Flutterwave surmounts legal obstruction to boost its offering in Kenya
This article was contributed to TechCabal by Seth Onyango via bird story agency. Fintech giant, Flutterwave has overcome legal challenges that threatened to cripple an ambitious growth strategy that made it the darling of venture capitalists internationally. “After considering all the facts presented to this court, as well as my earlier ruling on the agency’s request for withdrawal of this suit, the withdrawal is hereby allowed and this suit is marked as withdrawn,” High Court Judge Nixon Sifuna said in a ruling handed down in Nairobi. The judge criticised Kenya’s Assets Recovery Agency (ARA) for initiating the case without completing investigations, deeming the action “inappropriate, negligent, reckless, and absurd”. Flutterwave had grown to become an investor’s darling on the continent and the removal of legal challenges in the key East African markets sets the stage for a face-off with M-Pesa, the region’s mobile money behemoth. The Nigerian-based company, which offers a range of payment solutions for individuals and businesses across Africa, faced a series of legal challenges in Kenya after the ARA accused it of money laundering in 2020 and froze its accounts. Founded in 2016 by Iyinoluwa Aboyeji, Olugbenga Agboola, and Adeleke Adekoya, Flutterwave is headquartered in San Francisco and Lagos and is currently valued at some US$3 billion. That makes it the most highly valued startup in Africa, overtaking previous records set by OPay, a fintech firm backed by SoftBank, and Chipper Cash, a cross-border payments platform supported by FTX, (both were valued at US$ 2 billion, in 2022). Flutterwave always denied the allegations brought by the ARA and challenged the court order, arguing that it had complied with all the regulatory requirements and obtained a license from the Central Bank of Kenya (CBK) in 2019. After months of litigation by the ARA, the judgement cleared the way for the fintech firm to resume operations in Kenya. The company may also chase a much-anticipated initial public offering (IPO) which could see it listing its shares in the territories where it operates. The end of Flutterwave’s legal woes could be a game changer in Kenya and East Africa, as the company seeks to expand its presence and compete with the dominant player, M-Pesa. M-PESA, which is owned by Safaricom, the largest mobile network operator in Kenya, has more than 55 million users and processes over 80% of the country’s digital payments. It has extended its services to other countries in the region. Kenya’s digital payments sector is often criticised for its complacency due to a lack of robust challenges to M-Pesa’s dominance. Flutterwave operates in more than 30 African countries and supports over 30 currencies, making cross-border transactions and remittances easy. The service has partnered with global payment platforms such as PayPal, Stripe, and Visa, enabling its customers to access a wider range of payment options and markets. The fintech startup also offers online checkout, e-commerce, invoicing, payment links, and virtual cards. According to a report by the World Bank, Kenya has one of the highest fees for mobile money transactions in Africa, averaging 11% of the transaction value. Flutterwave’s entry could significantly lower those fees as it chases its ambition to become the leading payment platform in Africa and beyond.
Read MoreCopia, Kenya’s offline e-commerce king, wants more customers to order from its mobile app
Copia Global, the Kenyan e-commerce startup that has raised $107m in venture funding across seven funding rounds, is launching a campaign to drive more sales through its mobile app. The company, which currently collects and delivers customer orders through 50,000 agents, is taking advantage of the fact that most low- and medium-income Kenyans now have smartphones. “We started with an offline experience because our customers were offline, but now we can fully focus on transitioning all to our app,” said Tim Steel, CEO of Copia, in a statement seen by TechCabal. Currently, most of Copia’s two million customers place orders for household items, electronics, or packaged foodstuff in person at neighbourhood shops, via USSD, or even call in orders (via phone) to their local shopkeepers. Copia’s new campaign will focus on helping these users transition to placing orders on its mobile app. “The goal is increased direct engagement with our customers so that they can see all our products and the pricing which is difficult when you are in an offline environment,” Steel told TechCabal on a call. The company launched a similar campaign last year to help agents use smartphones more, leading to an increase in the use of its agent marketplace app from 5% to 80%. A key driver of success was that Copia offered smartphone financing to its agent network. It will offer the same smartphone financing facility to allow current offline and new customers to purchase smartphones (and higher ticket items) and pay in bits. Founded in 2013 by Tracey Turner and Jonathan Lewis, Copia relies on a network of 50,000 street shops in small towns and semi-rural areas in Kenya to collect and deliver orders. Increasing app usage will change this model as customers rely less on nearby shops, which double as Copia agents to place orders. These shops will still