Bolt opens first Kenya office to address driver complaints
While Bolt has been running operations in Kenya for a couple of years, it did not have a physical office where driver partners could go for assistance. The new facility aims to solve this oversight. Estonian e-taxi company Bolt has opened a driver engagement centre in Nairobi. This marks the first facility of its kind in the city, addressing the concerns raised by driver partners who lacked a physical office to report their challenges. It should not be confused with its regional centre in Nairobi, which was opened in mid-2022 as a base for high-level managers overseeing operations across the continent. With operations in more than 16 cities and towns across Kenya, Bolt aims to enhance its relationship with drivers and effectively address their complaints and suggestions through this office. Previously, issues were addressed via email correspondence with teams outside of Kenya. Located in Nairobi’s Westlands area, drivers can schedule appointments to visit the centre, ensuring prompt and efficient handling of their concerns. Bolt states that the office will provide various services including driver support, effective communication channels, training opportunities, community building, driver appreciation, and positive branding. Linda Ndungu, country manager, Rides, says, “Bolt is committed to ensuring that the needs of our driver partners are addressed and resolved in an effective and timely manner. The launch of this centre is a testament that we are strongly committed to enhancing our driver welfare and engagement, which will ultimately contribute to the success and growth of our business and the ride-hailing industry at large. We shall continue to collaboratively work with all our key stakeholders to continue offering affordable, safe and convenient ride-hailing services in Kenya; and creating entrepreneurial opportunities that enable more people to earn a sustainable living.” Bolt is one of the 14 licensed taxi apps in Kenya. It runs operations alongside rivals such as Uber, Little Cabs, Yego, and Farasi, among others. Back in 2021, Bolt entered the food delivery business with a product called Bolt Food. The move aimed at offering competition to Uber Eats, among other food delivery firms such as Glovo and Jumia Foods that have found notable local success. A few weeks ago, Bolt Food expanded beyond Nairobi to Mombasa. Bolt, among its rivals, has also encountered legal hurdles in the country before. For instance, driver compensation continues to be disputed to date, and while it remains to be the cheapest taxi app around, it took local regulations to adjust rates for the benefit of riders and drivers. In July 2022, the Kenyan government introduced new rules that reduced the commission rate that e-taxi firms could charge their drivers from 25% to 18%. In response to these new rules, Little Cab changed its pricing structure from a 15% commission to a fixed fee of 18%. Uber and Bolt both agreed to a commission rate of 18%. However, they also added a new booking fee to their fares. This booking fee was not in place before the new rules were introduced, and it means that Uber and Bolt are still taking more than 23% of the total fare charged.
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Next Wave: What has $15 billion of investments in African startups taught investors?
<!– In partnership with –> Cet article est aussi disponible en français Outside of tracking fundraising metrics, the last $12bn to $15bn invested in African startups through VC should have been a learning experience. So what are we learning about these experiments in African venture capital so far? Experiments are useful. It forms the core of what we know today as the scientific method. But it was not always so. Initially, early Greek philosophers such as Plato, believed that all knowledge could be obtained through pure reasoning and that there was no need for empiricism, i.e. to go out and measure anything. Over time, however, from Aristotle to Ibn al-Haytham, Roger Bacon to Galileo, and Karl Popper to today, the concept of hypothesizing, testing and recording the results became standard scientific liturgy. Investing in startups, self-development or modern national economies is not on the same level as lab tests on the latest wonder rock. But it can borrow from the scientific method. Whether for 19th-century whaling or for investing in dynamic fast-changing things like startups. Why is this important? Repeatable experiments are even more useful Biology, medical science and physics rely on the important principle of making experiments re-creatable to develop and test innovation, build consumables from it, and scale access. Generally, the more an experiment is re-creatable, especially outside of controlled situations, the more reliable it is. But the experimental process cannot always be controlled. Nature seems to be its own freak. And there are not many opportunities for this freakishness put on display as much as it is when investing in technology, markets and entrepreneurs bundled together as a startup. So it is not surprising that investing success is not exactly repeatable. But if venture results are exactly not what you want to bet on for being repeatable why should think of them as experiments? Because when venture investing and most social activities are viewed as learning opportunities, we have a chance to improve survivability and outcomes. Take this popular illustration of Survivorship Bias for example. We now know that the red dots show the areas where the aircraft is survivable because the warplanes that made it back to their bases were all hit in these areas (quick refresher if you don’t get it). Survivorship bias says more about human weaknesses in interpreting experimental data than it does about the experiments that generate such data. What is important to keep in mind is that we often learn how to best interpret the results of experiments from the process of creating that previously unknown information not just from the result of the experiment. That we’re able to spot a pattern is important. When we think about startup investing in emerging