business-in-africa

By NJ Ayuk*

Qatar learned that it possessed truly huge reserves of natural gas in 1971, when Royal Dutch/Shell discovered the North Dome structure, also known as the North field

As I got into the process of writing my recent book Billions At Play, The future of African Energy and doing deal, the story of Qatar intrigued me. Its success is contagious and African LNG producers can learn from this country.

Qatar learned that it possessed truly huge reserves of natural gas in 1971, when Royal Dutch/Shell discovered the North Dome structure, also known as the North field. At the time, though, neither Shell nor Qatar’s government had a great deal of interest in developing the site. Their focus was on crude oil, which was then making the country very rich.

As a result, nothing much happened at North Dome for more than a decade. Shell did not actively pursue development work there, and neither did Qatar General Petroleum Co. (QGPC, now known as Qatar Petroleum or QP), which was the beneficiary of Doha’s nationalization of the oil and gas industry in 1977.

Conditions began to change in the late 1970s. Qatari crude production started to decline after 1979 as the country’s largest oil fields matured. In turn, international oil companies (IOCs) began to lose interest in signing service contracts with QP, since they did not believe Qatar’s aging reserve base warranted massive long-term investments.

These developments did not have much immediate impact, since crude prices were rising enough to keep revenues high. But in the 1980s, oil prices sank – and brought oil revenues down along with them. As a result, Qatar’s government began looking for new ways to generate income. Gas was an obvious option, since global demand was rising and national reserves were ample. Officials in Doha began to draw up plans for monetizing production from the North field, which is now known to contain at least 450 trillion cubic feet (13 trillion cubic meters) of gas in recoverable reserves.

Eventually, they developed a three-phase plan that called for beginning with domestic sales and then proceeding to pipeline exports before finally launching marine exports of liquefied natural gas (LNG). To implement the plan, they set up a joint venture known as Qatar Liquefied Natural Gas Co. Ltd. (Qatargas) between QP, BP (UK) and Total (France).

The first phase, which provided for domestic gasification, was a relatively simple process due to the small size of Qatar’s population. But events in the late 1980s and early 1990s made the second phase, which called for the construction of an export pipeline capable of delivering up to 20 billion cubic meters per year to other member-states of the Gulf Cooperation Council (GCC), more difficult.

There were multiple reasons for this, including but not limited to the following: Saudi Arabia lost interest in Qatari gas after discovering reserves of its own, Qatar and Bahrain became embroiled in a border dispute, and Kuwait found itself preoccupied by the Iraqi invasion that led to the First Gulf War. Doha floated proposals for alternative routes in the hope of drawing interest from markets outside the GCC, but to no avail.

The failure of the pipeline gave Qatargas an opportunity to skip the second phase of the project and proceed directly to the third – namely, using production from the North field as feedstock for a gas liquefaction plant that could turn out LNG for export by tanker. At the same time, rising demand for gas in Japan, South Korea and Taiwan gave Qatar an incentive to focus on LNG. Additionally, BP made the decision to exit Qatargas, the venture formed to develop North. This cleared the way for the U.S. company Mobil (now part of ExxonMobil) to join the project.

Mobil was a good fit, partly because it had ample financial resources and partly because it had extensive experience with LNG through its participation in the Arun scheme in Indonesia. It was able to access and deploy the technologies needed to launch Qatar’s first LNG plant. That facility brought its first 2 million ton per year production train on line in late 1996 and began commercial production and exports the following year.

Since then, Qatar has continued to ramp up gas production and to expand its LNG industry. It has worked with foreign partners to build more gas liquefaction facilities and is now home to three LNG mega-trains with a combined production capacity of 77 million tons per year. These plants helped make Qatar into the world’s largest LNG producer in 2006, and they have kept the country at the top of the list ever since. Meanwhile, Doha decided last year to build another mega-train that will raise the figure to 110 million tons per year by 2024. Qatar operates the largest fleet of LNG tankers in the world, and its LNG goes to customers all over the world.

