MFS Africa's Acquisition Playbook

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Last week we had 591 people apply for our first Ops Associate role. I see why people hire recruiters now 😅

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Today is part two in our collab series with Sati.

Sati is written by Marge and Ona, and no one dives as deep as these two on African startups.

Alright - let’s get into it.

It’s 2015. After five years of barely getting by, Dare has just raised $500,000.

And mobile money had hit escape velocity.

Recall how Dare and Maz first built MFS Africa?

Their idea was to create interoperability between mobile money wallets and other services.

The vision was that mobile money wallets would eventually need to be connected to services like insurance, lending, ringtones, and payments.

But four years in, Dare had a realisation.

Telecoms wanted interoperability between mobile money wallets first.

At the end of 2014, MFS Africa launched the first mobile money cross-border connection between Benin and Côte d'Ivoire.

(Yep, that trip - where everything almost all fell apart).

And the response was epic. Transfers between mobile users in Côte d'Ivoire and Benin took off.

Naturally, users in Benin and Côte d'Ivoire would try to send money to other countries next.

That’s when he realised that the fastest path to interoperability was between mobile money wallets.

Or what we call Peer-to-Peer transfers.

Sending money cross-border in Africa was both hard and expensive. Transfer fees cost about 20% of the transfer value.

To put that into context, in 2015, $160 million was sent in remittances between Rwanda and Uganda.

That means ~$32 million was eaten up in cross-border transfer fees. This was a problem.

The idea of ‘interoperability’ (layer 1 infrastructure) was a solution to this.

And MFS Africa was ready.

Dare’s team had already built a platform that let users debit (pay), credit (receive), authenticate and manage electronic signatures.

For the last five years, MFS Africa was the ‘Research and Development’ arm for telcos across the continent.

And they had hooked up a lot of mobile money wallets to their platform. 60 million mobile money wallets, to be exact.

Dare’s ambition was to take the cost of intra-Africa transfers down from 20% to a single-digit percentage.

Telcos loved it. And the adoption happened quickly.

MFS Africa started with the Benin and Côte d'Ivoire corridor for MTN. Then Rwanda and Uganda.

And when MFS Africa launched their partnership with Vodafone Group in 2015, connecting MPesa users to other mobile money networks across the world, the flip switched.

Dare tells us that’s when the telcos started approaching MFS Africa.

But peer-to-peer transfers were just one part of MFS Africa’s vision.

Once mobile money was established and connected, MFS Africa was ready to layer in more and more services to increase interoperability between mobile money wallets and other services.

Over the last ten years, that scope of connections widened and widened.

When you have over 400 million mobile money wallets connected to your platform, there are a lot of services you can provide.

Now MFS Africa connects:

• Banks to Mobile Money. MFS Africa’s partnership with Ecobank in 2018 let them connect mobile money accounts and Ecobank accounts - the first major connection between bank accounts and mobile money accounts.

• Virtual and Physical Cards. In 2019, MFS Africa and Visa partnered to allow mobile money users to generate Visa virtual cards for transactions - opening up international transactions to African mobile money users.

• Collections and Payouts. With their penetration of mobile money wallets, MFS Africa collects and disburses payments for large enterprises.

• Last-Mile Money Transfer: When you send money to Africa, how does it get to where it needs to go? Platforms like Western Union partner with MFS Africa as a ‘last-mile partner’ because they have over 400 million mobile money wallets, bank accounts (and, now cash pick-up points through their acquisition of agent network Baxi). Which leads to..

• Baxi by MFS Africa: Nigeria has low mobile money penetration, and agency banking reigns supreme. Baxi by MFS Africa is a super-agent network that sells Point of Sale Devices (like the one below) to agents. They provide cash-in/cash-out services, and allow bill payment and money transfer to the banked and unbanked across Nigeria.

MFS Africa has built a payment network between mobile money and other services.

And MFS Africa has not only built, but also invested and bought its way into increased interoperability.

The MFS Africa Acquisition Playbook

Frannie Tyner, MFS Africa’s Director of Corporate Development, explains that payment networks work best with scale.

And while one way to scale is to build. Another is to buy.

