Here’s what the Nigerian tech ecosystem expects from a Tinubu presidency
The manifesto of President-elect Bola Tinubu offers plausible plans for Nigeria’s tech ecosystem, but stakeholders believe much more needs to be done in areas of infrastructure and enabling policies. In March, TechCabal reviewed the plans of Nigeria’s President-elect, Bola Ahmed Tinubu, for the country’s tech industry. Tinubu’s manifesto—part of which is aimed at achieving an inclusive digital economy—offers interesting plans to improve the tech space. These plans, among others, include the creation of one million new jobs in the first two years, talent outsourcing, development of e-commerce, championing tech manufacturing, and state adoption of blockchain technology. However, these plans appear workable only on paper and reflect a lapse in the government’s understanding of the tech space. With the incoming government expected to be sworn in on May 29, 2023 amid a legal tussle over the legitimacy of the elections, tech players argue that beyond its exciting promises, the Tinubu administration must address certain grey areas to help the tech ecosystem. Infrastructure is important For Tayo Oviosu, founder of fintech startup Paga, one issue the Tinubu administration must address is the high cost of accessing the internet in Nigeria. In 2021, Nigeria was reported to have the least affordable internet in the world. According to a recent survey by Surfshark, an Amsterdam-based cybersecurity firm, Nigerians are overpaying for the internet they get when compared to other countries. “To accelerate technology adoption, the cost of data needs to go down. Nigeria is the only country I know where the telco regulator has a minimum price for data in the regulations. It should be removed. Let the telcos compete fairly, and I believe we will see the prices go down,” Oviosu told TechCabal. He added that the new government must prioritize solving the country’s electricity crisis, which is one of the biggest problems for Nigeria’s tech sector. Adewale Yusuf, CEO of AltSchool Africa, an ed-tech startup, shares a similar view. Power shortages are particularly a problem for Nigerian startups who are left with no option but to incur extra costs trying to generate electricity for themselves. According to the World Bank, the economic cost of power outages in Nigeria is estimated at about $28 billion, equivalent to 2% of its Gross Domestic Product (GDP). Getting policies right One of the lasting legacies of the Buhari administration is the Nigeria Startup Act signed into law in October 2022. The landmark legislation is touted as a game-changer for Nigeria’s tech ecosystem as it addressed major hiccups around the regulatory landscape for startups, such as a pathway to dialogue with the government, tax breaks, and funding opportunities. But eight months after its hailed passage, the act is yet to be domesticated by any of the country’s 36 states and its capital. In March, the federal government inaugurated a 27-man implementation committee for the Nigeria Startup Act. Oviosu said now is the best time to enact the law. Though the Act offers tax breaks, the Paga CEO wants the Federal Inland Revenue Service (FIRS) to give tax holidays to startups to encourage more investment. Oluwatomi Solanke, Founder & CEO of Trove Finance, agrees, saying, “The government should also consider incentivizing startup hiring.” Segun Cole, Founder of Fund the Gap Alliance, adds that for the new government to fully realize the potential of the tech sector, it should consider creating a Ministry of Startups. “Such a ministry would serve as a dedicated point of contact for startups, offering targeted support and resources to help them grow and scale. This would signal the government’s commitment to fostering innovation and entrepreneurship in Nigeria and help attract even more investment and talent to the sector,” he said. Addressing the talent gap is a must The global demand for tech talent keeps increasing, but in Nigeria, the situation is grimmer considering the “Japa” trend, reflected in the mass exodus of tech talent from the country. For context, the country has about 89,000 software developers, out of a population of over 200 million. Cole believes that Nigeria has a large pool of talented and innovative young people, but many lack the technical skills and training needed to succeed in the tech industry. “The Tinubu administration is expected to invest in education and training programs to develop the next generation of tech talent, as well as to attract more talent from other countries,” he said, citing Itana, the talent hub being spearheaded by Iyinoluwa Aboyeji. For Solanke, more attention must be paid to promoting research and development (R&D) in tertiary institutions. “Many innovations we see in the United States come from its Ivy League universities. The government should focus on R&D hubs and even incentivize students working on tech-focused projects. I think this will help spark innovation and in turn, catalyze the tech ecosystem, ” he told TechCabal over a call. Adewale, whose AltSchool is training African tech talents, adds that he expects the new government to create “access to financial aid for students to learn in-demand skills.” With strategic investment in building the capacity of young Nigerians in tech, the supply of tech talent is expected to ramp up.
