Mercury, a US bank that works with startups worldwide, has told Nigerian company founders whose accounts it closed on August 22, 2024.
According to the Bank, Nigeria has been listed as a prohibited country by its partners; hence, it would not be able to continue operating an account for Nigerian startups and others from the prohibited countries.
According to the Bank's website, 37 countries, mainly from Africa and the Middle East, are on the list of countries not allowed to do business with the Bank. Other African countries on the Bank's "blocklist" besides Nigeria are Burundi, Cameroon, the Central African Republic, the Democratic Republic of the Congo, Mali, Mozambique, Sudan, and Zimbabwe.
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Mercury's Restrictions on International Founders
Beyond a short message on its website saying that international founders "in countries prohibited by our banking partners" can no longer start an account with Mercury, the company did not say why those countries were banned.
One of the co-founders of the Nigerian edtech startup Altschool Africa, Akintunde Sultan, said that he was upset that the Bank didn't give an apparent reason for its decision.
“Mercury closed my accounts too, even with founders living in the US. There is no proper process or appeal; carry your money and go if you have ties to Nigeria. The policy that caused this isn’t well explained because comparing Nigeria to Afghanistan is funny. I guess we’re all moving our accounts to a new USD business account,” he shared in a post on X.
The email from the Bank to the startup founder read:
“We regret to inform you that due to recent changes in how we determine account eligibility, we can no longer 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.”
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US Banking Solutions for African Startups
To facilitate funding, numerous African businesses established themselves in the United States. Mercury and other financial institutions enable individuals to establish a bank account in the United States without physically being present.
Industry analysts have also noted that for any African startup that has received capital from US investors, it is easier to keep the capital in dollars in the US and only bring what they need for their operational needs to their home country.
Additionally, this helps them pay any foreign workers straight from the US.
Until its collapse last year, Silicon Valley Bank (SVB) was the primary financial institution for numerous African entrepreneurs. Many transitioned to alternative options, such as Mercury, following SVB's collapse.
