“I’ve been unable to open the One Bank app for over five days,” a Sterling Bank customer who asked not to be named told TechCabal. 

While the bank notified customers about possible service disruptions due to the upgrade, it did not provide specifics. 

“A core banking application is a critical tool for all financial institutions, so an upgrade of this nature is a big deal,” said a software expert at a Nigerian bank who asked not to be named.  

Building these systems is time-consuming, expensive, and risky. A botched system upgrade at Royal Bank of Scotland (RBS) in 2012 left over 6 million customers unable to access their accounts. The bank was later fined £56m by regulators. 

SEABaaS, its new software, was built to Sterling Bank’s specification, three people with knowledge of the matter told TechCabal. A Google search shows that SEABaaS is also a product by Bazara Tech Inc., a Nigerian software company, suggesting that they may have developed the new software.

According to Bazara Tech Inc. ’s website, “SEABaaS is a future-proof, platform-agnostic core banking SaaS solution designed to elevate user experience for enterprise customers. Its architecture features microservices, APIs, hybrid cloud, and multi-cloud. It also spans a unified 360-degree customer view, AI and machine Learning capabilities, and intuitive user interfaces.”

Bazara Tech Inc. did not immediately respond to a request for comments. 

Sterling Bank previously used Temenos T24, a banking software used by Keystone Bank and the Central Bank of Nigeria. Finacle is another popular core banking software option First Bank, Stanbic IBTC, UBA, and FCMB use. 

Changing its banking application could be driven by cost considerations, difficulties in integrating with existing legacy systems, or attempts to avoid vendor lock-in. 

Sterling Bank did not respond to a request for comments. 

Sterling Bank will share details of the new banking software and migration process next week after it solves the current downtime, two people with knowledge of the process said. The bank considers the development of its custom banking software a major move in Nigerian banking, the same people said. 

Before that grand rollout to the press, it will need to pacify customers, many of whom could still not use the One Bank app at the time of this report, so as not to jump ship while it continues its migration. 

When Deepankar Rustagi founded Vconnect in 2010, it was one of Nigeria’s first marketplace products for hiring freelancers and artisans. Despite reaching over 400,000 businesses, an absence of integrated payments in a pre-Flutterwave world caused problems, and Vconnect closed its doors in 2017. 

In 2019, Rustagi took another stab at another marketplace, this time for fast-moving consumer goods. He set out to digitise Nigeria’s traditional supply chain with OmniRetail, a B2B e-commerce startup that connects retailers to manufacturers and distributors. 

OmniRetail is a function of Rustagi’s sales experience in Tolaram, the Indomie noodles maker, and a first-hand understanding of the bumpy road manufacturers must take to reach retailers. Technology is the asphalt that makes the road smoother, Rustagi believes. 

Building this road with technology in Africa’s large informal markets is challenging. Traditional wholesalers, who have deep networks of retailers, and buy enough volumes to receive discounts from manufacturers, are difficult to unseat. 

While one school of thought believes consolidation—such as Wasoko’s recent merger with MaxAB is the answer—Omniretail’s CEO believes in a hybrid approach. He believes the key to success is a mix of consolidation of strong players and technology companies onboarding traditional middlemen. 

OmniRetai’s pitch to retailers is that they will benefit from joining a “network of networks.” This network comprises three products: Mplify, a platform for distributors; Omnibiz, a platform for retailers; and Omnipay, a payment product.

In practice, it looks like a retailer ordering products on Omnibiz, a distributor nearby accepting that order on Mplify, and making payments through Omnipay.

OmniRetail has moved quickly since its launch, raising $3 million in 2021 and reporting revenues of ₦59.3 billion in 2022. By 2024, it topped the Financial Times list of Africa’s fastest-growing companies. 

Rustagi credits this rapid growth to the company’s deep market understanding. Before scaling its model, it used Surulere as a sandbox. 

“We did our small experiment in Surulere to get the right unit economics right, then we started multiplying into other areas, and now into other countries, and we saw the power of scale.” 

The company claims to serve 140,000 retailers, 4,500 distributors, and 135 manufacturers and has a monthly gross merchandise value (GMV) of $160 million.