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Google Search’s upcoming feature can identify AI-generated Images
Google is introducing a new image search feature called “About this image”. It will allow users to check if an image is generated by AI, and where it first appeared online. This will enable Africans to independently fact-check the origin of AI-generated images. In response to the increased ease of creating realistic fake images using artificial intelligence tools, Google is implementing a new feature in its image search to combat the spread of misinformation. This feature will aid in curbing the proliferation of misinformation through misleading AI-generated images, such as the popular photo of the Pope in a puffer jacket. Image source: Google The upcoming feature, named ‘About this image‘, will provide users with additional contextual information about an image, including its indexing date on Google, its initial appearance, and its presence on other online platforms. The main purpose of this feature is to assist users in identifying the original source of an image, while also providing context by incorporating any debunking evidence provided by news organizations. According to its blogpost, Google is collaborating with various platforms like Midjourney and Shutterstock to ensure that they label their AI-generated content as such. Google will also do so for every AI-generated image produced by its tools. Significantly, the introduction of the ‘About this image’ feature coincides with Google’s upcoming release of its own text-to-image generator. According to the company, this tool will include information that allows viewers to recognize the images as AI-generated. Image source: Google AI-generated images in Africa The widespread use of AI-generated images to disseminate misinformation or disinformation in Africa has been limited. However, there have been instances where Africans intentionally employed authentic or digitally altered images to mislead others, particularly for political reasons. In response to this challenge, Google has provided fact-checker tools and financial support to organizations dedicated to fact-checking, ensuring accurate contextual information accompanies published images and news. More recently, Google granted $2,000,000 in funding to Nigeria Fact Checkers, aimed at leveraging artificial intelligence (AI) to combat misinformation during the just concluded general elections. AI-generated image created by Nigerian artist Malik Afegbua Considering the increasing accessibility and popularity of technology, the potential impact of AI-generated images in Africa should not be underestimated. Google’s upcoming tool will further empower Africans by enabling them to independently verify the authenticity and origin of images.
Read MoreVodacom, MTN double down as fibre race heats up
Vodacom and MTN are increasing their stakes in fibre. If their recent moves are anything to go by, it seems like pan-African mobile network operators, Vodacom and MTN, are doubling down on their fibre bets as the race for dominance heats up. According to Bloomberg, MTN is planning to construct an inland fibre cable to connect ten countries at a cost of $320 million. The cable will comprise 20 000 kilometres of new fibre cabling which will interconnect over 100 000 kilometres of existing fibre. The project, which will be done in three phases, is expected to be completed by 2025. Additionally, MTN’s GlobalConnect wing, which is being turned into a separate subsidiary, plans to roll out a total of 135 000 kilometres of fibre by 2025, generating as much as $1 billion in revenue. Vodacom, on the other hand, also plans to expand its fibre business, pending the Competition Commission’s approval of its $693 million deal with Remgro. Through the deal, Vodacom plans to expand its fibre offering into some of its other operating countries, including Tanzania and the Congo. In November last year, South Africa’s telco regulator, the Independent Communications Authority of South Africa (ICASA) announced that it had approved fibre network operator Dark Fibre Africa’s transfer of its operating licences to Vodacom. In November 2021, Vodacom announced that it would shell out R6 billion ($337.5 million) in cash, and fibre assets valued at R4 billion for a 30% stake in MAZIV, a newly formed holding company which encompasses Dark Fibre Africa’s (DFA) fibre assets. DFA is currently South Africa’s second largest fibre network operator. Despite the major investments by the two telco giants, in South Africa, Telkom, another mobile network operator, currently dominates the fibre industry in the country through its subsidiary, Openserve.
