Those refunds were possible because the founders, Michael Okoh and Chike Ononye, decided there was no scale-up route for the product and chose to move on. 

After announcing the shutdown in April 2024, at least two angel investors wanted answers on how much money the startup had in the bank. They wanted to know how Thepeer spent the $2.1 million it raised in a June 2022 seed round that valued the company at $5 million. One publication said the company had only $450,000 in the bank when it shutdown.

However, the founders told early investors that despite the July 2022 funding announcement, the company had only received $1.35 million in that round. Two publications reported in April that one investor asked to audit the company’s accounts before the shutdown was finalised. 

A pre-seed investor who asked not to be named told TechCabal that no audit happened. 

Other investors were happy to treat any possible discrepancy in the accounts as a rounding error and simply wanted to move on from the matter, one person with knowledge of the talks said. Venture capital firms, which typically loathe public involvement in spats with portfolio companies, often choose the path of least resistance in these matters. 

Thepeer did not respond to a request for comments.

The return of capital comes four months after the company’s surprise shutdown, despite having twenty months of runway left. That runway could have given the founders more time to experiment and find product market fit, a common occurrence among struggling startups. 

Startups like Target Global-backed Kippa pivoted from fintech to edtech after shutting its agent banking business. 

“Despite what seemed like a significant runway, we forecasted that we would not be able to onboard and drive integration of our services with customers at a fast enough rate to achieve scale and sufficient revenue,” Ononye told TechCabal in April. 

Thepeer’s shutdown was not for lack of effort. The startup explored a buyout by larger companies to boost returns but could not align investor interests with those of the larger firms, Ononye said. 

The startup also considered pivoting to at least four verticals, including fraud detection, the creator economy, and financial reporting but decided against using investor funds for the pivot, one person familiar with direct knowledge told TechCabal. 

Thepeer’s lack of market fit was a “chicken and egg” problem. Its solution, which enabled customers to move money across different business wallets, required many businesses to integrate with its payment platform to succeed.

It struggled to convince businesses, spoilt with options like Paystack and Flutterwave, to integrate its payment gateway. When it managed to onboard businesses, they were hardly active. The startup onboarded 82 businesses in its three-year lifetime but only a quarter were active, highlighting its struggle with adoption. 

With limited businesses on its platform, it failed to achieve the transaction scale needed for profitability. The startup struggled to generate meaningful revenue, making less than $1,000 from the over $500,000 it processed in the first three quarters of 2023. 

The unlicensed startup also struggled with regulatory compliance when it tried to onboard enterprise businesses like banks, which could have provided the scale needed for survival. “Compliance was tricky… and their well-regulated fintech partners didn’t help them consistently,” one person familiar with the matter told TechCabal. 

“We are open to getting acquired by a licensed business that will allow us fully execute and accelerate onboarding of enterprise businesses including banks,” read Thepeer documents from October 2023 seen by TechCabal. 

“When you are selling a niche payment method in the market, it is always going to be an uphill battle,” Ononye told TechCabal. 

Thepeer’s payment gateway, which required customers to hold deposits across multiple wallets, competed with popular payment methods like cards, transfers, and cash, which dominate Nigeria’s payments market.  

“There’s a huge education gap in what they are doing, and they just weren’t prepared for that,” one person close to the business told TechCabal. 

Thepeer needed to change customer behaviour and drive wallet-to-wallet transactions before achieving market fit, a costly venture the business could not afford. Fintechs like OPay and Moniepoint succeeded in changing behaviour only after significant investment. 

“We were pioneering a completely new method of payment that did not exist in the market before, and from the get-go, it was a bet on whether it was going to work out or not. Building the tech was not going to be enough. (We) required more time and capital than we had anticipated,” Ononye said. 

Another stressor the business had was the time required to integrate with each business as the startup, which employed 10 people, struggled to onboard businesses quickly enough. 

