Richmond Bassey, the CEO of Bamboo, a Nigerian-born retail trading app, has stated that despite the challenges the country is facing, Ghana’s fintechs face a souring local market.
According to Mr Bassey, in spite of a weak local economy, a currency in free-fall, and tight market conditions globally, Bamboo retains optimism about its new Ghana operations. However, he noted that it’s not the same story for everyone as non-payment fintechs with individual and SMEs clients have been hit hard.
Worsening local and global economic conditions mean non-payment fintechs may face more headwinds. But Bamboo’s CEO said he is unfazed by the downturn.
Headwinds Building Up
Mr Bassey explained that before this round of crises put pressure on Ghana’s economy, an unpopular 1.5% levy on electronic payments had put pressure on revenues for payment companies.
The CEO added that Ghana’s public market has ranked in the top ten best stock exchanges in Africa in the past three years.
“In the year-ended 2021, Ghana’s stock market was the second-best performing public market in Africa (investors recorded a 38.59% return in US dollar terms, or +43.66% in local terms). This strong performance has undoubtedly encouraged local investment in Ghana’s publicly traded companies and funds. However, the local bourse has declined by 11.78% between November 2021 and November 2022.”Richmond Bassey
However, coupled with raging inflation and a spiraling cedi, it is a fair assumption that investors may be reassessing their investments or at least investing in more attractive markets like the US.
“Bamboo appears to be banking on this. Even though the market isn’t doing well, I’d like to think that we are growing because we are educating people that even though it is not doing well, there are opportunities to invest.”Richmond Bassey
Defying the Fate of Robinhood
Mr Bassey noted that he is being inspired by US retail trading app, Robinhood. He disclosed that Bamboo offers users educational tools including free premium content from popular investment education websites, Motley and Mywallst. But its main offering is a partnership with US-based DriveWealth LLC that allows Bamboo to buy fractional shares in US-listed companies and funds.
Meanwhile, Mr Bassey noted that Bamboo has raised a total of $32.6 million in funding over five rounds, including a $15 million Series A fundraise which was announced in January this year, 2021.
In contrast, Bamboo’s inspiration, Robinhood, isn’t doing very well. After peaking at 21.3 million in the second quarter of last year, 2021, the app’s monthly active users declined to 13.3 million in August this year. Robinhood’s users are also trading less than they did a year ago and the company failed to reach revenue estimates in the last earnings call held just three weeks ago.
With the downturn in publicly listed companies in the US, Bamboo users are becoming more cautious. “People want to invest for the long term,” CEO Bassey said. Users now spend more time in the app but are buying less of more, he stated. Exchange-traded funds (ETFs) like Vanguard are a growing favourite, he added.
Unlike Robinhood’s public filings which show a decline in engaged users, Bamboo’s CEO noted that Bamboo users spend about eight hours monthly on the app, up from just over five hours from the second half of last year, 2022.
“The economic conditions are impacting how much people want to invest, not their willingness to invest. What we are seeing is that volumes have grown. In the first half of 2022 we’ve seen that trade values have reduced, not the volumes. For more risk-averse investors, the company is considering offering an 8% fixed-yield product to Ghanaian users. The product is currently only available in Nigeria.”Richmond Bassey
In the meantime, Bamboo appears to be doing well in general, but it is not clear if it can replicate its Nigerian performance in Ghana. Bassey believes that growth in new account openings reinforce his belief that there is still strong demand especially since most users appear to be purchasing company shares for the long term.
Ghana is suffering a twin debt and currency crisis. The economy is also struggling through record high inflation. The country’s debt servicing is expected to take up 47% of revenue in 2022. Negotiations for a $3 billion IMF rescue program are ongoing as the government scrambles to shore up falling revenues and prop up the value of the Ghanaian cedi.
A few months after Bamboo, an online brokerage app, launched in Nigeria in 2020, and it was flooded with emails from Ghanaians requesting access to the app. The waiting list from Ghana grew to 50,000. Two years later, this September, Bamboo opened access to Ghanaians after securing permission from Ghana’s Securities and Exchange Commission (SEC).