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TechCabal Daily – Airtel Africa’s profit dip
Lire en français Read this email in French. 16 MAY, 2023 IN PARTNERSHIP WITH Good morning WhatsApp is doing everything it can to not give us an edit button. In its latest announcement, it’s releasing the Chat Lock feature which will allow users hide chats in a password or biometric-protected folder. P.S A huge welcome to Mariam Muhammad who’s joining the Newsletter team at TechCabal as Intern Reporter. In today’s edition M-KOPA raises $250 million Airtel Africa’s losses Microsoft’s $69 billion acquisition of Activision is a go Gricd is now Figorr The World Wide Web3 Opportunities M-KOPA RAISES $250 MILLION M-KOPA, a solar power provider and digital asset financing platform in Kenya, has announced one of the largest 2023 raises in Africa’s tech ecosystem. The platform just raised $250 million. This comes after almost a year after it closed a $75 million in equity funding round in March 2022. In its latest round, Japanese-based trading house Sumitomo Corporation led with $36.5 million. Other investors including Blue Haven Initiative, Lightrock, Broadscale Group, Latitude, all took part in the equity round alongside Sumimoto. Standard Bank Group, M-KOPA’s strategic partner, facilitated the debt financing round which exceeded $200 million. Other lenders include IFC, Lion’s Head Global Partners, FMO, British International Investment, Mirova SunFunder, and Nithio. M-KOPAs primary business revolves around helping customers purchase products and services like smartphones, solar power systems, loans, and health insurance. They operate in Kenya, Uganda, Ghana, and Nigeria. M-KOPA’s unique credit model allows individuals to make a small upfront payment for these products and then pay off the remaining amount through affordable installment payments. This not only makes the products more accessible but also helps customers establish a positive credit history over time. Big picture: In an interview with Techcrunch, CEO of M-KOPA, Jesse Moore stated that the platform will now focus on electric motorcycles. “We’re very excited about electric mobility and we’re sure that in the next couple of decades, there will be a big switch in ownership where electric motorbikes will scale when there’s financing to go with them,” he said. MONIEPOINT RANKED 2ND FASTEST-GROWING AFRICAN COMPANY Moniepoint is Africa’s second-fastest growing company, as shown in FTs latest report. We also processed 1 billion transactions worth $43 billion in Q1 alone. Read all about it here. This is partner content. AIRTEL AFRICA REPORTS A 5% PROFIT DECLINE Airtel Africa’s revenue has been on the rise, but unfortunately, its profit margin faced a 5% decline during the first quarter of this year. The telecom, while acknowledging this setback, points to the tough operating conditions and concerns about currency devaluation as the primary culprits. How so? The telco’s revenue grew by 11.5% to $5.25 million in Q1 2023, compared to $4.71 million in the same period in 2022. On the other hand, Airtel’s profit after tax (PAT) for the period under review dropped by 0.6% to $750 million, compared to $755 million during the same period in 2022. It wasn’t just the money: Airtel Africa blames the devaluation of currencies in the countries they operate in for its lower financial performance. But that’s not the only hurdle they’ve had to jump over in their quest for regional growth. Many subscribers got their SIM cards blocked because they haven’t connected their National Identification Number (NIN). Airtel Africa reported that as of March 2023, 6.4 million customers had submitted their NINs, while 3.5 million customers had completed the verification process and had their services restored. The company’s financial statement revealed a revenue loss of $110 million during the reviewed period due to this crackdown, resulting in a slowdown of revenue growth by approximately 2.4% at the Group level. EU APPROVES MICROSOFT’S $69 BILLION ACQUISITION OF ACTIVISION The European Union (EU) has given Microsoft the green light for its $69 billion acquisition of game publisher Activision. The deal stands to be the biggest of its kind in the world, and the EU’s decision comes after the takeover was blocked in the UK. Before that, it had received approval from the competition court in South Africa. Why was it blocked in the U.K? This deal puts Microsoft in competition with companies like Sony and other rivals in the gaming industry. Regulators were concerned regarding Microsoft’s acquisition of the company, fearing that it could lead to unfair competition and Microsoft’s excessive dominance in the market. What changed their mind? Per Nairametrics, Microsoft gained approval from the EU by providing gamers and cloud streaming competitors with 10-year licensing agreements for Activision’s PC and console games. This move was welcomed by the EU as it promotes competition, fosters growth, and allows for the streaming of these games through any cloud game streaming service, a first in the industry. ATTEND FINTECH WEEK LONDON Fintech Week London 2023 is a five-day event that runs from June 19 to June 23, 2023, with a two-day flagship conference on June 19 and 20. Tickets are now on sale and you can get 15% off when you register your spot here with the code: TechCabal2315. This is partner content. GRICD REBRANDS TO FIGORR Nigerian startup Gricd has figured out a new name. Yesterday, the company announced a rebrand that will see Gricd become Figorr. This comes after it raised $1.5 million in seed funding. Figorr is experiencing a surge in demand for its solutions beyond Nigeria, prompting the company to embark on an expansion effort. This growth initiative comes after Figorr secured $1.5 million in seed funding, led by Atlantica Ventures and with the participation of VestedWorld, Jaza Rift Ventures, and Katapult VC on May 15, 2023. Figorr has also received grants amounting to $275,000 from different entities, including the Google Black Founders Fund, and Africa Business Heroes by Jack Ma Foundation. More about Figorr: Figorr uses technology to offer internet of things- powered solutions that cater to businesses, particularly in the healthcare and agriculture sectors. Their solutions provide valuable information, including the location, humidity, and temperature of highly perishable products. By offering this vital visibility, Figorr helps entrepreneurs
