West Africa in Focus /

Flutterwave's exposé allegations are bad news for Africa fintech

  • Flutterwave exposé casts a shadow on Africa's growing fintech industry

  • Nigeria's government seeks more borrowing for subsidies. Higher yields are on the horizon, as already seen in Ghana

  • Ghana, Côte d'Ivoire and Nigeria are looking to form a cocoa cartel to capture value in the cocoa market

Flutterwave's exposé allegations are bad news for Africa fintech
Janet Ogabi
Janet Ogabi

Senior Research Analyst

Tellimer Research
14 April 2022
Published byTellimer Research

An exposé on Africa’s leading unicorn, Flutterwave, took Nigerian Twitter by storm on Tuesday, and it could cast a shadow on Africa fintech. Meanwhile, Nigeria’s leading telco, MTN, is set to join the fintech industry having secured a payment service banking licence, unlocking more value in the company.

Nigeria's government is looking to secure approvals for more borrowing to finance its increasing oil subsidies. This, along with rising inflation, increases the likelihood of higher yields, as has happened in Ghana. We also have details on the cocoa producers seeking to form a cartel, and Nigeria’s latest power outage.

Flutterwave exposé bad for Africa fintech

Flutterwave became Africa’s most valuable unicorn with a US$250mn Series D raise in February. But an exposé on the founders was published on Tuesday and has gone viral on Twitter.

The report contains strong allegations of insider trading and malpractices. Besides possible repercussions from the US SEC for the Delaware-incorporated company, the allegations, if true, could cast a shadow on the growing tech space in Nigeria and across Africa. As we stated in our earlier report, wannabe African unicorns should focus on strategic partners, management expertise and building customer trust.

West Africa's most recent tech funding rounds

Nigeria’s increasing fiscal deficit makes the case for higher yields

Nigeria’s President Buhari sought approval for amendments to the 2022 budget, necessitated by the Russia-Ukraine war. Key modifications to the budget include:

  1. Increasing the provision for petrol subsidies from NGN442bn to NGN4.0tn (2021: NGN1.64tn)

  2. Increasing the crude oil price projection for the year from US$62/bbl to US$73/bbl.

  3. Decreasing estimated oil production for 2022 from 1.88mn bpd to 1.60mn bpd. This is because Nigeria is struggling to meet its OPEC quota.

We have explained how higher oil prices are causing harm to Nigeria's economy despite it being a net oil exporter. These adjustments increase the projected fiscal deficit for 2022 by NGN965.4bn to NGN7.4tn (3.99% of GDP), to be financed through domestic borrowing.

The increased borrowing alongside pent-up inflation buttresses our expectation for higher fixed-income yields, particularly over H2 2022.

Nigeria fiscal deficit to GDP (%)

MTN Nigeria gets final approval for mobile money – let the competition begin!

MTN Nigeria has received final approval from Nigeria's central bank for a payment service bank licence. As we have previously stated, there is deep value beyond Safaricom/M-Pesa in Africa's mobile money services. Although M-Pesa has been the poster child for mobile money on the continent, MTN Group has been building momentum with MoMo (currently operating in 16 countries), which is now a contender for the top position.

Nigeria will give MTN a huge opportunity to outdo other mobile money providers

With a licence to operate in Nigeria – where MTN currently has c68.5mn subscribers and a strong agent network – the telco could become a leader in Africa's mobile money services.

Nigeria to join Ghana and Côte d'Ivoire in cocoa cartel

West African producers are looking to get better value for their cocoa beans by joining forces to form an OPEC-like cartel. Côte d'Ivoire and Ghana, which together produce 60% of global cocoa supply, set up a Living Income Differential (LID) system in 2019 whereby a US$400/tonne LID premium was charged to buyers. But this was short-lived.

Farmers have found it challenging to obtain fair pricing for their produce – they currently only receive 6% of the value of the US$100bn chocolate industry. However, a key difference compared with OPEC is that, unlike crude oil, cocoa rots if it isn't sold quickly, making it a buyer’s market.

West Africa produces over 70%of global cocoa beans supply

Lights out as Nigeria’s grid collapses for fifth time this year

Losing power has become an all too familiar event for Nigerians. This time, the collapse of the national grid was due to vandalised transmission lines, leading to the loss of 400MW of power.

It appears to have been less severe than the previous outages, but is still a stark reminder of Nigeria's struggling energy infrastructure. This leads to woefully inadequate power consumption as shown below.

Electric power consumption (kWh per capita)

The recurring collapse of the national grid, alongside challenges in the supply of fossil fuels used in powering widely-used generators, is bolstering interest in a long-overlooked power source – solar.

Ghana’s government bills are undersubscribed despite higher rates

Ghana’s treasury bills sale was significantly undersubscribed for the second week running despite recent fiscal stability measures and a hike in the policy rate by 250bps to 17%. Investors priced the bills much higher with the 91, 182 and 364-day yields printing 90bps, 47bps and 117bps higher than the previous sale. However, the sale was undersubscribed by 39.5%, albeit this was an improvement from 66.8% at the previous auction.  

Investors appear to be taking their time to be soothed by the recent fiscal and monetary measures taken, especially since the credit rating downgrades earlier in the year. Investors are also seeking a premium to ensure positive real returns as inflation continues to rise (March: 19.4%). See the Ghana yield curve below.

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Nigeria's Inflation – 14 April

Nigeria's March inflation numbers – which are due today – will not be pretty. We expect inflation to increase again as energy costs remain high. Nigeria's inflation rate is likely to remain in double digits for the rest of 2022, driven by rising energy prices, insecurity in the food-producing states and election spending. 

Ghana Q4 2021 GDP – 20 April

Ghana’s economy is expected to grow by 5.8% in Q4 2021, according to consensus. This is a slowdown from 6.6% in the previous quarter, but an improvement from -3.2% in Q4 2020. The IMF estimates growth could print at 4.6% in 2021 and 4.9% in 2022.


Nigeria’s all-share index return turned positive this week, increasing by 1.3% wow and bringing the ytd gain to 11%. More buoyant market sentiment was illustrated by the wide positive market breadth, with 56 gainers and 19 losers.

A driver of this was the many dividend payments made last week, as investors looked to reinvest their payouts and lock-in at relatively low prices. We saw this particularly in banking stocks – Zenith, GTCO and UBA – as well as in TRANSCORP. In addition, foreign investors looking to repartriate their holdings also continue to show interest in dual-listed stocks such as Seplat. Unsurprisingly, there was positive sentiment in MTNN following the securing of the PSB license, as we highlighted above.

The outlook for Nigerian equities is unchanged: FX restrictions will keep Nigeria off-limits for fresh capital from foreign investors, while locals will dominate. In addition, several factors point to increased domestic yields towards H2, which might put a dampener on local participation in equities.

Tellimer's West Africa Equities Coverage

Market indicators

Nigeria's yield curve (%)

Ghana's yield curve (%)