Why Malawi’s nascent tech ecosystem is ripe for growth
Malawi is not exactly famous for its vibrant tech ecosystem as a result of several factors. The country has an internet penetration rate of only 24% in a population of 20 million people, a virtually non-existent venture capital ecosystem, and a limited presence of leading continental and global tech companies. However, due to efforts from the innovators, public and private sectors, as well as development institutions, this is slowly changing. In July, the country will for the first time, host the 2024 Africa Smart Cities Congress. The congress aims to promote smart city innovations from Malawi and the rest of Africa and present them to the world. The country was chosen for its efforts in building out smart cities as evidenced by the Mvera Innovation City, a smart city project in Lilongwe which is nearing completion. “The fact that we will have global innovators here shows that Malawi’s innovation is getting the recognition it deserves from the world,” said Christine Mhone, ambassador of the African Smart Cities Innovation Foundation. Even Africa’s most valuable startup, Flutterwave, is paving the way for entry into the Malawi market. The company recently received a license from the country’s central bank to facilitate remittance payments into the country. These developments beg the question, how exactly are Malawi’s ecosystem stakeholders changing the narrative about its tech innovation landscape? According to Vincent Kumwenda, former CEO of incubator mHub, these enabling policies, as well as programmes from international development partners and innovative entrepreneurs, have played a large role in growing the country’s ecosystem. Despite the progress made, issues of poor infrastructure, unclear regulatory frameworks, and lack of funding for innovators persist, Kumwenda told TechCabal. “There are efforts to address these challenges, so I would say, slowly and surely, we are on our way to becoming a tech hub of note.” mHub was one of the first digital hubs in Malawi. Image source: mHub The role of government and international organisations Malawi’s technology sector regulator, the Malawi Communications Regulatory Authority (MACRA), is trying to use its regulatory powers to strike a balance between enabling innovation and also ensuring that innovators abide by the country’s laws. Last year, Malawi was one of the first southern African nations to license Starlink to facilitate internet connectivity. On the other hand, MACRA also barred MultiChoice from increasing prices for its DStv service, leading to the pan-African broadcaster terminating service in the country. The two parties eventually reached an agreement to bring the service back. MACRA also recently signed an MOU with the organisers of the Africa Smart Cities Conference to offer support for the initiative. Besides enforcing regulatory compliance, MACRA is also actively involved in helping startups build innovative solutions. Through the Muuni Fund, an ICT research & innovation fund that aims to provide seed money to nurture and incubate local innovations across Malawi, MACRA is currently working with 70 startups across the country to help them launch technology products and services into the market. In the next financial year, the Muuni Fund aims to assist as many as 250 startups, an ambitious 257% from the current cohort. “The Muuni Fund encourages local solutions for local problems. But most importantly, it creates a sustainable framework that will allow local innovators to come to market, be competitive and survive,” added Suleman. In support of these initiatives by the public sector are international development institutions. As head of exploration of the United Nations Development Programme’s Accelerator Lab, McDonald Nyoni is responsible for identifying innovative local solutions that contribute to the achievement of the Sustainable Development Goals (SDGs). Some of the Lab’s mandates include identifying and supporting innovations that address some of Malawi’s pressing challenges, such as access to housing, financial inclusion, access to renewable energy sources and poverty eradication. In August 2023, UNDP Malawi launched Fin Mobile, a digital banking app for SMEs. Additionally, the Lab is also working with the government to build an innovation bridge portal which will connect innovators with the private sector and international organisations to explore potential synergies. “Because of the strategic partnerships with the government, I would say the future of innovation in Malawi is very bright,” Nyoni told TechCabal. “The Accelerator Lab’s external facing model allows us to address challenges which impact people, which significantly increases its impact.” It all comes down to the startups Because of challenges like lack of access to funding, technical talent, and a complex regulatory framework, the country does not have the most vibrant startup