👨🏿🚀TechCabal Daily – Kenya gets $1 billion
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy pre-Friday Cancel culture is just for show, and Netflix’s password-sharing crackdown might be proof of this. Instead of losing subscribers, the platform gained over 5.9 million subscribers from April to June 2023—right after it stopped users in several regions from sharing passwords. In today’s edition Safaricom is expanding to South Asia IMF backs Kenya’s new taxes with $966.8 million Nigeria and Egypt’s central banks sign MoU Apple Pay is live in Morocco The World Wide Web3 Event: The Moonshot Conference Opportunities Mobile Money Safaricom is expanding to South Asia Image source: Safaricom In the spirit of partnerships, Safaricom has joined forces with TerraPay, a global payments infrastructure company, to expand M-PESA to South Asia. Through this partnership, M-PESA customers can effortlessly send and receive money to over 200 million individuals in Bangladesh and Pakistan, with upcoming plans to expand further into India and Nepal. How does it work? Using the M-PESA Global service, M-PESA users can conveniently send funds to individuals in Bangladesh and Pakistan, either to their mobile numbers or bank accounts. The service is accessible through the M-PESA Super App or by dialing *334# and selecting M-PESA Global in the “Send Money” menu. TerraPay joins a list of over 35 partners under the M-PESA Global service, enabling seamless money transfers and payments across over 170 countries. Zoom out: With this partnership, Safaricom is further expanding into the remittance market, aiming to offer customers secure, transparent, and efficient payment options globally. Secure payments with Monnify Monnify has simplified how businesses accept payments to enable growth. We are trusted by Piggyvest, Buypower, Wakanow, Fairmoney, Cowrywise, and over 10,000 Nigerian businesses. Get your Monnify account today here. Policy IMF backs Kenya’s new taxes with $966.8 million Image source: Zikoko Memes The International Monetary Fund (IMF) has given Kenya’s new taxes a $966.8 million (Ksh136.7 billion) thumbs up . But the president’s opposition party and many Kenyans are protesting the taxes because they are going to worsen the raging cost of living crisis. What taxes? Kenya’s new Finance Act of 2023 is introducing new housing levies and a hike in taxes on fuel which will increase the already high cost of essential goods and services. But the government insists that these taxes are necessary because it is running out of cash and needs to salvage the economy. And the IMF agrees? Yes, the IMF supports the thinking of the government and is putting its money where its mouth is. Per the Standard, the IMF signed off a new $966.8 million (Ksh136.7 billion) loan to reduce the impact of the bad economic environment while the government tries to fix things. How bad are things? Things are so bad that Kenyans are protesting against these taxes. The new taxes and hikes will leave them with significantly less disposable income. This loan is designed to help the country in the long run, but it is expected to subject hard-pressed Kenyans to tougher economic times before things get better. How so? The government will have to cut public spending, and this could include cutting off public jobs amid a raging unemployment crisis. Fintech Nigeria and Egypt’s central banks sign MoU The Central Bank of Nigeria has recently signed a Memorandum of Understanding (MoU) for Fintech collaboration with the Central Bank of Egypt. In a tweet Nigeria’s apex bank named this partnership the “Nigeria-Egypt FinTech Bridge”. The signing took place during the Seamless North Africa 2023 conference in Cairo days ago. What is the goal of this agreement? According to the Central Bank of Nigeria, this agreement is expected to accelerate financial inclusion, enhance payment systems, deepen cross-border regulatory collaboration, and information sharing. The collaboration between the two central banks holds promise for a more connected and progressive financial landscape in the region. GrowthCon 1.0: Learn how to unlock 10X Growth Connect with growth leaders, operators, and enablers to explore proven tactics for driving sustained business growth in Africa at GrowthCon 1.0. Experience curated masterclasses, case studies, a growth hackathon and more. Get your tickets here! Fintech Apple Pay now available in Morocco Image source: Tenor On Tuesday, Apple Pay launched in Morocco, providing a convenient payment option for customers. With this launch, Morocco becomes the second African country, after South Africa, to have access to Apple Pay services. What is Apple Pay? Apple Pay is a mobile payment and digital wallet service developed by Apple Incorporation. It allows users to make payments in stores, within apps, and on the web using their iPhone, iPad, or Apple Watch. Banks support Apple Pay. The Crédit immobilier et hôtelier(CIH) Bank, one of Morocco’s largest banks, has announced in a tweet that it now supports Apple Pay. Another major bank that supports Apple Pay in Morocco is Crédit Agricole Group of Morocco (CAM) Bank. Zoom out: With Apple Pay, you can easily add your Mastercard credit cards and bank cards to the Wallet app. Then, you can use your iPhone or Apple Watch to make secure payments at contactless payment points. Crypto Tracker The World Wide Web3 Source: Coin Name Current Value Day Month Bitcoin $29,965 – 0.75% + 11.12% Ether $1,894 – 1.16% + 9.47% BNB $241.48 – 0.73% – 0.48% Cardano $0.32 + 2.53% + 25.65% * Data as of 05:35 AM WAT, July 20, 2023. Events The Moonshot Conference This is Moonshot by TechCabal. Moonshot is a conference that will bring together Africa’s tech ecosystem to network, collaborate, share insights and celebrate innovation on the continent. Click here to join the waiting list to get more news and updates about this conference. Opportunities The SaaS Accelerator Programme: Africa 2023 has opened applications for its accelerator programme to enable early startups in Africa to receive funding. Selected startups will receive up to $70,000 in funding. Apply by September 7. Wise Guys SaaS Accelerator Program is looking to help SaaS startups level up through tailored guidance and support from world-class mentors and experts. Apply
Read MorePan-African technology firm inq. announces new CEO and AI products
