It should be borne in mind that buying a share in a big company like Amazon could mean paying about $3,000, which meant luxury very few can afford despite the prospects of the trillion-dollar company and returns from its share price, this is a lot for those who can afford to. However, efforts are made in this regard, pioneered by Robinhood, one of such in Nigeria is the investment app Bamboo.
This is because with fractional investing, access to these securities is democratized and people can own smaller shares in big companies. Going forward, it is understood there are many Robinhood-Esque platforms globally due to a growing need to invest in U.S. stocks in different parts of the world, and the aforementioned app is one.
Today the Nigerian investment app launched in January 2020 is announcing that it has raised $15 million in a fresh financing round, which follows two years of significant growth having raised $2.4 million to facilitate it.
U.S.-based Greycroft and Tiger Global co-led the Series A round (understood to be the second Tiger Global-led investment announced this month after Ghanaian fintech Float). This also saw the participation of other investors like Saison Capital, Motley Fool Ventures, Chrysalis Capital, and Y-Combinator CEO Michael Seibel.
In the meantime, Nigeria’s currency, the naira is currently seeing the downside against the U.S. dollar, and while it experiences devaluation and runs on an almost 16% inflation rate, building a portfolio of stocks, notably U.S. stocks is considered a viable way they can hedge against inflation and currency devaluation.
It’s evident an average Nigerian could see the process, tedious and expensive that takes weeks, however, the investment app Bamboo is poised to simplify that. The subject app known as a brokerage and retail investment platform through its partnership with DriveWealth LLC, lets Nigerians set up an account in minutes and buy and trade U.S. stocks in real-time.
‘Richmond Bassey’ who co-founded app Bamboo with COO ‘Yanmo Omorogbe’ said: “What we essentially want to do is to make investing in the global stock market easy for Africans”.
“In accessing investment options, especially in capital markets, both locally and globally, we want to make that easy for Africans because we’re driven to help Africans create and preserve wealth by owning shares in the world’s most successful companies”.
Looking at Nigerian stock market space, investing is relatively nascent, and Bamboo has managed to rack up impressive numbers within a short while, showing expertise in user acquisition and retention. The company claimed it has over 300,000 users; of that number, it’s been observed that 20% are active daily traders, noting that 75% have never traded stocks before using the subject platform. In 2021, repeat depositors accounted for 85% of deposits on the company’s platform.
Users on this platform are charged a commission of 1.5% per transaction, which is in the regions of ~$0.1 (N45) to $45 withdrawals for users with naira and dollar bank accounts respectively.
Meanwhile, there are concerns over fintechs’ operation in the subject market, outside competitors in retail investment space such as Rise, Chaka, and Trove. As a result of the declaration from Nigeria’s capital market regulator SEC, in April, declared the activities of these investment firms as illegal and warned capital market operators to stop working with them.
Hence, in August, the Central Bank of Nigeria (CBN) accused these firms of operating without licenses as asset management companies and “utilizing F.X. sourced from the Nigerian F.X. market for purchasing foreign bonds/shares”. This followed a court order to freeze these firms’ accounts for six months pending CBN’s investigation. According to findings released by Apex bank, the four fintech’s had a total of $30 million turnovers from January 2019 to April 2021. Although, Bamboo had told a source familiar with the matter that it received a court order to unfreeze its accounts, which the tight regulatory space has somewhat stood in the way of other Robinhood features and free investment platforms like crypto.
- What more do we know?