Read MoreFin South Africa partners with NHFC to disburse housing loans to South Africans
South African fintech startup Fin announced that it has signed a First Home Finance Subsidy Memorandum of Understanding with the National Housing Finance Corporation (NHFC). The MOU will see Fin become the first non-bank intermediary to facilitate the disbursement of First Home Finance Subsidies in South Africa. Through Fin Home Loans, the startup aims to give low to middle-income Fin customers access to affordable finance for building materials. Supported projects will range from new builds and renovations to kitchen fittings or extra room creation, adding a work-from-home space, solar & backup systems, and more. Speaking on the new partnership, Mark Seymour, the founder of Fin Home Loans said, “When we integrated Thuthukani into Fin earlier this year, I looked forward to scaling the business and bringing our offering to many more people. This partnership with the NHFC confirms that this was the right move and is the first of many as we strive to better serve our customers and partners.” Fin’s partner-first embedded credit strategy will enable its partners to use Fin’s tools and services to provide credit to their customers, allowing Fin to partner with corporate employers in South Africa and assist them in housing their low to middle-income employees through Fin’s payroll credit solutions. “The NHFC is happy to partner with Fin as the first non-bank intermediary to facilitate NHFC First Home Finance Subsidies linked to non-mortgage products. We are impressed with what they’ve accomplished thus far as an NHFC-approved lender, and through this partnership, we are excited to see what more they can do to help South Africans build their dream homes with the support of the First Home Finance Subsidy,” said Azola Mayekiso, CEO of the National Housing Finance Corporation. In March, Fin announced its acquisition of Thuthukani, a Pretoria-based fintech startup as part of its expansion efforts. Through the acquisition, Thuthukani’s incremental housing finance offering was renamed Fin Home Loans and integrated into Fin’s South African portfolio with a mandate to give middle to lower-income Fin customers access to affordable finance.
Read MoreDo South African startups exit too early? Experts have their say
Since 2015, more than one-third of acquisitions in the African tech space have involved South African companies. Does the hypothesis that some of the exit deals are premature legitimate? South Africa is and has, for a while now, been the undisputed king of mergers and acquisitions in the African tech startup ecosystem. According to Disrupt Africa’s 2022 South Africa Startup Ecosystem Report, the country’s startup ecosystem leads the way in exit mergers and acquisitions (M&As). Refinitiv Data says that in the first half of 2021 M&A deals involving tech companies increased by $160 million, an almost 2,000% increase compared to the same period in 2020. Several reasons have been attributed to South Africa’s impressive M&A dominance. These include active capital markets and banking systems, mature companies that can snatch up startups, and others. However, together with the appreciation of exit opportunities in the ecosystem, there are some concerns, albeit not that constantly had, that South African startups might be exiting too early, giving perhaps a warped picture of the country’s M&A space. TechCabal talked to some experts in the country to try to see if the hypothesis holds any weight. Why do SA startups exit? M&As are typically valuable exit avenues for all involved. Acquirees get a very nice payday for founders, employees, and investors and access to a broader pool of markets, resources, and capital. Acquirers benefit from product diversification, talent acquisition, and market expansion. According to Chris Loker, managing partner of the corporate advisory firm Moksha, the main motivators for tech startup acquisition deals are exits for international growth, procuring capital required to scale, or access to a wider client base. But these deals come particularly when the concept is proven. “Banks have even set up incubators to test new innovations, knowing that a corporate is often where innovation goes to die and their new product lead times can be many years. The travesty is that we don’t often get repeat entrepreneurs as failure is viewed with disdain or exits are rich enough – in the latter case, the trend of successful entrepreneurs becoming angel investors will hopefully grow,” Loker explained. For more established companies—and some startups too—the main reason is product diversification. Acquiring a startup that already has a product and traction makes more business sense instead of building the said product from scratch. A South African investment banker who has overseen numerous acquisitions and wishes to remain anonymous for employment reasons explained: “I’ll give an example of when many retailers were caught off guard when the [COVID-19] pandemic hit. A lot of their online stores were not well established to service their customers when the lockdown happened. This drove many of them to either evaluate whether they could develop or improve their online mediums quickly enough. The quickest route out of this predicament would be to make an acquisition, and an example is MassMart acquiring OneCart to assist them with their online service