A systemic problem for African startups
How a lack of access to funds in U.S. dollars could potentially stifle growth.
It’s one thing to deal with the challenges of building a business in a developing market, but having to worry about basic banking infrastructure as well, is a double blow.
That's precisely the situation many startups in Africa and some other emerging markets face with the impending closure of their Mercury Bank accounts – one of the popular U.S.-based banking options for the tech ecosystem in Africa, giving them easy access to funds in U.S. dollars.
Scrutiny against Africa by Western financial bodies have always been an evolving issue. Despite countries like Nigeria, South Africa, and Kenya brimming with talent and potential and home to major tech hubs in the continent, they have sadly been labelled high-risk countries – in most instances unfairly.
To have a crucial financial service like this pulled out is a setback of epic proportions, potentially stifling funding and growth. And, while other bank options in the U.S. exist, the reality is the same, it appears to be a systemic problem targeted at African economies.
Still, it is a wake-up call to develop homegrown infrastructure that would support the financial needs of the African tech ecosystem.
Until the next one,
– Emmanuel
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