“Integrations required hands-on engineering from us for each wallet, one after the other, as no two businesses functioned the same way. We also needed to ensure that the experience for customers of the businesses was as consistent as possible,” Ononye said.

“We are currently conducting a comprehensive review of the recent increase in fuel prices and considering various initiatives to minimize its impact on driver earnings. Our aim is that Uber remains the app of choice for drivers while ensuring an affordable service for riders.” Tope Akinwumi, the Nigerian country manager for Uber, told TechCabal. 

Drivers are already expecting ride-hailing platforms like Uber and Bolt that use algorithms to set prices to increase fares following the latest increase in fuel prices. While ride-hailing companies decide on raising fares, drivers are turning to Indrive, a ride-hailing platform that uses a bidding system that allows drivers and riders to set fares. 

Bolt did not respond to a request for comments.

In the meantime, in Lagos, Nigeria’s economic capital, ride-hailing customers are facing a near-permanent surge in fares as fewer drivers operate on the road. Ride-hailing platforms typically use surge pricing to align ride fares with the often delicate balance of driver availability and rider demand. 

Drivers told TechCabal they are waiting for ride-hailing companies to react to the new pump price before they hit the streets. “If I buy fuel for ₦1,200 or ₦1,500, I will probably park my car at home for like three days and wait to see what Bolt and Uber will do about the new fuel price,” a gig driver told TechCabal.  

When demand exceeds supply—such as during high-demand periods or when there are insufficient drivers on the road—ride-hailing platforms apply surge pricing to incentivise drivers to get on the road. 

In May, Bolt introduced a flexible pricing system, similar to Indrive’s system, allowing passengers to offer higher fares to drivers to increase their chances of getting rides during periods of high driver demand.

“I have been in the queue all day and I still don’t have fuel by 2 p.m., that automatically means that I can not work today,” a gig driver told TechCabal on Tuesday. Long queues at filling stations have led to traffic in major areas of Lagos, which drivers say may have led to the surge. 

Drivers also told TechCabal that they have been in fuel queues since 4 a.m. but have yet to buy fuel because filling stations have not started selling today, leading to a scarcity of drivers working. 

“There is no filling station selling fuel on the island,” a driver who asked not to be named told TechCabal. He added that he had been searching for fuel for hours but is reluctant to buy at the black market rate, which hovers above ₦1,000 per litre.

Ride-hailing platforms are in an unenviable position following Tuesday’s fuel price hike as they need to appease customers—who are spoilt with options and dealing with record inflation—and drivers—who constantly demand lower commissions and increased fares. 

It was always going to happen. When Nigeria’s Central Bank announced in March 2024 that it was raising the capital requirement for commercial banks by as much as tenfold, no one was surprised. The absence of surprise did not make the task less daunting—Nigeria’s commercial banks have two years to raise ₦4 trillion ($2.9 billion). 

For many of the banks, it’s not their first rodeo. In 2004, the minimum capital requirement was increased to ₦25 billion, leading to several mergers and acquisitions. 

However, the central bank’s decision to exclude retained earnings—including FX gains—makes the capital raising in 2024 efforts more daunting. That clause has forced banks to rely on selling shares to retail and private investors. 

While it makes for a challenging timeline for banks, it’s a significant revenue opportunity for investment bankers, accountants, and lawyers. 

Investment bankers, accountants, and lawyers could earn as much as ₦113.2 billion ($82.07 million) in fees, according to capped fees stipulated in the Investment and Securities Act. Nigeria’s Securities and Exchange Commission (SEC) has a 2.83% cap on the fees these professionals can charge on equity raises. 

“Most of the time, we don’t charge the maximum because of competition. There is always someone willing to take a lower fee. Also, if the transaction is quite significant in value or in size, it can still amount to a large amount,” an investment banker who asked not to be named so he could speak freely told TechCabal. 

Some issuing houses— which help banks select the most suitable approach for their capital raise and oversee the process—charge under 1% for capital raises, three people with knowledge of the matter said, citing competition. Fidelity Bank, for instance, listed nine issuing houses in its rights circular. 