inq. has announced a new group CEO as well as numerous AI products which will officially be unveiled in an event to be held in Lusaka, Zambia, on August 30. Pan-African edge technology provider inq. has announced a new group CEO in Glad Dibetso who succeeds former CEO Nick Reed. Prior to this development, Dibetso was the CEO of Cloud Exchange and later joined the company’s advisory board. He was also the West Africa CEO of Dimension Data. Speaking on the appointment at a media briefing this morning, CEO of inq., Andile Ngcaba, stated that Dibetso brings much experience in heralding technology companies on the continent. “We’re very happy to get a person as experienced as Glad to lead this company. The reason why we requested him to join this company is because of his deep experience in cloud digital transformation in the African continent. We are blessed to get a calibre like him to lead us as we embark in digital transformation through our new products,” he said. For his part, Dibetso stated that the reason for his joining is to lead the company’s mandate to make an impact in the continent’s digital transformation ambitions. “My mission is to make sure that inq. is an impact driven company. So impact will be at the core of everything that we do and making sure that the countries and the communities that we operate in are in a different and more advanced place after we’ve long left. So this is what my legacy would be at Inc,” he said. “Digital Transformation is my speciality and we believe that the continent is ready for digital transformation. We do not want to be left out in this race because we feel the next level of jobs for our youth will come from the digital platforms across the continent.” New products inq. also introduced a slew of new AI products, to be officially launched at an event in Lusaka, Zambia, on August 30, as well as numerous “centres of excellence” to be built across the company’s numerous markets. The first of the products is DocAI, a platform which will allow businesses to digitise their manual processes. Users can use inq.’s area-specific deep learning optical character recognition (OCR) to upload scanned documents or images of any type and extract the required fields and map them into an Excel file or database. Second is VideoAI which will allow enterprises to use artificial intelligence to get detailed analytics to deploy, manage, and monitor alerts across multiple regions. Inq. claims that this will provide quick, actionable intelligence for existing surveillance camera systems. Lastly, the company will also launch Wi-Fi 6 in its various markets. Additionally, inq. also announced that it will be launching centres of excellence across its pan-African markets to supplement its own in-house innovation as well as talent. Zambia will host the AI centre of excellence, Malawi the cybersecurity centre of excellence, while Botswana will host the innovation centre of excellence. “We believe that Africa should develop its own talent pipeline in the form of men and women who will participate in building solutions for Africa, to solve agriculture projects, to solve food security issues, to solve urbanisation issues, to solve health issues, to solve security issues using artificial intelligence. We hope that the centres of excellence will contribute towards creating this type of talent,” added Ngcaba. inq. currently has direct operations in nine African countries, with an additional non-direct presence in 16 more countries.
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Peacock, which will host ‘Showmax 2.0’, increases prices for the first time
Peacock, the platform which ‘Showmax 2.0’ will be hosted on, has announced price hikes. Will this development affect Showmax’s ability to attract subscribers when it launches? Peacock, the platform on which Showmax 2.0–slated to be launched by March 2024—will be hosted, has raised subscription prices effective from next month. The new pricing applies to new and existing users and is the first price hike Peacock’s launch in 2020. According to an email sent to subscribers, the ad-supported Premium subscription will go up by $1, to $6 per month, while the ad-free Premium Plus option will increase by $2 to $12 per month. An annual Premium subscription will go up by $10, translating to $60 per year, while the Premium Plus subscription will increase by $20, making it $120 per year. Earlier this year, Peacock axed its free-tier subscription package. The hike is attributed to the fact that Peacock is currently burning through cash. Despite rapidly gaining subscribers— it had 22 million subscribers in April— increased programming costs led to a loss of more than $700 million. How does this affect Showmax? In April, Multichoice announced a partnership with US media giant COMCAST, owners of NBCUniversal, and its UK counterpart SKY to create “Showmax 2.0, ” a new platform powered by Peacock. It will be 70% owned by Multichoice and 30% (stake sold for $30 million) owned by UK and US partners. Leveraging Peacock’s “scalable and feature-rich technology,” Multichoice’s vast array of local content combined with global content from its partners, Showmax 2.0 aims to give top global streaming platforms on the continent a run for their money. Showmax 2.0, which is expected to launch by March 2024, will be hosted on the Peacock platform. (Image source: MultiChoice) But first, it may need to worry that Peacock’s pricing is now approaching that of competing platforms. Hulu charges $7.99 a month with ads, $14.99 without) while Max ranges from $9.99 to $19.99). Netflix also has multiple tiers from $6.99 to $19.99. Do African streaming audiences care enough about a platform’s underlying technology to be willing to pay top dollar for it? Won’t they instead be willing to pay the same amount, or slightly more, for the likes of Netflix, who might have less advanced technology but more content? Additionally, if other streaming platforms acquire sports content rights, will Peacock’s “superior” technology be reason enough for subscribers not to migrate from Showmax 2.0? These are the questions that MultiChoice executives will be pondering. Showmax is the exclusive distributor of high-demand content like the English Premier League and Indian cricket league. If competitors like Netflix strike deals for such content, it will put much pressure on Showmax. According to its annual financial results, MultiChoice intends for Showmax to reach $1 billion in revenue in five years. Multichoice has also bumped up its growth expectations of the platform by a multiple of three by 2032 and content production by ten by 2033. With Peacock’s first price increase, MultiChoice may not use pricing as a selling point for Showmax 2.0 as the platform will most likely pass the increments onto the consumer. It is doubtful that Showmax, which is already hemorrhaging through cash as evidenced by parent company MultiChoice withholding dividends to make further investments into the platform, would be willing or able to harbour the Peacock platform costs without sharing at least some of them with the consumer. With its launch date looming, it will be interesting to see how Showmax 2.0 adapts to the rapidly changing and increasingly challenging operating environment in the video-on-demand streaming industry.
