👨🏿‍🚀TechCabal Daily – Nigeria’s fraud-fighting faction

Startups

In December, creator platform Selar ended the year by showing its creators some love. Designers, writers, and marketers across Nigeria received customised boxes with notes that advertised its newest product, Show Love. 

The simple campaign, according to chief marketing officer Milton Tutu, drove over 2,000 creators to use the platform within weeks. 

It’s a new year, and the platform has shared its 2023 numbers: over 150,000 creators made ₦4 billion ($4 million) in sales.

How? From the get-go, Selar listened intently to creators’ needs. The platform, which was founded in 2016 by Douglas Kendyson, had a focus on addressing the needs of creators looking to sell digital products. Per Kendyson, it took four years of constant customer feedback and cold-calling creators to perfect the product.

Success on a lean team: 2023 was a year where global creator platforms crumbled, with funding down by 58%. But Selar more than scaled through, doubling its 2022 numbers with a lean team.

Kendyson shared some unusual cost-saving measures used at Selar, such as not providing custom email addresses for everyone, emphasising their commitment to efficiency. The startup’s revenue model—a 4%-6% commission on product sales, a subscription-based SaaS model, and earnings from a foreign exchange spread—is also proving to be sustainable.

The platform’s growth, however, has a lot more interesting lessons. Read about it here.

Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here.

Cybersecurity

Last year, a number of Nigerian fintechs came together to collaborate in their fight against fraud. Codenamed “Operation Radar,” the idea was to create a united front and share information and data on bad actors.

But save for its very cool name, Project Radar didn’t seem to do much and now financial institutions are back to the drawing board. They’re hoping another attempt at collaboration will work its magic. 

Everyone is running at a loss: This time, the banks are also looking for regulatory approval to launch their fraud-fighting mission. According to an insider, a presentation to the Central Bank is due by the end of Q1 2024.

A recent report shows that deposit banks alone lost a staggering ₦9.75 billion ($10.8 million) in Q2 2023, a 276% increase compared to the same period in 2022, with Bureau de Change operators and banking agents emerging as key vulnerabilities, often serving as fraudsters’ cash-out channels.

The Central Bank isn’t sitting idle: The CBN has been actively seeking solutions, mandating the establishment of fraud desks in financial institutions since 2015. Individual measures such as linking Tier-1 bank accounts to the Bank Verification Number (BVN) or National Identity Number (NIN) have been commended and also frowned upon, as industry experts argue that these measures haven’t stopped the bleeding. 

This time, things might be different. The new solution proposed by Nigerian banks and fintechs will see all financial institutions held accountable, including fintechs who are often blamed for lax security.

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Regulation

Starting March 1, 2024, OPay says it will block accounts that are non-compliant with Nigeria’s KYC regulations.

Why? The Central Bank of Nigeria, last year, instructed that all tier 1 bank accounts—the lowest tier of a bank account—be linked with the NIN and BVN over concerns about increasing fraud cases. 

OPay has been under intense scrutiny over its porous KYC verification system. In October last year, Fidelity Bank, a Nigerian commercial bank blocked transfers to OPay and other neobanks over concerns that their lax KYC processes contributed to increased fraud cases. 

New reforms: The fintech has taken measured steps to restore the loopholes in its system. New customers will be required to link their BVN and NIN upon opening of accounts. The fintech also said it is working on perfecting its porous facial verification system which has long been explored by bad actors to impersonate people and commit fraud.

The company faced scrutiny last year when users, who had registered for its vertical services such as ORide or OFood, reported unauthorised opening of bank accounts in their names.

The twist: Although OPay seems to be addressing KYC methods and app security, some users assert that malicious actors are still attempting to infiltrate OPay’s system, evident in a viral video where a customer alleges impersonation and unauthorised opening of 10 business accounts in her name. Whether these incidents predate the fintech’s crackdown on such activities or are recent remains to be clarified.

Paystack merchants in Ghana can now send single and bulk transfers to Ghanaian bank accounts from the Paystack Dashboard and via API. Learn more →

Shutdowns

When Cova launched in December 2021, the CEO, Oluyomi Ojo said the company would serve as a “single source of truth” for its users, providing a platform for them to organise their assets in one place and transfer ownership to their listed beneficiaries in the event of their death.

Two years into its journey, and having amassed thousands of customers globally, the Nigerian wealthtech startup is set to cease operations on February 10, 2024.

Per Benjamindada.com, the shutdown was communicated to users in an email on January 24, citing “several factors” that led to this decision, with user subscriptions to be refunded on or before February 13. 

