US Mercury Bank to close accounts of startups in 13 African countries

American financial technology firm Mercury has announced that it will close the accounts of businesses in 37 countries including 13 African countries. The move, effective August 22, 2024, has sent shockwaves through the continent’s tech ecosystem.

Burundi, Cameroon, Central African Rep, DR Congo, Congo, Liberia, Mali, Mozambique, Nigeria, Somalia, South Sudan, Sudan, and Zimbabwe are the thirteen African countries affected by the restrictions.

The San Francisco-based digital bank, a popular choice for African startups—especially following the collapse of Silicon Valley Bank—cited “recent changes in how we determine account eligibility” as the reason for the closures.

According to an email from the bank shared by Akintunde Sultan, co-founder of a Nigerian ed-tech startup, AltSchool Africa, Mercury has not offered concrete details on the reasons behind these restrictions.

“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.”

The closure of Mercury accounts will significantly impact African startups that rely heavily on dollar funding and international operations.

Over 60% of venture capital funding for Nigerian startups comes from the United States, with 80% of these startups being formally incorporated there for easy access to funds.

Many founders are now actively seeking alternative banking solutions to navigate the disruption.

In a post on X, Sultan shared that “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.”

Alexander H., founder of HRtech startup Synergyy stated “Losing our Mercury Bank account because ‘Nigeria’ is a huge blow. The continued discrimination of African Startups in the global market is not a welcome development.”

The abrupt closure of accounts without prior notice has sparked concerns about the broader treatment of African startups within the global tech ecosystem.