Read MoreDisappointed Kenyans fault Starlink for its $650 cost
Starlink has launched in Kenya, offering broadband via satellite signals. It aims to benefit rural areas, but its high cost makes it impractical for many. While Safaricom plans to compete with satellite internet services, local ISPs remain a reliable choice. Starlink has finally launched in Kenya. Manufactured by Elon Musk’s space exploration company, SpaceX, Starlink offers broadband connection via satellite signals, similar to how some TV companies, like MultiChoice’s DStv, transmit signals to television sets. The arrival of this product in the country is intriguing because it is unique and holds the potential to benefit customers who have eagerly waited for it since the waitlist went live. Interested parties had paid a $99 fee to reserve Starlink and have since been notified about its availability via email. Starlink for sale in Kenya! Note, buying a Starlink with global roaming allows you to travel almost anywhere. https://t.co/Gg8krpPpwY — Elon Musk (@elonmusk) July 18, 2023 Kenya is among the few African countries with access to Starlink, along with Mauritius, Mozambique, Rwanda, and Nigeria. Nigeria was the first country on the continent to be served by the service, eliciting mixed reactions from users and enthusiasts. A similar reception has been observed in Kenya, where some people are excited about the product while others remain unaffected. The cost of Starlink in Kenya The primary reason why Starlink may remain a niche product is its high cost for an ordinary Kenyan. In addition to the non-refundable booking fee of $99, customers must pay KES 89,000 ($628) for the kit, which includes the Starlink dish, mounting stand, cables, and a power source, along with KES 3100 ($22) for shipping and installation, totalling KES 92,100 ($650). Furthermore, there is a monthly subscription fee of KES 6500 ($46). In contrast, ordinary fibre-powered broadband connections from local providers like Safaricom and Zuku cost a fraction of that amount. Customers usually only pay monthly subscription charges and receive free other hardware components, such as routers, from their internet service providers. Local ISPs also offer a complimentary ethernet cable, whereas Starlink charges an additional fee. Starlink has partnered with connectivity firm Karibu Connect as an authorised reseller in Kenya. Tech blogger and ICT consultant Emmanuel Chenze says that Starlink does not make sense to people who local broadband providers already serve. “If you’re in any major town in Kenya, why would you bother with Starlink? Chances are, local ISPs very well serve your area, and there’s very good fibre connectivity where you are. Does the high initial set-up cost of Starlink make sense to you? I’m in a 2/3-person household, and the 50mbps I pay for from Safaricom is more than sufficient for our needs. It costs me 5k per month. Even in a year, I won’t have spent the 90+k you’ll spend on your Starlink set-up costs and a further 72k on the monthly subscription,” he said in a tweet. Some agree that Starlink’s launch in Kenya will provide quality broadband internet to people who lack access to it, particularly those in rural areas. This initiative makes sense because many localities, besides major towns and urban centres, lack wireless or hardwired internet providers. Starlink aims to bridge the gap for a specific group in unserved and underserved areas. However, the major drawback is its high price, which makes it unaffordable for many potential users. Moses Kemibaro, one of the customers who booked the service, says, “Buying the Starlink terminal will set you back a total of KES 89,000, which includes a shipping fee of KES 3,100. At the same time, the monthly subscription would be KES 6,500, which doesn’t seem ridiculously priced but is still more than what I currently pay for my home Internet service.” Speeds are great but useless for online gamers Starlink offers two packages in Kenya. The first one provides downlink speeds ranging from 25 to 100Mbps and uplink speeds of 10Mbps. The second package offers even higher speeds, reaching up to 250Mbps for downlink and 35Mbps for uplink. While the uplink speeds are impressive, Starlink acknowledges that actual speeds may vary, likely due to cloud cover and weather-related issues. However, it’s important to note that Starlink is unsuitable for gaming due to its high latency. For those wondering, these are the advertised speeds for Starlink in Kenya pic.twitter.com/H7eKKvlGMH — OoF (@NigelJr_) July 18, 2023 “Users will be able to engage in common internet activities like email, online shopping, or streaming a movie, but they won’t be able to engage in activities like online gaming or video calls. Service will improve dramatically over the next year,” says a sign-up statement in an email sent to customers. Competition is gearing up Safaricom plans to launch satellite internet services, which coincides with Starlink’s offering in Kenya. This product will target customers in rural Kenya. The service will be provided through a partnership with AST SpaceMobile, Starlink’s competitor, which Vodafone Group Plc, Safaricom’s parent firm, supports financially. AST SpaceMobile aims to establish the world’s first space-based mobile broadband network for standard mobile phones. This satellite data service will supplement fibre optic cables, Wi-Fi, and cellular networks. Under this collaboration, Safaricom and AST