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Kuda Bank is bleeding

Big Tech This Week
Kuda Bank is bleeding
By Fatu Ogwuche • Issue #53 • View online
Top of mind: Happy Sunday from Lagos!
I’m in Eko, aka Lagos for quick meetings, then off to Dubai on Monday for the Dubai Metaverse Assembly led by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai.
In Metaverse news, Nedbank just bought some virtual land. I have thoughts.
Let’s get to it.
3 big things:
  • Kuda bleeds money
  • Nedbank’s Metaverse strategy
  • Nigeria and EVs

Kuda Bank is bleeding
Cover art by Samuel Jolayemi
Cover art by Samuel Jolayemi
The short: Nigeria’s digital bank Kuda recorded a stunning ₦6 billion loss in 2021.
Heavy funding: Kuda raised a ton of money in the past few years. In 2019, it received a $1.6 million pre-seed investment, followed by a $10 million seed round in December 2020 – the largest seed round ever funded by an African startup at the time, plus a $25 million Series A round in March 2021 and a $55 million Series B round through its London subsidiary in August of the same year. 
In the books: That’s enough money and investment to make anyone think Kuda Bank was doing fine, but a closer look into their finances tells a different story.
According to its financial report, the company’s income climbed by 4,315% in 2021, sweet. But after deducting costs, the business recorded a mindblowing loss of ₦6 billion for the year. 
Yikes: A deeper analysis revealed that the loss was heavily impacted by non-performing loans (NPL), which were at 69% at the end of the 2021 fiscal year. Their expansion plan also hurt their numbers. Kuda’s personnel costs grew by about 500% from ₦215,437,000 in 2020 to ₦1,285,381,188 in 2021.
The large workforce also meant buying equipment which is subject to depreciation, causing their operating cost to increase by 652%.
Free Bank: Being disruptive comes at a cost, and Kuda absorbed it all. Its customer acquisition strategy involved free bank transfers via its app and no card maintenance fees when it began operations, in the spirit of its tagline – “The Bank of the Free.” Was the model disruptive? Yes. Profitable? Debatable.
No free lunch: Kuda Bank now collects fees for transfers and deposits, claiming it’s following the Central Bank of Nigeria’s instructions. Their customers can expect more changes soon.
Final thoughts: A good friend thinks this loss might be strategic – bleed money now to acquire customers through freebies – make money off of acquired customers long-term. Could work. But recent layoffs at the company concern me.
Nedbank breaks into the metaverse
The short: South African Nedbank leapt into the metaverse by purchasing a 12x12 village in Ubuntuland.
Nedbank says:
Creating experiences that go beyond banking has always been a focus for Nedbank. Our entry into the metaverse is not merely about having a presence in this space; it’s about meeting the needs of our clients on the platforms that resonate with them.
Africarare’s metaverse: Ubuntuland is stationed in Africa’s first metaverse called Africarare. Nedbank justifies its purchase with the demand by businesses and people looking to get in on the technology. The bank becomes neighbours with fellow plot owners MTN, who purchased some land in February in a bid to feel more like a tech company. The plot is still under construction.
Final thoughts: I’m bullish on the metaverse, but I still can’t wrap my head around paying real money for virtual land. I might be a convert one day, but today’s not it.
However, I love that big institutions like MTN and Nedbank are giving it the validation it needs, which is critical for adoption. 
Electric Vehicles in Nigeria
The short: Is Nigeria ready for EVs? 
The hypothetical: Nigerian artist, Lojay released a music video for his new song called LEADER! with the white Tesla Model X presented in glorious cinematic lighting in the video. I got curious about what it could mean to own an EV in Nigeria.
Let’s investigate.
Price tag: Most car owners in Nigeria buy pre-owned economy cars, aka Tokunbo – so the $120,000 price tag for a Model X would be way over budget.
Upside: Goodbye to gas money and queues. All you need to do is charge up the car, and you’re on the road. 
In his interview with Nairametrics, Jelani Aliyu, the DG of the National Automotive Design and Development Council (NADDC) – who drives a Hyundai Kona Electric in Abuja, said
When I drive my electric vehicle, I don’t have to make stops to fill up my tank. I only need to charge it when I get home. The car requires less maintenance than petrol-powered cars.
Downside: Compared to African countries like South Africa, Kenya, Uganda, and Morocco, which are increasing the number of EV charging stations, Nigeria is far behind.
You can set up a home charging system, and the power demand of an EV is similar to what you use at home to power an air conditioner or large refrigerator. But with no assurance of constant power supply for the 4 to 6 hours the Model X battery requires for a full charge, it’s not a solid plan.
Final thoughts: Nigeria’s not quite ready yet. But I’m certain it will soon catch the eye of one of the 300 EV charging companies in the world. That coupled with the news about the start of production of EVs in the country. But, for now, we can only dream, Lojay. 
That’s it for the week. I’d love to hear your thoughts about this week’s issue. Please respond to this email or find me on Twitter @fatuogwuche :) 
Ps – do us a solid by sharing the newsletter with your network of tech enthusiasts. Invite them to join the party :)
See you next Sunday!
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Fatu Ogwuche

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