serve as pickup locations, and shopkeepers will still earn commissions from app orders. Copia says it can better control the shopping experience, have complete visibility over how customers place orders, and even begin to customise offerings based on a customer’s historical preferences. Kenya’s smartphone usage has increased More Kenyans now own and use smartphones than ever, and mobile internet packages’ costs have fallen steadily since the early 2010s. A Kantar East Africa study commissioned by Copia said 73% of middle and low-income consumers in Kenya now own smartphones. Per the report, half of Copia customers who currently own smartphones use the internet at least once weekly. Given current trends, more Kenyans will transition to smartphones as prices fall and smartphone financing becomes more accessible. “Copia is usually the first commerce app our consumers experience, so we have a real responsibility to bring the world to their fingertips,” said Tim Steel. It’s an admission that Copia’s target demographic (rural and peri-urban) are not digital natives and may have difficulty weaning themselves off agents. In January 2022, Copia announced a $50 million series C round. This year, the company has cut at least 700 internal roles, in addition to shuttering a recently launched Ugandan business. In addition to its e-commerce business, Copia runs several brand product lines and operates two facilities that produce and package sugar and rice.
Read MoreConstellr wants to enhance farming in Africa with data
Constellr’s data will contribute to Africa’s agriculture industry by helping smallholder farmers prepare for climate change and understand changing planting seasons. Constellr, a German-based satellite data company, is offering land surface temperature (LST) data to African farmers to help them plan for better harvests and face climate change. What is LST, and why is it important? Land surface temperature is a measurement of how hot to the touch the land is, and how safe it is for planting crops over time. An understanding of this data can protect farmers from severe losses and boost food production, Rosa Schmidt, marketing project manager for constellr, told TechCabal in an email. In farming, temperatures are one of the primary determinants of plant growth and availability of produce. Instability or lack of understanding of the soil’s temperature impacts the outcome for farmers. As farming depends primarily on rain, LST will become “instrumental in drought monitoring by pinpointing areas experiencing water stress. This early detection empowers farmers to proactively adapt strategies, whether by adjusting planting schedules or opting for drought-resistant crop varieties. Farmers can also promptly detect abnormal temperature patterns indicative of other types of crop stress (e.g., from diseases) and adapt their approaches to ensure healthier and more productive crops,” Schmidt explained. Africa’s agriculture industry, despite its promise of a bright future, faces challenges such as “unequal access to resources, climate constraints, lacking infrastructure, technologies that are not equipped to handle varying economic and ecological situations, increasingly competitive markets, and low remuneration,” according to consulting firm Morgan Philips. Constellr is expanding into Africa, starting with Morocco, South Africa, and Zimbabwe. “With Africa poised for the highest population growth and impact of climate change but also being the continent with the highest potential for a jump in agriculture productivity, this [expansion] holds even greater significance,” Schmidt said. Data for everyone In Africa where a significant percentage of farmers are uneducated, LST data is inaccessible to the average farmer, despite its merits of helping farmers plan their planting and harvest seasons better. Only 15 out of 54 African countries have launched satellites into space and can gather EO data. Countries like Nigeria and Ghana have used these satellites to aid farming, but the data is usually expensive and hard to obtain. Smallholder farmers who need it the most, can’t access LST data. As water scarcity concerns continue to stand in the way of achieving $1 trillion in revenue in the African agriculture industry, companies like constellr promise to make the data available and affordable to support a sustainable and more efficient farming ecosystem. Constellr’s plan to make LST data available to more farmers, according to Schmidt, involves a four-pronged partnership approach with commercial companies, intergovernmental remote sensing institutions, space agencies, and NGOs. By working with the four partners, constellr will share the cost of accessibility across partners so that the end users, farmers, will get it at affordable rates. When asked about their pricing model, Schmidt said the company will provide locally contextualised rates across different countries. By using local NGOs and intergovernmental institutions, data will be available to farmers in summarised bits over different farming seasons, and may go as far as being read on the radio and in local newspapers to make it more accessible. For a start, Schmidt confirmed that constellr has “a handful of projects and partners in Africa for whom our goal is generating positive environmental and economic impact”. These partners will be their starting point.