In short, its LNG program has been a smashing success.

Showing the way

The story of Qatar’s success is interesting in its own right. But does it have any deeper meaning? Could it serve as a template – that is, as a map that other gas-producing countries can use to blaze their own trails toward success?

I believe it can. Specifically, I believe African gas producers pursuing LNG projects have a lot to learn from Qatar. They will have a better chance of maximizing their gains if they follow Qatar’s example.

Obviously, Africa can’t duplicate Qatar’s experience. Its gas-producing states don’t have the same geography or demography, and they don’t have access to the same marine trade routes. But it can benefit from some of the lessons that Qatar learned along the way. I’ll list a few of them here.

A little help from my friends

Qatar began looking into plans for launching LNG production less than a decade after nationalizing its own oil and gas industry. Even so, it had a clear understanding of the fact that it could not pursue this goal without outside help.

More specifically, QP and the Qatari government knew they would need partners with plenty of cash, experience, and access to gas liquefaction technology. They also knew they would need partners that were willing to absorb the risks involved in opening up a new frontier. As it happened, Mobil met all these criteria.

Africa’s future LNG producers like Senegal, Equatorial Guinea, Mozambique, Tanzania, Congo, Cameroon, South Africa, Nigeria and Angola will need help too. Like Qatar, they will need to pair up with IOCs that can help cover the costs of establishing a new sector of industry, that have experience in handling all of the physical and logistical complications of such projects, and that can supply the sophisticated technologies needed to compress and cool gas into a liquid state that can be transported by tanker. Also like Qatar, they will need investors that are ready to build this sector of the economy from the ground up (this last point is particularly important in countries such as Mozambique, Tanzania, Senegal and South Africa that are trying to launch LNG projects in short order after the first discoveries of gas.)

Staying flexible

Qatargas’ original plan called for starting small, with domestic gasification, and then scaling up – first by building pipelines, a type of infrastructure that had already been in use for the better part of a century, and then by taking on the more complicated task of building a gas liquefaction plant, marine terminal, and other associated facilities. But as noted above, efforts to move the pipeline phase of the project forward foundered due to unexpected obstacles.

Instead of focusing on these obstacles, Qatargas decided instead to take a different approach. It accepted that its efforts to draw up new plans and engage in further negotiations had failed, and it moved on. It dispensed with the second phase of the project altogether and got to work on the third phase. And that marked the first step of Qatar’s journey to becoming the largest LNG producer in the world.

This is an important lesson for Africa’s future LNG producers: sometimes the original plan simply doesn’t work out, even when all parties make good-faith efforts to resolve their differences. So, it’s time to try something different. It’s time to look for a new solution. For example, if an African gas producer reluctantly concludes that there’s no way to build an onshore gas liquefaction plant without incurring unacceptable environmental, financial, or social risks, it shouldn’t give up. Instead, it should look into floating LNG (FLNG) options or consider the possibility of using gas liquefaction facilities in a neighboring country.

Resource management

Qatar can also teach African gas producers a thing or two about resource management. This is a crucial consideration for QP and its partners in Qatargas, since most of their feedstock comes from a single source – the North field. This field may be huge, but it is hardly inexhaustible. In fact, Doha imposed a moratorium on new development initiatives at North in 2005, saying that it needed to conduct a thorough study of the site in order to assess its long-term potential and keep reservoir pressure at adequate levels.

The moratorium was not permanent. Qatar’s government lifted it in 2017, and QP responded by drawing up plans for the North Field Expansion (NFE) project and for the construction of new gas liquefaction facilities. In September of this year, the company said it had shortlisted several firms and invited to bid for the NFE contract.

These events are significant because they demonstrate that Qatar wants to keep its LNG plants in business for a long, long time. They show that the country is willing to accept some short-term setbacks in order to ensure that its largest source of gas can remain in production over the long term.

