Much was said about the capacity for economic development across Africa using a fantastic number of startups, multinationals and investors descending in the continent looking for opportunities. However, for Africa to achieve its entire potential it requires infrastructure and an ecosystem which makes it possible for companies to flourish. A crucial part of the infrastructure in the electronic era is technology which provides companies the ability to accept electronic payments like cellular money, credit cards, credit cards, virtual cards, instantaneous bank transfers and QR codes . It is now even more critical as society moves from cash; together with Africa in specific leading the way worldwide from the adoption of cellular money leading to unprecedented levels of financial inclusion in under-served communities.
Powering this electronic trade across Africa is DPO Group, a home-grown Kenyan technology winner headquartered in Nairobi, which has invested the past 14 years softly constructing and scaling digital payment options currently employed by 50,000 retailers across Africa and increasing earnings at a quick rate of 40% each year involving 2017 and 2019. This week, at a powerful increase to the African American technology arena, DPO Group declared it could be gotten from the dollar London Stock Exchange recorded payments firm, Network International, for $288 million. This represents one of the biggest African technology firm acquisitions and the biggest in African internet payments and provides us a fantastic chance to research the elements that led to DPO’s achievement and what other businesses can emulate.
The thought for DPO was conceived when DPO’s Co-founder and CEO Eran Feinstein seen Kenya in 2006 where he had been approached with a Kenyan airline which needed him to construct software for processing on line bookings and charge payments from overseas people. At the moment, net adoption was very low and many African companies didn’t offer you online payments. Thus, Feinstein seeing an chance to offer a distinctive and valuable support and expecting the exponential development of digital trade, moved out of his homeland of Israel into Nairobi to start DPO and has been permanently established there ever since. From modest beginnings with a couple of customers and just 6 employees as lately as 2016, DPO Group has become an African American payments juggernaut calculating $2 billion worth of trades annually and functioning around 19 nations with over 300 workers; most of whom were hired locally from the African nations DPO functions in. This usually means that DPO has increased the amount of individuals it uses across Africa an astounding twentyfold in under 4 decades. The business currently counts international blue-chip brands like Uber, DHL, KFC, Expedia and Booking.com as customers.
Unlike a number of other tech companies which have attempted to replicate services and products from global markets in Africa, Feinstein and the group at DPO recognised early on that they had to know and respect the cultural differences which exist across Africa markets and assemble products and neighborhood teams suited to every marketplace. This has caused the growth of genuinely innovative products such as the DPO Dumacard, a digital card which among others items solves the issue of several African American customers who can’t use their cellular money e-wallets, e.g. M-Pesa, to purchase goods on internet consumer platforms like Amazon and Netflix. The Dumacard has tremendous potential to empower countless African American users to shop online and hasten their addition to the international financial and electronic ecosystem.
DPO’s connection with Uber is a fantastic instance of DPO working across several nations, in this instance Kenya, Tanzania, Uganda and Ghana, to provide exceptional solutions. Uber lacked one integrated platform to accumulate cash obligations from motorists, which led to lost earnings. DPO supplied Uber having an automatic solution through that it might bill its own drivers and collect its commissions through cellular cash payments. DPO was best positioned to supply this kind of alternative given its capacity to process cellular money payments in numerous countries and currencies that enabled Uber to concentrate on its core business without needing to incorporate with the many cellular money pockets in many nations. The connection with KFC is just another illustration of DPO allowing international brands to scale their operations in Africa. KFC was searching because of a centralised online ordering system for its own franchisees in South Africa and had the capability to scale this option quickly and easily through the rest of Africa. DPO managed to supply them with an internet payment service which enables customers to set and pay for orders in any given KFC socket using cards or instantaneous bank transfers and allowed KFC to expand into East Africa by allowing it to take cellular money obligations. DPO now processes payments for over 900 KFC outlets across Africa.
DPO can also be seeing signs that Covid-19 has accelerated the structural change from cash to online payments. In McKinsey’s Africa consumer poll, over 30% of customers stated they were raising their use of mobile and online banking tools throughout the pandemic, and e-commerce adoption by SMEs in South Africa is expected to double, reaching 45 – 55% by 2025 compared to 37% in the USA and 68% in the uk. A good illustration of this accelerated change is that the e-commerce shop given from DPO to Artcaffe, a retailer in Kenya. Artcaffe functions a cafe and coffee chain with approximately 16 sockets and had no internet presence at the onset of this season. In March, when Covid-19 began to affect companies, DPO provided Artcaffe a solution with its own ready to use e-commerce shop which also eases and processes electronic payments. DPO functioned with Artcaffe to construct not only an internet shop for their own bakery series but a much bigger food ordering market, where Artcaffe currently sells goods on behalf of a number of its providers thereby providing them access to a bigger marketplace and helping them remain afloat during this challenging time for many offline companies. This higher adoption of DPO’s electronic payments options through Covid-19 has contributed to DPO increasing the overall value of transactions it processes by an unbelievable 57% and 49% in May and June respectively compared to the very same months last year before adjusting for currency changes.
DPO’s growth took off in 2016 when the company received a significant investment from London-based global growth equity investor and financial services specialist, Apis Partners, to fund its expansion across Africa. Both organisations shared the same vision that Africa, as one of the fastest growing and most under-penetrated markets for online payments the world, presents a unique opportunity to build a large, world class business. Working in tandem with Apis Partners, DPO acquired and successfully integrated five companies in only 4 years, an impressive feat to accomplish anywhere in the world, all the while launching new products and entering new countries. In addition to being one of the leading pan-African online payments companies, DPO, supported by Apis Partners, became the dominant online payments processor in South Africa, the largest market for online payments in Africa, through a series of astute and well managed acquisitions in that market. This achievement proves that companies can drive significant growth through bold strategic acquisitions while based any country across Africa and do not need to be based in the global financial hubs in South Africa, Europe and elsewhere outside Africa in order to successfully execute acquisitions in major markets. DPO’s phenomenal growth and impact is testament to what can be achieved in Africa as soon as visionary entrepreneurs work with like-minded investors who share their vision and understand the African market.
In a vote of confidence, Matteo Stefanel, Apis Partners’ Managing Partner said of Feinstein and his DPO Co-founder, Offer Gat, “Eran and Offer are outstanding and visionary entrepreneurs who have built DPO into a truly world class business in a very short period of time. They exemplify the type of dynamic management teams Apis looks to invest in, and we are very proud to have worked with them and to have been part of the DPO journey. As they embark on the next phase of their journey as part of Network International, I am confident that Eran, Offer and the rest of the DPO team will continue leading the way in the African payments sector.”
While DPO has enjoyed great success, they have barely scratched the surface in terms of how large the African payment solutions space can become. The current size of the internet payments market across Africa is around $800 million and expected to increase significantly to $6.9 billion by 2025. Following DPO’s acquisition by Network International, Feinstein and the DPO team intend to continue leading the way in African digital payments and delivering world-class solutions across the continent. When asked about the acquisition Feinstein said, “This deal represents a significant milestone for the pan-African payments landscape and the customers and businesses we serve. Combining the two companies will allow us to broaden our offering for new and existing customers, significantly improving capacity for Africa’s merchants to do business not only across the continent but in the Middle East as well as globally.”
It is rare that we see an acquisition and success story of this magnitude in African Tech so it’s imperative that we investigate the reasons behind it and try to replicate it. At its core, this is a story about a group of partners with a shared vision coming together to construct a high-quality product and enterprise specifically for Africa. I’m sure that as Africa continues to grow and digitise, DPO’s technology will remain a core part of of the infrastructure facilitating financial transactions across the most continent.