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👨🏿🚀TechCabal Daily – Google asks Nigeria to dismiss $150 million suit
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Today’s newsletter is dedicated to everyone who tweeted about Blue Eye Samurai on Netflix. It may not have changed this editor’s life as many of you claimed it would , but it sure helped him have several satisfactory meals. Speaking of Netflix, ICYMI, it’s not leading Africa’s streaming market anymore. Showmax now leads with 1.8 million subscribers across the continent while Netflix has 1.6 million. What’s more, South Africa is the only giant of Africa Netflix knows as the country accounts for majority of the subscribers. Anyway, that’s old news. Here’s today’s. In today’s edition SEC halts trading of Tingo shares Google asks Nigeria to dismiss $150 million suit Nigeria to provide 3,000 paid internships with UNDP Vodacom’s earnings shrink due to Ethiopian foray The World Wide Web3 Opportunities Companies SEC halts trading of Tingo Group shares Image source: Zikoko Memes Remember Tingo Group—that Nigerian agri-fintech that was called an “exceptionally obvious scam”? Well, the US Securities and Exchange Commission (SEC) has suspended trading activity of its shares on the stock exchange from November 14 to November 28, 2023. There has been alarming information in public documents by and about the company, and the SEC wants to make sure that Tingo Group is not deceiving the public. What is Tingo saying now? The company did not comment on the SEC’s announcement. Yesterday, Tingo released its financial reports for the third quarter of 2023, claiming $586.2 million in net revenues and gross profits of $137.9 million. ICYMI: Six months ago, Hindenburg Research, an investigative firm wrote a scathing report about Tingo. Hindenburg alleged that Tingo’s public financial statements were fabricated. It also alleged that Tingo falsified reports about partnerships, projects, and expansions. Tingo denied the allegations, but the company’s share price crashed by 55% following the damning report. Zoom out: One week ago, Tingo Group’s CEO Dozy Mmobuosi announced that he had founded a new club football called Club 1472. The news came seven months after his £115 million ($124.89 million) takeover of Sheffield United failed. His new club will compete with Nigerian clubs like Sporting Lagos which is also owned by a Nigerian tech founder, Paystack’s Shola Akinde. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Big Tech Google asks court to dismiss Nigerian’s $150 million lawsuit GIF source: Tenor In a legal twist that could rival a Silicon Valley drama, Google, the tech juggernaut, is facing off against a Nigerian, Chianugo Peter, in a $150 million lawsuit. The lawsuit, which also involves GoDaddy.com, revolves around the shutdown of Peter’s domain name—YouTubeAudio.com—which Peter bought eight years ago from GoDaddy to host his application. Google, the parent company of YouTube, says that Peter’s domain name infringes on its trademark rights. On the other hand, Peter says that he bought the domain name in good faith. He also alleges that GoDaddy and Google encouraged him to make use of the YouTubeAudio.com domain name for the past eight years. Unmeritorious or Unstoppable? Google, the second defendant in this legal showdown, isn’t pulling any punches. In a statement filed on November 10, the company asked a high court in Abuja to dismiss Peter’s claims as “unmeritorious” and “unworthy.” They argue that Peter didn’t act in good faith and even approached Google before starting operations, acknowledging the tech giant’s rights. What Peter wants: A number of things. Peter wants a declaration that he rightfully registered the YouTube Audio business name and secured the YouTubeAudio.com domain name in good faith from GoDaddy. He also wants $50 million for the 8 years of promotional work and marketing efforts. He also wants to be paid $100,000,000 for loss of anticipated profits associated with the brand equity and goodwill of YouTube Audio and YouTube Audio.com domain name. He also wants ₦50,000,000 ($62,292) for fresh registrations and securing an alternative domain name, along with ₦10,000,000 ($12,458) for legal expenses in prosecuting this suit. Google’s reaction: Google counteracts, claiming that Peter lacks a bona fide claim and doesn’t own the YouTube trademark. According to Google, they are the international owners