offering.” A number of acquisitions that have happened in the South African tech space do seem to be majorly driven by product diversification. Weaver Fintech acquired PayJustNow to expand into buy-now-pay-later. TymeBank acquired Retail Capital to expand into offering online banking services for SMEs. inq. acquired Syrex to diversify its product offering into hyper-converged cloud technology. Imperial Logistics acquired ParcelNinja to expand into e-commerce and last-mile distribution and Vodacom acquired iot.nxt to expand into Internet of Things (IoT). Market expansion and talent acquisition are two other significant reasons for acquisitions in South Africa. A market-expansion-driven acquisition example is Africa Fashion International acquiring online art marketplace Wezart with the intention of using the platform to expand its product offering globally and provide a stronger user base for artists. Talent acquisition deals are also getting more popular because as the ecosystem grows, competition for tech talent is getting tougher in the continent. For startups with capital, acquiring a smaller startup to integrate its talent often saves time and money instead of poaching it. This is known as an acqui-hire. For example, after raising an $83 million Series C round in July 2021, fintech startup Yoco acquired web3 software development agency Nona Digital in March 2022 to accelerate its roadmap by bringing a team of highly-specialised fintech product and technology professionals into the Yoco team. Are the concerns about early exits warranted? According to Keet van Zyl, co-founder and partner at venture capital firm Knife Capital, there is some legitimacy to the hypotheses. Van Zyl states that in some instances, there is a disconnection between the growth capital needed by startups and what is available, so it makes sense to sell instead of trying to embark on more fundraising. On average, according to van Zyl, South African startups exit after three to four rounds of funding. “Despite the increasing availability of deal-flow, there remains a significant follow-on financing gap for high-growth local startups with proven traction. Regarding South African entrepreneurs, we have a large mismatch between the size of the opportunities and the amount of capital required to access them. Compared to peer economies, the venture capital and growth equity investment market in SA is drastically under-serviced with available investment capital. Therefore sometimes when startups try to raise growth capital, they turn to strategic investors who seize the opportunity and make a full acquisition offer,” van Zyl tells TechCabal. However, according to van Zyl, this trend is not necessarily bad as it allows for an increased number of smaller exits – which then recycles capital into the ecosystem – instead of a long road to unicorn building and a lack of liquidity for investors. Clive Butkow, CEO of Johannesburg-based venture capital firm Kalon Ventures, shares the same sentiments with van Zyl regarding why startups exit too early. According to Butkow, if a startup is not clocking around 200% to 300% growth and an offer presents itself, it should be very well considered by the founding team and investors. “Late-stage venture capital has always been hard to come by in South Africa. For most founders, if
Read MoreAirtel Africa reports 5% decline in profit for Q1 2023
Despite a growth in revenue, Airtel Africa has reported a 5% drop in their profit for the first quarter of the year. Airtel’s CEO cites the challenging operating environment and worries about currency devaluation. According to a financial statement published on the Nigerian Exchange Group (NGX), Airtel Africa has reported a 5% decline in their profit for the first quarter of 2023. Airtel’s profit after tax (PAT) for the period under review dropped by 0.6% to $750m, compared to $755m during the same period in 2022. Conversely, the telco’s revenue grew by 11.5% to $5.25m in Q1 2023, compared to $4.71m in the same period in 2022. Commenting on the financial performance, Airtel Africa’s chief executive officer (CEO), Olusegun Ogunsanya, stated that the operating environment of the company has been challenging in many ways and expressed hopes of improvement over the numerous challenges. “The resilience of our underlying EBITDA margins has shown the effectiveness of our operating model, despite significant inflationary and foreign exchange pressures. Strong customer and ARPU growth over the year demonstrates that demand for our services remains very strong and gives us the confidence to continue investing to support our future growth potential,” Ogunsanya said. Ogunsanya also noted that the local currencies of its operating countries have been under pressure. He admitted that currency devaluation is beyond the telco’s control, but plans have been put in place to mitigate its impact by ensuring its revenues outpaces devaluation. Airtel Africa also revealed that its revenue growth for the quarter was impacted by clampdown on Nigerian subscribers who had not submitted their National Identification Number (NIN). The telco noted that as of March 2023, 6.4 million customers had submitted their NINs while 3.5 million customers had been fully verified and unbarred. According to the financial statement, the clampdown caused a revenue loss of $110m in the reviewed period, leading to a lag in revenue growth of almost 2.4% at Group level, and 6% in Nigeria. The telco’s financial statement also reported that its mobile services revenue grew by 16.2% across its regions. Mobile services revenue was up by 20.3% in Nigeria , in east Africa by 13.4% and in francophone Africa by 11.9%. “Mobile services revenue growth was driven by both voice and data services, voice revenue grew by 11.8% and data revenue by 23.8%. Mobile money revenue grew by 29.6%, driven by 32.6% growth in east Africa and 20.3% in francophone Africa,” the report read.
