Well, well, well. While you were still nursing your New Year's hangover, African banking decided 2026 would be the year of consolidation. Flutterwave, “The Stripe of Africa” just swallowed Nigeria's "Plaid for Africa" in an all-stock deal that has VCs wondering why all-stock? Let’s get into today’s edition.

• Flutterwave acquires Mono in $25-40 million all-stock deal, marking Africa's first Y Combinator-to-YC acquisition

• Moody’s downgrades Bidvest as Nigerian Bank Acquisition Looms

• Kenya's VASP Act becomes law, establishing comprehensive crypto regulation framework supervised by CBK and CMA

• African startups raised $3.2 billion in 2025, up 40% year-over-year with clean energy overtaking fintech in Kenya for the first time

ONE BIG THING

Flutterwave Swallows Mono: Open Banking meets Payments

Why it matters: This is a bet on Africa's banking infrastructure future. Flutterwave (Africa's most valuable fintech at $3 billion) just acquired Mono in an all-stock deal worth between $25-40 million, signalling that the next phase of African payments growth will be driven by bank-based, authenticated payments rather than traditional card rails.

State of Play: Founded in 2020, Mono built what insiders call "Plaid for Africa": essentially APIs (code that helps two programs speak to each other) that let businesses access bank data, verify customers, and initiate direct account-to-account payments. The startup raised $17.5 million from heavyweights like Tiger Global, General Catalyst, and Target Global. The company claims to have powered over 8 million bank account linkages across Nigeria, South Africa, and Ghana - roughly 12% of Nigeria's banked population - delivering 100 billion financial data points to lenders and serving clients like Moniepoint and PalmPay.

Catch Up: This deal marks Africa's first Y Combinator-to-Y Combinator acquisition (both companies are YC alumni), and it's not a distress sale. Some early investors reportedly saw paper returns of up to 20x, though these gains remain unrealised since it's an all-stock deal. The acquisition follows a multi-year partnership dating back to 2021, making this more strategic consolidation than opportunistic grab.

Zoom In: Why would Flutterwave, which processes over 1 billion transactions worth $40 billion since 2016, need Mono? Two words: vertical integration. Card transactions in Africa involve multiple intermediaries - acquirers, issuers, switches - each taking a cut and introducing failure points. Settlement can stretch beyond 48 hours. Mono's infrastructure enables direct account-to-account transfers that settle almost instantly on local rails, bypassing the high fees and failure rates plaguing international card schemes like Visa and Mastercard in Africa.

More strategically, this positions Flutterwave to own the financial data layer behind transactions, potentially evolving from payment processor into a comprehensive financial institution capable of offering credit-related services. Think of how Mastercard acquired Finicity for $825 million in 2020 to integrate open banking APIs for lending, risk scoring, and identity verification.

Is this a trend? For the broader African fintech ecosystem, this signals a maturation trend: startups that once aimed to become standalone giants may increasingly find better outcomes by integrating into scaled platforms. And in short that means, the era of consolidation has arrived.

Moody's Downgrades Bidvest Bank as Nigerian Access Bank Acquisition Looms

What's happening:
Moody's downgraded Bidvest Bank's ratings after a 12-month review, citing Bidvest Group's decision to sell its 100% stake to Nigeria's Access Bank for approximately R2.8 billion. The rating agency shifted affiliate support probability from "high" to "low," meaning Bidvest Bank will no longer benefit from parent company backing (though some contingent funding lines remain until ownership transition concludes).

Why it matters: Bidvest, an R84 billion industrial conglomerate, is exiting financial services entirely after failing to build banking scale over 26 years. This reflects a broader truth: banking requires either massive scale or extreme specialisation to succeed profitably. Bidvest tried the former, couldn't achieve it, and is now refocusing on core industrial businesses where it actually makes money. Access Bank, operating in South Africa since 2021 (after acquiring Grobank), plans to merge Bidvest Bank with its existing subsidiary to create an enlarged platform anchoring its SADC regional growth strategy. Moody's stable outlook balances good capital/liquidity buffers against weak asset quality and limited diversification. Basically the bank has too many non-performing loans and their business is too concentrated in one area (Like Fleet management and foreign exchange).

Bidvest's banking journey: acquired Rennies Foreign Exchange (1998), obtained banking licence (2000), renamed to Bidvest Bank (2007). In 2011, it failed to acquire Mercantile Bank from Portuguese authorities who called the approach "hostile" - Mercantile later went to Capitec, becoming Capitec Business. Bidvest Bank's 2023 numbers: R234 million trading profit, R5 billion in loans/advances, R8 billion in deposits. This is small by South African banking standards, which is precisely the problem. But Access Bank has been methodically building African presence, and this acquisition fits its regional expansion strategy.

So what? This continues the broader European bank retreat narrative: HSBC exited South Africa in 2024 (clients transferred to FirstRand and Absa), BNP Paribas wound down South African corporate/investment banking two years ago. Now an industrial conglomerate is also saying sayonara. Who are the winners here? Nigerian pan-African banks (Access), established South African players, and Moroccan banking groups. Seems like the lesson is pretty clear: you either commit fully to banking with proper capital and scale, or you exit. It’s tough, but half-measures don't really work in financial services. It will be interesting to watch Access Bank's post-merger integration strategy - successful consolidation could boost its SADC positioning significantly.

📊 POLICY WATCH

THE SCOOP

Quick hits from around the banking world:

• South Africa's digital payments projected to exceed ZAR2.9 trillion ($159 billion) in 2025, with card usage rising at 10.4% annually and consumers averaging 118+ card transactions per year.

• African startups' debt financing exceeded $1 billion for the first time, accounting for 45% of total funding by mid-2025 as investors favour predictable cash-flow models.

• Ghana cleared $1.47 billion in legacy energy sector debts in 2025, restoring World Bank guarantees and settling power producer arrears. Go Ghana!

• Sad day as Zimbabwe's Econet Wireless to delist from ZSE and create infrastructure spin-off for Victoria Falls Stock Exchange listing.

• First Atlantic Bank lists on Ghana Stock Exchange after 30 years, potentially stirring further activity on the Accra bourse.

• Angola's banking system shows renewed lending momentum to productive economy, suggesting banks are taking more real-economy risk.

• Kenya's economy grew 4.9% year-over-year in Q3 2025, faster than previous periods with strongest job growth in years.

On This Day

January 12, 1910: The South African Reserve Bank was recommended for establishment, though it wouldn't officially open its doors until 1921. The recommendation came after the Transvaal Commission on Banking and Currency Laws proposed creating a central bank to stabilise the country's currency following the economic chaos of the Second Boer War. Fun fact: Before the SARB, South Africa had no fewer than three separate currencies circulating simultaneously - the Cape pound, the Transvaal pond, and various British notes. Imagine trying to price your morning coffee.