A United States bank that operates accounts for startups globally, Mercury, has notified Nigerian startup founders who have accounts with it of plans to close their accounts on August 22, 2024.
According to the bank, Nigeria has been listed as one of the prohibited countries by its partners, hence, it would not be able to continue to operate an account for Nigerian startups and others from the prohibited countries.
The list of the prohibited countries published by the Bank on its website shows 37 countries mainly from Africa and the Middle East.
Aside from Nigeria, other African countries blacklisted by the Bank include Burundi, Cameroon, the Central Africa Republic, the Democratic Republic of Congo, Mali, Mozambique, Sudan, and Zimbabwe.
No further explanation was given
Aside from a short message on its website stating that international founders “in countries prohibited by our banking partners” are not eligible to open an account with it anymore, Mercury did not provide further explanations on why the countries have been prohibited.
A co-founder of Nigerian edtech startup, Altschool Africa, Akintunde Sultan, whose company is affected by the closure lamented that the Bank gave no clear explanation of its action.
“Mercury closed my accounts too even with founders living in the US. No proper process or appeal, just carry your money and go if you have ties to Nigeria. The exact policy that caused this isn’t even well explained, because comparing Nigeria to Afghanistan is funny. I guess we’re all moving our accounts to a new USD business account now,” he shared in a post on X.
The email from the bank to the startup founder simply read:
“We regret to inform you that due to recent changes in how we determine account eligibility, we are no longer able to support accounts for businesses with associated addresses located in these countries (the prohibited countries). As a result, we will be closing the Mercury account for AltSchool Africa Inc. on August 22, 2024.”
What you should know
Many African startups are incorporated in the US to have easy access to funding. Financial institutions such as Mercury make it possible for them to open a US bank account even without actually being in the US.
Industry analysts have also noted that for any African startup that has received capital from US investors, it is easier for them to keep the capital in dollars in the US and only bring what the need for their operational needs to their home country.
This also makes it easier for them to pay any of their foreign workers directly from the US.
Until its collapse last year, Silicon Valley Bank (SVB) was the main bank for many African startups. SVB’s collapse saw many of them move to other alternatives including Mercury. (Nairametrics)