Lawyers also face the same problem. Competition has led to “awful” fees, a lawyer at a Lagos-based law firm helping more than five banks raise capital told TechCabal. According to the SEC’s rules, legal fees are capped at ₦10 million for lawyers advising on the rights issue. 

However, most law firms often make less than the capped fees. “There’s a lot of negotiation involved and if you refuse the bank’s fees, they just take their business elsewhere,” the lawyer added. 

Lawyers conduct due diligence on the issuer to identify potential risks, and draft and review key documents such as the prospectus, placement agreements, and subscription agreements. They ensure compliance with relevant laws and that all material information about the issuer and the offer is accurately disclosed, protecting against legal claims and helping investors make informed decisions.

Other professionals like auditors and accountants also make money from a rights offer but their fees are capped at ₦4 million and ₦7.5 million, respectively, according to the SEC’s rules.

The SEC and the Nigerian Exchange Limited (NGX) also make money from each public raise through fees. The SEC’s fees are capped at ₦500,000 for the first ₦1 billion and 0.15% on the balance above ₦1 billion. The stock exchange can make a maximum of ₦ 400 million. 

The bank recapitalisation will strengthen the banking sector and help push Nigeria closer towards the government’s goal of becoming a $1 trillion economy by 2030.

While it might benefit Nigeria in the long run, for now, the bank’s supporting cast is benefiting from the new capital raise. 

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“Eneke the bird says that since men have learned to shoot without missing, he has learned to fly without perching,” Nigerian literary giant Chinua Achebe writes in “Things Fall Apart.”

He might have as well been talking about how financial institutions must adapt as bad actors continue to follow the money. In the first quarter of 2024, financial institutions reported 11,472 fraud cases in Nigeria. 

When fraud occurs, banks and fintechs help their customers recover funds by working with the police and the courts. Court orders help banks and fintechs to compel the receiving banks to freeze accounts or reverse questionable transactions. 

Commercial banks receive those refunds through bank drafts, while fintechs use partner banks. The funds are held in fraud recovery accounts before they are returned to customers. However, these recovery accounts can also be hacked. 

In May 2023, one African fintech lost ₦146,188,208 ($317,200) it helped customers recover from fraudsters. 

The fintech, which held the recovered funds with a tier-2 Nigerian commercial bank, said the account was “fraudulently hacked into,” according to court documents. The stolen funds were sent to accounts in 26 banks and fintechs, a standard method used by fraudsters to widen the trail and complicate recovery efforts. 

“The petitioner as (a) fraud recovery agent is helpless as these monies are some of the monies recovered on behalf of clients, which they supposed to be remitted by the petitioner to the owners,” said an excerpt of a court document seen by TechCabal. 

While the fintech has begun the recovery process, customers are growing impatient. “The [fintech’s] clients are disturbing the petitioner to collect their money recovered by the petitioner on their behalf and the petitioner cannot explain to their clients what exactly happened to their money.” 

The fintech has asked the court to compel the 26 banks and fintechs to share their customers’ KYC records and block their accounts from making transactions, highlighting the importance of KYC records. The fintech has also asked the court to issue arrest warrants for three suspected perpetrators.  

Most of the affected senior employees have spent a decade at IHS Towers and received “significant” severance packages, the same person said. “[The company said] it was not because of underperformance but because of the economy,” they added. 

IHS Towers did not immediately respond to requests for comments.

Since 2022, IHS Towers has faced pressure from investors over its poor financial performance. The company lost $409 million in the fourth quarter of 2023 after a currency devaluation in Nigeria shrunk revenues and caused FX losses from USD loans.

The company, which currently employs 1,600 people, reported a $1.9 billion loss in 2023, a 304% increase from the previous year’s losses. Its market capitalisation is $1.3 billion, a $6 billion decline since 2021.

