South Africa’s Adumo leans on US$15m equity investment for expansion
Paul Kent, CEO of South African Fintech group Adumo, formerly known as Crossfin Transactional Solutions, says a new US$15-million investment into the company from international financiers will enable it to roll out payment innovations and digital lending to retailers and consumers impacted by COVID-19.
Adumo has a strong presence in the South African digital payments market and also has operations in some Sub-Saharan Africa markets.
On Tuesday it announced a US$15-million equity investment by the International Finance Corporation which has been earmarked “to fund the growth” of the company.
“The pandemic and associated impact on consumers and businesses are transforming the face of the payments industry, with interest in cashless payment services at an all-time high,” said Kent.
He added: “The funds we have raised from our new equity partners will help us roll out new payment innovations and purpose-based lending services to support consumers and retailers as they navigate an uncertain 2021.".
Digital payments solutions such as merchant and card payments have become especially important in the African context, given the fast rise of the informal sector. Countries like Nigeria, South Africa and Zimbabwe have an established informal sector, home to many operators.
However, according to the IFC, there is a digital payments gap in these sectors that are still predominantly cash-based. The international financier believes that digital and mobile payment solutions “can help businesses increase footfall and improve customer retention by supporting the transition away from cash-based” transactions.
“Through this investment in Adumo, we will be helping small businesses tap into the digital economy, which is more important now than ever before,” said Sérgio Pimenta, the IFC’s Vice President for the Middle East and Africa. “Digital payments are often the first step for a small business to build a credit history, which opens the way to access further financial services such as financing to grow the business.”
Reports show that Adumo processes more than US$5-billion worth of digital transactions annually, processed across about 50,000 active card machines.