markets that do not share many of the characteristics that make alternative investments like venture capital attractive and useful in better-developed markets, we are forcing ourselves to become students. Because we realise that we are conducting randomised uncontrolled trials. Especially when you have between $15 billion and $20 billion invested a decade. What have we learnt after $15+ billion in investments? | Charts by Ayomide Agbaje, TC Insights Like the warplanes and young pilots that were sent flying into bullets to unwittingly illustrate survivorship bias for us today. What made the difference? Being able to document this randomised uncontrolled experiment. Because it is uncontrolled and randomised, this type of documentation is not always conventional. Regardless we have to find a way to take the documentation we are given and uncover the lesson the bulletholes teach. In World War 2, the planes that returned were the documentation. It is part of the live experiment. Partner Message Join hundreds of African tech entrepreneurs, investors, media and ecosystem stakeholders at Africa’s biggest tech gathering in Morocco! Register now Do we recognise the last $15 billion of VC investments into African startups for what it is? Some are obvious. Several of these patterns are already the subject of public and private conversations. A lot more are not. And I wish they were and that these conversations were louder than the hype train we’ve had to endure. I share a few patterns that may or may not be biased on survivability. Please feel free to add yours on Twitter, LinkedIn or wherever. Venture investing in Africa may be unconquered and immature. But it is no longer the wild west. Foreign VC firms are losing their rose-tinted lens as the market is demanding more sophistication than a lot of investors are willing or unable to commit to. Just ask the ashes of investment firms going back to 2015. Investors are increasingly willing to consider PE-lite venture capital models (without the leveraged buyouts and other complexities) in how they think about exit expectations. And it’s not just an African thing too. Africa needs growth-stage funds, but investors cannot make up their minds about what fund size makes sense as a balance between management fee yield and expectations of profits on the fund. A lot of VCs will be taking (or are already taking) refresher courses on portfolio management. The downside is that they will still need to translate that into Africanese (and for different markets in the continent too). Do you still think you have a thesis? We are getting over our obsession with valuation. As Chris Muscarella, Partner at Timon Capital noted in a brief Twitter conversation with Eghosa Omogui, GP at EchoVC Partners (find it here), “the market is figuring out what terminal values at exit and [what] those paths look like. And that will work its way back to valuations and pricing over time.” This is the first cycle bottom(?) for many of us, and too many of us are just figuring things out as we go. It’s not a bad thing in and of itself. But it is the ultimate test of maturity. The question before us is, “Leave the linen out to dry,” or “Learn how to dry linen when it is wet, dry and cold without losing our fingers
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👨🏿🚀TechCabal Daily – Safaricom buys M-Pesa Holdings
Lire en français Read this email in French. 22 MAY, 2023 IN PARTNERSHIP WITH Good morning This is the final week of our survey. We’re looking for opinions and thoughts on what the newsletter can do better. Fill the survey and stand a chance to win a $50 gift card. Or just fill it out of the goodness of your heart, and your wish for us to succeed. In today’s edition Vodafone to sell M-Pesa Holdings for $1 Nigeria may pass its NITDA bill Eskom warns of more load shedding TC Insights: The Future of Africa’s EV market The World Wide Web3 Job openings VODAFONE TO SELL M-PESA HOLDINGS FOR $1 MILLION Kenya’s Safaricom is taking on more responsibility. Last week, Vodafone announced that it would sell M-Pesa Holding Company Limited (MPHCL), the company that manages all M-Pesa deposits, to Safaricom for $1. Per its statement, the transaction began on April 17, 2023, and should be completed by July 2023. Side bar: M-Pesa Holdings is different from the M-Pesa service Safaricom offers. The former is an indecent trustee that holds all deposits of the latter and invests them for the benefit of the customers. While Vodafone is yet to reveal why it’s selling the trust to Safaricom, many believe that the move will boost Safaricom’s activities. With three consecutive quarters of financial decline—mostly led by the cost of its expansion into Ethiopia—Safaricom could use a cash flow-generating asset like MPHCL. The holding company, per Vodafone, presently has €1.2 billion ($1.3 billion) in customer funds which Safaricom could invest in short-term securities. A ticking expense: The sale also transfers liabilities of MPHCL to Safaricom, which includes a $2.4 billion lawsuit filed by three Kenyans. In it, the plaintiffs claim that MPHCL violates Kenya’s trust laws by using customer deposits to give loans through its Fuliza service. 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. NIGERIA’S CONTENTIOUS ICT BILL MAY PASS Months after it passed its celebrated Startup Act, the Nigerian legislature may soon approve a new law that many say threatens its tech ecosystem and its inclusive Startup Act. Last week, the Committee on ICT and Cybersecurity recommended that the Senate pass a bill to amend the regulatory Act for Nigeria’s ICT bulldog, the National Information Technology Development Agency (NITDA). ICYMI: In August 2022, TechCabal broke the news of the proposed bill. The bill will bring all sectors of tech, information and communications under NITDA’s purview, allow NITDA to issue and renew licences, force tech companies to pay even more taxes, and levy hefty punishments, including fining and imprisonment, for breach. Several provisions of the bill directly contradict the provisions of the Nigeria Startup Act. Kill the bill: Since its announcement, several stakeholders have been against the