While its share price has slightly rebounded in August to $3.56 after trading at $2.98 in July, it is still a far cry from the highs of 2021, when it sold for $21.

IHS Towers operates over 40,000 towers in Africa, roughly 25% of the continent’s entire tower infrastructure, which it leases to telcos like MTN and Airtel. This service is crucial for Africa’s digital economy plans, as towers provide the backbone for internet connectivity. 

However, rising fuel prices, maintenance costs, inflation, and FX volatility in Nigeria—which accounts for over half of IHS’s sales and revenue—have threatened the business. 

In the first quarter of 2024, the business spent $88.8 million on power, its largest operating cost.

“The company used more than $1.5 billion in cash last year for investing activities, but the line items on the company’s published statement of cash flows for such investing activities are not explained in any meaningful way,” a shareholder said in a June 2023 letter. 

Gimba Mohammed, the director of government and external relations at IHS Towers, said at a conference in August that it cost the business more than ₦14 billion to fix fibre cuts between 2022 and 2023. 

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“We did [private equity] for 10 years in Ethiopia, and it didn’t work. We have been through so many painful learnings and had to pivot and change up our investment model,” Matt Davis, Renew Capital’s CEO, told TechCabal.

The firm will invest between $50,000 and $500,000 in more than 40 asset-light and tech-enabled businesses within a year. It has opened its West African portfolio by investing in Affinity, a Ghanaian digital bank.

“We believe that the [Affinity] deal is going to open the gateway for us in West Africa,” said Chudi Ofili, Renew’s investment manager for West Africa.

Renew Capital runs two funds: a $6 million angel syndicate and a $15 million follow-on fund. The  $6 million fund powers an accelerator program that offers startup executives management training, digital marketing, and fundraising support. 

Startups that hit the metrics Renew Capital sets during the accelerator program will get up to $4 million in follow-on funding. 

“We invest $150,000 on average into a high volume [of startups],” Davis said. The firm will accept around 50 startups into the accelerator, with only 20% receiving the average follow-on check of $1.5 million. 

Besides investing in startups, it partners with foreign governments like Canada and the United States to promote investing in Africa. “We have this passion to change the way the world views Africa from a place of giving to a place of investing,” Davis said. As part of this partnership, Renew Capital invites foreigners to Africa as it pitches investing on the continent to them. 

“They have no clue what’s going on here, so we bring them here and they spend a week. It helps us because we need people to think differently (about investing in Africa),” Davis said. 

Matt and his wife, Laura Davis, the managing partner, run the firm together. “It’s our child,” Matt said about Renew. While acknowledging the risks of a couple running an investment firm, he told TechCabal that working with his wife has been “amazing.”

“Getting married [to Laura] is the best decision I’ve ever made. She has a unique set of skills that are very different from mine. I design and come up with the concepts and she executes them and turns them into results,” he said. 

TechCabal spoke to Matt Davis for this interview in which he shared Renew Capital’s investment thesis and why they are backing African startups. 

Most of your portfolio companies are based in East and Southern Africa. Why the shift to West Africa, especially Nigeria?

Davis: Our vision is to be in 27 countries and we are currently in 14 countries.  You have to be extremely intentional about country selection because each country has its own unique risk profile and opportunities. We spend a lot of time evaluating countries. As far back as 18 years ago, we knew we wanted to invest in Nigeria but we had to be ready. 

We had to learn and make our mistakes because when we go to Nigeria,  we would have to be on our A game. I didn’t feel we were even close till now. Nigeria is going to become one of the major global powerhouses, both from an investing and economic perspective.

Right now, I think the country’s leadership is trying a big shift and it is starting to make progress, although it’s painful because change is painful. The indicators we track allow us to monitor, on a fairly regular basis, the movements that are happening at the country level. Those indicators show that it’s a good time to start investing in Nigeria despite the current state of the currency and the macroeconomic environment. 

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Nigeria is going through one of the worst economic conditions in thirty years. How are you considering that when you are investing? 