of the “YOUTUBE” trademark, registered in Nigeria since 2007, predating Peter’s use by eight years. Missing from the spotlight: During a recent court appearance, Google’s defence was acknowledged, but GoDaddy.com is yet to join the legal dance floor. The court granted an extension to Google’s legal team, and the next hearing is set for February 12, 2024. Get faster ZAR payouts with Paystack In August 2023, Paystack reduced payout time for ZAR payments in South Africa to just 2 working days. See what Paystack has been up to in 2023 → Economy Nigeria to provide 3,000 paid tech internships with UNDP Bosun Tijani. Minister of Comms, Innovation, and Digital Economy. Image source: TechCabal Nigeria’s plan to upskill its citizens is coming with practical applications. Yesterday, the minister of communications, innovation and digital economy Bosun Tijani announced that the country had partnered with the United Nations Development Programme (UNDP) to provide 3,000 internships to its 3MTT fellows. JSYK: In October, the ministry announced its 3 Million Technical Talent Programme (3MTT) which is set to see three million Nigerians trained in digital skills by 2027. Per Tijani, 3MTT has a 1-10-100 plan in place: 1% of the three million trained in three months, then 10% over a defined period, then 100%. In the first phase, which is set for November 2023–February 2024, 3MTT will focus on twelve technical skills including software development, UI/UX and AI/Machine Learning. Now, the 3MTT fellows will also be provided with practical experience as well. The UNDP will provide a 12-month paid internship for 3,000 fellows to “allow them to apply the skills they learn in the programme.” It’s unknown, at this time, if the internships will apply only to the first cohort of 30,000 fellows who are set to graduate in
Read MoreUnion Bank is now a private company one year after ₦191bn acquisition
Union Bank, Nigeria’s second-oldest deposit money bank, will no longer be listed on the Nigerian Exchange Group (NGX) one year after its acquisition by TitanTrust. The ₦191 billion acquisition—a crucial part of TitanTrust’s five-year plan to join Nigeria’s elite league of tier-1 banks—means TitanTrust now has ₦1.53 Trillion in customer deposits. As part of the delisting process, Union Bank will buy out all its remaining shareholders. The bank is offering ₦7.70 per share, compared to the ₦7 per share that TitanTrust paid when it acquired 89.3% of Union Bank’s shares. It closed today at ₦6.70 per share, from ₦6.50 when the markets opened. “This move is an effort to attract larger private investments to reconsolidate our position as one of the top pioneer Banks in Nigeria,” said Mudassir Amray, the CEO of Union Bank. This is the third time a Nigerian company will go private in one year. Ardova Plc ended its 53-year run on the NGX in July 2023. Rak Unity Petroleum, the first indigenous company to be quoted on the exchange, voluntarily delisted from the Nigerian bourse last month after undergoing a liquidation process. Five more companies will delist from the stock exchange, including GlaxoSmithKline (GSK), PZ Cusson, Oando, Coronation Insurance, and Capital Hotel. Recent data from the Nigerian bourse showed that a total of 121 quoted companies have been delisted from the official list of the NGX between 2002 to 2022.
Read MoreBreaking: SEC halts trading of Tingo Group shares to protect investors
America’s Securities and Exchange Commission (SEC) has suspended trading activity for Tingo Group on the stock exchange. Tingo is a Nigeria-focused agriculture company that claims to provide a marketplace and payment services for farmers in the country. The self-described “agri-fintech” company is listed on the NASDAQ, which requires it to comply with US regulations and corporate governance standards. However, Tingo has been the subject of controversy following a June 2023 report by Hindenburg Research alleging its business in Nigeria is a fraud. Hindenburg Research is an American short-seller that bets against companies’ stock and then publishes damaging reports on them. The scathing report alleged that Tingo is an “exceptionally obvious scam” and further disputed several claims by its founder Dozy Mmobuosi, about developing “the first mobile payment app in Nigeria.” Tingo’s share price crashed by half following the damning report. “The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of [Tingo],” the SEC wrote