bill, with many stating that it will undermine all the progress made with the Startup Act. Earlier this month, telcos—under the Association of Licensed Telecommunications Operators in Nigeria (ALTON)—also wrote to the National Assembly requesting exclusion from the bill. Now: The Committee, which considered input from stakeholders across Nigeria’s ICT sector, reported last week that 17 out of 31 stakeholders it surveyed were in support of the bill. The Committee, however, noted that the Senate should consider complaints and comments from stakeholders who opposed the bill, and work on revising the problematic sections. NOW READ THIS FROM TECHCABAL The “Big Four” are not reducing steam, but new leaders are emerging in Africa’s tech ecosystem. Scaling with success: Wasoko’s rise in Africa’s B2B e-commerce. ESKOM WARNS OF MORE LOAD SHEDDING In coming months, South Africans may find themselves with even less power supply than they presently have. Last Friday, the country’s power-generating company Eskom warned that its systems were severely constrained with a high risk of more load shedding during the winter season. According to the company, with breakdowns or unavailable capacity due to unplanned maintenance at 15,000MW, load shedding might be predominantly implemented at Stage 5 for the winter period. Should breakdowns reach 16,500MW, load shedding might be implemented at Stage 6. If unplanned outages reach an average of 18,000MW load shedding might be required daily and implemented up to Stage 8. Eskom emphasised that the 18,000MW scenario that could culminate in Stage 8 is an ultimate worst-case scenario. Save electricity, get paid: Meanwhile, the company has been working on a solution to reduce consumption during the winter season. Two weeks ago, it announced an incentive programme that will reward South Africans who reduce their power consumption. Per the minister, for every megawatt an individual or business saves—through reduced demand—they will get R3 million ($154,000). In January, the National Energy Regulator of South Africa (NERSA) approved a new scheme that allows residents of Cape Town to feed excess electrical power from their own generators into their power system, in exchange for cash. 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. TC INSIGHTS: THE FUTURE OF AFRICA’S EV MARKET Electric mobility in Africa is still in its development stage. Although the sales of electric vehicles (EVs) on the continent have increased in recent years, they have remained the lowest worldwide. For instance, South Africa is the continent’s largest e-mobility market, yet electric vehicles account for 0.05% of the total 12 million automobiles in the country at 1,000 EVs as of 2022. While these electric vehicles offer cost-effective and environmentally friendly alternatives, their path to widespread adoption is faced with controversy and challenges. The chart shows that the projected stock of electric vehicles (EVs) in sub-Saharan Africa by 2040 is expected to be 13.5 million in
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6 key benefits of buying from iStore Pre-owned SA
When it comes to buying gadgets, many people are often hesitant to purchase preowned products. However, buying from a reputable source like iStore Pre-owned in South Africa can offer several key benefits. Here are six advantages to consider when buying from iStore Pre-owned South Africa. Lower cost One of the main benefits of buying preowned from iStore Pre-owned South Africa is that it is significantly cheaper than buying a new device. This can be especially useful if you want to own a high-end device but don’t have the budget for a brand-new one. With iStore Pre-owned South Africa, you can save up to 50% on the retail price of a new device. Additionally, all preowned devices sold by iStore Pre-owned South Africa come with a six-month to one-year warranty and are thoroughly tested and inspected before being put up for sale. Environmentally friendly Another key benefit of buying iStore preowned devices is that it is a more environmentally friendly option. By purchasing a preowned device, you are extending the life cycle of that product and preventing it from ending up in a landfill prematurely. This is especially important given the fact that electronic waste is one of the fastest-growing waste streams globally. When you buy from iStore Pre-owned South Africa, you can feel good knowing that you are making a positive impact on the environment. Access to older models Another benefit of buying preowned devices from iStore Pre-owned South Africa is that you can get access to older models that may no longer be available for purchase new. This is particularly useful if you have a specific feature or functionality that is only available on older models. For example, if you prefer using a headphone jack, you may find an older iPhone model that still has one. Quality assurance iStore Preowned South Africa offers a comprehensive quality assurance program for all its preowned devices. Before a device is put up for sale, it undergoes a thorough inspection and testing process to ensure that it is in good working order. This includes checking the battery, screen, buttons, and ports, among other things. Additionally, virtually all preowned devices sold by iStore Preowned South Africa come with a warranty, giving you peace of mind in case something goes wrong. Upgrade options If you are someone who likes to upgrade your devices frequently, buying preowned from iStore Pre-owned South Africa can be a cost-effective option. When you purchase preowned, you can save money on the upfront cost of a device, making it easier to upgrade to a newer model when the time comes. Additionally, if you decide to trade in your preowned device when you upgrade, you can get a credit towards purchasing your new device. Same great service Finally, when you buy preowned from iStore Pre-owned South Africa, you can expect the same great service and support that you would receive if you were buying a new device. iStore Preowned South Africa has a team of trained professionals who can help you with any questions or concerns you may have about your device.