Davis: I think it’s cyclical. I know it’s painful for the country to be going through this but I think it’s growing pains. In a way, it is a fortunate pain because the country has to rebuild fundamentals. 

Just like a business, Nigeria got overlevered by borrowing and spending a lot and now the revenue needs to catch up. During the global financial crisis when Spain, Portugal and Italy had to go through a painful period and now they are doing alright. 

Things will improve, judging by the sheer size of Africa and the size of Nigeria within that ecosystem. I won’t say you’re too big to fail, but the will and the strength of the population will make the gears start to click. It is going to take some time, but the country will get there. 

What is your investment thesis?

Davis: Finding amazing founders comes first. We think the future is Africa, but the people who are going to build that future are trustworthy,  focused, and very disciplined founders. We look for them in any market that we enter. We are sector-agnostic. 

We go after tech-enabled, highly scalable companies that are asset-light and disrupting industries by eliminating massive friction that has prevented those industries from getting to the enormous population that needs to be served. It all comes down to finding amazing founders. 

What do you think is the difference between the East and West African tech ecosystems? 

Davis: From what I see in our pipeline, I was surprised to realise that the Nigerian tech ecosystem is more mature and humble with valuations than I was expecting.  In East Africa, now, I feel like there’s a little bit too much hype and startup euphoria that needs to be hardened. 

Founders in West Africa understand that the trust band is low for startups generally in Africa. We all have to prove ourselves. In East Africa, you hear founders wanting a $10 million pre-seed valuation, which is ridiculous.  

You have been investing in Africa for a long time. What would you say are your biggest lessons? 

Davis: My biggest lesson learnt is that we are always learning. As soon as I think I’m smarter than the market, that’s when I fail. You have to constantly be in learning mode and walk into every situation with your eyes wide open. I always say to trust nothing but try everything. You have to just really be committed and you really have to be here. You need a great team and you need people you trust. 

What are your red flags? 

Davis: Transparency is the biggest one for us. I made some big mistakes early on so when founders are cagey and don’t share their pain problems quickly, we are worried that something else is going on and there’s a bigger risk happening. 

We have three criteria: coachability, scalability and trustworthiness. We have deeper levels of analysis that we screen founders on but it fails broadly under these three. The number one red flag is lack of integrity and we will walk away from the deal pretty quick if we sense that they are not trustworthy. 

Do you invest in startups without product market fit? 

Davis: Although it is very rare, we are willing to if the founder is very strong. We like to see that there’s market validation in the form of revenue but we will consider if it’s an exceptional team. Even if they don’t have product market fit, they should have a minimum viable product and show early indicators of great traction. 

They have to have some key performance indicator that shows that there is market interest in what they’ve built and revenue is wonderful. 

What does your investment process look like? 

Davis: We prefer convertible notes for $50,000 to $500,000. We write a fairly high number of those checks and for me, that’s better than any due diligence in the world. We put real money into a company, work with them and see how they perform. Then we get ready to invest in them again and this time we bring others around. We help them get through that funding raise as quickly as possible.

How do you pick the startups you invest in? 

Davis: We have a structured process. The first phase is an exercise where we want to see how the founders perform. A lot of companies might feel like they are beyond the stage of having to go through this but that’s not what we’re looking for.

Then our investment managers have their screening process and we let them focus on screening deals, then they present that to our investment committee. At this point, we start to engage our global network of investors. We often have deal calls where our investors can join in.

Finally, we sit down with the founders and talk terms and if everything goes well, they go through due diligence, which is heavy on the legal side. We are trying to make sure they are ready to get a bigger check from us in the future.

After these Nigerian successes, it’s turning its attention outside Nigeria and aiming to become more pan-African. Since Kola Aina founded Ventures Platform in 2016, it has only invested in 12 non-Nigerian startups. 

“Even though we started from Nigeria and most of our investments are based in Nigeria, we always set out to be a pan-African investor,” said Dotun Olowoporoku, the managing partner of Ventures Platform.