in its suspension notice published Tuesday. According to the notice, the suspension is linked to “questions and concerns regarding publicly available information about Tingo Group, including press releases and periodic filings.” The suspension of trading will last from November 14 to November 28, 2023. Tingo did not immediately respond to TechCabal’s request for comments. According to US federal securities laws, the SEC can suspend trading in any stock “for up to ten trading days in the public interest and for the protection of investors.” Earlier today, Tingo released its financial reports for the third quarter of 2023, claiming $586.2 million in net revenues and gross profits of $137.9 million. It did not comment on the SEC’s announcement. However, in September, three months after the allegations by Hindenburg Group, Tingo declared itself innocent of all allegations after claiming it had hired outside counsel. It said the allegations that its financial statements were misstated by hundreds of millions were due to “typographical errors” while denying other allegations. Shortseller Hindenburg Research calls Tingo Group an exceptionally obvious scam
Read MoreNigeria’s AltSchool Africa to receive support from Rwanda’s $30m tech fund
AltSchool Africa, the Nigerian edtech startup that styles itself as the African version of the US coding bootcamp BloomTech, will receive strategic assistance from Intellecap, an Asia and Africa-focused advisory. The program, fully paid for by the Rwandan Innovation Fund, will help AltSchool plan for its next growth phase, TechCabal learned. In April 2023, AltSchool raised $3 million, and Angaza Capital, a VC firm that co-manages the Rwandan Innovation Fund, participated in that round, data from Pitchbook shows. This investment has previously not been reported. Adewale Yusuf, Altschol’s CEO, confirmed that his startup received funding from the innovation fund earlier but declined to share any figures. The Rwandan Innovation Fund was established in 2021 with a $30 million loan from the African Development Bank as part of the country’s push to position itself as a technology hub in Africa. “The Rwandan government has been super helpful to our success since we entered the market, and we’re grateful for their support,” said Yusuf in a LinkedIn post. AltSchool opened a Rwandan office at the Norrsken hub last year, one of the first in a line of African companies being wooed by Rwanda; it has four staff in the country and is currently hiring for more roles, Yusuf told TechCabal. Flutterwave set up an East African settlement hub earlier in the year, while Paystack also confirmed expansion plans in Rwanda. More companies will follow. Besides the original $30 million AfDB loan, the Rwandan Innovation Fund wants to attract a further $30 million in commitments from private investors, with the government chipping $8.6 million. The fund invests across Africa with a target to back 150 tech-enabled companies, ten incubators, and accelerators, as well as 20 early-stage growth opportunities. So far, the Fund has deployed $6.6 million in 11 startups across East Africa. AltSchool and its online offering AltSchool offers online-only learning. Unlike BloomTech, its extensive curriculum covers business, data, engineering, media, and the creative economy. It also charges $20-$50 monthly for the duration of those courses and also operates the income-sharing agreement (ISA) model common with online edtech startups like ALX. To make this work, the firm works to connect learners to internships. ultimately trying to ensure that they land jobs. So far, AltSchool has supported about 20,000 learners across eight African countries. The startup has been committed to providing young Africans with the knowledge and skills to build sustainable careers within and outside the tech ecosystem. Across Africa, youth unemployment has been a persistent problem, with only about 3 million out of 10 million youth who enter the labour force being able to secure employment or earn sufficient income for their livelihoods. With edtechs like AltSchool, young people can pick up skills that are in global demand. It was AltSchool’s second funding round after it announced $1 million in pre-seed funding from VCs and angel investors in 2022. Voltron Capital and Obda VC were some of the VCs in the round, while Paystack’s Sola Akinlade and Folarin “Falz” Falana, a Nigerian musician, also participated.