Read MoreEarly days, but Safaricom’s Ethiopian venture could pay off
It has been over seven months since mobile network operator Safaricom officially launched shop in Ethiopia. There are clear signs the company has grown, having onboarded a little more than 3 million customers on its networks. Safaricom also has plans to launch mobile money services in the country, M-PESA. However, what other performance metrics has the mobile operator achieved so far? Safaricom has been interested in entering the Ethiopian market for some time, and the venture was officially announced in October 2022. The commercial launch of Safaricom Ethiopia was a major step toward expanding its market beyond Kenya, with an international consortium including Vodafone Group, Vodacom Group, Sumitomo Corporation, and British International Investment. This partnership cost $850 million. Seven months later, Safaricom has amassed millions of monthly active users with plans to expand in a market that is virgin territory due to state-owned Ethio Telecoms being the only competition. “During the year, we launched commercial operations for Safaricom Telecommunications Ethiopia Plc (STE) on October 6, 2022, post the phased city-by-city customer network pilots that commenced on August 29, 2022. We are optimistic about the transformative opportunities it presents for us. Our focus has been to accelerate the pace of the rollout, and we have now covered 22 large and medium-sized cities representing a population coverage of 22%. Plans are underway to roll out to the remaining cities, i.e., Assosa, Nekemte and Mekele,” Safaricom CEO Peter Ndegwa said in an Investor Briefing for 2022/2023 FY. Ethiopia by numbers Ethiopia is a big country with a population of around 120 million people, 78 percent of whom live in rural areas. These people are currently being served by two telcos, which is a low number considering other African nations have more than 5 carriers attending to an even smaller number of people. READ MORE: As Safaricom seeks to conquer Ethiopia, its profits are taking a hit Nonetheless, Safaricom Ethiopia continues to explore ways of levering this market. For instance, over 63 million people are over 18, while 13.5 million are between 14 and 18 years old. This is a notable market opportunity it can take advantage of, which can even be more lucrative. Kenya has 50 million people, according to the last census. With plans to launch M-PESA services in Q2, Safaricom Ethiopia is aware of the opportunity, as 35 percent of the Ethiopian population is financially included. Mobile penetration is, however, still low at 57 percent. Mobile penetration is the percentage of a population that owns or has access to a mobile device. The state has 10,000 large enterprises, as well as 240 000 SMEs. These organisations will likely tap into Safaricom Ethiopia’s products, including enterprise services such as the cloud, IoT, and more. There are plans to keep these projects rolling because the carrier has already built two data centres. The first facility cost $100 million. Telco-specific numbers According to an Investor briefing report by Safaricom that was revealed this week, Safaricom continued to fast-track its service offerings in Ethiopia. For instance, the operator has equipped over 5,000 acquisition locations with digital biometrics supported by electronic know-your-customer (e-KYC) back-office verification processes to streamline customer onboarding. The corporation boasts that the registration process takes less than 10 minutes per customer and has rolled out 4G/3G/2G sites ready for 5G. Safaricom Ethiopia has 114 exclusive branded distributor shops offering its services and serving customers in 5 different languages. It also serves 90% of customers within 2 minutes, and they have over 90% brand awareness in launched cities, with more than 30% brand consideration. Based on the population dynamics, Safaricom is also selling itself as a youthful brand with internet services. Its acquisition offer is focused on data, prepay network calling, SMS, mobile data, and home 4G Wi-Fi offerings. Airtime purchase is available through key bank digital channels, and it offers personalised offerings through its customer value management (CVM) system. The telco also offers a range of branded devices, including 2G and 4G feature phones, 4G smartphones, MiFi’s, and routers. Performance numbers According to 2022/2023 FY results, Safaricom Ethiopia has over 3 million customers. About 2.1 million use the carrier actively, with Safaricom aiming for 10 million by 2024. The customers generated KES 562.4 million (over $4 million) in revenue. 