Ghana’s fintechs face a souring economy

Despite a weak local economy, a currency in free fall, and tight market conditions globally, Nigerian-made retail app Bamboo remains optimistic about its new Ghana operations. But it’s not the same story for everyone—non-payment fintechs and individual customers and SMEs have been hit hard..

A few months after Bamboo, an online brokerage application, launched in Nigeria in 2020, CEO Richmond Bassey said he was inundated with emails from Ghanaians requesting access to the application. The waiting list from Ghana has grown to 50,000. Two years later, this September, Bamboo opened access to Ghanaians after obtaining permission from Ghana’s Securities and Exchange Commission (SEC).

Worsening local and global economic conditions mean non-payments fintechs may face more headwinds. But Bamboo’s CEO says he is not phased by the decline.

Wind towards construction

Before this series of crises put pressure on Ghana’s economy, an unpopular 1.5% levy on electronic payments put pressure on the income of payment companies.

Ghana’s public market has been ranked in the top ten stock exchanges in Africa for the past three years. In the year ended 2021, Ghana’s stock market was the second best performing public market in Africa (investors recorded a return of 38.59% in US dollar terms, or +43.66% in local terms). This strong performance has undoubtedly encouraged local investment in Ghana’s publicly traded companies and currencies. However, the local stock market declined by 11.78% between November 2021 and November 2022.

Coupled with rampant inflation and a spiraling cedi, it is a fair assumption that investors can re-evaluate their investments or at least invest in more attractive markets like the US.

Bamboo seems to be banking on this. “Even if the market is not doing well, I would like to think that we are growing because we are educating people that even if it is not doing well, there are opportunities to invest,” community engagement officer, Deola Adebiyi, said. African business in September.

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Challenge the fate of Robinhood?

Inspired by Robinhood, the US retail trading app, Bamboo offers users educational tools including free premium content from popular investment education websites, Motley Fool and But its main offering is a partnership with US-based DriveWealth LLC that allows Bamboo to buy fractional shares in US-listed companies and funds. Media reports put the number of Bamboo users at 500,000.

According to Crunchbase, Bamboo has raised a total of $32.6M in funding over five rounds, including a $15 million Series A fundraiser announced in January of this year.

But Bamboo’s inspiration, Robinhood, isn’t doing very well. After peaking at 21.3 million in the second quarter of last year, the application’s monthly active users declined to 13.3 million in August of this year. Robinhood’s users are also trading less than a year ago and the company didn’t reach revenue estimates in its latest earnings call just three weeks ago.

With the decline of publicly listed companies in the US, Bamboo users are becoming more cautious. “People want to invest for the long term,” CEO Bassey told TechCabal. Users now spend more time in the app but are buying less of more, he says. Exchange-traded funds (ETFs) like Vanguard are a growing favorite.

Contrary to RobinHood’s public filings showing a decline in engaged users, Bamboo’s CEO says Bamboo users spend about eight hours each month on the app, up from just over five hours in the second half of last year.

An internal report published by the company indicates that users are indeed buying more (in terms of volume) than they are selling. The report does not indicate the value of these transactions.

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Economic conditions “will affect the number of people willing to invest, not their willingness to invest,” Bassey said. “What we see is that the volumes have grown. In the first half of 2022 we have seen that the value of trade has been reduced, not the traders,” he added. For more risk averse investors, Bassey said his company is considering offering an 8% fixed yield product to Ghanaian users. The product is currently available only in Nigeria.

In the meantime, Bamboo seems to be doing well overall, but it is unclear if he can replicate his Nigerian performance in Ghana. Bassey believes that the growth of new account openings reinforces his belief that there is still strong demand especially since most users seem to be buying company shares for the long term.

It is still possible that Ghana’s worsening economy may force users to be more conservative as it certainly has for Bamboo’s older peers in the US.

An economy out of order

Ghana is suffering from a twin debt and currency crisis. The economy is also struggling through a high inflation of 37%. In October, traders closed their shops for three days to protest against rising inflation. Joseph Obeng, leader of the Ghana Trades Union Association, the country’s largest lobbying group for retailers, said the local media that the combined effects of high inflation, exchange rates and interest rates have “deeply eroded” the capital of business owners by more than 50% this year.

From attacks on foreign exchange offices to the Nigerian ban on food imports, the Ghanaian government is desperately trying to control the economy.

The country’s debt service is expected to take up 47% of revenue by 2022. Negotiations for a $3 billion International Monetary Fund rescue program continue as the government strives to shore up falling revenues and prop up the value of the Ghanaian cedi. Part of the government’s plan includes encouraging “traders to reduce profits that contribute to inflationary pressures” even as rising commodity prices bite into profits.

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Richard Duodu, CEO of Financial Mobile Suite, a financial services company with products covering wealth management, lending, tax administration and payments. said TechCabal. Eventually, the withdrawals slowed down after Duodu’s corporate clients applied “haircuts”.

“Little by little, clients are getting used to this new reality and can only hope that the International Monetary Fund deal that looks like our last resort will work the magic we’ve all been praying for.”

But an International Monetary Fund loan will come at a steep price – a default on $ 14 billion in foreign bonds (basically debt) the government sold to investors in Europe, Africa and around the world. And big cuts in the government budget. Foreign investors did not take this news kindly. This IMF program will be Ghana’s 17th program since independence in 1957.

The IMF’s signature austerity measures may also take time to deliver benefits—if any. In the short term, however, Ghanaian citizens and residents will feel the pinch.

A fintech founder told TechCabal via text, that one of his company’s clients, a frozen food business, has seen up to a 70% reduction in sales due to hyperinflation. “Further investigation showed that the fast food businesses that mainly patronize this SME could not afford the cost of cooking oil—the main ingredient for frying the chicken. This is because the price of oil rose by 200% in the span of a week. [Cooking oil] is now selling at 500% YTD,” said the founder.

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