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👨🏿🚀TechCabal Daily – SA to get more charging stations in 2024
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning We are hiring! We’re on the hunt for experienced senior reporters in Nigeria, South Africa and Kenya to help drive our tech coverage. If you’re passionate about the business of tech in Africa, love storytelling, and have significant newsroom experience, then join us. If this sounds like someone you know, please share this opportunity with them. In today’s edition Showmax now leads Africa’s streaming market Mercedes-Benz to launch 127 charging stations in SA Bolt Food exits SA Eyowo postpones resumption The World Wide Web3 Events Streaming Showmax now leads Africa’s streaming market Image source: YungNollywood It looks like fewer people are Netflixing and chilling in Africa. Showmax, MultiChoice’s streaming service, now accounts for 40% of the continent’s streaming market. Netflix, which led the African market in 2021 with 40% of the market has seen a slight decrease since then. Showmax now has 1.8 million subscribers while Netflix has 1.6 million. How did Showmax outplay Netflix? Showmax CEO, Marc Jury, says that the company’s 1.8 million subscribers are due to its decision to double down on local content production. The company channelled $1 billion into content production and acquisition on the continent in the financial year ending in 2023. What has Netflix been doing? Netflix has grown to 1.2 million subscribers in the past four years. South Africa remains its largest market, accounting for 73.3% of its subscriber base. Nigeria, Africa’s most populous country, remains a small market for the streaming service—at 10.5%—despite significant marketing activities and a major content acquisition. Why are things slow in Nigeria? According to research firm Omdia, one hindrance to Netflix’s subscriber growth is the low penetration of credit and debit cards in many regions, which has affected how Africans pay for the streaming platform. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Mobility Mercedes-Benz to roll out 127 charging stations in South Africa Image source: Mercedes South Africa’s mobility market is getting more electric…and it’s pretty ironic. Mercedes-Benz will be rolling out 127 new electric vehicle (EV) charging stations worth $2.13 million in South Africa next year. The country already has over 400 public and private charging stations. Per MyBroadband, other electric vehicle manufacturers, distributors, and charging network managers have announced plans to install more next year and bring the number of charging stations to 700. The country’s surging demand for electric vehicles across the country is ironic considering that it is grappling with an energy crisis. What energy crisis? For 15 years, South Africa has been experiencing widespread national blackouts. The electricity supply is unable to meet the demand, and since 2007, the blackouts, termed “load shedding”, have only gotten more frequent. The International Monetary Fund (IMF) recently attributed the crippling power cuts to the country’s record-breaking weak performance this year. It is not just that: These cars are also heavily taxed! The value-added taxes (VAT) on electric vehicles like those imported by Mercedes-Benz make the cars more expensive in South Africa than in many other places in the world. For example, in May, the price of an imported pickup truck in South Africa was around 89% higher than the retail price in the US. It is not personal: It is not only individuals who are buying electric cars, bikes, or other vehicles in South Africa. The country has seen a lot of businesses including ride-hailing and delivery startups adopt electric vehicles. For example, Uber recently disclosed that in December, it will launch its first electric vehicle-based service, known as Uber Package, in Cape Town, South Africa. Get early access to Paystack Direct Debit Paystack has partnered with NIBSS to develop Paystack Direct Debit – a fully digital solution for processing direct debits from customers’ bank accounts in Nigeria. Get early access → Logistics Bolt Food exits South Africa Image source: Zikoko Memes Bolt Food announced, on Friday, that it would shut down operations in South Africa from December 8, just two days after the company announced its exit from Nigeria. Why? A spokesperson for the company shared that it was shutting down due to “business reasons”, which is similar to the reason cited for the exit from Nigeria. The company has struggled to scale and control more than 5% of the food delivery market in these two countries despite the advantage of a bigger company presence. Last week, TechCabal reported that Nigerian food delivery service, Chowdeck, grew 10x in ten months and crossed ₦1 billion ($1.2 million) in monthly transaction volume. In South Africa, the food delivery market is expected to generate over $2 billion in revenue in 2023 with about 22.7 billion users by 2027. Despite these ripe markets, Bolt Food has struggled to deliver due to poor malpositioning. An over-confident approach: In Nigeria, Bolt’s foray into the food delivery sector lacked the same tenacity exhibited with its ride-hailing service—or perhaps it depended on the popularity of its ride-hailing service. Over the past two years, the service has grappled with complaints from its Nigerian customers who cite extended