that's not the case, this may just solve a little problem.
[00:32:41] Speaker A: What you are talking about is a possible way to stop fraud, but as if it's the only thing you are suggesting. Meanwhile, there are many channels through which this fraud.
So it's not a problem. But what you are looking forward to is implementation. How do you want to implement this? CBN needs to be giving us information to know how they want to do this so that we can pass it to the people that are doing the POS terminal, that are using the POS terminal so that they will know how to prepare themselves. So we need more information on how they plan to do this recertification. Let them not do registration and also find a way to implement it so that it will be mainstream, it will touch everywhere and it is until they are able to do that before we can check how useful it will be or how much fraud it is going to stop. So we are looking forward to that. To CBN please, among other things do yeah, yeah. We've come to the end of what we are yet to discuss today. There are other news things that happened. Things are always happening in the african tech space and you can trust Techwind Africa to report them. So you can go to our website and stay up to date with every news that everything that happened in the african tech space this week and even in previous weeks, you find them there. Don't forget, if you have anything to say to us, a feedback, a comment, a question, you can send us an email at podcast at Techpoint Africa podcast at Techpoint Africa. We will be looking forward to your feedback. Don't forget our newsletters that are currently running and if you're listening to us on either Spotify or Apple Podcast, don't forget to leave us a review so that more people can know about the Techpoint Africa podcast. Also drop a question if you have any there. We'll get to it and we'll answer you. You can also listen to us on Google Podcast or any other platform. You listen to your podcast this Friday. I mean tomorrow there will be another edition of Pitch Friday and for this we are bringing a player, an experienced player from the ELT tech space and it would be answering different questions around the business of startup running a startup. The person of Dr. Neto Ikpeme, please don't forget to attend. It will be Odin at the zone Ten Park Zone tech park at Bagada. Thank you for joining us for another episode of Techmen Africa podcast and we'll see you in the next one. Bye.