Again, Qatar’s example should give African gas producers food for thought. It shows that there are good reasons for taking a measured approach to the development of major reserves – and that the LNG sector can keep growing even when key feedstock suppliers must abide by certain restrictions on production levels. In other words, it serves as a reminder that Africa ought to do more than simply extract and sell its gas. African producers should aim to develop their resources in ways that offer the most benefit to the most people for the most amount of time.

Making our own luck

Of course, Qatar owes some of its success to sheer luck. Its gas sector emerged at a time when the country was highly motivated to find a replacement for dwindling oil revenues, when demand for gas was on the rise, when there were few viable alternative markets in the region, and when Mobil happened to be on the lookout for a new LNG project following the maturation of the Arun field in Indonesia.

Once again, Africa can’t duplicate Qatar’s experience. It can’t count on that sort of luck, on everything coming together at just the right time.

But it can learn from Qatar’s example – and create a little bit of its own luck. Hopefully, Africa can benefit from the fact that global demand for gas is still rising and will continue to do so for some time, even as more and more consumers pin their hopes on renewable energy. Now is certainly a good time to try – not least because LNG projects should also generate interest in gas-to-power projects and other African initiatives. The Gas Exporting Countries Forum’s meeting in Malabo Equatorial Guinea will be a good start.

*Africa Energy Chamber. NJ Ayuk is an experienced oil and gas dealmaker who heads the Pan-African legal conglomerate Centurion Law Group and serves as executive chairman of the African Energy Chamber (https://EnergyChamber.org/). He is a passionate advocate of the idea that oil and gas can help propel economic development in Africa, as detailed in his newly released book, Billions at Play: The Future of African Energy and Doing Deals.

• The launch of Verve Global Card in Dubai, marks Verve’s entrance into the United Arab Emirates (UAE)
• Verve Global customers can already transact in 185 countries globally

Dubai, November 16, 2019 – Verve, a leading payments technology and card business in Africa, held a first transaction event today in Dubai, United Arab Emirates. Verve Global cardholders can now use their cards on Discover Global Network to transact in more than 185 countries and territories, including Dubai, United Arab Emirates.

The first transaction event took place at Emperor Retail outlet, City Walk by Meraas Al Safa Str. Dubai. Senior executive members of Verve International were joined at the event by key partners including Jerry Fosker, a senior Executive from Discover Global Network, Shamsudeen Fashola; Group Head Retail Banking FCMB, Margaret Okhoya; Product Manager Card Services FCMB, Lanre Oladimeji; Group Head Retail Banking Zenith Bank, Nneka Onwuegbuche; Product Manager, Card Services Zenith Bank, among others.

Speaking at the launch in Dubai, Mitchell Elegbe, Interswitch Group Managing Director expressed his excitement, stating that the decision to bring Verve Global to Dubai was a strategic one: “Dubai is an important destination of choice for business and leisure as well as being a popular destination for Nigerians.”

The transaction in Dubai comes following the successful launch of Verve Global in New York in August this year, and marks Verve International’s first entrance into the UAE region.

Elegbe continued: “As we approach the Dubai Expo 2020, we believe this is the right time to expand into a region with a rapidly evolving payments market. The launch in Dubai will provide an efficient way for new and existing Verve Global cardholders to transact whenever they visit the region”.  

Expressing his gratitude to stakeholders and partners present, Mike Ogbalu III, Chief Executive Officer, Verve International, reiterated the mission and vision of Verve, stating its core objective of making seamless payment solutions available to Nigerians and Africans in every part of the world. “We are very delighted that a domestic card scheme of African origin can be used to make payments across the world. We express our gratitude to all our partners, particularly Zenith Bank and First City Monument Bank, who have joined us today. One of the biggest assets of Verve International is our partners (both those who are here in Dubai and all others). Thank you for joining us on this epic journey to plant our footprints all over the world. We are very confident that you will remain with us as we continue to take bold steps”, he said. 

To get a Verve Global Card is quite easy; please visit your bank and request one.