The firm’s $46 million fund, which was launched in 2021, typically invests $250,000 to $1 million per startup. As it deepens its roots outside Nigeria, it will only invest in “key strategic markets” with a stable political environment, homegrown technology talent, and angel investors. Its most recent investments outside Nigeria have been in the Francophone West Africa region, which satisfies these benchmarks. 

“Startups only breed where the ecosystem has been put together,” said Olowoporoku. In 2023, the sector-agnostic fund invested in twelve startups, making it one of the most active investors on the continent in a year when funding declined 36% year-on-year. 

Besides its vast portfolio, Ventures Platform made its name by being a hands-on investor for its startups. In November 2022, the firm appointed Damilola Teidi to lead a team solely focused on supporting its portfolio companies. 

“As a founder whose aspiration is to build a business that generates a ton of free cash flow, there is no better fund. In my lowest moment as a founder, when we went down to zero revenue, Ventures Platform was there. When I needed to recruit talent, Kola Aina had time on his calendar to speak to an engineer,” Njavwa Mutambo, the CEO of Caantin, a non-Nigerian Ventures Platform portfolio startup, told TechCabal. 

Ventures Platform: Lake versus Ocean Strategy

VC investing is like fishing; you cast your net into a vast ocean and hope for the best. While that’s a simple analogy, VCs and fishermen head to sea every time to take their chances based on robust analysis and hope for outsized returns.

For Ventures Platform, fishing either happens in lakes or oceans. The Big 4 (Nigeria, Kenya, Egypt, and South Africa) are seen as oceans where multiple “sharks” can exist in the same market and still thrive, while smaller ecosystems are seen as lakes where there is mostly only one “shark.” 

Francophone West Africa ties into the firm’s lake strategy, as the firm sees the region as pockets of lakes. The firm will invest in startups in the region as long as they can “dominate the market quickly,” own up to 80% of the market share, and be able to expand into neighbouring countries.

“It’s easy for companies to start in Senegal, expand to Cote d’Ivoire and Cameroon, and become huge businesses without coming to Nigeria,” Olowoporoku said. 

However, acquiring a significant market share can be expensive and capital-intensive. In recent months, the African tech ecosystem has adopted a more conservative approach to spending after the end of the zero-interest rate policy, which reduced startup funding. 

But Olowoporoku told TechCabal that his firm would still back a startup in the region that is raising money to acquire customers and can retain them. The firm recently invested in Tanel, a health insurance company, and its fourth investment in Senegal. This has not previously been reported.

Ventures Platform is also looking to invest in Francophone West Africa, where startups have an easier path to exit due to French companies’ interest in entering the region through acquisitions, according to Olowoporoku. “We want to go to that market and look for companies that other people might have ignored because they look at that market from a narrow point of view,” he said.  

Ventures Platform’s GRMTT metrics

Venture capital firms often have a thesis for building their portfolios, and Ventures Platform is no different. The firm has five prerequisites for investing in a startup.

The firm considers a startup’s growth rate, which must be “incredible” before it cuts a cheque. “Venture investors invest in high-growth companies,” Olowoporoku said. 

Ventures Platform also considers the startup’s revenue margin before investing, which helps it determine valuation, and the diversity of the revenue source, which can help startups adapt to exchange rate volatility. “Revenue is important because it’s a reflection of whether they’re creating value and whether someone is willing to pay for that value,” Olowoporoku said. 

The firm also considers the current reality of the market and the potential of the market in which a startup operates before investing. “A fast-growing business in a capped market is less valuable than a slowly growing business in an uncapped market,” Olowoporoku said.

Editor’s Note: An earlier version of this article mentioned that Ventures Platform only invests in startups with revenue. This has been corrected to reflect that Ventures Platforms invests in pre-revenue startups.

“The banks do not give out more than ₦100,000 cash now if you have a savings account, so we meet supermarkets, wholesalers, and filling stations for cash. It is a mutual agreement; they need to lodge cash, and we need cash for our business, so I don’t charge them,” a POS agent in Ketu, Lagos, told TechCabal.

