"Sequoia-backed Wave takes on telcos in Africa mobile-money war"

" Sequoia-backed Wave takes on telcos in Africa mobile-money war \r\n\r\nMobile money agents in Ivory Coast halted service for Wave Mobile Money Inc. few weeks ago, in an attempt to stymie the growth of the young fintech gobbling up market share across West Africa.\r\n\r\nThe agents \u2013- brokers who enable unbanked people to store and send money through cellphones \u2013- were unhappy with their commissions and expected the suspension to severely cripple the company\u2019s business. Instead, Wave had one of its best weeks since launching three years ago in West Africa\u2019s third-biggest economy. \u201cTransactions spiked for a couple of hours,\u201d said Katier Bamba, the company\u2019s general manager for Ivory Coast.\r\n\r\nThe money transfer app came out unscathed because, unlike telecommunications companies which use intermediaries to manage agents, Wave maintains direct relationships with individual agents. That allowed it to keep doing business as usual.\r\n\r\nIt wasn\u2019t the first time that the five-year-old fintech has upended the industry. When Wave first launched in Senegal in 2018, it took on the local unit of French telecommunications giant Orange SA, forcing the latter to cut prices to compete.\r\n\r\nNow, with a new e-money license at its disposal, Wave is expanding its services, becoming the first non-telco, non-bank with the ability to facilitate small-and-medium sized lending, and to issue micro-credit and virtual credit cards in eight countries in Francophone West Africa independent of a financial institution.\r\n\r\nWith this, the region\u2019s already fierce mobile money wars are heating up.\r\n\r\n Grow Fast, Die Slow \r\n\r\nNone of this would be possible without M-Pesa, the original mobile transfer operator. Launched in Kenya in 2007, the Safaricom Plc product is how people across the continent do business. But in contrast to East Africa, where M-Pesa revolutionized the market, West Africa was until recently far less competitive. Wave spotted an opportunity.\r\n\r\nIn Senegal, Wave\u2019s primary market, only 17% of people have a bank account, but nearly half of adults use mobile money services. In West Africa, mobile money usage saw a 60% increase over the previous year, hitting $239.3 billion in transactions. But with more players competing, the market is getting tighter.\r\n\r\nA showcase for this is Dakar\u2019s downtown commercial district, where colorful stickers for mobile money companies reflect changes in the national market. There\u2019s the red-and-white logo for YUP, the Soci\u00e9t\u00e9 G\u00e9n\u00e9rale SA app that canceled its service earlier this year. There\u2019s the orange of Kash-Kash, the app launched by a local fast-food entrepreneur, which never really took off. Then there\u2019s Wave\u2019s trademark sky blue.\r\n\r\nTo take control of the market, Wave co-founders Drew Durbin and Lincoln Quirk raised $200 million in 2021 \u2014 then (and still) one of Africa\u2019s largest fund-raising rounds \u2014 from investors including Sequoia, Stripe, Founders Fund and Paretch Africa. This was on top of the half-billion dollars they made selling their first company, the remittance startup Sendwave, to Worldremit. Wave soon became the most-used app in Senegal, and with a $1.7 billion valuation, Francophone West Africa\u2019s first and only unicorn.\r\n\r\n What Comes Next \r\n\r\nAs with many VC-funded startups, the company\u2019s future might come down to the length of its runway \u2014 or how soon it can turn a profit. In June, amid a global slowdown in investment, Wave fired 15% of its staff in Mali, Burkina Faso and Uganda, and pared back an aggressive plan for expansion. The following month, it took a 90 million euro syndicated loan from the World Bank Group\u2019s International Finance Corp. It also quietly expanded into Gambia.\r\n\r\nThe battle to the bottom of transaction fees has incurred other costs. In April, Orange\u2019s Middle East and Africa Chairman, Alioune Ndiaye, accused Wave of destroying 20,000 jobs in Senegal by reducing mobile money agents\u2019 take-home earnings. Additionally, mobile money operators\u2019 aggressive focus on smartphone users has created concern that poorer users might be left behind.\r\n\r\n\u201cThere is a race to get these app users because they are higher-value customers,\u201d said Ashley Onyango, head of financial inclusion at GSMA.\r\n\r\nThe more immediate question is how Wave will continue to expand beyond its partnerships with four of Senegal\u2019s biggest banks \u2013- Ecobank Transnational Inc., Societe General, Oragroup SA and United Bank for Africa Plc. Clues might be found in its new financial services or arrangements with Auchan Holding SA and Casino Guichard-Perrachon SA, two of the country\u2019s largest supermarkets.\r\n\r\nWhile it\u2019s clear to many that fintechs like Wave will shape the future of money in Africa, how exactly they\u2019ll do so is an open question.\r\n\r\n \u201cOnce you have the client base you can easily add other services, such as insurances, e-commerce, entertainment platforms or even education,\u201d observed Souleymane Gning, founder of digital broker Assuraf Assurance who previously consulted for Orange and MTN Group Ltd. in West Africa. \u201cCash-in, cash-out in itself isn\u2019t profitable. Then it could just be an ATM.\u201d "

"Sequoia-backed Wave takes on telcos in Africa mobile-money war"

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