Media Contacts:

Cherry Eromosele

Group Chief Marketing & Corporate Communications Officer

Email: cherry.eromosele@interswitchgroup.com

About Verve

Verve is Interswitch Group’s innovative payment scheme, offering products and solutions that enable consumers to transact all over Nigeria and across international markets. As the largest domestic card scheme in Africa, we have built a high-class value chain ecosystem that benefits from the services that Interswitch provides.

About Interswitch Group

Interswitch is a leading technology-driven company focused on the digitisation of payments in Nigeria and other countries in Africa. Interswitch is a leading player with critical mass in Nigeria’s developing financial ecosystem and is active across the payments value chain, providing a full suite of omni-channel payment solutions.

Interswitch was founded in 2002 as a transaction switching and electronic payments processing business, building and managing payment infrastructure, delivering innovative payment solutions and driving transactions across Nigeria and other African markets. We provide secure payments solutions and services that facilitate convenience and real value for consumers, businesses, governments and other organizations, helping to reduce costs, improve operational efficiency and drive sustainable revenue growth.

About Discover

Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover card, America’s cash rewards pioneer, and offers private student loans, personal loans, home equity loans, checking and savings accounts and certificates of deposit through its direct banking business. It operates the Discover Global Network comprised of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation’s leading ATM/debit networks; and Diners Club International, a global payments network with acceptance around the world. For more information, visit www.discover.com/company.

Cape Town, 14th November 2019 – Luno’s CEO Marcus Swanepoel, speaking at AfricaCom 2019, has outlined how the implementation and use of cryptocurrencies will be an important part of Africa’s future.  Luno can see that as cryptocurrencies develop over the next ten years, they can become part of everyone’s lives, solving many of the issues currently associated with existing fiat currencies.

Commenting after his keynote at AfricaCom, Marcus said: “Cryptocurrencies are on a growthpath which can help solve the fundamental problems of the existing monetary system, which in many parts of Africa is not fit for purpose. At the moment we tend to hear about the perceived issues with crypto and although these stories make headlines they also serve to make us forget the problems which have beset the traditional financial systems in Africa.  

“Africans using traditional currencies are often faced with high transaction costs, inflation and currency devaluation, exorbitant interest rates and high levels of fraud. Coupled with all this – accessing the existing system (despite the fact that many have a mobile phone and conduct other elements of their lives online) is still incredibly restrictive” 

This has in turn led to a lack of financial inclusion and huge unbanked deposits, which does not help people or nations and severely hampers economic growth and financial freedom. 

“It will take time for the full benefits of cryptocurrencies to be seen. Cryptocurrencies  have only effectively been in general circulation for five to ten years, so it is still nascent, but like the early adopters of the internet, the long term benefits are very clear. 

Marcus had a clear message for the conference audience which was that cryptocurrencies are alive and well. They are about to enter a very significant and exciting period, and through forward thinking and proactive regulation, countries across Africa can set themselves up for future growth and success.  

Luno is continuing to put its support behind regulators who are embracing cryptocurrencies and who recognise the long term benefits a secure and transparent blockchain system offers, especially for developing markets. As the company expands across Africa,  collaboration with regulators, governments and the broader financial ecosystem will be key. 

Marcus concluded: “Cryptocurrencies will be life changing for many millions of people in Africa.  For the unbanked and those that lose out every time they deal with the existing financial services sector, there lies ahead a better way of moving, storing and exchanging value.  We just have to remember that cryptocurrencies are very new, and will need time to develop to its full potential. Luno is at the forefront of bringing this inevitable change to the world in a responsible way. Markets which are prepared to see the potential and work with the cryptocurrency industry will very quickly move ahead of jurisdictions which refuse to change. We’ve seen this in every sector which technology touches, and the financial technology and cryptocurrency sector will be no different.”

By NJ Ayuk *

African nations must and will take advantage of their hydrocarbon resources for economic development. Environmental sustainability is a part of it, not an impediment.

