This week, in a strong boost to the African tech scene, DPO Group, a home-grown Kenyan fintech champion, announced that it would be acquired by the multi-billion dollar London Stock Exchange listed payments company, Network International, for $288 million. This represents one of the largest African tech company acquisitions and possibly the largest in African online payments.
The idea for DPO was conceived when DPO’s Co-founder and CEO Eran Feinstein visited Kenya in 2006 where he was approached by a Kenyan airline that needed him to build software for processing online bookings and credit payments from overseas visitors. At the time, internet adoption was still very low and most African companies didn’t offer online payments.
So, Feinstein seeing an opportunity to provide a unique and valuable service and anticipating the exponential growth of digital commerce, moved from his homeland of Israel to Nairobi to launch DPO and has been permanently based there ever since. From small beginnings with a handful of clients and only 6 employees as recently as 2016, DPO Group is now an African payments juggernaut processing $2 billion worth of transactions annually and operating across 19 countries with over 300 employees; all of whom were hired locally in the African countries DPO operates in.
This means that DPO has grown the number of people it employs across Africa an astonishing twentyfold in less than 4 years. The company now counts global blue-chip brands such as Uber, DHL, KFC, Expedia and Booking.com as clients.
Unlike many other technology companies that have tried to replicate products and services from international markets in Africa, Feinstein and the team at DPO recognised early on that they needed to understand and respect the cultural differences that exist across Africa markets and build products and local teams suited to each market. This has led to the development of truly innovative products like the DPO Dumacard, a virtual card that among others things solves the problem of many African consumers who cannot use their mobile money e-wallets, e.g. M-Pesa, to pay for products on online consumer platforms such as Amazon and Netflix. The Dumacard has enormous potential to empower millions of African consumers to shop online and accelerate their inclusion into the global financial and digital ecosystem.
DPO is also seeing indications that Covid-19 has accelerated the structural shift away from cash to online payments. In McKinsey’s Africa consumer survey, over 30% of consumers said they were increasing their usage of online and mobile banking tools during the pandemic, and e-commerce adoption by SMEs in South Africa is expected to double, reaching 45 - 55% by 2025 compared to 37% in the United States and 68% in the United Kingdom.
This increased adoption of electronic payments solutions during Covid-19 has led to DPO growing the total value of transactions it processes by an incredible 57% and 49% in May and June respectively compared to the same months last year before adjusting for currency fluctuations.
DPO’s phenomenal growth and impact is testament to what can be achieved in Africa when visionary entrepreneurs work with like-minded investors who share their vision and understand the African market.
COURTESY OF DPO GROUP
However, while DPO has enjoyed great success, they have barely scratched the surface in terms of how large the African payment solutions space can become. The current size of the online payments market across Africa is around $800 million and expected to increase significantly to $6.9 billion by 2025.
Following DPO’s acquisition by Network International, Feinstein and the DPO team intend to continue leading the way in African digital payments and delivering world-class solutions across the continent. When asked about the acquisition Feinstein said,
“This deal represents a significant milestone for the pan-African payments landscape and the customers and businesses we serve. Combining the two companies will allow us to broaden our offering for new and existing customers, significantly improving capacity for Africa’s merchants to do business not only across the continent but in the Middle East as well as globally.”