Banking agents began buying cash from these businesses in February 2023, when the Central Bank’s hasty currency change created a massive cash squeeze. They paid ₦5,000 for every ₦100,000 to fuel stations and other cash-heavy businesses and transferred the cost to customers who were paying between ₦500 and ₦700 for a ₦5,000 withdrawal.  

A court ruling in March 2023 compelled the CBN to modify timelines for the currency change, solving the cash crisis. While that stopped agents from buying cash, they still source money from these businesses in exchange for waiving deposits. 

It’s a win-win situation that works but creates an unintended consequence: a cash shortage at commercial banks. 

A central bank policy capping weekly over-the-counter withdrawals at ₦500,000 also contributes to the cash shortage. The regulator has tried to wean Nigerians off their cash dependence and has cut cash disbursements to bank branches. The resulting cash scarcity at the banks drives businesses to the agents, who rarely run out of cash.

Bank branches, which rely on cash deposits from the central bank and customers, have had to cap over-the-counter withdrawals as cash-heavy businesses take their deposits to agents instead of banking halls, further driving Nigerians to POS agents.

“Even though the central bank has a ₦500,000 limit, we cannot give out more than  ₦100,000 for each customer. Sometimes we open with only ₦600,000 or ₦1,000,000, and we have to make sure people get cash when they come to the banks, so we ration it,” a banker told TechCabal. They added that the central bank delivered cash to their Ojodu branch only twice the previous week.

With withdrawal limits at bank branches and ATMs, customers now visit bank branches for customer care issues, as foot traffic at branches has “dipped,” a banker at Wema Bank told TechCabal. 

“We have reduced the stress of going to the banks,” said Raheem. There are 120 POS terminals for every ATM in Nigeria, as there are less than 23,000 ATMs in the country and 2.7 million active POS terminals.

When he secures cash for his stalls, Raheem, like most agents, provides Cash-In Cash-Out services for many traders, charging ₦100 on withdrawals under ₦5,000 with fees of up to ₦5,000 depending on the transaction size. Agents say they include the cost of rent, local government taxes, data, transport and the risk of holding cash in those fees.

Daily profits vary and can be as low as ₦1,000. At least five agents in Mile 12 told TechCabal they earn enough to sustain their families daily. Some agents can make as much as ₦25,000 daily, more than a third of Nigeria’s newly approved monthly minimum wage. 

Nigeria has approximately 1.5 million banking agents; low entry barriers and subsidised POS terminals help drive agency banking’s popularity. Their ubiquity has also helped drive the growth of digital payments in Nigeria, as the value of cash transactions dropped by 36% from 2019 to 2023. 

The FCCPC has now shared a 116-page document detailing the charges against WhatsApp and Meta, the company’s rebuttals, and the investigative process. The core of the investigation is an updated WhatsApp privacy policy sent to users in May 2021. 

The FCCPC argues that WhatsApp did not allow users to opt out of the policy and presented them with a different privacy policy from European users. Meta deleted previous versions of the policy and attempted to mislead in its submission, the commission claimed,

Crucially, an early version of the policy, which was later deleted, told users they could either accept or be kicked off the social media platform, FCCPC showed. The commission found WhatsApp’s “my way or the highway” stance anti-competitive. 

While the commission cited WhatsApp’s market dominance—65% of Nigerian internet users are on WhatsApp, while 28% use Facebook, per an independent survey cited—it argued that even if it did not have such market power, WhatsApp’s actions violated customer rights. 

Why the 2021 privacy policy is a big deal

The 2021 update was sent to users through frequent pop-ups asking them to accept the privacy policy. While there was an arrow that allowed users to dismiss the pop-up, they could not opt out or reject the update. 

If users refused to update their apps, the pop-ups became more frequent, and many users lost the ability to read or respond to chats. 