OmniRetail makes money by getting a margin from a distributor to sell its products faster to retailers. It also makes money from the manufacturer by providing them insights on how their products move within the market. Information like this can improve efficiency by ensuring they produce just what the market needs at any given time.

The revenue lines indicate OmniRetail’s knowledge that merely replacing the distributor is a small-margin game.

“The value chain margin in commerce overall looks like 35%, and there are various layers, including distributor, wholesaler, and retailer. Transportation is happening at each stage, and working capital and loans are required at each stage. If you can play a role in these different layers of efficiency, you can get a large amount.” 

While Rustagi will not be drawn into sharing exact figures, he claims OmniRetail’s net profit margin has increased by 8%. ”Our gross margin has increased by 4%, and our losses have converted into profitability. Today, we are a net profitable company.”

It has found early success in food and beverages where “margins are thin, but profitability is sure.”

“If you look at how much money you spend in a month, a significant portion goes into buying bread, noodles, pasta, garri, and rice. If we can deliver low-margin categories, then tomorrow, when we onboard other categories, we can grow our margins.”

OmniRetail will also grow its business to Francophone Africa and has tapped Steve Dakayi, an ex-Jumia executive, to lead the expansion. In Nigeria, it will expand to 24 cities, almost double the ten it currently operates in.

“We are now considering scaling outside food and beverages into other essential goods. We are not doing electronics; it is still another aspect of retail,” he said. 

Rustagi also discussed the company’s use of Artificial Intelligence, which has captured the imagination of shareholders and business leaders. 

In 2020, Rustagi says OmniRetail built an AI model that gives retailers data on customers’ buying patterns. Retailers use those insights to stock in-demand brands and improve their turnover. 

With increased turnover will come a need for loans, which OmniRetail provides in partnership with the Bank of Industry. 

“You don’t just have to ensure logistics and fulfillment. You have to ensure payments and credit as well.” 

OmniPay is integrated with 14 financial institutions, including Paga, Stanbic IBTC, Access Bank, and Moniepoint. 

“Now, we do ₦20 billion in payments every month. And the way it is growing, I think very soon, we’ll be doing 10s of millions every day.” 

Listening to Rustagi, it’s difficult to believe this sector has generated multiple think pieces questioning its future. It doesn’t feel like irrational optimism; Rustagi genuinely believes OmniRetail has cracked the code. 

“We are a company that can grow 10x in three years.” 

It is the second major fuel increase for a country that tried to end costly fuel subsidies in May 2023 when prices tripled from around ₦200 per litre. A second fuel hike in over a year will raise operating costs for last-mile delivery companies and food delivery businesses. Gig drivers, who have endured a tough year, will be among the worst hit. 

Unlike last-mile and food delivery companies that pass on costs to customers, gig drivers do not set their prices. And cabs, still largely considered a luxury for most Nigerians, may experience softer demand if price increases are passed on to customers. 

Ride-hailing companies like Bolt, Uber, and InDrive, which use algorithms to set prices, are wary of steep price increases in a country where incomes are already under pressure. 

Uber did not immediately respond to a request for comments.

“I now use public transportation and Uber when I am going on long distances and public transportation when I am going on short distances,” a product designer in Lagos told TechCabal. 

As customers adjust, gig drivers who face increasing maintenance costs because of record inflation—headline inflation quickened to 34.19% in June 2024—are also becoming pragmatic. 

“It got to a stage when any ride that comes in for ₦1,500 or ₦2,000, I don’t attend to them because I know what I go through to get fuel,” a gig driver who asked not to be named told TechCabal.

Beyond pragmatism, gig drivers, who often have to meet daily targets to earn bonuses from ride-hailing companies, have asked for fare increases. Warning strikes, dialogues with ride-hailing companies and conversations with the government have been part of their strategies to force fare increases. 

They also want these companies to reduce their commission on driver earnings from around 25% to 10%. It is unclear if that margin works for the companies. A similar situation happened in Kenya, where drivers began to impose their ride prices. 

“They have to adjust their prices because they cannot expect drivers to make money for them and expect them to make low prices. If they don’t increase fares, the drivers will frustrate the platform”, a gig driver told TechCabal. 