Johannesburg, 14 November 2019: In an article written for the Guardian newspaper this week, Nobel Peace Prize Winner Archbishop Desmond Tutu of South Africa argued for an Apartheid-style boycott on coal, oil and gas companies as a solution to fight climate change and help ensure global environmental sustainability goals. “We must stop climate change. And we can, if we use the tactics that worked in South Africa against the worst carbon emitters,” the subtitle of the piece reads.

The sentiment expressed by Mr. Tutu is laudable and speaks to many across the world that have become rightfully concerned by the effects of climate change on our environment.

However, it is also a misguided sentiment. Oil and gas companies are not autocratic regimes focused on oppressing the people and steal their resources. They are businesses, which yes, are focused on profit, but they are also focused on the sustainability of the business itself. In practical terms, it means that these companies adapt to the needs of the economies they are integrated in. Boycotting oil and gas companies will not have an impact on carbon emissions, but it might raise the price of fuel in the long run. That is not the goal intended. 

While there is demand for hydrocarbons, there will be production. The shift in the dynamic of supply and demand in recent years can already be spotted in the way oil and gas companies have restructured. More and more, these companies are diversifying their portfolios to include renewable energy assets and many of them are at the forefront of research and development of new technologies to help exploit renewable resources. I cover this extensively in my recent book, Billions at Play. Oil and gas companies are shifting into becoming “energy companies”, they are even rebranding, with Equinor (former Statoil) being the most evident example, to showcase that change in corporate paradigm. And in all honesty, who else would be better prepared, better funded and better placed to drive the energy transition that we all seek. Demonizing energy companies is not a constructive way forward, and ignoring the structural role that carbon-based fuels have in today’s society distorts the public debate. Bringing energy companies, governments and civil society groups together to find functional solutions will achieve much more.

This is especially the case in Africa. While the concerted effort amongst all of the world’s nations is fundamental to curb the effects of climate change, it is paramount to have a clear understanding of what efforts will be most decisive, and which regions of the world are in a better position and have the biggest responsibility to tackle these issues.

To be sure, Europe, North America and China, by and large responsible for much of the CO2 emissions that are behind the changes in our climate, have to live up to that responsibility and move towards more sustainable practices.

We can not expect African nations, which put together have polluted 7 times less than China, 13 times less than the United States, and 18 times less than Europe since the beginning of the industrial revolution, according to Carbon brief, to undermine their best opportunities for economic development by simply aligning with the Western view of how to tackle CO2 emissions.

Gabriel Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, summed it up quite decisively to the press last week during the Africa Oil Week in Cape Town. “Under no circumstances are we going to be apologising,” he said, “anybody out of the continent saying we should not develop those

[oil and gas]

fields, that is criminal. It is very unfair.”

Minister Lima’s blunt words are an answer to a number of misconstrued views about the African continent, and about the oil and gas industry it is striving to develop. While a few nations across the continent have been producing hydrocarbons for decades, these resources have mostly been exported to fuel industrial development in Europe, the US and Asia. The reasons for this are varied and have as much to do with the European colonial legacy as with the lack of existing financial resources and expertise to develop local economies over the last century.

That, however, is coming to a change. As I have argued and championed for years, African nations are finally starting to make use of these resources to develop their own national economies. We must remember that nearly half of all Africans still don’t have access to electricity and that nearly every company in the continent struggles with the lack of power reliability, which raises operational costs, reduces productivity and hurts their ability to compete in international markets. African leaders are now painfully aware of the damage an unreliable energy network causes on national economies and are moving to change that.

Today, natural gas is by far the most economically sustainable way of producing power in enough quantities to fuel economic development. Petrochemical plants represent a massive economic opportunity to produce byproducts from oil and gas with a higher value within the supply chain, an opportunity to create jobs, develop infrastructure and produce wealth. Refineries too have a dramatically positive impact in curbing the need for fuel imports. All of these are fundamental pieces of the puzzle that will foster Africa’s economic growth and promote the betterment of the lives of its people. I have been saying this for a long time and have helped with that development through the African Energy Chamber, supporting cooperation amongst African nations to promote intra-African trade on energy resources and build synergies, which is the way forward.

