A little over a year after it closed a USD 10 Mn Series B round and announced its intention to expand globally, Nigerian fintech startup, Paga, has announced the acquisition of Apposit; a software development company that has operations in Ethiopia though incorporated in the U.S.
By virtue of the development, Paga will kick off operations in Ethiopia in a matter of weeks (just after the startup obtains a local banking license).
Besides that, Paga’s CEO Tayo Oviosu, has also revealed the startup’s plans to expand beyond the shores of Africa — Paga will also launch its payments products in Mexico in 2020 and the acquisition of Apposit appears to be key to that plan.
Paga’s acquisition of Apposit was somewhat catalysed by the fact that both companies have their histories intertwined.
Apposit was founded in 2007 after CEO, Adam Abate, moved back to Ethiopia 17 years ago after studying at Brown University and working in fintech in New York.
Abate linked up with his best friend, Eric Chijioke (a Nigerian), and Simon Solomon and the trio played a part in co-founding Apposit which focuses on building large-scale enterprise software for Africa.
On his part, Oviosu founded Paga in 2009 after returning to Nigeria, having completed his MBA at Stanford University and having put in work at Cisco Systems for a couple of years.
A chance encounter saw Oviosu meet Chijioke after travelling to Ethiopia for a wedding. Chijioke was a brother to Oviosu’s roommate at Stanford who had welcomed Oviosu to crash at his place in Ethiopia.
After the duo (Oviosu and Chijioke) met, it was only natural that a conversation about digital finance innovation in Africa took form. Eventually, Paga struck a partnership with Apposit such that Apposit dedicated an engineering team to build Paga’s payment platform.
Chijioke even became Paga’s CTO (while maintaining his technical engineer role at Apposit). Apposit even invested in Paga at some point.
A decade later and both companies have grown into reputable businesses. Apposit has grown its business into a team of 63 engineers and technicians and has racked up a warm list of client partnerships.
The company was responsible for the digitisation of the Ethiopian Commodities Exchange and has contracted on IT and software solutions with banks, non-profits, and brick and mortar companies.
On its part, Paga has created a multi-channel network to transfer money, pay bills, and buy things digitally. The company has 14 million customers in Nigeria who can transfer funds from one of Paga’s 24,411 agents or through the startup’s mobile apps on iOS or Android, or via USSD in feature phones. There are also remittance partnerships with the likes of Western Union to boot.
According to Oviosu who spoke to TechCrunch, the startup has processed 104 million transactions worth USD 6.6 Bn since inception. Also, Apposit has played a key role in Paga’s payment product development over the years.
With the acquisition, Paga absorbs Apposit’s tech capabilities and team of 63 engineers. The new company will direct its boosted capabilities and its total workforce of 530 to support expansion. Paga Ethiopia, as the new Ethiopian entity will be known, will be headed by Adam Abate.
The acquisition of Apposit is all part of Paga’s plans to drive financial inclusion via digital channels in underserved markets like Ethiopia where mobile money is used by less than 1 percent of its 100 million inhabitants.
Paga aims to shift the financial needle in the country. “The goal is straightforward. We want Ethiopians to use the Paga wallet as their payment account. So it’s about digitizing cash transactions and driving financial services,” said Oviosu.
However, the digital payments startup, which has raised a total of USD 34 Mn in VC, faces stiff competition from relatively better-funded new entrants in the form of OPay and PalmPay which have taken the market back home in Nigeria by storm and are gearing up for a Pan-African onslaught.
Also, as Paga increasingly leans towards a PayPal/AliPay play, the expansion into more emerging markets (with similar financial inclusion challenges) beyond the shores of Africa is likely to see it compete with some of the world’s biggest fintech players.
Featured Image Courtesy: TechCrunch