SpaceMobile will evenly share revenue. They have agreed to maintain market exclusivity within their regions to ensure the partnership’s success. Starlink is a niche product in Kenya In urban areas of Kenya, having a Starlink connection might not be the most practical choice unless it’s specifically for business purposes. This is because the local fibre network already serves these areas very well. However, if you have the financial means or are dissatisfied with the local ISPs, having Starlink as a backup option could be beneficial. Starlink may not be fully ready to cater to most rural areas in Kenya. But once it is, that’s where it will truly shine and offer great value for money. Sticking with the known local ISPs is the easier choice despite their imperfections. These local ISPs are generally reliable, even if they have their flaws. For instance, Zuku and Safaricom may
Read MoreRaising Your First Funding Round: 8 lessons from Lagos Startup Week
Lagos Startup Week, an annual event that brings together entrepreneurs, investors, and industry leaders in Nigeria’s tech ecosystem, hosted its event last week. One of the panels that stood out was on how to raise your first round and here are important nuggets from the event. Lagos Startup Week may have ended but the lessons definitely resonate for any tech founder looking to succeed in the world of tech. Starting a business is hard, especially a technology enabled startup. Last week, the trio of Odunayo Eweniyi of PiggyVest, Dolapo Morgan of Ventures Platform and Seun Alley of Fez Delivery shared crucial pointers for tech founder looking to raise venture capital funding. Clarity If there is one thing both Alley and Morgan agree on, it’s the fact that the essence of the business and the problems it intends to solve must be clear. Morgan states it must be a one liner. It is really important for any founder seeking funds to not ramble. Being clear also involves figuring out the business model, staff structure, how one intends to raise and how long that period must last. Traction It is important that before seeking a raise, you must have launched. You must have grown before anyone would take an interest in you. If you are pre-seed, there are a million and one things you can do to show growth. “If you are a new startup, you can show things like users or other tricks that show you are making progress. If you are post revenue, show your revenue. We want to see what your growth looks like on a monthly basis. The magic number people argue like 15-20% of the monthly growth rate. Per year in Nigeria you need to do 50% due to high inflation, currency devaluation, ” Morgan explained. Hire Generalists The current trends of layoffs have taught businesses that more can be made with less. It’s a temptation to hire so much when one is starting out and turning back to cut those hires due to economic challenges. Cofounder of PiggyVest, Odunayo Eweniyi notes that her firm was a team of 12 for a very long time before it recently expanded to fit over 100 people due to the other products they created. “At the beginning stage of your business, the kind of hiring you should be doing is generalist people — people who can stretch across various roles, whose skills and experiences translate,” she said. Capital efficiency The poster lady for capital efficiency is Odunayo Eweniyi. As she rightly asserts, her startup raised $1.1m in 2018 and is yet to raise any funding since then. This situation led her to figure out how to work with little money. “Capital efficiency is stretching one dollar further than it would normally go, “Eweniyi explained. With unpredictable markets in Nigeria, one has to be capital efficient especially with the dearth of funding for African founders. Capital efficiency is building the right customer persona, finding them and then selling to them. Bootstrap It’s usually common for founders to actually bootstrap their businesses. Alley noted that she invested 10 million into her logistics startup. Eweniyi agrees as well. Sometimes, you need to support your business by yourself, to keep it afloat. It is also okay to have a side hustle, raise money from close friends, as long as you can return it. Valuation For many startups, who are at the pre-seed level, valuation of their startups is a bit of a pickle. However, it’s important to be able to assign value to what you are building even in the season of valuation markdowns, according to PiggyVest founder. You are building in a market and there is a company similar to you whose valuation you can check. So you can adjust upward or downward. Account for everything Run your company the way you should run a company. Budget very strictly, don’t overspend. There are boundary lines between departments. Make sure every dollar is accounted for and make sure they are bringing in value. Also, audit your firms. Some of these wise words are ways to think about your Startup. VC Backable Not every business needs VC funding. But if you must raise, your business must be VC back able. This simply means you must be able to grow at the rate of 10 times or more. The money being raised is not free money. If one is writing you a check of $50,000. It’s only natural you return it with interest. Also, check the portfolio of your investors to be sure they are not backing a similar business to yours because they may find it difficult to back yours. In all, the key is embracing innovation and tapping into underserved markets.