ecosystem. However, this could change soon. In addition to the Muuni Fund by MACRA, Malawi is currently in the process of drafting a startup bill which is expected to be tabled in parliament by the end of the year. The bill aims to address the challenges faced by startups in the country, including simplifying investing for foreign investors and also streamlining and simplifying regulatory requirements. One such startup is Mlimipay, founded by Stanislaus Sakwiya in 2021. The company has developed a digital wallet designed exclusively for smallholder farmers in Malawi who find difficulties accessing mainstream financial systems. Startups like MlimiPay are building innovations which promote inclusion. Image source: MlimiPay “In Malawi, access to funding as well as a complex regulatory framework are major hurdles to the success of startups,” Sakwinya told TechCabal. This point is reiterated by Samuel Chiwanda, co-founder of fintech startup ClickMobile. Founded in 2010, ClickMobile specialises in mobile messaging solutions via platforms such as SMS and USSD, which are vital for rural area dwellers where internet penetration is low. “Most people have brilliant ideas, but funding is very hard to come by. The little funding available is sometimes not best utilised by recipients,” Chiwanda said. To ensure that startups have access to technical talent and the requisite business development skills they need to build sustainable enterprises, incubators like Ntha Foundation are playing their part. Founded by Nthanda Manduwi in 2018, the foundation was one of eight hubs to receive $250,000 in funding from the Malawian government in 2021 to train 500 innovators in digital
Read MoreCBN revokes 4,173 BDC operator licenses one week after new guidelines
Nigeria’s Central Bank has revoked the license of more than 4,000 Bureau De Change operators (BDCs) weeks after sharing important rule changes for their operations. The affected operators failed to pay necessary fees, render returns or comply with anti-money laundering and terrorism financing regulations, the apex bank said in a statement on Friday. “The CBN is revising the regulatory and supervisory guidelines for Bureau de Change operations in Nigeria. Compliance with the new requirements will be mandatory for all stakeholders in the sector when the revised guidelines become effective,” the statement said. The revocation of the licences comes just four days after the Central Bank reversed its three-year stance on selling dollars to eligible BDCs. The U-turn came days after the Central Bank released new rules for BDCs that required them to be more transparent. Under the new rules, operators must have external auditors, digitally integrate with the CBN, and link all transactions to an active bank verification number (BVN). The Central Bank also increased the minimum capital requirements for BDCs to N2 billion for Tier 1 license holders and N500 million for Tier 2 licenses. This range of measures by the Central Bank seeks to give the apex bank insight into transactions from the parallel market. On Wednesday, the National Security Adviser (NSA) arrested two Binance executives after authorities demanded to see a list of Nigerians who use Binance for peer-to-peer trading of the USDT/NGN. “What we’re hoping to accomplish by this, frankly, is to bring some sanity to an industry that arguably no longer serves the interests of those whom it was meant to protect,” CBN governor Olayemi Cardoso said at the end of the rate-setting meeting on Tuesday. TechCabal reported on Monday that the fear of being arrested by officials of Nigeria’s anti-graft agency, the Economic and Financial Crimes Commission (EFCC), has driven currency traders away from street trading. Nigerian regulators have declared open season on business. It’s already causing chaos
Read MoreZoho maintains local currency payments over dollar in Kenya and Nigeria as inflation rises
For now, Zoho will continue charging customers in local currency in Nigeria and Kenya amidst surging inflation. Zoho, a global company that creates cloud-based business tools, said on February 29 that it would continue charging customers in Africa and the Middle East in local currency. The decision may boost profits as the company weathers inflation and currency depreciation in markets such as Kenya and Nigeria. “We are not going to change how we bill our customers at all,” Veerakumar Natarajan, country head, Zoho Kenya, told TechCabal. Zoho, however, cautioned that while its billing model will remain, there are possibilities for price adjustments in the future. With rising business costs, some companies have substantially reduced their expenses. However, per Zoho, which launched a local office in Kenya in May 2023, its partner network jumped by 212%, partly because customers continue to use its products since they pay in Kenyan shillings. “Customers are happy to stay with us because we charge in Kenya shillings. This