South Africa based Fintech group Adumo has secured R225 million (appr. $14.9 million) in capital from the International Finance Corporation (IFC), which is a member of the World Bank Group. The IFC Financial Institutions Growth Fund also contributed investments in order to expand access to digital payment services, especially for the financially underserved SMBs.
Adumo, which is an independent payment provider that maintains an active presence in 14 African countries, reportedly owns merchant acquirers Sureswipe and Ikhokha and payment processing service Innervation Pan African Payments.
Paul Kent, CEO at Adumo, stated:
“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 are intended to support Adumo so it can make digital or online payments systems a lot more affordable and accessible to SMBs based in Africa, many of which still depend on cash to settle most of their transactions.
Sérgio Pimenta, the IFC’s VP for the Middle East and Africa region, remarked:
“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 provided by IFC and the IFC Financial Institutions Growth Fund, a fund that’s managed by IFC’s asset management firm, includes $15 million (R231m) worth of preferred shares to finance the growth of the company.
In South Africa, smaller businesses currently employ over 50% of the country’s entire workforce and contribute nearly 35% to the GDP. However, many South African SMBs do not have access to essential services that would help their companies grow to serve more clients.
Digital and mobile payment services may help these small businesses with streamlining their operations and improve their ability to retain more customers while supporting a transition to a more efficient cashless economy.