Read MoreAs MultiChoice’s troubles continue, Canal+ is smelling blood
As MultiChoice continues to face troubles, French broadcasting giant Canal+ continues to up its stake in the company. Is a takeover in the works? A fortnight ago, MultiChoice’s share price plunged by 13% after JP Morgan Chase & Co downgraded the pan-African broadcaster’s rating. According to Reuters, the brokerage firm adjusted MultiChoice’s ratings downwards from “neutral” to “underweight”. An “underweight” rating means that JP Morgan expects the company to underperform based on the average total return of stocks in its coverage universe over the next 6 to 12 months, and hence it is encouraging stockholders to sell. As MultiChoice’s woes continue, French broadcasting giant Canal+ has increased its stake in the company to 31.7%. South African law mandates that when a shareholder reaches a 35% stake in a listed entity, they are to make an offer for a takeover. “Under South Africa’s takeover regulations, any company that acquires more than a 35% beneficial interest in a company’s securities is obliged to make a mandatory offer to the remaining shareholders (minorities included) on the same terms as the acquisition it took to reach the 35% threshold,” said Jimmy Moyaha, an independent financial markets analyst. “This is particularly interesting as Canal+ has been increasing its stake since 2020. The company has gone from holding 20.1% of MultiChoice, to now holding around 31.7%.” According to Moyaha, due to South African regulations which limit foreign ownership of South African broadcasters to 20%, it is unlikely Canal+ is actually attempting a full takeover. “[The regulations mean] that the voting rights of Canal+ would always be limited to 20% of the company’s total voting power as per a provision in MultiChoice’s Memorandum of Incorporation. If a takeover is to happen, we could be faced with the prospect of MultiChoice losing its status as an official broadcaster in South Africa. This would be detrimental to its revenues and this is why it is unlikely to happen at this stage. But anything is possible in life,” he added. However, Mpumelelo Ndiweni, CEO at Colmin Group, an African markets advisory and investment company, believes that we are witnessing an attempt at a takeover by Canal+, but MultiChoice’s recent troubles are not the motivating factor behind the transaction. “Canal+ has been wanting to buy MultiChoice for some time and it’s picking up the shares to trigger the mandatory offer,” he said to TechCabal. “It wants to become the leading pay-tv provider across Africa. Remember that Canal+ is in francophone countries while Multichoice is in anglophone countries so buying it makes it gain access to those viewers, creating an Africa pay-tv leader in the process.” MultiChoice’s troubles In addition to its plunging share price, MultiChoice also has to contend with DSTv’s dying business model and getting Showmax, its streaming bet, on par with the likes of Netflix and Disney+ on the continent. A fortnight ago, Showmax was dealt a blow as HBO struck a deal with Netflix to avail some of its top-rated productions on the latter’s platform. Prior to that development, Showmax and DSTv had been the exclusive distributors of HBO content on the continent. Multichoice has and continues to pump a significant amount of funding into Showmax. In its financial results for the year ended March 31, 2023, the company shared that it would withhold dividends to shareholders to further finance the Showmax project. “In view of the challenging South African market, the uncertain currency outlook, the funding needs of the Rest of Africa business and the investment required to drive Showmax to become the leading streaming platform on the continent, no dividend has been declared for FY23,” the company stated. Multichoice’s current source of solace is in its position as the sole holder of broadcasting rights to the majority of premium sporting content on the continent. However, that privilege is a deal away from being blown out of the water, just like its former HBO stronghold. “MultiChoice may benefit from exploring more affordable, yet personalized packages like a Sports Only package for example. The business would have to move with intent though because if Disney+ were to roll out an ESPN package for example, this would mean that most South Africans who currently subscribe to Disney would have a sporting alternative that would more than likely come in significantly cheaper than a DSTV bouquet,” Moyaha tells TechCabal. What’s next? According to MultiChoice, it is monitoring the activities of Canal+ and “continues to have engagements on a regular basis” with the company as the two businesses “look at areas of collaboration”. Meanwhile, Canal+ states that the share-buying spree is merely a financial investment, which has averaged a 5% yield over the last 3 years. According to Ndiweni, the next step in the saga might be MultiChoice deciding to sell some, but not all, of its business to Canal+. “Multichoice may break up and sell its “rest of Africa” market assets to Canal+ while it retains South Africa and tries to drive DStv Now and Showmax to profitability. Alternatively, the companies may merge in Africa with Canal+ focusing on pay-tv while MultiChoice focuses on the online part of the business,” he said. Moyaha believes that the propensity for shareholders to benefit if a takeover does indeed take place will depend on the conditions of the acquisition and the answers to some pertinent questions. “We would first need to know the answers to a few important questions. Questions like if MultiChoice would move to operate as a foreign broadcaster in South Africa? Would Canal+ be looking to acquire and eventually de-list MultiChoice? Would there be conditions imposed on the acquisition by the Takeover Regulation Panel? What price would be fair to shareholders given that we are currently back at the lowest prices for the share?” he said. Ndiweni, on the other hand, believes that the value to be unlocked from a possible takeover transaction depends on how exactly the deal is structured. “In terms of just a straightforward takeover deal, I would say not much value would be realised because
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Analysis: How Egypt’s fintech ecosystem is finding its pace and dragging banks along