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South Africa’s Eskom to pay citizens for saving electricity
Lire en français Read this email in French. Editor’s Note Week 20, 2023 Read time: 5 minutes Settle into your favorite reading spot to read today’s edition, as it entails the biggest tech stories from across Africa. Enjoy! Pamela Tetteh Editor, TechCabal. Editor’s Picks Kenya to locally assemble smartphones Kenya is edging closer to local smartphone assembly. According to the ICT Cabinet Secretary, the smartphones will cost the proposed amount of $40, and will be released in July. Learn more. Nigerian telecoms may disconnect USSD Nigerian telecoms are set to stop facilitating banks’ USSD services due to the banks’ failure to pay over ₦120 billion ($260 million) in USSD debts. Learn more. SA to pay citizens for saving electricity Eskom plans to reward South Africans with as much as R3 million ($154,000) for every megawatt of power they save. This is to reduce the increasing hours of blackouts in the country. Learn more. Zimbabwe sells $39 million of gold-backed token Zimbabwe took a leap of faith and landed right on its feet! The Reserve Bank of Zimbabwe’s first gold-backed digital currency sale sold 14 billion Zimbabwean dollars’ worth of gold-backed digital tokens—worth around $39 million. Learn more. MTN’s $320 million project MTN has kicked off a new project, Project East2West, which will invest R6 billion ($320 million) to connect 10 African countries between 2023 and 2025 with a fibre cable network. Learn more. Egypt sells stake in Telecom Egypt The Egyptian government has sold 9.5% of its stake in Telecom Egypt to pay its debt. The government wants to raise $2 billion by selling its stake in 32 companies by June. Learn more. The Next Wave Want to stay ahead of curve and get futuristic analysis of the business of tech in Africa? Then sign up for the Next Wave Newsletter to get started. It goes out every week at 7 AM (WAT). Ghana secures $3 billion IMF bailout Ghana’s request for a $3 billion bailout from the IMF has been approved. Investors had been betting on this news over the past six months, making Ghana’s cedi the world’s top-performing currency against the US dollar. Learn more. Africa to get another data centre Africa Data Centres has revealed its plans to commence construction on recently acquired land in Accra, Ghana’s central business district. The upcoming facility will be the largest in West Africa, excluding Nigeria, to date. Learn more. ‘Golf Mafia’ cleared of any wrongdoing Remember those alleged Zimbabwean gold mafia members who were accused of looting the country’s precious gold reserves? They have just been cleared of all wrongdoings as the investigations revealed no evidence of gold smuggling on their part. Learn more. Miva secures online university license Miva has been granted an online university license by the NUC. The university will commence offering degrees in eight courses before expanding to other fields. Read more. Who brought the money this week? This week, Kenya-based fintech company M-KOPA raised $250 million in debt and equity funding. Jia, a Kenyan fintech startup, received $4.3 million in seed funding. The round was led by TCG Crypto. Other participating investors include BlockTower, Hashed Emergent, Saison Capital, Global Coin Research, Packy McCormick, Anand Iye, Jared Hecht, and Rory Eakin. Figorr Nigerian cold chain technology company raised $1.5 million in seed funding. The round was led by Atlantica Ventures. Other participating investors include Vested World, Jaza Rift, and Katapult. Egypt’s auto-tech company Helpoo raised an undisclosed amount in funding from Saudi firm Morni. Chari, a Moroccan B2B e-commerce company, raised undisclosed follow-on funding from Plug and Play. South-African cybersecurity company Port443 raised an undisclosed amount in funding from Iziko2.0, a technology investment firm, and RMB Ventures. What else to read this weekend? What does the naira devaluation mean for Nigerians? Laid-off employees and tech newbies weathering the global downturn Do South African startups exit too early? What the tech ecosystem expects from a Tinubu presidency Kenya’s Data Protection Commissioner takes aim at loan apps Is the internet safer for women today than ten years ago? The story behind M-KOPA’s $250 debt and equity raise Nigerian banks and telcos faceoff Here is Safaricom Ethiopia’s 7-month report card Share TC Weekender Written by: Ngozi Chukwu & Hannatu Asheolge Edited by: Pamela Tetteh 18, Nnobi Street, Surulere, Lagos, Nigeria Unsubscribe from TC Weekender
Read MoreKenya edges closer to local smartphone assembly
Local smartphone assembly has been part of the ICT ministry’s plan to foster digital inclusion for all Kenyans and provide affordable access to smart devices. HMD Global, which sells Nokia-branded devices, has revealed that it has similar plans and goals. Smartphones are not exactly cheap in Kenya. While companies such as Transsion (which manufactures TECNO, Itel and Infinix smartphones) and OPPO among others offer more affordable alternatives, they have since adjusted their prices upwards, compelled by the tanking dollar rate, inflation and local taxes. Specifically, in the Finance Act, 2022, the government proposed a 10% tax on the importation of phones, in addition to the existing import duty which stood at 25%. This development no doubt hinders digital inclusion and could stall smartphone penetration, as the majority of Kenyans cannot afford the devices. Earlier this year in a TV interview, Kenyan ICT and digital economy cabinet secretary Eliud Owalo proposed the possibility of manufacturing smartphones locally for $40 (a little over KES 5000), to bridge the digital gap. He shared that despite being competitors, telecom companies in Kenya such as Safaricom, Jamii Telecom, and Airtel, had come together to address