When the United States Congress enacted the Sarbanes-Oxley Act (SOX) in 2002, it was a legislative sledgehammer swung in response to the financial debacles of Enron, WorldCom, and their ilk. Designed to restore investor confidence and enforce corporate accountability, SOX introduced rigorous audit standards, placed personal liability on executives, and tightened financial disclosures. It also made listing on US exchanges a more bureaucratic and costly affair. Two decades later, the consequences of SOX still reverberate, especially for foreign companies — including African tech startups — eyeing the American capital markets.
The US IPO Dream and African Startups
The American public markets remain the ultimate prize for many ambitious African startups seeking global capital. However, the stringent requirements of SOX have made the process of going public in the US both expensive and legally perilous. Compliance costs alone can exceed $2 million annually, a financial burden that can easily drown companies still struggling to establish themselves. Then there is the regulatory minefield: CEOs and CFOs must personally certify financial statements, a risk that turns into potential 20 years prison time if inaccuracies — deliberate or not — are uncovered.
Despite these hurdles, the attractiveness of US capital markets persists. Africa’s tech landscape has seen significant growth, with companies like Jumia making history as the first Africa-focused tech firm to list on the New York Stock Exchange (NYSE) in 2019. Yet, Jumia’s own post-IPO trajectory — marked by fraud allegations, governance concerns, and stock volatility — has served as a major insight into the vagaries associated with going on IPO in the US. The recent allegations against another African tech firm SWVL by short seller Wolfpack Research is another case in point. And then, there is the far more egregious case of Tingo Group.
Tingo Group’s Show of Shame
Tingo Group, once touted as a promising African fintech, failed a crucial test of proving that African tech companies can offer competitive listings — instead, it provided a masterclass in financial deception. Its founder, Dozy Mmobuosi, built a narrative of a booming mobile and agri-fintech empire, allegedly leasing mobile phones to farmers in Nigeria and Ghana while facilitating agricultural transactions through a proprietary platform. Investors, hungry for exposure to Africa’s digital revolution, bought into the story.
Reality, however, was far less inspiring. Tingo Mobile’s financials were a maze of fabrications, its claimed revenues and assets little more than creative accounting efforts. In truth, the company had no meaningful operations, no real customer base, and — according to US authorities — about $15 in its bank account at the end of 2019. Mmobuosi and his associates allegedly led a grand deception, falsifying financial statements and creating fake supporting documents to mislead auditors and investors alike.
US regulators eventually came calling. By January 2024, the US Attorney’s Office unsealed a criminal indictment against him, accusing him of securities fraud, wire fraud, and other financial crimes. In August 2024, the US District Court for the Southern District of New York entered a final judgment against Mmobuosi, resulting in the cancellation of his shares in Tingo Group and its subsidiary Agri-Fintech. Mmobuosi, facing arrest in the UK, promptly fled to Nigeria, where he remains a fugitive.
It would be tempting to argue that the Sarbanes-Oxley Act was precisely designed to catch cases like Tingo Group. After all, SOX mandates stricter financial controls, independent audits, and executive accountability. Yet, the reality is that fraudsters, when sufficiently motivated, can still manipulate the system.
The audit firm engaged by Tingo Mobile — Olayinka Temitope Oyebola & Co. — raised numerous red flags about the company’s internal controls but still issued unmodified opinions affirming Tingo Mobile’s financial statements. That a small Nigerian audit firm could rubber-stamp blatant fabrications raises questions about regulatory oversight, not just in Africa but in the US as well. The very mechanisms SOX put in place to prevent another Enron failed to detect Tingo Group’s house of cards until significant damage had been done.
The Impact on African Startups Eyeing US Listings
The fallout from Tingo Group will undoubtedly reverberate across the African startup ecosystem. If US investors were already skeptical about African IPOs, this episode will do little to reassure them. Even before Tingo’s downfall, US exchanges were raising the bar for overseas IPOs. The Holding Foreign Companies Accountable Act (HFCAA), initially targeting Chinese firms, has set a precedent for tougher oversight of foreign companies. More scrutiny, more compliance hurdles, and possibly even less investor appetite for African firms seeking US listings will be the inevitable consequences.
African tech startups with legitimate aspirations to list in the US will now face an even steeper climb. Heightened due diligence by regulators and investors will likely increase costs and slow down approval timelines. While this may filter out bad actors, it also means genuine companies with solid business models could struggle to access US capital markets.
For African startups considering public listings, the London Stock Exchange (LSE) has increasingly become the preferred alternative. The UK’s regulatory environment, while strict, is generally viewed as more flexible than the US’s post-SOX framework. Companies like Airtel Africa and Helios Towers have successfully listed on the LSE, drawing significant investor interest without the added burden of SOX compliance.
With Tingo Group’s debacle fresh in memory, it is likely that more African startups will rethink their IPO strategies. While the lure of US capital remains strong, the cost of compliance, regulatory risks, and potential investor skepticism may push more companies towards London — or even regional African exchanges. Flutterwave, a Nigerian payments startup that initially intended to list in the US, where most of its investors are based, has recently shifted gears and is now exploring the Nigerian Stock Exchange.
The Bottom Line
The Tingo Group scandal serves as a stark reminder that while US capital markets offer unparalleled access to funding, they also demand rigorous governance and accountability. Historically, no African tech startup has exceeded positive expectations on US exchanges — Jumia, SWVL, and others included. The Sarbanes-Oxley Act was supposed to ensure financial integrity, but as this case has shown, it is not foolproof.
For African tech startups with genuine ambitions to list in the US, the road ahead is now steeper. The burden of proof will be heavier, and investors will demand far more transparency. Yet, in the long run, a higher bar for compliance may benefit the ecosystem — ensuring that only the strongest, most accountable companies make it to the global stage. Whether this moment signals the beginning of a retreat from US markets or a call for better governance across African tech startups remains to be seen.
