US Bank Collapse May Affect Financial Inflows, Jobs In Nigeria Business CoverStories
The chief executive at General Partner of Future Africa, an early-stage venture capital firm, Iyinoluwa Aboyeji, who noted that SVB was one of the banks that knew how to bank tech companies, said many Nigerian tech companies banked with SVB for this purpose.
“The bank was affected as a result of the high interest rate and the bank wasn’t playing with depositors’ money; the bank invested the money in safe instruments. Unfortunately, because of the way they communicated their solution to the impediment, investors panicked and therefore they all rushed to the bank to withdraw their money.
“This will impact them, because operational funds become stuck, in that they will not have the funds to pay salaries, making them lay off staff. I know one such tech company. Meanwhile, in Africa, Chipper Cash is one of the biggest tech startups in Africa that is affected, in that it has some of its funds with Silicon Valley Bank. Recall that Chipper Cash laid off 12.5 per cent of its employees in December, 2022. We expect to see more layoffs with this new development,” he said.
Meanwhile, the head of financial institutions ratings at Agusto&Co, Ayokunle Olubunmi, whilst relating the SVB circumstance to the Nigerian banking industry, stressed the need for banks to diversify their assets and exposure.
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