The African Development Bank has estimated that between USD$130 and USD$170 billion a year in the run up to 2025 would be needed to close the infrastructure gap across the continent. How are African nations to fund these fundamental developments if they give up on exploring their natural resources? How can the Western world, or anyone for that matter, suggest, or demand, that African nations leave these resources underground when it was these same resources that powered economic development everywhere else?

After decades of colonial occupation and subsequent political and military in-fighting, many African regions have now reached the level of stability that will allow them to build working functioning economies. The fuel for that will be these countries’ natural resources, be it oil, gas, coal or diamonds. Boycotting the companies that can help these countries develop these resources would be paramount to economic suicide.

This is not to say that environmental sustainability and climate change should not be at the top of the list of concerns when debating the African energy sector, but it should inform environmental impact assessment policies and foster best practices in the industry, not put a stop to it.

Yes, renewable energy sources can have a role in contributing to expand electrification in Africa, and solar and wind power have become competitive when compared to carbon-based generation, but that will always depend on the resources available in each region and will always have to be supported by other forms of generation capacity that can overcome the issue of intermittency that follows renewable power generation.

This is already happening. Kenya, for instance, is one of the world’s leading nations in terms of the share of its energy matrix coming from renewables, on its way to reach 100% in the coming years, but it also holds some of the world’s largest geothermal energy reserves, and it will continue to develop its oil reserves because it needs the money to fund economic development.

Africa’s time to grow and develop is finally here, and it will be funded by its natural resources. Misguided moral lessons from the West will do little to change that because the financial resources coming from these activities are crucial and irreplaceable. In a somewhat ironic way, even if Africa wanted to stop using fossil fuels and shifted every power station to renewable sources, it would still be forced to develop its oil and gas fields in order to fund that transition.

There is no point in promoting radical approaches to the energy transition, particularly for Africa. A balanced manageable and well-lead approach of progressive transitioning combining hydrocarbons and renewable energy development alongside strong environmental protection policies in the sector is the option that is not only realistic, but that will allow to combine economic growth and environmental sustainability.

The New York Times quoted Mr. Gwede Mantashe, South Africa’s Energy Minister, in an article covering the Africa Oil Week. “Energy is the catalyst for growth,” he said, “they even want to tell us to switch off all the coal-generated power stations,” “until you tell them, “you know we can do that, but you’ll breathe fresh air in the darkness”.

Enough said.

*NJ Ayuk is the CEO of Centurion Law Group and the Executive Chairman of the African Energy Chamber. His experience negotiating oil and gas deals has given him an expert’s grasp of Africa’s energy landscape. He is the author of “Billions at Play: The Future of African Energy and doing deals.”

Mozambique’s state oil and fuel company Empresa Nacional de Hidrocarbonetos (ENH), tabled a $24.6 billion transformative project for Mozambique’s economy, the largest deal to feature at the 2019 Africa Investment Forum.

The project includes the development of the Golfinho and Atum fields and the nation’s first onshore liquefied natural gas plant.

Mozambique’s Prime Minister Agostinho do Rosário made the announcement at a media briefing session during the Forum, the continent’s premier investment marketplace, organized by the African Development Bank and its partners.

The project is an opportunity to create jobs and will revive the Mozambican economy, Agostinho do Rosário told journalists.

State oil company ENH Chief Executive Officer Omar Mitha says the country is already courting global investors to raise US$1.3 billion to fund the company’s share in the Area 1 natural gas project, in which it holds a 15% stake.

For African Development Bank President Adesina, African governments must not carry the burden of infrastructure alone; they must allow private sectors to lessen the load.

Last year’s inaugural Africa Investment Forum secured investment interest worth $38.7 billion of dollars in just three days. For this year’s edition, the Bank and its partners are aiming to cap that figure.

