South African fintech group Adumo recently announced R225 million in new funding from the International Finance Corporation (IFC), a member of the World Bank Group, and the IFC Financial Institutions Growth Fund to expand access to electronic payment solutions, particularly for underserved small and medium-sized businesses.
Adumo, an independent payment provider with a presence in 14 African countries, owns merchant acquirers Sureswipe and Ikhokha and payment processor Innervation Pan African Payments.
Paul Kent, the chief executive of Adumo, said: “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. 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.”
The IFC’s investments would support Adumo to make digital payments systems more affordable and accessible to smaller businesses in Africa, many of which rely on cash transactions.
Sérgio Pimenta, the IFC’s vice-president for the Middle East and Africa, said: “Through this investment in Adumo, we will be helping small businesses tap into the digital economy, which is more important now than ever before. 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.”
The investment by the IFC and the IFC Financial Institutions Growth Fund, a fund managed by IFC’s asset management company, consists of $15 million (R231m) in preferred shares to fund the growth of the company.
In South Africa, micro, small and medium-sized enterprises employ more than 50 percent of the workforce and contribute about 34 percent of gross domestic product, but many don’t have access to key services that would help their business grow. Digital and mobile payment solutions can help businesses increase footfall and improve customer retention by supporting the transition away from cash-based transactions.