the affordable smartphone deficit in the country. Owalo stated that the manufacturing infrastructure was being put in place as Kenya transitions from an importer of technology to a manufacturer. The target launch date for this initiative was set for July 2023. The feasibility study for this project has been completed and the necessary local and imported components have been sourced. During the Information Communication and Technology (ICT) week held in Nairobi, it was reported that the government is still on track to ensure the success of this project. According to the Cabinet Secretary, the smartphones will cost the proposed amount of $40, and will be released in July. The devices will be assembled in Konza City, Kenya’s upcoming green city. However, other than the mentioned telcos, it is still not clear which other companies will take part in the assembly process. Nokia to assemble some devices in Kenya A few weeks ago, HMD Global, manufacturers of Nokia smartphones, announced plans to assemble some of its smartphones in Kenya. HMD’s goal is the same: to improve access to affordable smart devices in Kenya. Nokia, which returned to the local market back in 2017, is a known brand, but its command in the smartphone market has waned as public interest has shifted to other brands. The brand is now trying to appeal to potential local buyers with affordable 5G-powered phones. HMD Global also intends to provide locals with device financing programs so they can purchase phones in payment installments. Safaricom also offers customers a similar phone purchase plan via the Lipa Mdogo Mdogo program. Customers are able to pay as low as KES 20 per day over an extended period for their very own smart devices. The program has been successful, seeing the sale of more than 0.5 million devices. Unclear partnerships For now, it is not clear if the government is only partnering with telcos for the local smartphone assembly. Other potential partners include Transsion Holdings and BBK Electronics (manufacturers of OPPO, Vivo and OnePlus devices). It is also unclear whether local assembly will be limited to smartphones only. However, more details will be revealed as the rollout date approaches.
Read MoreShared struggles: Laid-off employees and tech newbies weathering the global downturn
As the global tech downturn persists, laid-off employees and tech newbies find themselves facing a common battle. From navigating job uncertainties to adapting to changing market dynamics, they share a collective journey marked by challenges and resilience. In an era marked by technological innovation and digital transformation, the tech industry has long been a beacon of opportunity and growth. However, the global tech downturn has cast a shadow of uncertainty, causing a ripple effect that has impacted the job market, and left many individuals grappling with the harsh reality of layoffs and limited prospects. The global tech downturn characterised by a slowdown in the tech industry, has been fueled by factors like economic shifts, market fluctuations, and widespread changes within the industry. Laid-off employees, once established in their tech careers, find themselves grappling with unexpected job loss and the daunting task of reinventing their professional paths. Simultaneously, tech newbies aiming to penetrate the industry, face an uphill battle as they encounter a more competitive and uncertain job market. Origins of the global tech downturn Rising interest rates, driven by high inflation, led to price increases for technology services. This prompted companies to make cuts, including layoffs, to reduce costs during leaner revenue periods. These higher rates directly impact venture capitalists (VC) and other funding of startups. Furthermore, the surge in online activity during the pandemic resulted in overstaffing and rapid team expansion in tech companies. However, as the world finds its post-pandemic balance and offline activities increase, the demand for tech services has decreased, leading to fewer job openings. The tech industry encountered another setback in March 2023 when the Silicon Valley Bank (SVB) collapsed due to its lack of diversification and a bank run. SVB played a crucial role in funding tech startups that faced challenges in obtaining support from other banks due to higher risks. As a result of SVB’s collapse, venture capitalists and banks have become more apprehensive about assuming the risks associated with supporting startups. Industry implications After experiencing over a year of bullish performance and reaching record highs, the global tech stock market started to decline in May 2022, and this decline has continued into 2023. In May 2022, Y Combinator, a startup accelerator, issued a statement with a strong suggestion for founders. “If your plan is to raise money in the next 6-12 months, you might be raising at the peak of the downturn. Remember that your chances of success are extremely low even if your company is doing well. We recommend you change your plan,” the statement read. Venture capital firm Sequoia also warned startups about the imminent economic recovery, urging founders to “move fast to extend runway and fully examine the business for excess costs.” African firms began terminating employees in response to the advice. Firms like Egypt-born mobility startup, Swvl, laid-off a third of its staff two months after going public via a special purpose acquisition company (SPAC). Other tech startups including Kenya’s logistics startup, Sendy, laid-off 10% of its staff. Bolt, an Estonia-based ride-hailing platform, also laid-off 17 of its 70 employees in Nigeria. Egyptian healthtech startup Vezeeta, also laid-off 10% of its 500-strong workforce. The aforementioned startups represent only a fraction of the layoffs that have occurred during the global tech downturn from its onset until the present. It