Chipper Cash Becomes Next FTX Investee from Africa to Lay Off Over 12% Employees

The Central Bank of Nigeria (CBN) has decreased the weekly cash withdrawal limit for individuals to 100,000 Nigerian naira ($225) from 2.5 million naira ($5,638).

“The maximum cash withdrawal per week via automated teller machine shall be 100,000 Naira subject to a maximum of 20,000 Naira ($45) cash withdrawal per day.” – Central Bank of Nigeria

Only denominations of 200 Naira and less will be loaded into ATMs.

The move is part of a policy intended to curb counterfeiting and discourage ransom payments to kidnappers. The decision is also meant to bring more Nigerians into the banking system, in a country where the majority remain unbanked and are always doing transactions in cash.

“N2.73 trillion ($4.9 billion) out of the N3.23 trillion ($5.7 billion) in circulation exists outside the vault of the commercial banks.  Evidently, currency in circulation has more than doubled since 2015, rising from N1.46 trillion ($2.6 billion) in December 2015 to N3.23 trillion ($5.7 billion) as of September 2022,” Central Bank Governor, Emefiele, said in November 2022.

The weekly limit for businesses has also been reduced to 500,000 naira ($1,128) from the current daily limit of three million naira ($6,766).  However in compelling circumstances, individuals and businesses could withdraw a maximum of five million naira ($11,277) and 10 million naira ($22,553) respectively once a month, it added.

CBN warned commercial lenders against violating the new cash limits which it said were in line with its policy to promote cashless transactions.

“Withdrawals above these limits shall attract processing fees of five percent and 10 percent, respectively,” the CBN said.

The announced restrictions are a follow-up to the new notes introduced by the bank in November 2022 to address corruption and the excess use of cash. According to the bank, both interventions will take effect in January 2023.

Part of the CBN’s strategy to drive down cash usage is to increase the adoption of the eNaira digital wallet that was launched in October 2021. Only one million Nigerians have downloaded the wallet since it was introduced with CBN vowing to increase sensitization efforts.

‘From today, we are going to carry out this sensitization program through all the nooks and crannies of this country until eNaira is widely accepted,’ an official said during the platform’s 1-year anniversary celebration in late October 2022.

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Pan-African payments app, Chipper Cash, has laid off 50 employees across multiple departments, with the engineering department losing 60% of staff.

According to Techcrunch, many employees took to LinkedIn to reveal this situation which has affected 12.5% of the company’s employees.

“This morning, a significant amount of Chipper staff were let go in a layoff. While I was not among them, many of my close colleagues and friends were. If you’re looking for talented engineering leadership, engineers, technical program managers, analysts, or IT staff…,” Erin Fusaro, the VP of Engineering at Chipper Cash said in her LinkedIn post.

Chipper made headlines when it raised $150 million in a series C extension that valued the company at $2 billion making it one of only 5 unicorns in Africa. The round was led by bankrupt crypto platform, FTX, financing about $40 million of the round as the 2 companies also explored how FTX users in Africa could use Chipper Cash to move funds on and off the FTX trading platform.

In November 2022, FTX clipped Chipper Cash’s valuation to $1.25 billion. This was revealed by a recent spreadsheet containing Alameda Research investment portfolio, indicating that Chipper Cash received an additional $35 million in SAFE from FTX at a $1.25 billion valuation.

The spreadsheet, obtained by Financial Times, includes nearly 500 companies with 7 from Africa that FTX saw as its investmets:

• Ovex ($5 million from FTX at a $122 million valuation)
• AZA Finance ($25 million promissory note/loan)
• African mobile money unicorn, Wave ($10 million in equity)
• South African crypto exchange platform VALR ($4 million equity)
• Nigerian crypto exchange startup, Bitnob ($500,000 from FTX at a $20 million valuation);
• Nestcoin  ($250,000 equity from FTX at a $30 million valuation)
• Congolese-based web3 startup, Jambo ($500,000 in tokens)

It is thought that some of FTX’s and Alameda’s portfolio companies didn’t receive the full amount of investments stated in the financials due to the ensuing insolvency.

In November 2022, another FTX investee, Nestcoin, a startup that builds, operates, and invests in Web3 applications for Africa, said it was forced to release some of its employees following the FTX bankruptcy.

Nestcoin which raised a $6.45 million pre-seed investment in February 2022 with several participants, including Alameda Research, said it had some of its funds stuck on the defunct exchange, affecting its operations. According to founder, Yele Bademosi, some of the money they raised was held in FTX, either as stablecoins or cash.

The revealed document does not indicate how Chipper’s funding was denominated nor how it was structured, but the company is evidently facing problems.

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