63% of the revenue was from mobile data, 24% from voice, and the rest from messaging and mobile incoming. However, the Ethiopia investment did make a dent in Safaricom Group’s overall financial performance. “Safaricom increased its Group Service Revenue by 5.2% to KES 295.7 billion while the Group net income excluding minority interest declined by 10.6% attributable to expected start-up costs and investment in rolling out operations in Ethiopia within the year,” said Safaricom (Kenya) in a statement. Nevertheless, customers reportedly use an average of 1.5GB of data and 55.4 minutes of voice. Safaricom has sold 106.9K mobile devices since launching, generating revenue from KES 676.6 million ($5 million). It has installed 1272 network sites, planning to double them by next year. M-PESA goes to Ethiopia As reported earlier, Safaricom is expanding M-PESA services to Ethiopia. It is Safaricom Kenya’s biggest earner, constituting over 39 percent of service revenue. For instance, M-PESA revenue grew 8.8% to KES 117.19 billion ($855 million), supported by 16.2% YoY growth in transactions per active user. One-month active M-PESA users jumped 5.2% to 32.11 million. The product serves consumers and businesses, with 76.4% of total registered M-PESA users active in the past month. While it was known that Ethiopian financial authorities would grant the telco the mobile money license, the development was not without hurdles because the state had initially reported it would not allow the product into the country. According to Safaricom, the licence costs $150 million. It is now prepping the technical viability of M-PESA. The service will go live before the end of June and will compete alongside Telebirr, which is offered by Ethio Telecoms. Telebirr is complemented with a super app, as does the M-PESA app. It remains to be seen how these services
Read MoreM-KOPA closes one of Africa’s biggest rounds at $250m with plans to go into e-mobility
M-KOPA closed a $75m drive back in February 2022. Today, the lender, which also offers other fintech-based services has supplemented its finances with a fund led by Standard Bank Group and has plans to venture into additional markets, among other new and interesting propositions. Digital financing firm M-KOPA has announced it has closed more than $250 million in debt and equity financing. The funds, according to the company, will be used to boost its fintech-based operation in new markets, particularly across Sub-Saharan Africa. M-KOPA, which closed a similar deal back in February 2022 valued at $75 million, has revealed that the round is one of the largest not just for the company, but also in the African tech sector. Standard Bank Group, M-KOPA’s strategic partner, arranged over $200m in sustainability-linked debt financing. Other lenders include IFC, Lion’s Head Global Partners, FMO, British International Investment, Mirova SunFunder, and Nithio. Sumitomo Corporation, an existing investor, contributed $36.5m in equity investment. Blue Haven Initiative, Lightrock, Broadscale Group, and Latitude also participated in the round. M-KOPA has found success in the Kenyan market following the launch of its solar-powered solutions for local households. At the beginning of its operations, the firm connected homes with solar systems, which included panels, batteries, LED lights, and charging stations for mobile devices. The selling point of the service was its ability to gainfully replace paraffin lamps with clean lighting and power sources for off-grid homes. All these services, which have since been improved over the years with more products such as access to TV services, are offered through M-KOPA’s pay-as-you-go model that allows users to make affordable instalments using mobile money (M-PESA). Customers can, for instance, pay as little as KES 100 (under $1) per day to keep their lights on. M-KOPA says it has sold over 3 million of these products through its sales model that has an agent network of over 10,000. This means it has sold a million more assets in more than one year. With more than $1 billion in cumulative credit provided to underbanked customers in Africa, M-KOPA has been a success story in East Africa. It expanded to Nigeria in 2021, with a more recent footprint in Ghana. According to the firm, it recorded an 85% compound annual growth rate in new customer acquisition from 2020 to 2022. Fueled by new funding M-KOPA plans to boost its smartphone financing offering, expand into additional markets, and prioritize sustainability. It is also committed to driving women’s financial inclusion and developing eco-friendly electric mobility solutions in the East Africa market. What they said Speaking on the round, Jesse Moore, M-KOPA CEO and Co-founder said, “At M-KOPA, we are working hard to create a positive environmental and social impact by systematically addressing the barriers to digital financial services. We have already unlocked $1bn in cumulative credit to over 3 million customers, and are proud of the thousands of local jobs we’ve created during tough economic times. As we continue to scale we remain committed to building a sustainable business and closing economic and digital gender gaps. We are delighted to have the support of new and existing investors who share our vision and mission.” “Supporting M-KOPA is in line with our purpose of driving sustainable growth for Africa and her people. Financial inclusion not only enables economic growth, it also accelerates it. M-KOPA has, in a short time, managed to positively impact so many lives by enabling access to power and smartphone connectivity, which are a vital part of enabling the economic empowerment of all.” added Nick Riley, Corporate Financing Solutions at Standard Bank
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Gricd raises $1.5 million, rebrands as Figorr