remains uncertain how long this economic downturn will last and which tech startups and investors will remain standing for the long haul. The struggles of laid-off employees and tech newbies In the midst of a global tech downturn, re-entering the tech industry can be a challenging endeavour, particularly for individuals who have been laid-off and newcomers seeking to establish themselves. To delve further into this subject, TechCabal spoke with individuals who fall into both groups. Uche* was a tech newbie, and when asked about the impact of the layoffs on her perspective, she responded, “I guess it has made me more careful. I imagine that if I join any company, I’ll do thorough research just to make sure that they are not going under three months after.” A senior software engineer who had been on the job for just eight months also shared his experience with getting laid-off and the duration it took him to secure another job. “I was laid-off because there were no funds and the company was trying to downsize. It was a very long period for me. It took me 4 months before I could get another job and I was so broke,” he said. Comparing the job market before the tech downturn with the current situation, he said, “Before the downturn I will say getting a job was not as hard as it is now. Then, there were jobs everywhere and companies were just expanding because there was money. The thing with IT is that you are always hiring. Except if there is no money to fund the team. Around February last year, I was being pushed. Literally every week, I get DMs on LinkedIn telling me there’s a role for me and they will like to talk to me about an opportunity. But all of that now has stopped.” Ruth*, an individual who has been in the tech field for a year, discussed her perspective on the layoffs. She said, “Whenever I hear Meta laid-off 11,000 people, it makes me feel like they didn’t need to have hired all those people, to begin with. Some companies are very very guilty of over-hiring. Maybe they do that because they don’t want to have to make one person do so many things. Managing employees is a lot of work, some companies are not able to find a balance with that and unfortunately, they start letting people go.” She suggests that one person could be hired to handle multiple roles and be paid well, instead of hiring multiple people to handle related tasks. “Instead of hiring a social media manager and a digital ads manager, if one person can do the job, pay them well. The
Read MoreThe future of financial inclusion remains unclear with Nigerian banks, telcos faceoff
In the ensuing battle between the telcos and the banks, Nigerians may truly suffer the bane of financial inclusion Telecom operators have insisted on withdrawing their services should deposit money banks (DMBs) fail to pay over ₦120 billion ($260 million) in Unstructured Supplementary Service Data (USSD) debts. The Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) Gbenga Adebayo, said their terms were simple—payment of debt or risk disconnection. Adebayo who spoke to TechCabal on the phone revealed that the industry regulator—the Nigerian Communications Commission (NCC)—had given ALTON the nod to unplug the support on the USSD platform to banks. On Thursday, May 18, CEO of Guaranty Trust Holding Company Plc Segun Agbaje described the USSD as a clumsy technology during a media parley organised to discuss the lender’s recently released full-year 2022 and Q1 2023 earnings report. He further stated that the ongoing fight between banks and telcos over USSD is nothing but a distraction by telecom firms from the real issue of high data cost, adding that Nigeria had one of the highest data costs in the world. Responding to the comment, Adebayo said all they need from the banks is to simply pay the debt owed. “Even in the narration going to the press, they are changing the story every day. Last week, they agreed they owed money and would find a way to pay. Following that, they said end-user billing will be applied to it. I don’t know how that would work knowing that the service is rendered per session billing. They have consumed the service, they charged the subscribers. How does end-user billing pay for the service they already owe?” “Today, they are saying USSD is expensive because of the high cost of data. they are changing the story every day, we are saying one thing: you owe us, pay us,” Adebayo explained. A protracted battle This is the third time an issue of this magnitude is reoccurring. In 2019, ALTON threatened to shut down the service over who would bear the cost of transaction fees. The same feat repeated itself in June 2021, two months after the Central Bank of Nigeria (CBN) transferred the cost to users at ₦6.98 ($0.015) fee per transaction. 2023 is the third time the issue has come up. In 2019, the debt was ₦32 billion ($69,200.513) but by 2023, the debt had now grown to ₦120 billion ($259,501,926). A business analyst Chika Mbonu, believes that disconnection will affect everyone, especially the financial inclusion plan. “There are a lot of people at the bottom of the pyramid that use the USSD. Everyone who uses it and the whole system will suffer difficulties,” Mbonu explained. He stated that everyone—telcos and banks inclusive—involved in the matter may have to shift positions. A public expert, Bala Zakka shares Mbonu’s thoughts and believes that the constant bickering between telcos and banks could negatively impact the sector. “I will call for restraint because if the telcos cut off the service, losses would be huge. It may end up causing social, and industrial calamities across the board. So many stakeholders would feel the brunt,” he said. Between January and December 2020, the value of USSD transfers increased, going from roughly ₦30 billion ($64,875,481) to ₦551 billion ($1,191,546,347). In November last year, data released by the Nigeria