Buy they have. MFS Africa has put together a machine that gives them access to new levels of interoperability by acquiring companies, like:

Acquisition #1: Beyonic

Beyonic is a Uganda-based digital payments provider for SMEs, fintechs, and social impact entities in Africa.

With the acquisition, MFS Africa saw the opportunity to take their network and service enterprises, letting them collect from and pay into those wallets.

Acquisition #2: Baxi

Nigeria has a small number of mobile money wallets but is Africa’s largest economy and home to the most SMEs in Africa.

In an interview on The Flip, Dare quotes ‘you don't go to Nigeria to try, you go to do.’

And they did. In 2021, MFS Africa acquired Baxi, kicking off their entry into Nigeria.

Baxi is one of Nigeria’s largest SME-focused payment networks, with 330,000 agents, cash-in and cash-out and services like money transfer a bill payments to the last mile.

Acquisition #3: Global Technology Partners (GTP)

In 2022, MFS Africa acquired GTP - a US Based company for $34 million. Usually the other way around, this was a first for an African company.

GTP is Africa’s number one processor for prepaid cards, and also processes debit cards - with over 80 banks using the platform as well as fintechs like Djamo and Chipper Cash.

The acquisition lets MFS Africa deepen its product offering by letting Africa’s unbanked population with mobile money wallets access cards and participate in digital commerce.

MFS Africa also has an active investment arm, investing in:

MFS Africa also has an active investment arm, investing in:

• Julaya, an Ivorian startup that lets businesses pay their employees and make payments with mobile money.

• Maviance PLC, a Cameroonian fintech providing agency banking and bulk bill payments. They raised $3 million from MFS Africa - the sole investor in the round.

• Numida (YC W22), a Ugandan startup that provides working capital loans of $100-$5000 through mobile money. MFS Africa led the $2.3 million seed round.

• Inclusivity Solutions, a South Africa-based digital insurance platform.

So how does MFS Africa decide what to buy and invest in?

Frannie breaks it down to three buckets: Product, Market and License.

📦 Product - MFS Africa doesnt intend to develop its own digital insurance, so they invested in Inclusivity Insurance in South Africa.

🛒 Market - When MFS Africa decided to enter Nigeria, they had to decide between building or buying an agency banking network. They bought Baxi - one of Nigeria’s most established agency banking networks.

👮🏾‍♂️ License - Rather than getting licensed in Cameroon, MFS Africa invested in Maviance. While they don’t have a license yet, they are in discussions with regulators on acquiring one.


Frannie explains that MFS Africa is on the lookout companies to acquire that will help scale their product, market coverage and licensing, with Egypt and South Africa in view.

But you can’t buy companies without the cash to splash. Recall their struggle raising capital in the last edition?

Now, they’re one of the most well-funded startups on the continent.

Their last raise was a $100 million Series C in November 2021, with investment from AfricInvest FIVE, Goodwell Investments and LUN Partners Group.

This was backed up a few months later in June 2022 with another $100 million Series C Extension from Admaius Capital Partners, CommerzVentures, Vitruvian Partners and AXA Investment Managers.

What’s next for MFS Africa?

MFS Africa has done a lot in the last 13 years. But their ambition is only ramping up.

Gwera Kiwana, Crypto Founder in Residence at MFS Africa, explains that there is a whole lot more coming with R&D investment going into the group.

‘Now that MFS Africa has built out a strong network with telecoms, agents, banks and services, the next phase is building more services that will be the backbone of African payments.’

At lunch in Nairobi yesterday a teammate told me she had never used MFS Africa.

It turns out, she buys Spotify with MPesa (MFS Africa) and has probably been sent money from an MFS Africa connection.

Today, mobile money users don’t always know who MFS Africa is. But they feel the company’s impact daily when they use financial services.

And Dare tells us that 13 years later looked at the first whiteboard where he and Maz sketched out MFS Africa would work - and it’s still accurate.

Although ahead of their time, MFS Africa stuck around long enough to become the hub for mobile money on the continent.

What do you think of MFS Africa’s growth story? Let me know here.

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👋🏾 Caleb