The Africa SMME Tech Report

Issue No. 19. Africa-Middle East local and small business tech news for 16 November 2021. This issue features ZoodPay, SYMPL, Tamara, Workpay, PayHippo, and more...

Fresh MENA Deals Keep BNPL Front and Center

Keywords: buy now pay later, fintech, payments, eCommerce, MENA

The buy now, pay later space is burning as hot in the MENA region as it is anywhere in the world.

For those not in the know, buy now, pay later is a branch of the payments space that allows consumers (and increasingly businesses) to make purchases and then pay them off in equal, often interest-free, installments.

Here are a few recent cases in point for why MENA continues to be an epicenter of BNPL activity.

BNPL for the Silk Road

ZoodPay, is a unit of Swiss company OrientSwiss that calls itself a buy now, pay later “super app”, has raised $38 million in a Series B round led by London-based Sturgeon Capital, Zain Ventures, plus some existing investors.

The company claims to have 8 million users.

While based in Switzerland, ZoodPay serves markets across MENA and Central Asia, including Uzbekistan, Iraq, Jordan, Lebanon, and Kazakhstan.

ZoodPay BNPL looks like a standard pay-in-four product. The company also operates ZoodMall, a mobile-only B2C cross-border marketplace with a reported 7 million products. It serves Silk Road countries in Central Asia and the Middle East.

ZoodPay is available in ZoodMall as well as through retail partners.

The company also offers the logistics local and cross-border system ZoodShip.

The fresh $38 million will go to fuel market expansion, according to the company. The company’s last funding round was a $10 million Series A in June 2020.

Save Your Money, Pay Later

A new Egyptian BNPL called SYMPL, which stands for ‘save your money, pay later’, launched its service in October and has secured an undisclosed investment from Egyptian VC A15.

SYMPL launched its BNPL checkout product in October. And to date, it reports relationships with Tradeline, an Apple reseller. It also reports retail partnerships focused on a few key categories. These include jewelry, including Al-Mawardy Jewelry, Damas, and Jawhara. Also autoparts via Your Parts, plus the hypermarket sector via Hyperone.

The company’s founders are Mohamed El-Shabrawy El-Feky, Yasmine Mohamed Henna, Karim Tawfik. Their backgrounds include founding ValU, a consumer finance platform, and Capiter, a B2B commerce platform.

While the company seems to be positioning itself as a disruptor of Egypt’s consumer payments space, its approach to BNPL doesn’t seem particularly unique, beyond its use of slightly different terminology for BNPL.

SYMPL will face off with existing competitors, including Fawry, Shahry, Valeo, and others.

BNPL “Much Needed” in MENA Says Tamara CEO

What’s most interesting about these new deals is that they show money will continue to pour into the region’s BNPL space. However, the focus appears to be moving away from the Gulf States into other MENA markets.

So why has BNPL become such a big force in the Middle East? According to the CEO of one of the region’s top platforms, it’s all about addressing an unmet market need.

Abdulmajeed Alsukhan, the co-founder and CEO of Tamara, recently pointed out in an interview with PYMNTS that the region’s banks have traditionally ignored average consumers, limiting access to credit. This, of course, created an opening for alternative forms of credit like BNPL.

As a result, the market attracted multiple players, including Tamara, Tabby, Postpay, Spott, and others. Most of the established players in the region, with the exception of Tabby, have either been acquired by or heavily invested in by global strategic players.

For example, in April Checkout.com led a $110 million investment in Tamara. A month later, the Australian BNPL platform ZipCo acquired Spotii for $16 million (at a $20 million enterprise value). And in June, the Australian-American BNPL Afterpay invested $10 million in Postpay. Subsequently, Afterpay was acquired by the American payments platform Square for $29 billion.

It’s interesting to see new players enter the MENA region. We expect more investment to continue flowing into MENA states outside of the Gulf region (e.g. Egypt), where most of the established players operate. The Gulf is crowded, and already consolidating.

We may also see more B2B BNPL investment, as we have seen happen elsewhere in the world.

Buy Now, Pay Later will be one of the key topics covered at the BigFive Digital MENA Summit, 17th February 2020 in Dubai.

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Remote Work a Big Opportunity for Growing WorkPay

Keywords: payroll/HR, geographic expansion, remote work, talent shortage

Nairobi-based payroll and HR platform Workpay is growing, and remote work is a key catalyst. The company just expanded to Nigeria and opened an office in Lagos.

Workpay is a graduate of the Y-Combinator and Google for Startups Africa. And it was recently named a recipient of Google Black Founders Fund.

Workpay provides the basic tools for running a large workforce. It offers tools to hire, run local payrolls, file taxes, manage compliance, and pay salaries in more than 15 currencies across Africa.