The drivers and their partner companies are locked in this delicate balance, with each weakened by Nigeria’s poor macroeconomic condition. While a price increase looks inevitable, it is unlikely to improve the drivers’ fortunes. If anything, the most likely outcome is more friction between gig drivers and ride-hailing companies for the next few months.   

*Additional reporting by Muktar Oladunmade

Based on that audit, investors alleged Adesanmi misrepresented the company’s financial position, mismanaged and misappropriated $1.5 million, said two people who asked not to be named so they could speak freely. The matter was reported to law enforcement in March, those people said, as the company began recovering funds.

Investors were surprised by Spleet’s decision to lay off employees in February 2024, said one person with direct knowledge of the matter. That person suggested investors were misled about Spleet’s finances in monthly status reports.

“We’re letting go of some team members because when prices went up, landlords began renewing at 0.8 to 2.2x last year’s rent,” Adesanmi told TechCabal in February. “Many of our tenants can’t afford that, and the best way to continue as a business is to lay off people.”

Investors weren’t the only ones the layoffs took by surprise. At least three former employees said they were blindsided by the decision because the company had only concluded a new round of hiring in December 2023.

Co-founded in 2018 by Adetola Adesanmi, Spleet provided an alternative to paying rent annually in Lagos. It connected tenants with properties they could rent monthly but soon found that that business model was difficult to scale.

“Growth was slow on the landlords’ side. We just couldn’t add as many landlords as we wanted to on time,” Adesanmi told TechCabal in 2022. It moved from being a marketplace for landlords and tenants to building infrastructure.

According to Crunchbase, the company raised $260,000 in a family and friends round in 2019. It raised $625,000 in a 2021 pre-seed round from investors like MaC Venture, Ajim Capital, and Daba Finance and $2.6 million in a 2022 seed round led by MaC Venture.

MaC Venture did not immediately respond to a request for comments.

Daniela Ajala, who joined the business as business development lead in 2019 before becoming Chief Operating Officer (COO) in 2020 now leads Spleet and has also been named cofounder.

Adesanmi declined to comment on any part of this story, citing confidential legal processes.

Spleet has remained the last one standing in the early class of proptech startups that sprung up from 2015. Pioneered by Fibre.ng, those startups believed they could disrupt the Lagos real estate market by offering monthly payment options.

Their assumptions soon ran into a hard reality: without fixing the massive housing shortage, landlords—and the agents who play a big role in the rental process—have no incentive to change the model. This left businesses at the mercy of landlords, and many of them soon shut down.

Yet, Spleet outlasted the pack by quickly realising that the juice was not in trying to change the hearts and minds of landlords who saw nothing wrong with the status quo. People close to the company believe this leadership change is just a pebble in the road; for Spleet, the road itself extends ceaselessly into the horizon with promise.

*MaC Venture is an investor in Big Cabal Media, TechCabal’s parent company.

At least two top banks did not ask employees to work remotely, telling them to “dress down” and “avoid protest routes.” Three employees at those banks said several teams still chose to work from home, with team leads citing safety concerns.

“All colleagues in non-essential roles are encouraged to prioritise working remotely from the nearest branch or hub,” said an excerpt from an email communication from a top Nigerian bank. “Colleagues in essential roles working on-site are required to maintain situational awareness and regularly engage supervisors or line managers to provide or receive important updates as applicable.”

Nigeria’s commercial banks are some of the country’s most prominent businesses, valued at trillions of naira. In the 2020 protest to end police brutality, the banks were widely criticised for allegedly freezing bank accounts related to protest organisers. When the protests were infiltrated by thugs, some Nigerian banks were affected by the violence. It has influenced how the banks react to unpredictable situations.

The Lagos state government is also choosing caution, telling people not to protest and surrounding many parts of the city with noticeable police presence. Two people reported significant military presence on the third mainland bridge and several other areas in the business district of Victoria Island.

At least four state governments have obtained court orders limiting protesters to certain parts of the city. The legality of those court orders has been questioned.

As Nigeria faces its worst economic crisis in a decade, Nigerians are feeling the pinch, with headline and food inflation at record levels. Economic reforms, including a much-needed removal of fuel subsidies and a relaxed FX policy regime, have not delivered the quick wins the government hoped for.

