MFS Africa, a Johannesburg-based fintech, has secured £2 million (~$2,576,000) in funding from the UK's Department for International Development (DFID). The investment was announced yesterday by International Development Secretary, Penny Mordaunt, during the launch of the "Companies to Inspire Africa 2019".
"We are committed to supporting innovative African companies to make it easier for finance to flow into and across the continent. It is estimated that US$66 billion in remittances flow into Africa annually, with approximately 10% originating in the UK," she said.
She added that:
"the transfer of money by foreign workers to their families in their home countries is a lifeline to many in Africa. But many are losing their hard-earned money to too high remittance fees".
In 2018, MFS Africa raised a total of $14 million in funding, putting it among the 25 most funded companies across Africa in 2018, per the Digest Africa Index report. It also became the first African fintech to be funded by a China-based VC after LUN Partners Group led the Series B.
This follow-on round, thus, falls under the Bridge category, per our methodology, and brings MFS Africa's total funding raised in the past 12 months to a little over $16.5 million.
The UK Government has before backed companies across the continent through different vehicles, the DFID included.
A notable investment towards the end of 2018 was the CDC Group's (UK's development finance institution) $180 million investment made into Liquid Telecom. In the same year, it also participated in M-Kopa's follow-on round, though the amount wasn't disclosed.
However, the CDC Group also made investments into Jumia Group, taking part in the e-commerce giant's $150 million Series C that it announced in November 2014.
The UK's increased participation into early-stage and emerging companies on the continent - through its investment vehicles and now the London Stock Exchange - could be a move to lure them to list on the exchange when the time is right for some, like Liquid Telecom and Jumia Group.