In 2017 there were 32 financial technology companies in Egypt—including but not limited to payments providers. By 2022, the number of technology companies that offered fintech services had increased five-fold to 177. A new report published by the Central Bank of Egypt sheds light on what has influenced this growth. The FinTech & Innovation Department of the Central Bank of Egypt attributes the growth of financial technology companies to “rising demand for FinTech & FinTech-enabled solutions” in Egypt. This demand and the natural attention venture investors pay to fintech helped add 151 fintech firms to the country’s fintech market map. According to the report, 95% of Egyptian fintechs (168) are headquartered in Egypt as opposed to the model where firms receiving foreign investment incorporate in Delaware or similar jurisdiction. These firms are concentrated in Cairo and Giza. The report highlighted how Egypt’s strong regional relationships with Gulf countries shape much of its fintech landscape. 94% of Egyptian fintech operators also have offices in the United Arab Emirates (58%) and Saudi Arabia (36%). 11% and 7% of Egyptian fintechs also operate in Bahrain and Oman respectively, with Jordan and Pakistan also a favoured destination for Egyptian fintech operators. Egypt’s fintech firms are expanding Gulfwards in part because they have significant customers in those markets. Roughly 30 Egyptian fintechs serve customers in the UAE, Saudi Arabia and surprisingly, Nigeria. Venture investment: local “bank” capital steps up Egypt is not much different from its continental ecosystem peers in the sense that fintech firms receive the bulk of technology startup investments made into Egyptian tech companies. “Venture Capital & Angel Investments represent a great share of overall FinTech investments in Egypt, with an average of 65% across the last 3 years,” note report authors. But in 2022 private equity inexplicably surpassed venture capital firms and angel activity, representing 55% of overall fintech investments into Egypt. The report offers no further insight into this curious activity. A separate report—the 2023 Egypt country spotlight by the African Private Capital Association (AVCA) may shed some light on this peculiarity. According to 2023 AVCA Country Spotlight: Egypt, private equity funds invested $877 million in Egyptian firms in 2022 across 76 deals, in what the report described as “a double the historical record.” Even as venture capital investment reached record highs. Most important for our purposes, the report pointed out that “Financials was the most active sector by volume (26%) and attracted the largest share of deal value (23%).” It is reasonable to expect that this referred to the financial sector and included fintech firm investment. Source: Fintech Egypt Egypt has also fared better in terms of recorded investment inflow to startups this year. Per Africa: the Big Deal data, it was the only African country in the last six months to maintain a streak of raising above $500 million by the end of the half-year. Women are the beneficiaries of 80% of remittances sent to Egypt… The government wants more of those precious foreign currencies to come through formal channels, so the central bank launched a pilot program to digitise remittances Despite a 25% decline in funding received by Egyptian startups, the country swapped places with Nigeria whose startups received 77% less than they received in the first half of 2022. Egyptian startups raised $540 million no doubt bolstered by MNT Halan’s mega $400 million mix of equity and debt round. Government reforms One theme in discussing Egypt is the impressive startup support system the country built in the form of accelerators and incubator programs. Egyptian tech companies are some of the most accelerated tech startups in Africa. Per Disrupt Africa’s 2021 report. 40% of Egyptian startups have participated in an accelerator or incubation program. In more recent times, fintechs, in particular, have enjoyed a government tailwind—an acceleration of sorts—that has followed the government’s resolve to support digital payments as part of initiatives to formalise the economy. “In today’s Egypt, the informal economy constitutes up to 50 percent of the country’s GDP,” writes Mohammed Soliman for the Columbia Journal of International Affairs. Mohammed Soliman is the director of the Strategic Technologies and Cyber Security Program at the Middle East Institute. PwC Middle East cited estimates that put the country’s informal sector at 40% of GDP. PwC also points out that 85% of small and medium-sized enterprises in the country are thought to be informal. To capture more of these segments in national economic planning—and revenue, of course, the Egyptian government has pursued reforms that simplify the onboarding of Egypt’s informal workers to financial services platforms. Women are the beneficiaries of 80% of remittances sent to Egypt. Remittances are a big deal for Egypt which is currently struggling with a foreign currency shortage. A significant portion of remittances are sent through informal Hawala channels. The government wants more of those precious foreign currencies to come through formal channels, so the central bank launched a pilot program to digitise remittances and provide beneficiaries (8 out of 10 of whom are women) “with incentives to encourage them to use banking products (accounts, prepaid cards, mobile wallets).” That government tailwind has been helpful. In particular, it helped Egyptian fintechs and payment providers drive 11 billion digital transactions worth an estimated 342 billion Egyptian pounds (about $18 billion using 2022 average exchange rates provided by ExchangeRatesUK.com). On those volumes, Egypt’s fintechs generated revenues of 62 billion Egyptian Pounds or $3.3 billion (see exchange rate explanation above). Egypt’s new payment network, InstantPay has processed 112.7 billion Egyptian Pounds in transactions from launch in March 2023 to March 2023 and has a registered user base of 2.1 million. Source: Fintech Egypt Source: Fintech Egypt But the regulatory tailwind has not completely done away with the speed bumps fintechs face. Suggesting that the government might need to move faster. Growing bank-to-fintech ecosystem Egypt is one of the most active startup M&A markets in Africa. The report shows that more than half of Egyptian startups (58%) were partners with another fintech. Note that fintech is used
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👨🏿🚀TechCabal Daily – Starlink is live in Kenya
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning WhatsApp latest update is saving time. You’ll no longer have to save people’s numbers in your phonebook before you can message them on WhatsApp. Simply click on the chat button, and search for the number, and you’ll be able to chat without saving their number. The feature is now live on Android and iOS. In today’s edition Starlink comes to Kenya Safaricom to launch internet satellite service Bboxx and MTN penetrate Rwanda Lottoland bets against Google The World Wide Web3 Event: The Moonshot Conference Opportunities Internet Starlink launches in Kenya Image source: Starlink Starlink is now available in Kenya! The satellite internet company tweeted that it is now officially extending its services to the East African country. Whether you are in a remote or rural location, the internet service provider says you can get speeds of over 150Mbps as long as its satellite dish has a clear view of the sky. Kenyans can get the broadband internet service for Ksh6,500/month ($45.9) with a one-time hardware cost of Ksh92,000 ($649.72). Star-linked countries: Other African countries where Starlink has launched include Mozambique, Rwanda, Nigeria, and Mauritius. The service is set to launch in 17 more African countries in 2023, with Zambia, and Angola scheduled for a 2023 launch. Sixteen countries—Uganda, Tunisia, Ghana and Egypt inclusive—are scheduled for a 2024 release, while 18 more countries have unconfirmed launch windows. Secure payments with Monnify Monnify has simplified how businesses accept payments to enable growth. We are trusted by Piggyvest, Buypower, Wakanow, Fairmoney, Cowrywise, and over 10,000 Nigerian businesses. Get your Monnify account today here. Internet Safaricom plans to launch satellite Internet service Image