July Edition; Aidi monthly review
In this issue, we will dig into the Nigerian startup bill; its objectives, timeline and implications for the Nigerian startup ecosystem. Going further, we will discuss why the virtual card service shutdown happened and alternatives for businesses and individuals, CreditChek and Swipe's funding round announcement, and opportunities for African startups will also be explored.
1. The Nigerian startup bill
Recently, news that the startup bill has been passed by the senate caused a positive stir in the ecosystem. The startup bill is a combined initiative by the Nigerian government and the tech ecosystem to utilize the potential of the nation’s digital economy through co-created regulations. The bill aims at ensuring that the laws and regulations for the ecosystem are carefully planned out to work in order to attract, protect and grow investments in tech startups.
The main objective of the bill is to provide a legal and institutional framework for the development of startups in Nigeria and to provide an enabling environment for the establishment, development and operation of startups, to foster the growth of technology-related talent and, to position the startup ecosystem as the leading digital technology hub in Africa, having excellent innovators with world-class skills and exportable capacity.
To unlock the potential of the ecosystem, the bill is focused on catering to startup investment seed funds, accelerators & incubators, regulations support, tax and fiscal incentives, training and capital development amongst others. A Council for Digital Innovation and Entrepreneurship was also set up to this effect. The council is made up of the Presidency, the Minister responsible for Communication, Finance, Budget & National planning, the Minister for Industry, Trade and Investment, the Minister for Science, Technology and Innovation, the CBN Governor, 3 representatives of the Startup consultative forum, 2 representatives from the Nigerian Computer Society and the Director-general of NITDA.
The council is charged with a number of duties including the formulation and provision of general policy guidelines for the realization of the objectives of the startup act, and ensuring the monitoring and evaluation of the regulatory framework to encourage the development of startups in Nigeria. The council has also established the startup support and engagement portal to allow startups to register with appropriate ministries, departments and agencies.
The startup portal has a consultative forum made up of labelled startups, venture capitalists, angel investors, the Nigerian Computer Society, incubators and accelerators. The role of this forum is to provide a platform for information sharing and collaboration in the ecosystem.
On Thursday, 228th July 2022 the bill passed the third reading at the House of Representatives and has now completed its rounds at the National Assembly. All that is left for this bill to become law is the president’s approval. There is a high chance that the president will give assent to this bill because the presidency itself created the bill in collaboration with other tech leaders in the Nigerian startup ecosystem. With this, local content will be improved with increased sustainability, creativity and economic growth becoming prevalent in Nigeria.
To learn more about the startup bill and how you can give support, see the website
2. Virtual card service shutdown + Alternatives
Between the 15th and 16th of July, ‘Nigerian tech Twitter’ was buzzing with news of the virtual dollar card shutdown. Financial technology companies like Flutterwave, Busha, Payday, Eversend and some others announced that virtual card services will be shut down indefinitely from July 17th. In an email sent to customers by Barter (Flutterwave’s virtual card platform), it stated that the reason for this change was a result of a withdrawal from their card partner (Union54). Other fintech companies like Busha also sent newsletters to alert their customers of this change. With this, customers will be unable to make online and in-store purchases with their existing cards and will be unable to purchase new dollar cards or fund their current cards.
According to Google, a virtual card is a non-physical dollar-denominated card for online payments. Virtual cards work exactly like physical bank cards with the only difference being that virtual cards are in the digital wallet of your device secured by encryption instead of a physical wallet. They provide a safe and easy way to make payments online and in-store.
How is Union54 involved and why has its card service was withdrawn? Union54 is a Zambian startup that provides debit card API for fintech and corporates that allows them to issue debit cards to their customers without needing the services of any bank or credit processor. Union54 found out that cardholders were trying to defraud merchants by asking for chargebacks after receiving their orders. Others tried to make purchases with empty cards and the third group, used their cards for fraud without the knowledge of the issuing companies. For Union54, card users' attempts to use their cards for fraudulent activities on other payment gateways caused suspicion with their card scheme, Mastercard (Please note that Union54 is a Mastercard principle member; giving them the ability to issue and acquire card transactions). The guess is that Union54 withdrew to improve its chargeback, reconciliation and settlement processes.
Following this change, conversations on setting up better KYC (Know Your Customer) and anti-money laundering compliance checks in the card issuing space. Pending the restoration of this service, customers can either turn to their banks to request domiciliary accounts or look for other fintech companies offering virtual cards (and are not affected by the withdrawal) like Mono and Chippercash, as alternatives.
3. Inside Aidi
- CreditChek led by Kingsley Ibe and Lionel Orishane launched in June and announced a pre-seed funding round of $240, 000 in July to drive its vision of becoming the most reliable credit infrastructure in Africa in the next 5 years. Read all about the launch and the plan for the next 5 years here
- Swipe, a credit-focused company that provides credit solutions for businesses in Africa through credit purchases secured $500, 000 preseed funding for expansion. Get all the scoop on the round and the solution they are providing on this blog
- The pan-African ‘investing in innovation’ i3 Program, supported by the Gates Foundation will give African e-health startups access to a grant of $50, 000, market and federal government access to events across the region and connections to a global ecosystem in the industry. Applications for the first cohort is ongoing and ends on September 5, 2022.
- HerMeNow Accelerator is providing training support to up to 30 women-led social enterprises for female-led businesses focused on building impactful solutions. To receive financial, mentorship and technical support, apply to the Accelerator
- Applications for the SheLovesTech startup competition for female entrepreneurs are open. Startups with at least 1 female founder or a majority of female consumers are strongly encouraged to apply. All application details are on the website