Why? In Cova’s first year of operation, Ojo mentioned that trust was a hurdle. Users were still adapting to the concept of such a platform, especially in African countries where thinking about death as an event to prepare for remains a sensitive topic. Additionally, Cova’s users needed a deeper integration as they sought to connect multiple bank accounts across different countries. While Cova allowed users to connect profiles to banks, savings apps—Piggyvest, Cowrywise,—investment platforms—Risevest, Bamboo—and crypto-wallets, as of 2022, only those in Nigeria, the UK and the US, could sync bank accounts.

The startup has not yet revealed the reason behind the startup’s decision but the platform’s $10/month subscription fee might have been another hurdle that hobbled the growth it needed. 

Nigeria’s unclaimed wealth crisis: In Nigeria, as of December 2020, about 47 million bank accounts with a deposit volume exceeding ₦1 trillion ($1.1 billion), lay dormant with effective unclaimed benefits. In August 2023, the Securities and Exchange Commission (SEC) revealed unclaimed dividends within the nation’s capital market soared to ₦190 billion ($218.3 million). As the challenges of financial disorganisation persist, it underscores the need for innovative solutions to streamline financial processes. While Cova might have shut its doors, other African startups such as Twinku are rising to provide an all-in-one asset management platform. 

Expansions

Nigerian edtech startup, AltSchool Africa, has set up shop in Kenya.

According to Adewale Yusuf, the decision to launch in the East African country stems from increased tractions that the startup has experienced. Per Yusuf, Kenya is AltSchool’s second-largest market by revenue and setting up shop in the country was a no-brainer. 

“We are not new to the people, but this will give us the opportunity to expand,” said Yusuf. 

AltSchool will now focus on providing hands-on support to its Kenyan customers and will also work on processing local payments faster. Tabitha Kayvu, AltSchool’s Country manager, will lead the startup’s Kenyan operations. 

AltSchool’s presence in Kenya offers great opportunities to the over 51.5 million young population. Per Yusuf, key partnerships with the stakeholders in the country made the difference. The startup is collaborating with different organizations to ensure that Kenyans have access the right access to the global in-demand skills that AltSchool has to offer.

Zoom out: While its diplomas in engineering, data, and business analytics are offered online, the launch in Kenya offers the startup the opportunity to explore building learning communities around the country. Yusuf says the startup is also working to deliver its courses in Swahili.

Thanks to TC Daily, startups can apply to get up to 6 months free, including unlimited AI. To register your interest fill this form here by February 1, 2024.

Crypto Tracker

Source:

Coin Name	Current Value	Day	Month
Bitcoin	$39,737	+ 1.50%	– 8.52%
Ether	$2,212	+ 0.65%	– 2.59%
Manta Network	$3.09	+ 27.07%	+ 36.09%
Solana	$86.19	+ 6.49%	– 26.97%

* Data as of 22:55 PM WAT, January 24, 2024.

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Fifty companies have been shortlisted for South Africa’s very first crypto licence. TechCabal reports that SA’s financial assets regulator is set to greenlight the first crypto licence in a couple of weeks and 50 companies are in the running. Last year, the Financial Sector Conductor Authority (FSCA) introduced a new licence to regulate the country’s tricky crypto space. Operators had until November 30 to apply for the licences or be booted out of the country. The regulator received 105 applications, but only 50 were presented to its licensing committee in December. It’s almost time to see who’s made it, and who will have to flip the coin again. 

Opportunities

• Every year businesses around the world lose billions of dollars to fraud. But there’s good news: the tide is turning. Artificial intelligence (AI) is emerging as a powerful weapon in the fight against fraud. Learn how to combat fraud with AI through this free online event. Register here.
• Applications are open for the Lagos Innovates x Firstfounders Idea Hub 8.0! a springboard to build a competitive, profitable and game-changing startup. There will be 8 weeks of transformative mentorship, tried-and-tested growth templates, exceptional masterclasses and unparalleled networking opportunities. Apply here.
• Goethe Institute Studio Quantum has opened applications for its new residency programme in Germany for artists from Nigeria. Throughout the residency, artists will receive invitations to travel to various locations, where they can integrate quantum technologies into the thematic content of their work. These artists are encouraged to create pieces utilising quantum technologies accessed through the cloud. Apply by February 11.
• Gen F, an initiative facilitated by Founders Factory is set to invest in startups from Africa through its Entrepreneur in Residence program. Selected startups will receive a $250,000 seed funding injection upon successful pitching. Apply here.

What else is happening in tech?

• Ojoma Ochai, CcHub’s new MD, is eager to bring emerging tech to the mainstream
• Don’t be a fool, don’t do fintech
• Techstars lays off 7% of its staff as venture industry contracts
• Zimbabwe plans to arrest Starlink distributors and users

Written by: Faith Omoniyi & Mariam Muhammad

Edited by: Timi Odueso & Olumuyiwa Olowogboyega

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