source: AST Space Mobile Elon Musk’s Starlink will face a new rival in Kenya’s satellite space. Kenya’s top communications company, Safaricom, has partnered with AST SpaceMobile to launch satellite internet services. Safaricom signed the agreement through its parent company, Vodafone Group Plc, which is an investor in AST SpaceMobile. What is AST SpaceMobile? AST SpaceMobile is a company based in Texas that designs and manufactures satellites that provide cellular broadband internet access to people all over the world. Their technology is designed to work with unmodified smartphones, so you won’t need to buy any new hardware to use it. ICYMI: AST SpaceMobile’s BlueWalker 3 satellite passed testing in 2022 and partnered with Vodacom and Safaricom for a trial in Q2 2023. After a successful test, AST SpaceMobile will scale up satellite deployments with Vodacom to provide ubiquitous 4G coverage across Africa and beyond. The future of internet service in Kenya already looks bright! The revenue-sharing agreement between Safaricom and AST SpaceMobile will be split 50/50, with both entities agreeing to maintain mutual exclusivity in their respective markets as part of the arrangement. Zoom out: Safaricom’s satellite launch is coming shortly after Elon Musk announced Starlink’s launch in Kenya. The entry of satellite internet providers into the Kenyan market is a positive development. It is likely to increase competition, drive down prices, and improve access to Internet services in rural areas. Telecoms Bboxx and MTN to increase Rwanda smartphone penetration Image source: Tenor Tech company Bboxx and MTN are partnering to increase smartphone access in Rwanda, per TechTrendsKe. Despite network coverage of 99%, the country’s current smartphone penetration is just 26.3%. What is their plan? Bboxx, through its pay-as-you-go smartphone service, will give citizens in Rwanda flexible payment plans for purchasing smartphones. Customers can make payments through MTN Mobile Money short code *182*2*4*2#. On the other hand, MTN Rwanda, in turn, will provide SIM cards, and a starter data pack that consists of 1GB per month for a period of three months. MTN Rwanda CEO Mapula Bodibe said, “At MTN, we believe that everyone deserves the benefits of a modern connected life and by partnering with Bboxx, we continue to make this vision a reality. This collaboration represents a significant step in bridging the digital divide by expanding access to affordable smartphones across the country. Together, we are committed to creating a more connected world to enable individuals and communities to access the power of the internet and thrive in this digital age.” GrowthCon 1.0: Learn how to unlock 10X Growth Connect with growth leaders, operators, and enablers to explore proven tactics for driving sustained business growth in Africa at GrowthCon 1.0. Experience curated masterclasses, case studies, a growth hackathon and more. Get your tickets here! Policy South African betting site initiates tribunal against Google Lottoland, a South African betting site has submitted an abuse of dominance complaint to the Competition Commission against Google. Why? Lottoland alleges that Google has restricted their access to its advertising platform and has applied for interim relief with the Tribunal. The Tribunal has agreed to hear Lottoland’s interim relief, which spans a duration of six months, starting from the date of the Tribunal’s order or until Lottoland’s complaint against Google with the Commission is resolved, whichever comes first. Image source: Tenor Lottoland’s request: Lottoland requests the Tribunal to instruct Google to grant them access to the company’s advertising service platform. Furthermore, Lottoland commits to comply with Google’s terms and conditions and pay the necessary fees for using the platform. According to a Google spokesperson, the company will carefully examine the report and engage in a constructive dialogue with the commission to address their inquiries. Crypto Tracker The World Wide Web3 Source: Coin Name Current Value Day Month Bitcoin $30,057 – 0.16% + 13.83% Ether $1,911 – 0.15% + 10.89% BNB $242 – 1.03% – 0.36% Cardano $0.32 + 3.90% + 23.27% * Data as of 04:50 AM WAT, July 19, 2023. Events The Moonshot Conference This is Moonshot by TechCabal. Moonshot is a conference that will bring together Africa’s tech ecosystem to network, collaborate, share insights and celebrate innovation on the continent. Click here to join the waiting list to get more news and updates about this conference. Opportunities The SaaS Accelerator Programme: Africa 2023 has opened applications for its
Read MoreAs fuel prices rise by 15%, ride-hailing drivers in Nigeria ask app companies to cut commission
Ride-hailing drivers are not enjoying the latest hike in fuel prices and hope app companies would reduce commissions to meet them halfway A new shockwave has greeted ride hailing drivers following the increase of the pump price of fuel in Lagos and Abuja. The price of fuel rose to ₦617 this morning in Abuja, while selling for ₦520 per litre in many parts of Lagos. Members of the Amalgamated Union of App-based Transport Workers of Nigeria (AUATWON) told TechCabal that the fuel price hike has put them in a tough spot. A vice chairman of the union, Ifako-Ijaiye, David Ademola, told TechCabal that today’s increase will further eat into their margins. “Buying fuel at ₦500 per litre was not favourable before.” The Chairman of the media and publicity committee for the union, Comrade Jossy Olawale, said he was lucky to get fuel at ₦492 per litre in Egbeda, but worried that the increase in fuel would only complicate matters for e-hailing drivers. The Union’s argument is that while they have no control over fuel prices, they should be given a voice in determining the commission they pay to ride-hailing companies. The Union has been in a running battle to get the major ride-hailing companies to reduce their commission to 10%. Nigeria’s labour ministry dallies on recognising AUATWON Olawale and Ademola believe that the delay in Nigeria’s labour ministry recognising AUATWON as the representative body for their interests has not helped their cause. With the commission of 25% which they still have to remit to app companies like Uber and Bolt, another fuel price hike worsens their position. This is why Olawale has called for the Ministry of Labour and registrar of the trade unions to swiftly issue their certificate of registration. He also asked the ministry to ignore ride-hailing companies’ objections to the registration of the union. “The ministry should trash that petition and allow our name to stay. They should issue our certificate immediately,” he said. A possible solution ? As the drivers continue their relentless pursuit of a 10% commission to be remitted to the ride hailing firms, they also called on the federal government and state government to look at alternative means of fuelling their cars, particularly with the Compressed natural gas (CNG). “Our members can’t afford the cost of conversion but we are asking the government to support us in funding this conversion so that our members who are unemployed graduates that have taken this job can continue to earn legitimately. We are also aware of the palliatives of ₦500 billion in place. We want AUTAWON to be captured in this palliative,” Olawale added.