is not the case with rivals, who bill their clients in US dollars,” Natarajan added. READ MORE: Nigerians feel the pinch as January headline inflation hits 29.90% and food prices soar Zoho said it uses a local currency billing strategy in key African and Middle Eastern markets. The approach allows clients in Nigeria, South Africa, Saudi Arabia, and Dubai to pay for Zoho’s customer relationship management software in their local currency. Natarajan said, “In Africa, our strategy is different because we charge in local currency and extend a discount as well.” When it set its price for Kenyan customers, the exchange rate was KES 100 to the US dollar. Currently, the currency has depreciated to KES 146 to the US dollar. According to Natarajan, the weakening Kenyan shilling may compel Zoho to revise its product prices upwards, but there are no such plans soon. For now, Zoho said it can offset the weakening Kenyan shilling by attracting more customers who pay in local currency. As the Kenyan shilling weakens, businesses are concerned about the safety of their dollar-based earnings. Fears include lower income, instability, and compromised livelihoods. Kenya Power, a power distributor, is facing KES 3.19 billion in losses and is considering switching to USD billing, raising concerns about the future of the local currency. READ MORE: Ethiopia’s inflation jumps to 28.7% as central bank acknowledges alleviation difficulties
Read MoreHow 2Africa Subsea Cable landing in Nigeria can propel regional ecosystem growth
This article was contributed to TechCabal by Uche Aniche. 2Africa project is a Subsea Cable connecting three continents and about 33 countries in Africa, including Nigeria. At 45,000km, it is the world’s longest submarine cable and is expected to connect about 1.3 billion people and deepen 4G and 5G Internet penetration to more remote locations. The subsea cable, owned by 2Africa Consortium —led by Meta— has now reached the shores of Nigeria through Lagos and Akwa Ibom states. The Akwa Ibom landing location which is managed by MainOne is at Ibeno and feelers suggest Rivers and Akwa Ibom states are the main focus for now. Doors are however open for other states in the region if enough interest is generated. Here are the top five ways I believe this represents a game changer for the extended business communities in general and the startup ecosystem within the regions in particular: Improved & Faster Internet Connection The deep-sea cable project will connect 32 other African countries and directly support economic development in Africa. This will foster further growth of 4G and 5G and increase broadband penetration to millions of people and businesses across the continent. At 180 terabytes per second, this will deliver high-speed internet to homes, offices, government institutions, and others in the region. Speedup Economic Growth According to the International Telecommunications Union (ITU global study), it was estimated that on average, an increase of 10% in mobile broadband penetration yielded an increase of 1.5% in GDP. We expect this cable landing and subsequent last-mile distribution activities to further grow the economy of the regions in particular and Nigeria by extension. Talent Attraction & Rapid Growth of the Startup Ecosystem We expect more companies to set up in the region leading to more talents choosing to live and work here. This will have some ramifications for the economy of the region but more importantly, it would attract and deliver more experienced professionals to the startup ecosystem, some of whom could become founders or work in some of the innovative startups that call the region home. This would also attract more investors. Affordable Internet Access We expect increased competition to lead to affordable Internet access. The 2Africa Cable will bring the total number of cable landings in Nigeria to seven. However, it is the only subsea cable to successfully land on the southern coast of Nigeria designed to deliver more than the total combined capacity of all subsea cables currently serving Africa at a capacity of up to 180 terabytes per second (Tbps). Job Creation & Youth Engagement The Cable landing will create hundreds —and probably thousands— of direct jobs via the rise of last-mile Internet service providers that are required to get Internet connections direct to homes and offices. Many more direct and indirect jobs will be created through several new Internet-enabled businesses such as data centres, cloud companies, and outsourcing agencies, among others. Additionally, affordable Internet will lead to more engaged young people who will connect and plug into several Internet-based opportunities and commercial recreational activities such as e-sports and gaming. Uche is the Convener of #StartupSouth, an organization that promotes and advocates for the development of the startup ecosystem in the South-South/South-East region of Nigeria.
