You might think that the huge sell-off in certain US stocks caused by rising inflation would have a direct negative impact on the level of activity on investment platforms for retail investors.
But for Bamboo, Nigeria’s investment app, which offers users the ability to invest in US securities, the opposite is true. The number of users on the platform has more than doubled from around 200,000 late last year to almost 500,000 today.
“We’ve seen a huge growth of users into Bamboo,” says Deola Adebiyi, Bamboo’s community engagement manager. “People are discovering Bamboo and when they do it introduces them to the stock market.”
Adebiyi attributes the growth to the enormous pull that the US stock market has for Nigerian and African investors despite currently being a bear market. The key to maintaining and even increasing user numbers during a tough period is being honest about the realities of the market, she says.
“Even though the market isn’t doing well I’d like to think that we are growing because we are educating people that even though it is not doing well, there are opportunities to invest.”
The firm raised a $15m Series A funding round in January after only two years of operations. It will pump the capital into building new products and expanding into other markets, including South Africa and Ghana.
Investing outside Africa and even in Africa’s own stock markets has traditionally been a headache for would-be investors across the continent. For African markets, the process often requires unnecessary complex and time-consuming procedures.
Accessing US markets for African retail investors is even worse. In Nigeria, for example, investors would have to visit a brokerage firm, fill out lengthy forms and start with a minimum of $10,000. Some resort to downloading Western trading apps using a fake IP address.
Like global equivalents eToro and Robinhood, Bamboo has made the US market easily accessible for Nigerians from a mobile phone.
The biggest attraction on Bamboo for Nigerian investors, Adebiyi said, has been US tech firms. Now the sector has taken a hit some are moving money into more defensive sectors like healthcare and energy, but many have held their positions in a bid to ride out the sell-off.
“They’re not necessarily selling off, there is no panic selling,” says Adebiyi. “They still have the Teslas and the Shopifys – tech is still a large part of the typical portfolio.”
This reflects how the platform is being used by the majority of Bamboo’s users – for long-term investing.
“You do have the day traders who cash in and out in a short space of time, but for most people they use it for long-term investments,” Adebiyi says. “So the downturn of the market isn’t really affecting them.”
The main barrier to growth for Bamboo is trust. Nigeria has a reputation for all manner of scams, which dissuades people from trusting the app.
“There’s a serious disconnect between Nigerians and finance,” says Adebiyi. “If you talk to Nigerians about investing they are worried they will be scammed because a lot of these investment proposals are fraud.”
Source: Tom Collins | African.business