Our survey shows consumer spending patterns have shifted towards digital payments since the start of the pandemic

Digital payments platforms led by telecos and fintechs are likely to emerge as long-term winners.

Thousands of years since its first use, cash still dominates the payments industry, with over 80% of the world’s transactions conducted using this means of exchange. But change is afoot. The global digital payments market is expected to grow at a CAGR of 24% in 2020–25, and Covid-19 could further accelerate this trend as consumer spending patterns have seen a considerable shift towards digital payments since the start of the pandemic. Governments, regulators and private sector businesses have all been encouraging individuals to avoid cash transactions.

Digital payments improve transparency, cost efficiency and financial inclusion in the economy while consumers…


China has one of the largest and most advanced fintech ecosystems with leadership in key growth areas like blockchain.

Popular strategies include boosting operational efficiency, enhancing management expertise, investing in technology.

The suspension of the Ant Group IPO has put the global spotlight on Chinese fintech. But aside from Ant there are hundreds of other fintech firms making up what is one of the world’s most advanced fintech ecosystems. In this report, the latest in our series on the risks and opportunities in the world’s key fintech markets, we analyse China. We draw on the results of three proprietary surveys we conducted of 20 Chinese fintechs, seven incumbent firms and 100 consumers, allied to desk research into a total of 1,018 local fintech firms.

China fintech landscape


The identity of the next president may not be that important for global markets

Low interest rates, the outlook for US bond yields and USD, and the pandemic, will be more powerful drivers.

We have discussed in detail the possibility of a contested result but, that short-term risk aside, markets can be fairly relaxed about the US election — the low global interest rates, which we expect to continue whatever the result, are likely to be a much more powerful driver of financial assets, as of course will the pandemic.

After all, markets have done pretty well under President Trump, judged by a simple comparison of performance of different financial assets during different presidential terms. For example, the performance of a range of assets compares favourably with those under Obama’s second term.


The acquisition could set precedent for more Big Tech looking for Africa exposure, disrupting banks’ fintech operations

Nigeria remains among Africa’s top destination for fintech offerings — Paystack’s acquisition may be the first of many.

In what could easily be called Nigeria’s “fintech deal of the decade”, Paystack — a homegrown payments solution provider — is in the process of being acquired by US fintech giant Stripe. This follows Stripe leading Paystack’s Series A US$8mn financing round in 2018, with Visa and Tencent. Although the terms of the deal have not been disclosed, reports puts the estimated value in excess of US$200mn (above NGN80bn).

Notably, this is the first outright acquisition of a fintech company in Nigeria — a major scorecard for the country’s fintech landscape. However, we note that larger transactions are occurring in…


Regulatory pressures, declining yields and new opportunities push GTB, Access and Sterling to pursue holdco structures

If the history of the evolution of Nigerian Banks has taught us any lesson, it is that — “the only constant thing in life is change.”

Shortly after the 2008/09 Global Financial Crisis, the ‘universal banking’ model was halted in Nigeria, with banks given two major options: spin off non-banking subsidiaries or adopt a holding company (holdco) structure. Many banks opted for the former option, while Stanbic IBTC, FCMB and FBNH restructured as holdcos, to maintain their investments in insurance, asset management, investment banking and other activities.

Fast-forward to today and the trend is reversing; Access and Sterling have received approval in principle from the Central Bank of Nigeria (CBN) to restructure as holdcos, while GTB’s approval is in the works.

Five reasons why this is happening

  1. Regulatory pressure — From arbitrary…

Covid has not softened the IMF’s stance on reform before funding for countries that have not shown good faith effort

Some argue the IMF has a “moral imperative” to support countries in crisis without normal conditionality.

Covid-19 has been an unprecedented external shock for advanced and developing countries around the world, with no one escaping its impact. And in the words of IMF Managing Director Kristalina Georgieva: “A global crisis like no other needs a global response like no other.”

As we have previously written (see here and here), Advanced Economies (AE) have responded with fiscal stimulus averaging c20% of GDP, cut interest rates to (or below) the zero-lower bound, and will launch an estimated cUS$6tn of asset purchases by year-end (totalling 15–23% of GDP across the five largest central banks).

However, policy space is more…


Mozambique becomes the 32nd country to be accepted by the Paris Club for bilateral debt service relief under DSSI

The vast majority of countries have been straightforward approvals, coming after IMF financing agreements.

Mozambique became the 32nd country to be accepted by the Paris Club for bilateral debt service relief under the G20’s Debt Service Suspension Initiative (DSSI) yesterday. There is now a wide and diverse enough sample of countries that have been approved for DSSI to enable us to make inferences about the experience so far and which may have relevance in thinking about how other countries may be handled in future.

This may be particularly pertinent as discussions about other potential debt relief candidates unfold (either within or outside the DSSI framework). Moreover G20 leaders are due to consider a possible…


The files are the latest illicit flows exposé following Luanda Leaks, Paradise Papers, Panama Papers, Swiss Leaks and Lux Leaks.

Long term, we see three implications: 1) US$ reserve status, 2) ethics challenge in EM/DM and 3) EM retention of capital.

Cache leaked from US Treasury in mid-19

  • Suspicious Activity Reports (SARs) are sent, confidentially, by banks globally to the US Financial Crimes Enforcement Network (FinCEN, which is part of the US Treasury).
  • They are sent when banks have concerns about transactions conducted for their clients in US$ currency, regardless of where the transaction took place physically (eg SARs can be sent by “correspondent” banks based in the US that facilitate transfers in US$ for banks located outside the US).
  • Their concerns are that the transaction in question…

Anyone who claims to know what Tech companies are worth in absolute terms (a ‘target price’) is an absolute charlatan.

Forward multiples relative to history are sub-optimal but may be more useful than target prices for top-down investors.

Always “I told you so” in Tech

The NYSE FANG+ index is down 10% in September to date. This is the first monthly decline in FANG+ since February 2020 (when there was also a 10% drop but from a much lower level, with FANG+ increasing 90% in the five months spanning April to August).

No doubt the investment industry is littered with folk saying “I told you so”; it is just that some of them do not confess to saying these Tech stocks were too expensive in…


Investors should position themselves to opportunities at TikTok’s competitors

The TikTok spat has revealed the vast valuations of video-based social media.

President Trump announced on Saturday that he has approved Oracle’s bid for TikTok’s US operation. The approval is “in concept” according to the President.

Oracle will own 12.5% of the entity, which will be named TikTok Global. Walmart will hold 7.5%. The deal requires Beijing’s approval, as as well other regulatory and shareholder clearances.

The bitter row between the US and China over TikTok has put the nose-bleed valuations of video-based social media in plain sight. ByteDance, TikTok’s parent, has been valued at US$140bn by CB Insights, making it the world’s most valuable start-up. The US operation could be worth…

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Find out what matters in emerging markets — from the experts.

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