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Renaissance Capital to offer advisory support to Nigerian tech, fintech startups

Adesoji Solanke speaks on startup regulations and what to expect at inaugural Renaissance Capital Nigeria Tech/Fintech Conference.

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Renaissance Capital
Adesoji Solanke, director, Frontier and SSA Banks Research Analyst at RenCap

Adesoji Solanke, the director, Frontier and SSA Banks Research Analyst at Renaissance Capital (RenCap), had an interactive session with TechEconomy.ng, explaining how Nigeria’s technology space can grow bigger through regulatory supports.

He also talked about what to expect in tomorrow’s Nigeria Tech session of RenCap’s 12th annual conference.

Telecom companies have quite a number of digital assets they sell, whether it’s airtime, data or other things. These companies serve critical role in terms of powering the rest of the economy, by providing infrastructure, particularly for data and the internet.

According to Soji, activities at these data points reflect the impacts in the rest of the economy.

Broadly speaking, tech is one area, where the activity levels have continued to be on the rebound year after year, despite the slowdown in GDP growth.

The amount of funding that has been utilised in the Nigerian tech sector is about a billion dollars this year alone.

Nigeria’s share of the total funding raised in the Africa tech ecosystem is actually about 43%. This means Nigeria takes the largest share of funding to date, and this is quite significant”, he said.

In terms of precautions put in place to prevent startup regulations and policies from watering down innovation, Soji pointed out the importance of advocacy.

When we talk about tech, what that simply means is that a lot of things are on the border of innovation. So for regulators, there are a number of things some of the tech companies are doing, which may not in themselves be wrong. But these are innovations, which the regulators never previously gave significant thought. So as these innovations keep on coming, there’s a lot of catch up that the regulators have to do; whether this is from the CBN or the SEC, or any of the other important regulators.

Renaissance Capital

Technology

In some instances, early-stage companies are trained to do certain things, but lack of sufficient attention to the compliance dynamics, which are required, particularly when they’re operating in segments that are highly regulated, may cause limitations.

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There’s room for them to start to think even more seriously about compliance. But I think this is where there’s a bit of a balancing act that needs to be played out with the regulators.”

Because if we look at what’s happened in developed markets, like in the UK, for example, what the regulators do is create a regulatory sandbox, to allow these innovative companies to test their solutions within a regulatory environment. This would enable the regulators to come up with the appropriate regulation that would balance out the regulatory concerns vis-à-vis, while still encouraging these companies to grow as they would like to grow going forward.”

No man is an island. Learning from other markets is essential for Nigerian regulators. Investors, founders, and everyone else who cares about the ecosystem need to come together to advocate for what they want; this is common practice across the world. Whether it’s in the US or other markets.”

Speaking further on the need for enhanced communication between industry players and the regulators, he said,

“I agree that there’s room for the communication to be better managed, in terms of some announcements that come through from the regulators. Nigeria needs the foreign investor flows, so there’s room for the regulators to also think about the implications of gaps in pronouncements on this mushrooming tech ecosystem.”

The Director, however, said that one of the mandates of the central bank is also around foreign currency hence, to the extent that when some fintech companies dabble into the remit of foreign currency dynamics, the central bank typically gets involved.

“If you actually look at the majority of the pronouncements that have come out as negative headlines for the ecosystem, underlying each of them, what you find is the common thread of each of these companies having something that has to do with foreign currency, FX.”

So whether it’s crypto, or the stock trading companies, among others, underneath each of them are some foreign currency elements. For Nigeria, the FX dynamic is a very sensitive issue, once you’re doing anything that interacts with FX, naturally, the risk of you coming under significant oversight from the central bank is very high.”

About the speedy growth of the ICT ecosystem in Nigeria, including the cloud infrastructure, data centres, the fibre optic cables being built by the government, among others developed across and beyond West Africa, Soji stated that a lot is opening up not just in Nigeria, but in many other African countries.

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This is a combination of different factors that are moving in the right direction at the same time. There’s the improvement of mobile penetration, the rising urbanisation dynamics, smartphone penetration, internet penetration, lower costs on mobile phones, smartphones and data.

In certain countries, the regulators are also becoming more amenable to the tech ecosystem. You also have the secular trend of evolving consumer behaviour. Consumers basically want to move to a place of the highest convenience.

Looking at banking transactions, they start from bank branches to ATMs, agency banking, the mobile phone – “So consumers want more convenience, and as technology developments evolve, consumers will continue to move to the place where they find the highest convenience factor.”

All of these factors are played out and what that simply means is that they need the backend infrastructure support required to drive the movement of that ecosystem forward.

More investments will be needed, whether in the cloud centres, or the subsea cables, which Facebook and a bunch of other people are building out around the continent, to help drive internet connectivity in Africa and also reduce the cost of that internet. This would simply mean that, as time goes on, there would be more traction in terms of digital and online activity.

“Africa will be no exception. It’s a trend that has played out in other emerging markets, and the same thing will play out in Africa.”

What does the future hold for the sector? And what should we expect from tomorrow’s session?

Renaissance Capital

Renaissance Capital

“Renaissance Capital has decided to double down on the Africa tech and fintech space. And what that simply means is that as an investment bank, we’ve historically used to support large corporate entities, will now be taken to support the early state ecosystem on the continent.” RenCap will be looking to do three things. These are:

  • Advisory – across equity, financing, debt, financing, mergers and acquisitions
  • Tech and fintech research
  • Venture investing
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Tomorrow’s event is RenCap’s first inaugural Nigeria tech and fintech virtual conference.

It’s no coincidence we’re focusing on Nigeria, which is the market that has attracted the largest share of venture funding in Africa today.”

A lot of this funding has been to the fintech sector, so it’s no surprise that we’re focusing on Nigeria to start with. But we do have operations in Egypt, Kenya, and South Africa, and these are the other three markets that follow Nigeria in terms of attractiveness for venture funding.

According to Soji, RenCap is very well positioned as an investment bank across all of these markets, to support the early stage ecosystem in all these countries.

An emerging ecosystem needs advisory and investment. Although there are unicorns already in Africa, the numbers are not enough. Renaissance Capital is coming at a good time to do this, but the question is: Why this time? Why wait till now before doing this?

Renaissance Capital has been doing things with tech companies on the continent over time, we just haven’t had a conference focused on tech.”

Soji gave an example of RenCap working with the largest listed fintech company in Africa. “We were a joint book-runner on their $80 million accelerated raise. This was a few months ago when they were looking to sell 4.3% of the company. We supported them in that transaction.”

Soji further stated that RenCap has worked with companies like Fairmoney in Nigeria and Global Accelerex.

The conference just so happens to be the first proper conference, but the company has built investment banking teams across the continent and currently has a number of ongoing transactions.

​Joan Aimuengheuwa is a content writer who takes keen interest in the scopes of innovation among African startups. She thrives at meeting targets and expectations. Contact: [email protected]

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  1. Pingback: Renaissance Capital To Offer Advisory Support To Nigerian Tech, Fintech Startups | Techvalley

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