In closing and addressing a question debt, Adesina said, “First and foremost, Africa is not in debt crisis, we have several countries that have challenges in terms of equity ratios tipping at the levels that raise concern. Africa is not one country, Africa is not two countries, Africa is 54 countries…There’s nothing to cause any alarm.”

The three-day Africa Investment Forum is taking place in Johannesburg, South Africa.

*AFDB

By Wallace Mawire 

The National Hydrocarbons Company (ENH) and the events company CWC, from London, will host  the 6th edition of the Mozambique Gas Summit and  Exhibition at the Joaquim Chissano International Conference Centre, Maputo on 13 to 14 November.

 It is reported that the event will be officially opened by His Excellency Filipe Jacinto Nyussi, President of the Republic of Mozambique.

This 6th edition will address the key topic: “Post-FID Gas infrastructure development-Economic diversification-industrialisation.” 

  It is reported that High-level representatives from the global oil and gas industry are expected to attend the conference   from around 55 countries and over 50 speakers from different areas of the energy sector.

 The event is also hosting 130 exhibitors, representing the entire oil and gas value chain, as well as 700 attendees including national, from various levels and international delegates, representing a record attendance since this event began.

• Visa to acquire a significant minority equity stake in Interswitch
• Partnership expected to expand the digital payments ecosystem across Africa, the world’s most underpenetrated market
• Interswitch and Visa share a vision to drive financial inclusion across the African continent

(Tuesday 12^th November, Nigeria): Interswitch Limited (“Interswitch” or the “Company”), a leading technology-driven company focused on the digitisation of payments in Nigeria and other countries in Africa, and Visa Inc. (“Visa”), the world leader in digital payments, today announced a strategic partnership that will further advance the digital payments ecosystem across Africa.

As part of the agreement, Visa will acquire a significant minority equity stake in Interswitch. The investment makes Interswitch one of the most valuable African FinTech businesses with a valuation of US$1 billion. Visa will join globally renowned investors, Helios Investment Partners, TA Associates and IFC, as shareholders in Interswitch, alongside Company management.  

Founded in 2002, Interswitch disrupted the traditional cash-based payments value chain in Nigeria by introducing electronic payments processing and switching services. Today, Interswitch is a leading player in Nigeria’s developing financial ecosystem with omni-channel capabilities across the payments value chain, processing over 500 million transactions per month in May 2019.

In 2018, electronic payments in Africa accounted for only 12 per cent of transactions by volume, compared to 54 per cent in Europe and 79 per cent in North America. Sub-Saharan Africa is the fastest-growing digital payments market in the world, with electronic payment volume expected to grow at a CAGR of approximately 35 per cent from 2018 to 2023 in the region (excluding South Africa). This progress is expected to be driven by the deepening payments infrastructure, population and urbanisation growth, GDP growth above the global average, increased mobile and internet penetration, as well as a supportive regulatory landscape for electronic payments and financial inclusion.

Interswitch’s core market, Nigeria, is the largest economy in Africa with a rapidly growing electronic payments market. Point of sale (“POS”) and ATM transactions per adult grew at a CAGR of 94 per cent and 59 per cent from 2013 to 2018, respectively. In Nigeria, there were only 11 card transactions per adult per annum in 2018 compared to 92 in markets like South Africa, 126 in Brazil and 465 in the UK. Despite this market under-penetration, POS card transactions in Nigeria are expected to grow at a CAGR of 63 per cent between 2018 and 2023.

In addition to its switching and processing services, Interswitch owns Verve, the largest domestic debit card scheme in Africa with more than 19 million cards activated on its network as of May 2019. The business also operates Quickteller, a leading multichannel consumer payments platform, driving financial inclusion across Nigeria with over 270,000 access points, as of 2018, from which consumers can initiate peer-to-peer transfers, bill payments, airtime purchases, and other e-commerce transactions, processing over 42 million transactions monthly as of 31 July 2019 (equivalent to over NGN560 billion (US$1.5 billion) through direct, indirect and Paypoint channels). Interswitch’s unique market capabilities and strong consumer proposition, has enabled it to deliver consecutive years of sustainable profitable growth.

