Investor Updates: African digital bank Umba gets $15M for expansion

African digital bank Umba gets $15M for expansion

Highlights

• Umba, a Nigerian digital banking platform operating in Lagos, Nigeria, has raised $15 million in Series A funding to expand financial products to underserved populations across three new markets in Africa.
• The new funding follows a $2 million seed round in 2020, bringing the total funding received to date to $17.5 million.
• Nubank and other investors like Tom Blomfield, the co-founder of Monzo, and previous backers Lachy Groom and ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital, and Streamlined Ventures participated in this round with VC firm Costanoa Ventures leading the round.

Source: Pymnts

Our Takeaway

In recent years, several neobanks have launched in Africa as they look to challenge incumbents in their respective markets. These startups don’t operate a monolithic model. While a few provide banking services to individuals and businesses on a single platform, some target varying sizes of businesses, while others offer tailored services to individuals. Currently, digital banks are among the most funded players by VCs in fintech.

---

Kippa launches new digital payments product for African SMEs

Highlights

• Nigerian fintech startup Kippa, which offers digital business and financial management solutions for SMEs in Africa, has launched its second product Kippa Payments.
• The startup’s first product is a simple-to-use, mobile bookkeeping solution used by over 350,000 SMEs in Nigeria. Using the app, small business owners can keep track of debtors and send automated debt reminders. 
• Kippa last November announced a $3.2 million pre-seed funding round led by Target Global. Kippa Payments is a digital payments solution enabling users to send and receive payments from customers and perform extended payments transactions automatically.

Source: Ventureburn

Our Takeaway

Across Africa, merchant acquisition is proving to be the “new” scramble for payment services on the continent. Offline and informal merchants exist all over Africa and account for up to 90% of businesses on the continent. As such, there’s a significantly large market of non-digital SMEs waiting to be tapped by Africa’s budding technology startups. Layering digital solutions on offline SME activity can create more efficiency for merchants, and generate returns for the startups.

---

Kenya to double tax on Big Tech

Highlights

• Kenya plans to double tax on foreign tech giants like Amazon, Netflix, Twitter, and PayPal which use the internet to market and sell products.
• The Treasury has proposed to increase digital tax service (DST) to 3% of the gross value of online transactions in the financial year starting July from the current 1.5% through the Finance Bill 2022.
• The Kenya Revenue Authority (KRA) has identified foreign firms, which derive income in Kenya through digital marketplaces as a major driver of tax receipts in a highly digitalizing global economy.

Source: TechCrunch

Our Takeaway

Similar to Kenya, countries in the East African region have in recent times made efforts to tax digital services revenues in a move to expand their tax bases as well as boost revenue collections, narrow fiscal deficits, and curb excessive government borrowing. While the move certainly bodes well for the government’s fiscal health, there are fears the decision could scare off investors from the budding digital services market.