Here are three big stories from Africa’s business and policy landscape you (probably) didn’t miss but should keep in mind this week:
Fintech Giant Flutterwave Hit by Alleged ₦11 Billion Security Breach
Last week, Nigerian fintech leader Flutterwave graced the news after a news report from Tech Cabal revealed that a suspected cyberattack on the company that resulted in the alleged loss of ₦11 billion ($7.2 million) in April 2024. According to the report, the perpetrators of the breach reportedly transferred the funds in small amounts to evade fraud checks. However, the exact amount stolen remains unclear. A separate source with knowledge of the incident told TechCabal that the actual loss could be as high as ₦20 billion, nearly double the amount acknowledged by Flutterwave. Furthermore, another source claims the stolen funds were transferred to other financial institutions within just four days, raising concerns about the effectiveness of security protocols.
However, Flutterwave, maintains that no customer funds or data were compromised in the incident. In a report by Tech Point, the fintech giant acknowledged “unauthorized activities” on one of its platforms but did not elaborate on the specifics of the breach. This is not the first time Flutterwave has faced security challenges. In March 2023, the company reportedly lost over ₦2.9 billion in an unauthorized transfer incident. Court documents revealed the funds were transferred to over 100 accounts across multiple banks. While Flutterwave initially obtained a court order to freeze the accounts, it was later lifted in February 2024. Despite these repeated incidents, Flutterwave assures its customers that their funds and data remain secure. The potential impact of this breach on Flutterwave’s reputation remains to be seen.
CBN approves 14 new IMTOs to boost foreign-currency remittance
Last week, the Central Bank of Nigeria (CBN) granted preliminary approval to 14 new International Money Transfer Operators (IMTOs). This decision comes amidst ongoing concerns about the Naira and a decline in remittances through official channels. However, it has become necessary to increase official remittance inflows especially after recent data revealed a 6.28% decrease in direct foreign exchange (FX) remittances during the first quarter of 2024. Compared to the $301.57 million received in Q1 2023, the first three months of 2024 saw only $282.61 million entering through official channels. This decline suggests a potential shift towards informal remittance methods, which can pose challenges for tracking and managing foreign currency flows.
While the CBN’s strategy focuses on attracting new IMTOs, the issue of informal remittance channels remains a significant challenge. Currently, nearly half of all remittances to Nigeria are conducted through informal channels. This trend is likely driven by the perceived disparity between the official and unofficial Naira exchange rates. The CBN’s decision to approve new IMTOs also follows a series of regulatory changes aimed at streamlining the money transfer industry. In February 2024, the apex bank significantly increased the IMTO license application fee, from ₦500,000 to ₦10 million. Additionally, a new minimum operating capital requirement of $1 million was established for foreign companies seeking IMTO licenses.
The CBN is confident that the influx of new IMTOs will have a positive impact on the official foreign exchange market. Hakama Sidi Ali, the bank’s Acting Director of Corporate Communications, believes this development will “spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX)”. Increased liquidity in NAFEX is expected to enhance price discovery, a process that helps determine a fair market value for the Naira based on supply and demand.
NGX: Oil and gas stocks decline by 6.5% in one week
It appears Nigerian Stock Exchange (NGX) investors fled the oil & gas sector last week, sending the NGX Oil & Gas Index down by 6.49%. This steep decline translates to a collective market value loss of N194.1 billion for leading companies like Conoil, Seplat Energy, and TotalEnergies. Seplat Energy, a major player in the Nigerian oil & gas sector, bore the brunt of the sell-off, hemorrhaging a massive N193.7 billion in market capitalization.
While the report doesn’t pinpoint specific reasons for the sector’s decline, global oil market dynamics and investor anxieties likely played a significant role. Volatility in global oil prices, concerns about potential supply disruptions in other oil-producing regions, and broader economic anxieties could all be contributing factors. Nigeria has also been experiencing a quiet shift in its energy sector. Over the past two years, a trend of international oil companies (IOCs) exiting onshore operations has emerged. Recall that in January Shell, a major player in the Nigerian oil industry for over six decades, agreed to sell its onshore oil production business, Shell Petroleum Development Company of Nigeria (SPDC), to a consortium for at least $1.3 billion. This consortium, named Renaissance, comprises a mix of international and local players, including Switzerland-based Petrolin and four Nigerian oil producers: ND Western, Aradel Energy, First E&P, and Waltersmith. Last year, Italy’s Eni sold its onshore subsidiary to Oando, a local company. China’s Addax also sold its four oil blocs to state oil company NNPC
ICYMI: Market roundup
- Nigeria’s equities market went downwards over a 5-day trading week, with the NGX All-Share Index depreciating by 0.11% to close at 98,125.73 points. The top gainers were International Energy Insurance Plc. (11.49%), Mcnichols Plc. (9.89%), Custodian Investment Plc (9.68%), Julius Berger Nigeria Plc (9.53%), and Airtel Africa Plc 8.97%). The top decliners were P Z Cussons Nigeria plc (-22.16%), NEM Insurance plc (-18.36%), Eterna Plc (-18.32%), United Bank for Africa plc, (-17.23%), and the Initiates Plc. (-15.22%).
- The naira closed the week at ₦1497.33/$1 on Friday at the investor’s and Exporters’ window.
- Brent crude closed the week at $823.98 while US West Texas Intermediate (WTI) crude closed at $80.06.
- The global cryptocurrency market cap stood at $ 2.43 trillion, as of 7 am Monday, the 20th of May. Bitcoin stood at $60,076.66, a 9.58%, increase over the week, Ethereum also increased by 7.45% to trade at $3.107.01, while Binance coin decreased by 2.12% over the week, to trade at $577.88
- Last week, Maad, a Senegalese B2B e-commerce startup, secured $3.2 million in debt-equity funding to bolster its growth in the western African country and to explore fresh opportunities in the wider Francophone region.
- Accion, a global nonprofit, launched a $152.5 million fund for large financial institutions, including microfinance serving small businesses currently excluded from the world’s financial system.