Gricd, a hardware startup that develops Internet of Things-powered solutions to support the last-mile delivery of perishable goods, has raised $1.5 million in seed funding as it overhauls its brand identity to Figorr. Founded in 2018, Gricd (now Figorr) had previously disclosed $512,800 in funding raised through grants, convertible notes, and angel funding. It also raised an undisclosed sum from Katapult VC. This latest round was raised by Atlantica Ventures with participation from VestedWorld, Jaza Rift Ventures, and Katapult VC. The company’s rebrand as Figorr, signals its new focus on software solutions. Oghenetega Iortim, the CEO of Figorr, told TechCabal that the rebrand represents the company’s new direction. “When I started the business, it was largely supposed to solve an agriculture problem, but now we’re doing so much beyond the agricultural space. We work with multiple sectors, including agriculture, healthcare, and logistics. We also recognize that our real superpower is data, which is why we went with Figorr (pronounced as figure).” According to Iortim, Figorr uses a hardware device, MOTE, which is “about the size of a pack of cards”, to transmit the location, humidity, and temperature of sensitive and perishable products in real-time to the cloud and customers. Customers can access this data either through a mobile app or an online dashboard. In instances where products are exposed to harsh conditions, Figorr will send an email or SMS notification immediately. During the COVID-19 vaccine rollout, Figorr’s solution helped Nigeria’s National Primary Health Care Development Agency (NPHCDA) track 40 million vaccine doses, according to Iortim. How Nigeria is using Gricd’s tech to save 4.2 million vaccines from wastage With this new funding, Figorr now plans to help its customers access insurance for their perishable products. Due to poor storage facilities and a lack of technology, Nigeria loses 50% of its food to poor storage. Across Africa, that number drops to 30%. These losses equate to total losses for the farmers and traders, which are then passed on to the end customer. According to the IMF, on average, Africans spend almost half of their income on food. “Insurance companies tend to shy away from underwriting these sorts of commodities [perishable commodities], which means that for my customers there’d be a 100% burn if they lose their goods. With our data, that’s gradually changing. We can show that a customer has done a great job in terms of the storage and transportation of certain commodities over a long period. The insurance companies are then a little bit more lenient and willing to underwrite those sorts of risks”, Iortim told TechCabal. Figorr’s MOTE “We’ve tracked over 200 million cold chain items, and the value of those items is well over $600 million. With the data that I have, if I were an insurance company, I would bet on about a third of those products. If you make 10% of that[ $20 million], it’s a lot of money to overlook, in my opinion”, he added. Figorr already works with some of the leading pharmaceutical manufacturers and food companies in Nigeria and across Africa to enable the effective transportation and storage of food and pharmaceuticals. It says it has successfully tracked more than 110 million perishable items and supported its customers to realise more than $200 million in savings. The startup makes money by charging its customers a monthly subscription fee to access data from one device. The subscription fee is charged per device per month, so if a customer has multiple devices, they pay for each one separately. The devices also do not consume more than 5MB of data per month and rely on 2G connectivity and SMS. They also use global roaming network providers, which means that they can latch on to the best available network. This is especially important for a continent with poor internet connectivity and penetration. Venture capital firms tend to shy away from hardware startups because of the long period they typically require to scale, the unpredictability of the business model, and the complicated process of sales and marketing. Iortim shared that Figorr also faced the same challenges; before this seed round, the company had raised $512,000, which mostly came from grants. Iortim told TechCabal that building a relationship with investors and the amount of data Figorr has gathered since 2017 helped overcome this hurdle. “For the investors that we currently have on board, we had to build a relationship with them and show them the numbers. Plus, we have gotten to a point where we have deployed a few thousand devices in about seven countries, so there’s a lot of value we can drive based on the data,” he said. Figorr will also use the new funding to expand to East Africa. Echoing Iortim, Aniko Szigetvari, founding partner at Atlantica Ventures, said, “Tega and the Figorr team have built a powerful suite of products and services to support the cold chain industry and ensure the quality of perishable goods and pharmaceutical products in Nigeria and across the continent. We are excited to support the growth and regional expansion of the company”.
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