This makes it a useful platform for organizations that want to hire remote teams, including international firms looking to hire Africa’s sought-after engineering talent.

Remote work, massively accelerated by Covid, has been a boon for African engineers, who can command high salaries working for international tech companies.

This has been great for the internationals. At the recent Localogy local search event in Los Angles, Afif Khoury, CEO of U.S.-based marketing automation platform Soci, revealed in an on-stage Q&A that the best recent engineering hires his company made were from Nigeria.

This is just one example of a tech company that discovered this previously untapped resource during the pandemic.

At the other end, African startups continue to struggle to compete for technical talent as they try to scale their businesses.

“There is quite a lot of talent, but in just the couple of years we've been around, it's gotten so much harder to access it,” said Martin Majlund, CEO of Kenyan eCommerce platform Sky.Garden in a recent BIG5D Podcast interview.

“And as far as the pricing, there is not a big discrepancy between hiring a European engineer and a Kenyan engineer now.”

Workpay says it is focused on helping African companies take advantage of the remote work opportunity.

“We are not only supporting some of the amazing companies in the continent like Flutterwave, Paystack, and Yoco but also the millions of SMEs in Africa in their growth endeavours,” said Workpay CEO/Co-founder Paul Kimani, in a statement picked up by multiple African tech news sites.

“What we are building is an infrastructure to allow SMEs to have the same advantage and tools to build their teams across the continent without breaking their banks.”

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PayHippo Raises Seed Round, Seeks Fresh Talent

Keywords: fintech, funding, West Africa, SME finance, buy now pay later

PayHippo, a Nigerian SME lending platform, recently raised a $3 million seed round, which the startup will use to bulk up on tech talent.

Notably, this round is led by individual investors, many from some of Africa’s leading fintechs. These include ChipperCash co-founders Ham Serunjogi and Maijid Moujaled, Fluterwave’s Olugbenga Agboola. Also chipping in were Chapel Hill Denham CEO Bolaji Balogun and Metis Capital Partners founder Hakeem Belo-Osagie.

The company says its biggest need is talent — particularly in engineering and data science.

Payhippo’s founding premise is that given Nigeria’s economy is driven by small businesses, accounting for an estimated 96% of Nigerian enterprises, more needs to be done to funnel financing to SMEs so they can operate more effectively and grow. Across Africa, startups are forming to fill this funding gap, which traditional banks have been either unwilling or unable to fill.

Payhippo has focused on its ability to make very quick lending decisions (it pledges a decision in less than five minutes), using its own propriety credit scoring model. So it makes sense that the company needs to bulk up on data scientists in order to scale.

PayHippo offers lending solutions directly to SMEs. It also has an offering for partners. This solution set is aimed at allowing companies that serve the SME market to extend credit to their customers and glean insights from transaction data.

Payhippo has also jumped on the buy now, pay later bandwagon. It offers a BNPL that partners can use to extend flexible payments terms to their customers.

In July, we wrote about PayHippo’s $1 million pre-seed round to help it build out an SMME microlending business. The product launched in January 2020.

PayHippo was founded by two Nigerians and an American.

The American, CEO Zach Bijesse, graduated in 2015 from the University of North Carolina at Chapel Hill. CTO Uche Nnadi is a Nigerian software engineer educated at the University of California at Santa Barbara. And COO Chioma Okotcha was raised in a Nigerian small business family. She has a background in microfinance policy.

PayHippo Differentiates with Speed

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Recent Episodes

Episode 25: Mike Smits, CFO, Ukheshe

Episode 25 of the BIG5D Podcast features a conversation with Mike Smits, who is co-founder and CFO of Ukheshe, a South African fintech that operates largely in the background of Africa’s financial services ecosystem.

Episode 24: Ezana Raswork, CEO, Taskmoby

Episode 24 of the BIG5D Podcast features Ezana Raswork, founder and CEO of Africa 118, an East African local search platform, and of Taskmoby, an on-demand home services marketplace platform based in Ethiopia.

Would you like to be a guest on our podcast? Reach out to us at info@bigfivedigital.org.

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Upcoming BigFive Digital Events

The BigFive MENA Summit

“Building the MENA region's local and SME technology stack”

17 February 2022
Media One Hotel
Dubai, United Arab Emirates

Thanks to ALSMA, Duda, Matchcraft, and bFound for sponsoring the MENA
Summit. To inquire about speaking at or sponsoring this event, write to Charles@bigfivedfigital.org.

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The BigFive Summit

“Building Africa's local and small-business digital ecosystem”

11-13 May 2022
Workshop 17
Cape Town, South Africa

Thanks to Duda and Matchcraft for sponsoring the BigFive Summit. To inquire about speaking at or sponsoring this event, write to Charles@bigfivedfigital.org.