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Ghanaian fintech SecondSTAX allows investors to access capital markets outside their countries, raises $1.6M
African capital markets exist in silos, as various exchanges within the continent are often inaccessible to investors outside their home countries. For instance, a South African investor who wants to diversify their portfolio outside the Johannesburg Stock Exchange may find investing in the Nigerian Stock Exchange difficult.
Not only does this limit investors’ access to high-growth securities, but it also limits access to capital that has grown in leaps and bounds over the past couple of years. Per reports, major regional exchanges in Africa have raised over $80 billion in equity capital markets and $240 billion in debt capital markets.
While local retail apps such as Bamboo and Chaka offer U.S. and foreign stocks to individual consumers, they are as constrained as traditional brokers when it comes to helping consumers buy stocks and bonds across different capital markets within Africa. However, there’s a startup taking a peek at the challenge and aiming to tackle it with its cross-border, multi-asset order routing and market data portal: Ghanaian fintech SecondSTAX (Secondary Securities Trading and Aggregation eXchange).
The platform, which will allow broker-dealers, asset managers, pension funds, and institutional investors to access markets outside their own country, is announcing its launch to the public today. To bolster its efforts, it has also raised $1.6 million in pre-seed funding from private investors and venture capital firms, including LoftyInc Capital and STEMeIn.
SecondSTAX co-founder and chief executive officer Eugene Tawiah brings immense experience to run such an ambitious project. In addition to spending more than a decade at Goldman Sachs, he ran various consulting and tech jobs for firms in financial services and capital markets.
In 2018, a landmark event tilted his journey into building SecondSTAX. That was the year MTN Ghana, a local telecom operator, went public in the West African country after raising about $237 million. “I was having conversations with heads of trading desks and there was a sense that during MTN’s IPO, that even though one had a bunch of cash to invest, if you were not in Accra, there was no way to access or buy into that IPO,” Tawiah told TechCrunch on a call. “And so the concept I had in mind was, if I stayed in Lagos, Nairobi, or some other place outside of Accra, how do I get access to these offerings and be able to trade them?”
Tawiah co-founded the company with Duke Lartey. SecondSTAX provides access to debt and equity securities across multiple African bonds and stock exchanges. Similarly, the B2B capital markets infrastructure platform says it will assist investment firms outside Africa that want to invest in emerging and frontier economies on the continent. Investment firms onboarded on its platform can also hold assets in various currencies, thereby reducing single currency risk and reducing the volatility in their returns, whether in Africa or elsewhere, the fintech said.
Breaking down how SecondSTAX works, Tawiah says to think of his company’s platform as a layer in a series of concentric circles. The first and second …read more
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UPI supercharged mobile payments in India. It’s now gearing up for next phase of growth.
In just six years, UPI has become the most popular way Indians transact online. The mobile electronics payments system was used for over 6.57 billion transactions in the world’s second largest internet market last month. Now, it’s taking steps to supercharge its growth.
The payments network, which was built by a coalition of banks, is India’s attempt to challenge card companies in an open market, bring hundreds of millions of people into the fold of digital payments and curb the proliferation of corruption.
“During the period between March 2020 and August 2022, UPI usage grew by 427%,” said Shaktikanta Das, the governor of India’s central bank, at a conference Tuesday afternoon.
The central bank is working to expand UPI to “several nations in Asia and the Middle East and other parts of the world,” and is setting up an international subsidiary, he said.
“UPI has emerged as the pride of the nation… It’s one area where I think India can play a major leadership role in the world in the days to come. It’s a phenomenal product, but we need to be extremely watchful of its infrastructure as it scales,” he added.
On Tuesday, Das said two new offerings of UPI — one expands its usercase while the other will helps it continue to scale — have gone live.
He said a lighter version of the payments system, called UPI Lite, is now live in the country with eight banks including HDFC, SBI and Kotak. UPI Lite, which was first proposed earlier this year, processes payments below 200 Indian rupees ($2.5) and is aimed at lowering the burden on banks’ infrastructure, executives said at a conference Tuesday.
For all its fast-growth, UPI continues to face some challenges with its success rate. UPI Lite is designed to work in near-offline mode and appears to handle settlement slightly differently from its mature counterpart. “You will receive SMS once a day for UPI LITE Transactions from your Issuing Bank containing history of Transactions carried out during the day,” an FAQ explains.
UPI Lite creates a virtual, on-device wallet that can hold up to $25. About 50% UPI transactions carry a value of $2.5 or less. “UPI Lite will provide users with a convenient solution for faster and simpler low-value transactions,” said National Payments Corporation of India, a special unit of the central bank that oversees UPI.
The central bank is also moving ahead with its plan to link UPI to credit cards.
Das said Indian Bank will be the first to issue Rupay Credit Card that links to UPI. By adding support of UPI on top of credit cards, the central bank is attempting to further grow the application of the newer payments system, allowing “increased opportunity” to customers to use their credit cards and build credit rating, the executives said.
“This could potentially increase credit card penetration and expand the scope of digital payments in India, positively impacting both card companies (such as SBI …read more
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