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Making Waves, slaying giants

Making Waves, slaying giants
By get.Africa Weekly • Issue #86 • View online
Jaam nga fanane,
That’s “good morning” in Wolof
A report on African venture funding in 2019 revealed a shocking stat, only 1% of the money raised in the previous year were channelled to francophone Africa — a mere $11m.
Fast forward to 2021, and Wave, a US-founded, Senegal-based mobile money operator, has raised $200 million in a Series A round of funding — nearly 20x what all the startups in the region raised in the year of that report.
The investment values Wave at $1.7 billion and handed francophone Africa its first unicorn. 
Big sling
The Wave investment is also the largest Series A round in all of Africa.
It’s for a fintech company, no surprises there — since 2019, fintechs have raised nearly half of the startup funding on the continent.
What stood out for me though is that this fintech company was a mobile money operator and that it needed the injection of capital not only to expand but also to continue to take on some pretty serious competition.
With their vast distribution networks and built-in customer bases, Africa’s telcos have had a headstart in mobile money. In Senegal, for instance, Orange Telecom’s Orange Money boasts a user base of 8 million and commands around half of the market share.
But with smartphone and internet penetration continually on the rise, the playing field is increasingly getting levelled and other mobile money providers, namely banks and fintechs, are finding more spaces to compete.
Wave’s success is one of the clearest examples of that space. Employing a strategy of transparent and affordable pricing — a 1% fee for P2P transfers and free withdrawals, deposits and bill payments — the company has stolen a march on smaller players in the market and is now on Orange Money’s heels. 
Not going down without a fight
Recently, in examining the different mobile money eras, I opined that:
“In mobile money 2.0, the dominance of Airtel Money, MoMo, M-PESA and Orange Money will be tested. And the operators without a strategy to face that test will find the new era significantly more challenging than the first.”
Orange Money seems to be employing a two-pronged strategy:
  1. Aboveboard: Matching Wave’s 1% fee proposition. 
  2. Under the table: Wave has accused Orange of applying anti-competitive tactics by restricting some of its transactions.
You see, the infrastructure that Wave has built its online distribution networks on top of is still owned by the telcos, leaving fintech mobile money operators like them vulnerable to their hosts.
That is why many have argued that for the field in mobile money 2.0 to be truly level, regulators have to force telcos and their mobile money units to operate as two independent entities.
Speaking of regulators, Wave has taken the matter up with the Regulatory Authority for Telecommunications and Posts (RATP) in Senegal. Their battle with Orange is shaping up to be that of (innovation + lots of cash) vs. (incumbency + lots of power).

get.Africa is a weekly roundup of the most important stories in African tech. To support, follow us on Twitter, subscribe to our YouTube channel, share this issue or send us an email. You can also check our archives.
Credit: Stillness in motion (via Unsplash)
Credit: Stillness in motion (via Unsplash)
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Overheard on Twitter
Capital allows founders to dream. Competition against telcos and their mobile money is going to be very hard. Wave is already making waves in Senegal, Ivory Coast and soon Uganda, going up against telcos. Capital allows them to play. Great for the ecosystem. Great play.
I'm writing a book on remote work for African businesses
I'm writing a book on remote work for African businesses
+ To make whiteboard animation videos like this for educational or marketing purposes, please send us an email.
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