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MFS Africa steps into Nigeria's digital space

In a deal subject to approval from the Central Bank of Nigeria, MFS Africa has signed an agreement to acquire Capricorn Digital

One of the strategies foreign firms adopt when breaking into a country is acquiring a local firm. An example is the acquisition of Paystack by Stripe. The largest fintech interoperability hub in Africa, MFS Africa is looking to repeat this trick as it plans to break into Nigeria.

MFS Africa has agreed to acquire Nigeria's Capricorn Digital, one of the country's largest digital solutions and distribution companies. Although both parties did not disclose the deal's value, Capricorn Founder and CEO Degbola Abudu said the deal is the second-largest of its kind in Nigeria's fintech space, behind the $200 million Stripe paid for Paystack last year.

“It’s a good time to partner with a company that brings a real pan-African presence and we see synergies across our operations," Degbola Abudu said. "They offer a wide range of value-added products and services like cross-border payments while we have access to SMEs in Nigeria, one of the biggest markets in Africa.

We believe that we’ve barely scratched the market’s potential. The deal brings many things that allow us to grow very quickly. Degbola Abudu

“We’ve been able to build a large business with relatively small capital but now we want to be able to compete, not just in Nigeria but also across Africa. The deal with MFS Africa gives us leverage to take Baxi and the model that’s been so successful in Nigeria to other African countries," Abudu said.

MFS Africa is on an acquisition spree across the African continent, acquiring three companies in the space of five years. According to the company CEO and founder, Dare Okoudjou, MFS Africa'sAfrica's big vision is to have a presence in all 54 African countries, serving 500 million people and millions of small businesses. Capricorn will now be called MFS Africa following its acquisition. However, its core product Baxi retained its name.

“The more we spoke with Degbola, the more we realised what we could achieve with a full acquisition instead of being only investors in which case there could be misaligned incentives,” Dare Okoudjou said.

“In other markets, one or two partnerships with mobile money operators could see us reach 60% of digital payment users in the country,” he says. “However, mobile money isn’t that widely adopted in Nigeria. Instead, agent networks such as Capricorn’s have grown rapidly,” he added.

“If you have a phone or POS, it should be enough to transact with the rest of Africa and the world. We’re building the foremost, currency-agnostic, real-time hub for payments on the continent, to enable people transfer money the way they can call each other.” Dare Okoudjou

MFS Africa now has the CBN to contend with following the agreement to acquire Capricorn. According to TechCabal, the company plans to engage with Nigeria’s central bank and other regulators to seek additional licenses needed to operate its full-service offerings—such as remittance, micro-lending, insurance—while also exploring commercial partnerships in the country.

Nigeria in focus

GDP: $432.294 billion in 2020 compared to $448.12 billion in 2019

Population: 206,139,587 in 2020 compared to 200,963,03 in 2019

GDP per capita: $2,097 in 2020 compared to $2,229 in 2019