Read MoreinDrive introduces commission charge in Botswana as Bolt arrives
inDrive, the California-headquartered ride-hailing app, which launched in Botswana in 2019, has introduced a 10% commission charge for drivers in Botswana, effective from February 28. The introduction coincides with the launch of Bolt in the country on the same day, setting the ground for an interesting ride-hailing battle. According to the company, introducing the commission charge forms part of a strategy to make further investments in Botswana, which inDrive describes as a “top priority market”. “After operating without commissions for five years, this aligns with our strategic goals to provide fair urban mobility access to more customers in Botswana,” said Vincent Lilane, business development representative, at inDrive in Southern Africa. Since inDrive’s launch in Botswana in February 2019, drivers have been operating it commission-free. Drivers who spoke to TechCabal differed on the introduction of the commission fee. One driver, who has been using the service for almost two years, stated that the commission was not an issue as they knew about it beforehand. “They are a business too, so it makes sense for them to want to make money,” the driver said. However, another driver said it was unfair for inDrive to start charging commissions before addressing some issues drivers had earlier communicated. “inDrive has to put a minimum on what riders can offer for rides,” he said. “Some of these rides are so cheap, and we only accept them because of desperation.” inDrive’s model allows riders to set a price for a ride which a driver can accept or refuse. Since launching in Botswana five years ago, the service has had mixed fortunes. Although it has grown in popularity as an alternative to public transport, it has also faced allegations of driver misconduct and has encountered pushback from local public transport operators who accuse them of taking away their business.
Read MoreNigeria fines Binance $10bn amidst investigation of crypto exchange
Nigerian authorities have imposed a $10 billion fine on Binance, the global crypto exchange at the center of a crypto crackdown in the country, Premium Times reported on Friday morning. Authorities have accused Binance of benefiting from “illegal transactions,” the report quoted a presidential aide as saying. The fine comes barely 48 hours after news broke that security agencies detained two executives of the global crypto exchange. Both executives flew to Nigeria last week following a ban on their website and were arrested by the office of the National Security Adviser (NSA). While the NSA initially denied reports of any arrests, it later confirmed that it was investigating Binance but did not share any details of the investigation. On Tuesday, Olayemi Cardoso, the central bank governor, claimed “$26 billion has passed through Binance Nigeria from sources and users who we cannot identify.” There have been reports that the government has asked Binance for user data and details. It is unclear if the company has handed over the requested data. *This is a developing story.
Read MoreMTN Nigeria reports ₦137 billion loss in FY 2023 as Naira devaluation shrinks margins
MTN Nigeria reported a loss for the full year 2023, its first in three years, after a Naira devaluation and rising cost of doing business ate into its margins. The telco reported a loss after tax of ₦137.0 billion in 2023 compared to profits of ₦348.7 billion in 2022. According to a full-year 2023 report released this morning, payment of tower lease cost—indexed to the US dollar but invoiced and paid in naira—comprised most of its foreign currency exposure in operating expenses. “In June 2023, the Central Bank of Nigeria (CBN) adopted a more liberal foreign exchange management system,” said Karl Toriola, MTN Nigeria’s CEO. “The cost of doing business in Nigeria, and for MTN Nigeria in particular, significantly increased the costs in relation to our tower leases.” Key takeaways MTN has 79.7 million mobile subscribers in FY 2023 Active mobile money (MoMo PSB) wallets increased by 163% to 5.3 million FinTech revenue grew by 2.4% MTN Nigeria operates in a high inflationary environment, further worsened by a currency crisis and rising energy costs. Nevertheless, MTN will expand its non-core services, such as Cloud, Unified Communications, and IoT applications, to capture future opportunities. This in addition to its growing 4G and 5G businesses. “We are actively engaging the regulators to resolve the USSD dispute with banks,” a statement from its financials read. Mobile services The telco’s financial statement also reported that its services revenue grew by 22.4%, driven primarily by data revenue growth of 39.8%. Voice revenue was up by 9.7%. The telco’s mobile subscribers increased by 5.3% to 79.7 million, underpinned by increased gross connections and churn management initiatives. Active data users grew by 12.7% to 44.6 million. Active mobile money (MoMo PSB) wallets increased by 163% to 5.3 million, powered by 326,000 MoMo agents, and 324,000 merchants in its ecosystem. TechCabal had recently reported that the MoMo service still requires more adoption. However, it announced a partnership with Mastercard yesterday to deepen that aspect. Nonetheless, its digital revenue arm saw a 69.9% increase to ₦37 billion, while its fintech revenue grew by 2.4%.