Hope Payment Service Bank, the self-described “premier digital-first bank in Nigeria,” has begun a legal process to recover ₦6.5 billion fraudulently obtained from its banking platform by unknown persons.

“On about July 15, 2024, there was unauthorised access to the Plaintiff’s banking platform, following which huge sums of money were transferred fraudulently from the plaintiff’s banking platform to certain beneficiaries’ accounts,” said an excerpt from a motion the company filed at a high court in Lagos and seen by TechCabal.

The fraudulently obtained sum was transferred to hundreds of accounts in commercial banks and neobanks. One bank executive said a few of the banks involved had begun to recover some of the money but declined to share exact figures.

Hope PSB declined to comment on any part of this story.

While Hope PSB reported the matter to the police on July 18, it did not disclose the mechanism of the fraud.

However, one person with direct knowledge of the matter told TechCabal the fintech was the target of a cyberattack but did not provide specifics. The company responded to the cyberattack by shutting down its banking infrastructure.

“It is better to have a downtime than to lose money,” that person said.

“This is the first time we have suffered an attack in five years, as we have a robust risk and compliance framework. Customer deposits are safe, and there was no risk transference,” a person close to the company told TechCabal.

As digital payments grow exponentially in Nigeria, bad actors target banks and fintech companies. While these companies invest in security, bad actors are becoming increasingly sophisticated.

Financial institutions lost ₦3.007 billion to fraud in the first quarter of 2024 across 20,638 reported incidents, according to data from the NIBSS fraud industry report.

As the slide continued, street traders retreated in several parts of Lagos following reports that officials of the Economic and Financial Crimes Commission (EFCC) planned to make arrests. Two currency traders in Lagos told TechCabal they received a tip-off Thursday morning of planned raids in several popular street trading markets. 

In February, over 100 FX traders were arrested for street trading. Other arrests were made in March and May 2024.  

“Street trading of foreign currencies is not allowed,” Blaise Ijebor, CBN’s director for risk management, said in May 2024. “We don’t want BDCs under the trees. They should be in offices, you walk into their office, change your currency, and walk away.” 

The Central Bank banned FX street trading in the first quarter of 2024 and tightened rules for Bureau de Change (BDC) licences. 

Under those new rules, tier-one BDCs that operate nationally must meet a capital requirement of 2 billion naira from 35 million naira. The capital requirement for tier two BDCs was raised to ₦500 million. Over 4,000 BDCs will need to reapply for licences and have until Q4 2024 to meet the requirements. 

The Central Bank has also restricted peer-to-peer trading on cryptocurrency apps, with several apps removing the naira-to-USD pair for users. The bank has also asked neobanks, perceived as popular among traders, to report customers who make FX trades. 

While relative stability followed those unorthodox moves, the CBN’s seeming helplessness in the face of unstable prices will be a crucial talking point ahead of a monetary policy meeting next week.  

In a passionate presentation on Monday, Agbaje defended the public offering, arguing that given the massive devaluation of the naira and the government’s stated goal of having a trillion-dollar economy, banks needed to shore up their balance sheets. 

GTCO, which began in 1990 as Guaranty Trust Bank backed by 42 shareholders and $2 million, must make a bull case because of accelerating inflation and historical skepticism of the Nigerian Exchange (NGX). The occasion called for bold predictions.

“There is no Nigerian company that has ever made a billion dollars in profit and we are going to be the first ones to give you that,” said Agbaje.  

Beyond profitability, the financial services giant talked up its ruthless efficiency. “Cost to income ratio is about 16%. That means you’re running your organisation on blood. Cost has always been a source of competitive advantage.”

“Our business model is very simple; we don’t go out and take money just for the sake of it because we want size. We concentrate on efficiency and profitability. Our balance sheet could be three times what it is today but we would be less profitable. The reason we’re profitable is that we’re a low-cost operator. “

What will GTCO use the money for?

₦370 billion of the total capital raised will be used for growth and expansion of the banking business (including recapitalistion) with a plan to “aggressively” roll out more branches in the next year. With 35 million retail customers and 2.9 million SME customers, GTCO believes the Nigerian banking sector is still significantly underserved.