Inter-Bank Settlement Systems (NIBSS) revealed that transactions worth ₦38.9 trillion ($84,121,874) were performed electronically through the NIBSS Instant Payment platform (NIP). These figures highlight USSD’s potential because several local banks expose their NIP through their various channels like internet banking, bank branch, Kiosks, mobile apps, USSD, and so on Banks are still using USSD At least 13 commercial banks still make use of the USSD service, TechCabal can confirm as of the date of publication. The 13 include Access (Diamond) Bank, EcoBank, Fidelity Bank, First Bank, Guaranty Trust Bank (GTB), Heritage Bank, Keystone Bank, Polaris Bank, Stanbic IBTC Bank, Sterling Bank, Union Bank, Wema Bank, and Zenith Bank. Meanwhile, the CBN’s acting director of corporate communication, Dr Abdulmumin Isa, had previously disclosed that the apex bank was intervening in the crisis. “The CBN is very much aware of the protracted dispute between the banks and telcos and has been engaging all stakeholders to ensure an amicable resolution,” he stated. Financial inclusion finally in the mud? The importance of USSD as a service cannot be taken for granted. Nine out of 10 mobile transactions in sub-Saharan Africa flow through the service. This is important considering that non-connected feature phones still dominate the landscape in the region. This means, only about half the continent’s population makes use of mobile phones, and a much lesser number are connected to the internet. Similarly, a survey from Agusto & Co Consumer Digital Banking Satisfaction Index for 2021 showed that USSD banking was the most popular banking platform among Nigerians. The report revealed that USSD banking makes up about 35% of the frequently used digital banking platforms. Given all available data, Zakka’s opinion may prove to be the way forward for both parties to come to a peaceful resolution. The implications of cutting off the service could add more to an already complicated problem. Since, it has been clearly established that not many Nigerians have smartphones to do mobile banking, what are the odds that disconnecting your average tailor, cobbler, or trader would help the situation?
Read MoreWith an impending naira devaluation, what is at stake for Nigerians?
A recent report by Absa Group Ltd. predicts a 15% devaluation of the Naira when the Tinubu-led administration assumes office. What are the implications for Nigerian citizens? In a few days, Nigeria’s president-elect, Bola Tinubu, will be sworn in. The president-elect assumes office with promises aplenty and very high expectations from Nigerians. In his 80-page campaign manifesto, amidst economic plans to address fiscal, monetary, and trade reforms, Tinubu promises to “carefully review and better optimise” the naira system. However, a recent report from Absa Group Ltd., a Johannesburg-based financial services firm, stated that following Tinubu’s inauguration, the Nigerian currency will be devalued by 15% to alleviate severe trade imbalances and dollar shortages. Investopedia defines devaluation “as the deliberate downward adjustment of the value of a country’s money relative to another currency, group of currencies, or currency standard.” In 2021, Nigeria embraced a multiple exchange rate regime by keeping a stronger pegged rate for official transactions and weaker rate for unofficial transactions. This method was employed to avoid an outright devaluation of the naira. According to the Central Bank of Nigeria (CBN), it operated a “managed float” policy at the time, which allowed it to intervene in the exchange market when necessary. However, the controlled nature of the exchange regime has now driven demand to the unofficial black market, leading to a wide discrepancy between the official and parallel markets, according to the Absa report. For context, CBN’s official exchange rate is around ₦460 per dollar, while the currency traded at around ₦752 per dollar in the black market in March. If the Absa report is to be believed, what then are the implications of a 15% currency devaluation on the ordinary Nigerian? More hardship “For the ordinary Nigerian, a devaluation by at least 15% means more inflation, which means a further increase in the cost of living and a further erosion of their respective purchasing power. Life in Nigeria will get harder. It is unfortunate, but that is the likely reality,” Basil Abia, a research consultant, told TechCabal. Inflation erodes purchasing power and plunges more people into poverty. Nigeria’s inflation rate has been hovering around the 20th percentile since the beginning of the year, rising to 22.04% in March—the third consecutive increase in 2023. Global economy and finance expert, Kalu Aja echoes Abia’s concern. “For the average Nigerian that spends the bulk of their income on food, a devaluation will see the cost of food rise simply because the means of production, PMS, and fertilizers are still imported,” he said. A double-edged sword Abia noted that the devaluation will result in increased inflation and an erosion of the Nigerian consumer’s already dwindling purchasing power. This will, in turn, affect the profitability margins of export-based micro, small and medium enterprises (MSMES) due to increased costs of imports, and increase the cost of living in the country. However, he adds that there could be some benefits from the devaluation. “If it is perceived to be temporary, it may present attractive opportunities for foreign investors to invest in our domestic financial markets. It is not certain, but it is a possibility that FPI (foreign portfolio investments) inflow to Nigeria may temporarily increase,” Abia said. Aja shares a similar view: “For citizens that spend Naira, it [devaluation] means imported inflation is more severe and reduces purchasing power. Keep in mind, devaluation is not entirely bad. It can be a