delivery times, limited coverage, and a constrained vendor list. While the company’s communications manager said Bolt had “heavily invested in the Nigerian market” including providing incentives to encourage customers, there were simply better services in the same market. In South Africa, the company hoped to appeal to users by offering lower prices for deliveries in some cases, but even this failed to retain users who had favourable alternatives like OrderIn and MrD Foods provided better. Fintech Eyowo postpones resumption of banking services again Image source: Zikoko Memes Eyowo, one of Nigeria’s oldest digital banks has once again postponed its resumption. Backstory: In May, the Central Bank of Nigeria (CBN) revoked the fintech’s microfinance bank licence, and since then, Eyowo’s customers have been unable to withdraw their deposits from the platform. The fintech promised customers that it would resume
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Netflix loses market leader status to Showmax
As competition intensifies in Africa’s streaming market, Netflix, the previous market leader, which held more than 40% of the market, has lost its status as the market leader to Showmax. Netflix, the world’s largest paid video streaming service, is losing market share in Africa as competition from Amazon Prime and Showmax intensifies. While Netflix controlled around 40% of the African streaming market in 2021, the latest industry data shows its dominance is shrinking. The California-based company now accounts for 35% and is no longer the market leader, as Showmax now accounts for 40% of the continent’s streaming market, according to Omdia Research, a tech research-based firm. As more competitors enter the region and step up their playbook, they’re squeezing market share for other players, including Netflix. The streamer has lost its lead in the market to Showmax, which now has 1.8 million subscribers. Marc Jury, Showmax CEO, previously said that the streaming service experienced a 26% year-on-year growth in paid subscribers in the last four years as it doubled down on local content production. The company also dedicated $1 billion to content production and acquisition on the continent in the financial year ending in 2023. According to data from Digital TV Research, an industry analytics firm, Africa had 41 million pay-TV subscribers at the end of 2022, with video streaming accounts for less than 10% of the subscriber base. Streaming players like Netflix and MultiChoice’s Showmax have deployed several growth tactics over the last three years, including splurging on new content and cutting subscription prices to win new customers. But the market has continued on its slow pace. Last week, TechCabal reported that IrokoTV, Africa’s oldest streaming service, had only 46,000 active users in December 2022, a 76% decline from the beginning of the year. IrokoTV’s CEO Jason Njoku shared that the service had invested $30 million in Nigeria but had yet to profit from the country. Netflix and its African push Netflix entered Africa in 2016, racing quickly to a few hundred thousand subscribers, which put pressure on incumbent players, including market leader MultiChoice, to brace for more competition. Despite the expansion of Amazon Prime Video and, more recently, NBC Universal’s Peacock to the continent, the market has grown slowly as broadband costs, stable internet, and low income continue to plague households on the continent. Africa’s streaming video-on-demand industry is expected to grow by 10.4% annually while Netflix is expected to grow by half of that as other platforms are expected to take up more of Netflix’s slowing subscriber base. After racing to 400,000 within its first two years on the continent, Netflix has added 1.2 million subscribers in the past four years. South Africa remains Netflix’s largest market, accounting for 73.3% of its subscriber base. At 10.5%, Nigeria, Africa’s most populous country, remains a small market for the streaming service despite significant marketing activities and a major content acquisition push in the West African country, according to Omdia Research. Netflix has worried about stagnation in subscriber numbers in mature markets like the US and Europe. It has been pursuing international expansion to offset any decline in its home market. The platform, which is experiencing declining growth in subscribers in more mature markets like the United States, is growing in Africa thanks to a move to reduce prices in some markets in the first quarter of the year. The growth in subscribers—6.8%— has directly increased the streaming platform’s revenue by 13.7%, exceeding $135 million in 2022. According to Omdia, one hindrance to Netflix’s subscriber growth is the low penetration of credit and debit cards in many regions, which has affected how Africans pay for the streaming platform. Netflix’s strategy in Africa combines licencing content such as Nigeria’s Black Book from local studios with producing original content such as The Origin: Madam Koi-Koi. This two-pronged approach has cost Netflix $175 million in six years, according to a report released by the streaming service in April. Although Nigeria had the most licensed content in Africa, it got $23 million, while South Africa got the lion’s share with $125 million. Netflix has more than recouped its investment, making more than $230 million in the last two years.