The partnership will create an instant acceptance network across Africa to benefit consumers and merchants and facilitate greater connectivity for communities. Both parties will also retain their respective independent solutions, and Interswitch will retain its scheme neutral strategy.

Mitchell Elegbe, Founder and Chief Executive of Interswitch, said; “Sub-Saharan Africa is the fastest growing payments market in the world, with growth driven by a young and dynamic population, rapidly evolving consumer behaviour, and an increasing desire for payment solutions that can be accepted across the continent and abroad. I am delighted that Interswitch has formed a partnership with Visa, with whom we plan to drive the next phase of transformation in the African payments landscape.”

Andrew Torre, Regional President CEMEA, Visa, said; “Africa is a priority region for us, and we continually seek strategic partnerships with local players to further strengthen our leadership position and enhance the payments ecosystem across the continent. This partnership aligns with our global strategy to work with and invest in innovative partners, and we look forward to working with Interswitch to provide new consumer and merchant experiences and support the rapid growth of digital commerce across Africa.”

Babatunde Soyoye, Helios’s co-founder and Managing Partner, added, “A strategic investment by Visa, the world’s leader in digital payments, into Interswitch is a substantial endorsement of the Company’s expertise in African payments. As an active investor in leading African payments businesses, we see tremendous opportunities to digitise payments across the continent and have worked closely with Interswitch’s management team to build a high quality and scalable platform geared to address some of these opportunities. We look forward to further collaboration with the Company alongside Visa.” 

The transaction is subject to the relevant regulatory approvals and is expected to close by Q1 2020.

FT Partners acted as exclusive strategic and financial advisor to Interswitch on this transaction.

Enquiries

Pretoria, South Africa, November 10, 2019 – The Africa Investment Forum will be short on talk and heavy on deals, the South African Government, the African Development Bank and key partners affirmed at a press conference ahead of the 2019 edition of the event.

Organized by the African Development Bank and its partners, the second edition of the Forum, will take place from place from 11 to13 November 2019 in Johannesburg, South Africa. The multi-stakeholder transactional marketplace is aimed at raising capital, advancing projects to bankable stage and accelerating financial closure of deals.

“Last year we achieved remarkable results with over $ 36 billion of investments interests that were signed or being were closed. We are hoping that this year it is going to be even better,” said Vuyelwa Vumendlini, Deputy Director General of the National Treasury of South Africa.

Sharing similar sentiments, Mduduzi Mbapa, Senior Advisor to the Premier of Gauteng noted that the biggest take away from last year’s edition was the need for greater interconnection on the continent. “In fact, many have been writing about Africa rising.  Through this Forum, we are making sure that our continent does rise and it contributes to the growth of the world,” he said.

Around 2000 delegates are expected to attend the innovative investment marketplace which will bring together heads of state, project sponsors, pension funds, sovereign wealth funds, institutional investors in 60 boardroom sessions to move projects from commitment to action.

“The Africa Investment Forum is designed to be a transformative platform for deals across the continent. The Africa investment forum goes way beyond the three-day event starting Monday. It is continuous process of nurturing deals, projects preparation, deal closure, meeting boardrooms, but most importantly ensuring that those deals actually happen to impact the continent,” said Chinelo Anohu, Head and Senior Director of the Africa Investment Forum.

The Africa Investment Forum partners include Africa 50, Africa Finance Corporation, Africa Export-Import Bank, Development Bank of Southern Africa, European Investment Bank, Islamic Development Bank, Trade and Development Bank.

Victor Oladokun, Director of Communication and External Relations at the Bank, said the Forum’s agenda was simple.

“In a nutshell, the Africa Investment Forum has a very simple agenda that is tilting the flow of capital into Africa at a much greater level that we have experienced up to now.”

*AFDB