It will also expand to new countries and grow existing subsidiaries like Ghana, Cote d’Ivoire, and Kenya. Despite these plans, the company will take a cautious approach to opening new subsidiaries.

The group also plans to double down on acquisitions in Asset Management and Pension Fund Administrations, having used the strategy to drive growth. Both subsidiaries account for 1.5% of the group’s revenues. 

“We are not thinking of the next couple of years as baby step growth, we are thinking of the next few years as the years where we separate this bank and this organisation forever from everybody; we want a market capitalisation that Nigeria would be proud of,” Agbaje said. 

Having deliberately gone slow in growing its loan books as macroeconomic conditions on the continent worsened, GTCO believes it has the ingredients to convince the worst of skeptics to buy a “slice of the orange.”

OPay contacted customers who received value for sums above ₦500,000 via emails and phone calls and asked them to fund their accounts so the retained funds could be debited immediately after it became aware of the issue. 

The fintech recovered 10% of the total amount from those customers. 

“While some customers responded positively to the Applicant’s request and cooperated with the Applicant in respect of the recovery of the Erroneosly Retained Credits, some customers have refused, failed, and/or neglected to fund their accounts to enable the Applicant to deduct the value of the Erroneously Retained Credits from their respective accounts,” the company said in a court filing. 

The fintech asked the court to freeze the customer accounts and filed an affidavit of urgency alongside its application. The orders were granted by the court on June 28, 2024, and OPay will now begin asking thirty banks to restrict the affected customer accounts. 

OPay declined to respond to comments. 

OPay customers received value for pending transactions

Financial institutions use bank response codes to categorise successful, pending, or failed transactions. For OPay, ‘RC 09’ is the code for a pending transaction for which the company does not debit its customer. However, from December 10, several cardholders made payments for pending transactions without getting debited. 

“The Switching Company (Interswitch) that facilitated the said card transactions between the Applicant and its cardholders during this period inadvertently settled all the RC 09 transactions as successful,” OPay said in its filing. 

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Yet for such a crucial segment, there are significant data gaps. How much revenue do these MSMEs make? How much of that translates into profits? What is the likelihood that these businesses will survive past the five-year mark? How much do they pay in taxes and levies? 

Here are two interesting answers: Only 1.3% of small businesses earn more than ₦2.5m monthly in profits while 79% earn less than ₦250,000 monthly profits.

Those data points are from Moniepoint’s Informal Economy Report 2024, launched in Abuja on Friday in partnership with the Small and Medium Enterprise Development Agency (SMEDAN) and the Ministry of Trade and Investment.

“By quantifying the informal economy’s impacts and nuances, we can better shape policies and programs to empower and uplift the entrepreneurs driving it forward,” said Tosin Eniolorunda, Moniepoint’s CEO. 

With more than 5 billion transactions processed in 2023, Moniepoint is perfectly placed to collect data and map the trends in Nigeria’s informal economy, having built its banking businesses through strong distribution to millions of Nigerians in the informal sector.

The fintech spoke to over 2 million businesses that signed up on its platform between 2019 and 2024 and excluded data from the thousands of agents scattered over the country. 

Follow the money

“By transaction value in Naira, retail & general trade alongside Food & Drinks, accounted for over half of Nigeria’s informal economy at 53.6%,” the report said.

Most business owners spend almost half their income on daily family expenses (48%). Feeding takes another 20.1%, while reinvesting in the businesses is 29.7%.  

The businesses in this category are neighborhood shops, restaurants, supermarkets, and others that sell “daily necessities,” explaining the influx of funding into B2B startups that are solving the distribution challenges these businesses face.

Nigeria’s informal economy: Young businesses led by young people

Over half (58%) of informal sector workers are under 34 years of age, and the businesses they work for are equally young. Eight of ten informal businesses are less than five years old, suggesting a high failure rate. It shows a gap in tools and support that keep businesses alive.

It also suggests a gap in business skills because unemployment is the top reason for most people to start a business (51.6%) while others start a business because their jobs don’t pay well (35.9%). 

The five-year mark is also important because it is typically at this point owners set up second businesses. Longevity is a predictive measure for business expansion, the report showed.