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This Swedish non-profit has big dreams for tech startups in Kigali
Sweden’s Norrsken Foundation hopes a $20 million investment in its first hub outside Stockholm will birth Rwanda’s first impact unicorn. On Wednesday 8 November 2023, Rwanda’s president, Paul Kagame formally opened Norrsken House Kigali. The 4,400-square-metre campus is a $20 million bet by Sweden’s Norrsken Foundation that Kigali will become a nerve centre for African technology companies. “Rwanda is an excellent testbed and a proof-of-concept hub,” said Niklas Adalberth, the 42-year-old founder and chairman of the Norrsken Foundation in his keynote address. If the Kigali hub is successful, Norrsken will set up similar hubs in other countries. The foundation defines success as being the home for billion-dollar impact businesses and a thriving community of companies that could create profitable businesses that are a net positive for the planet. It’s a big win for Rwanda; with a gross domestic product of around $13 billion and growing public debt, the country needs private-sector investment. “The country can be small but the value we create can be very high,” president Kagame told guests at Norrsken Africa Week. Adalberth was only 24 when he co-founded Klarna, the Buy-Now-Pay-Later company that is Europe’s most valuable private company. Adalberth exited the company in 2016 and founded the Norrsken Foundation to support impact businesses. Since then he has progressively sold down his stake in Klarna to less than 1%. Half of the proceeds were committed as an initial investment into the Norrsken Foundation. Since its creation in 2016, Norrsken’s house in Stockholm has become the centre of the city’s impact entrepreneurship space in a country that is considered Europe’s impact hub. By bringing the right mix of investors, entrepreneurs, and talent, the foundation hopes to recreate the same success in Kigali. Built on the former site of École Belge de Kigali, a Belgian school founded in 1965, the Kigali campus is the second such hub the foundation has put up since it acquired one of the grand halls of an old tram station in downtown Stockholm for its first facility. Two weeks ago, the foundation opened its third house, a 3-storey, 10,000-square-metre building in Barcelona, Spain. The Kigali campus which has been operational since January 2022 hosts roughly 1200 members, East Africa director, Pascal Murasira said at Norrsken Africa Week. The event is Norrsken’s first impact entrepreneurship and investment meeting held outside Stockholm. Wooing capital to Kigali Two weeks ago, Norrsken22, an independently managed African growth-stage VC announced it had raised $205 million to invest in growth-stage tech companies in Africa. Last week, Norrsken22 partners were part of fund managers at Norrsken Africa Week. An event the Norrsken Foundation said was organised to bring capital allocators and tech founders together in person. The Norrsken Foundation is a founding partner of Norrsken22. This first Africa event was held in the Norrsken campus in Kigali on the 8th and 9th of November. More than 1,500 entrepreneurs, investors, government officials, and academia from Europe, Southeast Asia, the Middle East, and across Africa attended the 2-day networking-focused meeting. The event also brought together the different arms of the Norrsken Foundation, including Norrsken22, the $205 million Africa-focused growth stage fund, and Africa Seed Fund, an early-stage investment outfit. African startups that had been part of the Norrsken Accelerator, a global impact-focused accelerator based in Stockholm were also represented by their founders. Kigali’s big push for private capital Since 2009 Rwanda has aggressively sought to position itself as a diversified investment hub in East Africa. In recent years, the focus moved to tech investments. A $30 million Rwanda Innovation Fund backed by the African Development Bank (AfDB) was launched in 2021 to invest in funds and directly back tech companies in East Africa. Per Statista, Rwandan tech startups raised only $1.9 million in 2022, a year when African startups raised the most ever. It was a decline from 2021’s $6.8 million figure. 2023 has been better. Kasha, a Rwandan startup raised $21 million in Series B funding, and Eden Care, a Rwandan insuretech became the first from the country to be accepted into YCombinator, the famed San Francisco-based accelerator program. Making Kigali a leading finance hub is a key part of president Kagame’s economic reform program. Convincing investors to invest in the country remains challenging. But the country’s new financial centre wants even more. It wants investment funds to be incorporated in the country and has created a special fintech program that boasts Flutterwave, Onafriq (formerly MFS Africa), Chippercash, NALA, and recently, Paystack as members. Just before Norrsken Africa Week, it hosted a breakfast meeting for investors. One early-stage investor who had attended the meeting told TechCabal that her firm was still weighing their options. Another early-stage investor said her VC firm was in the process of setting up a new fund in Rwanda and scouting for office space. They favour Norrsken, which is home to at least 3 other VC firms (Katapault, Angaza Capital, and Renew Capital). Earlier this year, on the sidelines of the Inclusive Fintech Forum, the Africa Business Angels Network (ABAN) and Kigali International Financial Centre signed an MoU to pave the way for the network to set up its catalytic Africa fund in Kigali. Entrepreneurs also suffer from indecision. One e-logistics startup founder who spoke with TechCabal was impressed with Kigali, but still weighing options. A location that facilitated access to capital without being too far from the business operations was ideal. “It’s a chicken and egg problem,” the founder conceded.
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