Lights out, banking apps down

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How a power outage at MainOne data centre took Nigerian banks offline

If you use a tier-1 bank, you may have experienced a service disruption in the early hours of Wednesday, October 9, 2024. You probably blamed the disruption on the ongoing technological changes by several Nigerian banks. You were wrong.

What happened was a power outage at a data centre operated by MainOne, a major internet provider for most Nigerian banks. The one-hour outage knocked several Nigerian banks offline and affected millions of customers. That’s why you couldn’t access your bank app that morning.

We will tell you why this is a big deal.

Think of your bank as a car and MainOne as the engine. The bank needs a reliable infrastructure—especially secure network connectivity—to function efficiently. MainOne provides that connectivity.

Urgent situations, they say, call for urgent measures. One person familiar with the situation told me that at least three chief technology officers (CTOs) of the affected banks visited the data centre hours after the outage happened.

Another person said a faulty circuit breaker caused the power outage. Data centres like MainOne’s consume significant amounts of power so they rely on multiple power sources, including utility and diesel generators. 

While MainOne has since fixed the problem, the incident is just another reminder of how important connectivity is to a bank’s operations. If you call the internet the lifeblood of a bank, you won’t be wrong.

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OmniRetail's recent all-stock acquisition of Nigerian fintech startup Traction Apps highlights a growing trend: investors are supporting founders to consolidate their startups into larger entities with greater potential for significant returns.

It previously happened in May 2024 when Paystack, the Stripe-owned fintech, led a group of investors to acquire Brass. Before that, in September 2023, Eke Urum, founder of investment platform Risevest acquired digital trading startup Chaka on the suggestion of an investor.

It's easy to see how the Traction Apps acquisition is a win-win for all parties involved. For OmniRetail which has been seeking funding for a new round, this deal will bolster its fintech arm and attract fintech investors who, in West Africa, are reportedly more liberal with cash and valuation multiples compared to other sectors. 

On the other hand, Traction Apps investors get to say they have exited another startup in a clime where many have been lost to the harsh funding climate. The all-stock deal gives Traction Apps investors equity in a startup with a brighter future. 

However, it remains unclear at what valuation Traction Apps was acquired and how much stake the incoming investors get in OmniRetail. As usual, the VCs are holding these numbers to their chest, leaving us guessing. 

Pick n Pay stores will soon start disappearing from Nigeria as the grocery retailer confirmed on Monday that it has sold its 51% share of its joint venture back to Nigerian conglomerate, A.G. Leventis. 

In 2020, Pick n Pay entered Nigeria—a market it described as “risky” upon entry—through a partnership with A.G. Leventis. The South Africa-based retailer operated two walk-in stores in Victoria Island and Ikeja, Lagos, where it distributed fast-moving consumer goods (FMCGs).

While the decision to leave Nigeria could be summed up as a result of the inflation and its impact on consumer goods, yet, some of its other chain businesses outside South Africa have not been performing so well due to currency devaluation.

The retailer reported a R1.1 billion ($62.2 million) loss before tax in the half-year period ending August 25. This was significantly higher than the R837.2 million ($47 million) loss it reported the year before. The company also reported mounting debts and its liabilities being greater than assets earlier this year.

Pick n Pay’s outgoing chairman Gareth Ackerman said the performance of their core Pick n Pay business has been poor and has not met expectations. 

The company will raise between R6–8 billion ($339 million–$452 million) in secondary share sales of its subsidiary FMCG business, Boxer Retail, which it acquired in 2002. With the funds, it will refinance and refocus its businesses outside of South Africa.

Pick n Pay is one of three largest grocery chains in South Africa, along with Shoprite and Spar Group. While Pick n Pay has been posting losses, its two biggest competitors—which still have a presence in Nigeria—have been thriving in the market which is likely due to their established presence in different regions in the country.

While Pick n Pay will no longer compete in Nigeria, it still has physical presences in Botswana, Eswatini, Lesotho, Namibia, Zambia, and Zimbabwe.