The 2021 update, which told users it would share their data with third parties and Meta for marketing and profiling purposes, had important implications. One key change was that the 2021 privacy policy did not require the third parties it shared user data with to seek permission from the users.  

In Whatsapp’s 2019 and 2020 privacy policies, users were told their information would be shared with  third-party providers who were required to “use your information in accordance  with our instructions and terms or with  express permission from you.”

FCCPC says Meta treated Nigerians differently from Europeans

“[The] Privacy Policy essentially compelled [users] to waive their right to self-determination and control processing and use of their personal data, and object to the sharing of such data with third parties, including Facebook companies,” the commission said in its report. 

The commission found this particularly worrying because of the amount of data collected by the Meta-owned messaging app. “WhatsApp collects 44 metadata points, Signal collects 4, and Telegram collects 4.”

“Remarkably, Meta parties cannot establish there are any unique, or key features of the service that materially differentiates the services to a point where it is impracticable to provide the service offered without the collection of such additional data,” the FCCPC concludes. 

While Nigeria’s data protection laws offer a similar level of data protection as European laws, Meta failed to offer users in both jurisdictions the same amount of privacy protection or information on the metadata that they requested, the use of the metadata, and how to use WhatsApp without accepting the policy. An excerpt from the privacy policy shows that consenting users agreed for their data to be used for profiling and marketing. 

The commission found that in the European privacy policy, the word ‘consent’ is mentioned at least ten times, but only once in the Nigerian version. European users also had an entire section dedicated to their rights and consents, while Nigerian users did not have similar privileges. 

In April 2024, Unified Payments was granted a Payment Terminal Service Aggregator licence (PTSA), only the second to be issued by Nigeria’s Central Bank.

“There was a single point of failure in NIBSS, the holder of the first licence, so there was a need to bring in another player,” a policy expert told TechCabal. 

PTSA holders must have a processing and switching licence, an average uptime of 99% in 2023, and ₦1 billion capital requirement. “We have been consistent in leading innovations and providing leadership in the industry, and we not only met but also surpassed all the criteria required by the regulator,” Apochi said about the application process.

The licence allows Unified Payments to maintain a database of payment terminals and record Point-of-Sale (POS) transactions in Nigeria’s agency banking sector. The fintech began recording payments in June, almost thirteen years after NIBSS started, and is taking a collaborative approach to earning market share.

“As a processor or switch, you are competing with others, but as a payment terminal service aggregator, from our point of view, we are not competing; we are collaborating with everyone in the industry without any form of discrimination to offer services and for the regulators to have oversight over what is going on,” Apochi said. 

Unified Payments will also look to partner with NIBSS, its competitor, as Nigeria’s agent banking sector grows exponentially. In March 2024, data from NIBSS showed that 2.7 million POS devices were in circulation—a 48% increase from 2023. 

“Upon getting our license, we had a meeting at the highest level between our company and NIBSS to understand [each other] and share points and ideas of how we can work together to ensure that there is service availability because that is what is most important to every operator and the Central Bank of Nigeria is service availability,” Apochi said in his Victoria Island office. 

Working with Fintechs

The PTSA license will require Unified Payments to work with leading companies in the agency banking sector, such as Moniepoint, Opay, and Palmpay. These companies have been in regulatory waters in recent months and in April, the central bank directed five Nigerian fintechs to pause onboarding new customers. 

“The central bank’s first focus is to grow payment transactions in Nigeria, but in conformity with regulations and guidelines issued by the central bank,” Apochi told TechCabal.

That ban lasted six weeks and was lifted after fintechs committed to a list of conditions set by the central bank. For Apochi, Unified Payments will help fintechs “achieve their business goals without running afoul of” regulatory requirements. 

“The primary focus for us as a service aggregator is not about [the] enforcement of rules and regulations. It’s about enabling service providers, industry operators, to provide their services and solutions in compliance with rules and regulations defined by the Central Bank of Nigeria,” he said. 

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