Pan-African Fintech Powering Digital Commerce, Acquired for $ 288 Million in Landmark African Tech Deal

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Much has been said about the potential for economic growth across Africa with a large number of startups, multinationals and investors descending on the continent in search of opportunities. However, for Africa to reach its full potential, it needs infrastructure and an ecosystem that allows businesses to thrive. An essential part of this infrastructure in the digital age is the technology that gives businesses the ability to accept electronic payments such as mobile money, credit cards, virtual cards, instant bank transfers and QR codes. transparently. This has become even more crucial as society moves away from cash; Africa, in particular, leading the way globally in the adoption of mobile money, driving unprecedented levels of financial inclusion in historically underserved communities.

The DPO Group, a Nairobi-based Kenyan tech champion who has spent the past 14 years quietly creating and evolving electronic payment solutions now used by 50,000 merchants across Africa and growing its revenue to a rapid rate of 40% per year between 2017 and 2019. This week, amid strong momentum in the African tech scene, DPO Group announced that it would be acquired by the London Stock Exchange-listed payment company, Network International, for $ 288 million. This represents one of the biggest acquisitions of African tech companies and perhaps the largest of African online payments and gives us a good opportunity to study the factors that have contributed to the success of DPO and what others companies can imitate.

The idea for DPO was conceived when DPO co-founder and CEO Eran Feinstein traveled to Kenya in 2006, where he was approached by a Kenyan airline who needed him to create software for process online reservations and credit payments from overseas visitors. At the time, internet adoption was still very low and most African businesses did not 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 based there permanently ever since. From humble beginnings with a handful of clients and just 6 employees in 2016, DPO Group is now an African payments giant processing $ 2 billion in transactions per year and operating in 19 countries with over 300 employees; who have all been hired locally in the African countries in which DPO operates. This means that DPO has increased the number of people it employs across Africa twenty-fold in less than 4 years. The company now counts leading global brands such as Uber, DHL, KFC, Expedia and Booking.com among its customers.

Unlike many other tech companies that have tried to replicate the products and services of international markets in Africa, Feinstein and the DPO team recognized early on that they had to understand and respect the cultural differences that exist in African markets and create suitable products and local teams. to each market. This has led to the development of truly innovative products like the DPO Dumacard, a virtual card that among other things solves the problem of many African consumers who cannot use their electronic mobile money wallets, for example M-Pesa, to pay for products. online. mainstream platforms such as Amazon and Netflix. Dumacard has enormous potential to enable millions of African consumers to shop online and accelerate their inclusion in the global financial and digital ecosystem.

DPO’s relationship with Uber is a good example of DPO operating in multiple countries, in this case Kenya, Tanzania, Uganda and Ghana, to provide unique solutions. Uber did not have a single integrated system to collect cash payments from drivers, which resulted in lost revenue. DPO provided Uber with an automated solution through which it could bill its drivers and collect its commissions through mobile money payments. DPO was best positioned to provide this type of solution given its ability to process mobile money payments in multiple countries and currencies, which allowed Uber to focus on its core business without having to integrate with different mobile money wallets in different countries. The relationship with KFC is another example of DPO allowing global brands to expand their operations in Africa. KFC was looking for a centralized online ordering system for its franchisees in South Africa and needed to be able to scale this solution quickly and easily to the rest of Africa. DPO was able to provide them with an online payment service that allows consumers to place and pay for their orders at any KFC point of sale using instant cards or bank transfers and also enabled KFC to be develop in East Africa by allowing it to accept mobile money payments. DPO now processes payments for over 900 KFC outlets across Africa.

The DPO also sees indications that Covid-19 has accelerated the structural shift from cash payments to online payments. In McKinsey’s Africa consumer survey, more than 30% of consumers said they were increasing their use of online and mobile banking tools during the pandemic, and the adoption of e-commerce by SMEs in South Africa is expected to double, reaching 45 to 55% by 2025 compared to 37% in the US and 68% in the UK. An example of this accelerated change is the e-commerce store provided by DPO to Artcaffe, a trader in Kenya. Artcaffe operates a coffee and bakery chain with around 16 outlets and had no online presence at the start of this year. In March, when Covid-19 started impacting businesses, DPO offered Artcaffe a solution with its out-of-the-box e-commerce store that also facilitates and processes electronic payments. DPO worked with Artcaffe to create not only an online store for their bakery chain, but a much larger food ordering marketplace, where Artcaffe now sells products on behalf of some of its suppliers, giving them access to a larger market and helping them stay afloat during this time. tough times for many offline businesses. This increased adoption of DPO’s electronic payment solutions during Covid-19 led the DPO to increase the total value of the transactions it processes by an astounding 57% and 49% in May and June respectively compared to the same months the last year before adjusting to currency fluctuations.

DPO’s growth really took off in 2016, when the company received a significant investment from Apis Partners, a London-based global growth capital investor and financial services specialist, to fund its expansion across Africa. Both organizations shared the same vision that Africa, as one of the most dynamic and least penetrated markets for online payments in the world, presents a unique opportunity to build a great, world-class business. Together with Apis Partners, DPO has acquired and successfully integrated five companies in just 4 years, an impressive feat to accomplish anywhere in the world, while launching new products and entering new countries. In addition to being one of the leading pan-African online payment companies, DPO, backed by Apis Partners, has become the dominant online payment processor in South Africa, the largest online payments market in Africa, thanks to to a series of smart and well-managed acquisitions. in this market. This achievement proves that companies can generate significant growth through bold strategic acquisitions while being based in any country in Africa and do not need to be based in global financial centers in South Africa, in Europe and elsewhere outside of Africa in order to successfully execute acquisitions in key markets. DPO’s phenomenal growth and impact is a 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.

In a vote of confidence, Matteo Stefanel, Managing Partner of Apis Partners, said of Feinstein and his DPO co-founder, Offer Gat, “Eran and Offer are exceptional and visionary entrepreneurs who have made DPO a world class company in a very short time. period of time. They exemplify the type of dynamic leadership teams that Apis seeks to invest in, and we are very proud to have worked with them and been a part of the DPO journey. As they embark on the next phase of their journey with Network International, I am confident that Eran, Offer and the rest of the DPO team will continue to lead the way in the payments industry in Africa.

While DPOs have been very successful, they have barely scratched the surface in terms of how big the African payment solutions space can become. The current size of the online payments market in Africa is around $ 800 million and is expected to grow significantly to reach $ 6.9 billion by 2025. Following the acquisition of DPO by Network International, Feinstein and the DPO team intend to continue to pave the way for African digital payments and deliver world-class solutions across the continent. Asked about the acquisition, Feinstein said, “This agreement represents an important milestone for the Pan-African payments landscape and the customers and businesses we serve. The combination of the two companies will allow us to expand our offering for new and existing clients, dramatically improving the ability of African traders to do business not only on the continent, but also in the Middle East and globally.

It is rare that we see an acquisition and achievement of this magnitude in African technology, so it is imperative to investigate the reasons behind it and try to replicate it. At its core, it is the story of a group of partners with a common vision who come together to create a high quality product and business specifically for Africa. I am confident that as Africa continues to grow and digitalize, DPO’s technology will remain a vital part of the infrastructure facilitating financial transactions across the continent.

This article is part of a series featuring underrepresented people making a difference. To submit feature ideas or keep up to date with new releases you can find me on Twitter – @ TommyPF91.

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