strategy to reduce a budget deficit or boost export, but you can devalue your way to wealth.” For Adedeji Olowe, founder of Lendsqr, a lending SaaS fintech, the impact of the devaluation on the Nigerian economy may be minimal. “The devaluation would be on the official exchange rate which nobody has access to in the first place. Furthermore, it makes the USD that the government earns go a very long way and helps the funds that are stuck to move out [say Emirates Airlines] but with substantial losses,” Olowe said. The devaluation also indicates that the Tinubu-led administration will likely retain the existing float policy and maintain an artificial exchange rate amid Nigeria’s foreign exchange (FX) shortage. The implication, according to Abia, is that the current economic uncertainties caused by a multiplicity of FX windows will be further accentuated. “There’s also a chance that the alternative FX window might be the closest accurate valuation of the Naira, forcing an increased transactional demand by investors, importers and individuals to use the FX window for all their FX transactions and needs,” he said. Aja adds that the issue with the exchange rate is the wide arbitrage, which the devaluation will address. He told TechCabal, “the devaluation seeks to close that artificial gap and bring more certainty to economic planning. You can’t plan if you have to buy $1 at 740 or 488; devaluation closes the gap a bit, less swings, makes the exchange less volatile, and even encourages remittances.” The implications of an impending currency devaluation on Nigerians are far-reaching and multifaceted. While it is poised to address imbalances in the foreign exchange market, the darker side is the burden that falls heavily on the most vulnerable segments of society, exacerbating poverty and inequality. As the country faces economic turmoil, it is crucial for the incoming government to implement comprehensive and sustainable measures to stabilize the currency, promote economic diversification, and improve the overall well-being of Nigerians.
Read MoreWinter is coming: Eskom warns of more load shedding in chilly months
South Africa’s national power utility Eskom has warned that it might need to implement high stages of load shedding in order to meet surging demand during the winter months. Yesterday morning during the System and Winter Outlook briefing, Eskom cautioned that the power system is severely constrained and there is a high risk of elevated stages of load shedding in winter. Giving a performance overview, Eskom Generation group executive, Bheki Nxumalo, said that the power generating system continues to show poor performance, with frequent plant breakdowns subjecting the country to elevated stages of load shedding. These shortages will persist throughout the winter months, necessitating the continued implementation of load shedding. Nxumalo added that unavailability of the three units at Kusile Power Station and the unit at Koeberg 1 Power Station have removed 3,080MW of capacity from the grid, equivalent to three stages of load shedding. “We are striving to reduce plant breakdowns to 15,000MW or below for the winter period to keep loadshedding at lower stages. We, however, concede that this will be extremely hard given the unreliability and unpredictability of the power generating fleet and that we are already about 3,000MW worse off this winter compared to the same period last year,” said Nxumalo. According to the outlook, with breakdowns or unavailable capacity due to unplanned maintenance at 15,000MW, loadshedding might be predominantly implemented at Stage 5 for the winter period. Should breakdowns reach 16,500MW, loadshedding might be implemented at Stage 6. If unplanned outages reach an average of18,000MW, loadshedding might be required every day and might be implemented up to Stage 8. Eskom emphasised that the 18,000MW scenario that could culminate in Stage 8 is an ultimate worst case scenario. “We fully comprehend the adverse impact that rotational load shedding has on South Africa’s already fragile economy and its people. We are doing everything to mitigate the intensity of rotational load shedding including taking lessons from the rest of the world. We have seen that effective rotational load shedding during winter months requires a coordinated effort among all stakeholders within a country,” said Eskom board chairperson Makwana. Interim Group Chief Executive of Eskom, Calib Cassim, said that South Africa experienced the highest levels of load shedding as the energy availability factor (EAF) deteriorated to 56% in the past financial year, against the target of 60%. However, he also remarked that there were some encouraging developments in the efforts to deal with the electricity crisis in the country. “The establishment of the National Energy Crisis Committee (NECOM) and the development of South Africa’s Energy Action Plan, overseen by government, are some of the positive developments aimed at addressing the electricity crisis. Furthermore, the determination by the National Energy Regulator of South Africa (NERSA) of a favourable tariff increase as well as the debt relief solution by the National Treasury are critical enablers of sustainable electricity supply industry,” Cassim commented. Speaking on the possibility of a national blackout which has been touted by the media over the last few weeks, Eskom Group Executive for Transmission, Segomoco Scheppers, stated that there are a number of control measures, including load shedding, that are aimed at protecting the power system from collapsing. “Efforts are underway to return a number of units from outages to mitigate the worst case scenario of 18,000MW or above from materialising. Eskom will also keep planned maintenance at a maximum of 3,000MW during the winter period,” said Scheppers.
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