Read MoreNigeria’s answer to food inflation is a commodity board; here’s why it won’t work
To address the increasing food inflation, President Bola Ahmed Tinubu has proposed a National Commodity Board. A commodity board is not a novel idea, but it is a poor choice of weapon against the soaring prices of food in Nigeria. In Nigeria, food inflation is a problem that won’t go away. With 90% of the working population spending 60% of their income on food and related expenses, it’s been clear for a while that urgent action is needed. Recent numbers from the National Bureau of Statistics show that food prices are the biggest driver of Nigeria’s inflation figures. It has compelled the nation’s president President Bola Tinubu to declare an emergency in the country’s food sector. President Tinubu’s plan to reduce food prices has several prongs, one of which is the establishment of commodity boards. Commodity boards are not new in Nigeria. The country has set up boards for cash crops like palm produce, cotton, groundnut and even grains. Most of these boards were created to boost and regulate exports. Yet, they have often caused market distortions and incentivised corruption until they were eventually dissolved. Tinubu’s commodity board is supposed to rein in inflation, but there is nothing to suggest that it will be any different from the ones before it. The National Commodity Board may cause market distortion “In the past, the commodity board improved the rural economy and brought more revenue to the farmers, but it created a toxic imbalance in the market. Another board of that sort will do the same,” Tade*, a policy expert, said to TechCabal. Tinubu’s proposed commodity board aims to control the cost of food items and fix them at a price that will profit the farmer and still be affordable for the Nigerian consumer who is currently battling inflation. To ensure this, the board establishes a price floor, which is a minimum price at which the crop will be bought from farmers. In the past, the boards also directly buy the produce at the pre-determined price from the farmers on a regular basis. The problem is that many times this fixed price is divorced from the market reality, and in such cases, people will inevitable cut corners and create market distortion. A clear example is how the government inadvertently created a black market for dollars when it artificially pegged the rates below the real market reality. The same thing happened in the 1960s when groundnut producers resorted to selling their produce directly to foreign buyers willing to pay higher prices, bypassing the Northern Nigeria Marketing Board’s established price floor. “Market distortions can occur when the board’s fixed prices fail to adequately reflect supply and demand forces,” Tade pointed out. This creates disparities within the market and completely undermines the board’s intended price stability. The National Commodity Board will be another fiscal burden The implementation of a commodity board can also place a significant fiscal burden on the country. Considering the macroeconomic environment of the country, the fixed price of produce may be unaffordable to the majority of the population. Under these circumstances, the board would naturally create a subsidy for the produce, and sell them to the public at artificially lower prices than what it initially bought from the farmers. But Nigeria is not in a fiscal position to provide subsidies. Tade expressed concerns about and believes that any sort of food subsidy will nullify the fiscal gains of the recent fuel subsidy removal. Additionally, the board itself requires funding for essential infrastructure needed to store the produce and distribute it. It also needs to fund the several organisations that will be contributing to the board’s functions. These organizations may include the National Commodity Exchange (NCX), Seed Companies, National Seed Council, Research Institutes, NIRSAL Microfinance Bank, and Food Processing/Agricultural Processing associations. Each entity on the board may require financial resources for its operations, research activities, market infrastructure, and other essential functions. The allocation of funds to support the board’s activities can strain the government’s budget, especially considering other pressing socio-economic priorities. Corruption and inefficiencies Making this board a middleman between producers and consumers creates room for more corruption. There is nothing that shows that the new proposed board will be corruption-proof, and the last thing Nigeria needs is another leaking purse. In addition, other inefficiencies associated with government agencies such as delayed payments, and nepotism, can adversely affect the lives of farmers, and discourage private sector participation and innovation. Duplication of existing structures The Commodities Exchange is listed as one of the organisations that is going to be a part of the proposed board but they have very similar functions. Mr Akin Akeredolu-Ale, managing director and chief executive officer of the Lagos Commodities and Futures Exchange said, “Reintroducing Commodity Boards back into the ecosystem will see duplication of functions. The existing structure required by the Commodity boards is already being implemented by the Commodities Exchanges.” Following the ban by the Federal Government on the direct purchase of farm produce by foreigners from farmers, producers have commodity exchanges to sell their goods at competitive prices. Would it not be better for the government to strengthen the infrastructure, expand market linkages, and improve the services offered by commodity exchanges? Tade thinks there are a plethora of other means the government can lower the prices of food. “On the import duties on produce like wheat can significantly reduce the cost of the things like pasta and bread which it is used to make,” he said.
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