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👨🏿🚀TechCabal Daily – Spleet lays off staff
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy new month Get ready to mark your calendars for the biggest female-only party in Nigeria: HERtitude2024, hosted by our sister publication Zikoko! It’s happening on April 20, 2024, and it’s the perfect chance for women to celebrate and connect. Ladies, you do not want to miss out on the fun! Before you sign out for the week, grab your tickets now for the amazing women in your life. In today’s edition Nigerian telecoms to disconnect 12 million subscribers Spleet lays off staff Nigeria gears up for Abuja Tech City MoMo Virtual Cards are coming Funding tracker The World Wide Web3 Events Telecoms Nigeria orders blockage of unlinked SIMs In December 2020, Nigeria’s former minister of communications and digital economy Isa Pantami announced an integration policy to link SIM cards to the country’s National Identity Network NIN database. The goal was simple: to ensure the NIN was a robust identification system for its citizens. Think of it as the equivalent of a social security number in the US. The government also hoped that the move would make it easy to track offenders of phone-related crime cases like kidnapping and banditry. The move was however widely criticised by the citizens due to the inconvenience of linking their SIMs with the NIN and the almost impossible deadline of December 15, 2020, at which time telecoms would have to block all SIMs that were not registered with valid NINs. The government has however postponed this deadline multiple times. And now, it appears the government is ready to take action. Time’s up: Yesterday, the Nigerian Communication Commission directed all telecoms to block subscribers not yet linked to NIN. MTN, AIrtel and Glo are set to block about 12 million subscribers who are yet to comply with the Nigerian government directive. The NCC said it “was committed to protecting consumers’ rights while ensuring their satisfaction.” The NCC has made this promise before. In May 2023, the regulator directed all licensed mobile network operators (MNO) to use unified shortcodes—*310#—so users with multiple SIMs don’t need to have a headache memorising multiple short codes. It remains to be seen if the NCC—out of its sheer love for users—will approve yet another deadline for the NIN SIM linkage. Access payments with Moniepoint You don’t have to take our word for it. Give it a shot like he did Click here to experience fast and reliable personal banking with Moniepoint. Lay offs Spleet to layoff staff Nigeria’s headline inflation rose to a near three-decade high of 29.92% in January. The inflation coupled with Nigeria’s depreciating currency has fastened its fangs on the purchasing muscles of its people of which 133 million are multidimensionally poor. Businesses and tech startups also bear the brunt, recording increases in operating costs and reduced profits. For property tech startup Spleet which allows monthly rental on its leased properties instead of a yearly rental charge, the inflation and devaluation are driving rental prices up by 2x. To cope with these new price changes, the proptech startup, on Thursday, said it was reducing operating costs and laying off some members of its workforce. Dig deeper here. Innovation Nigeria signs MoU to build Abuja Tech City By the close of 2022, the tech ecosystem in Lagos, Nigeria, had reached a valuation of $8.4 billion. Yaba, a suburb within Lagos, emerged as a prime location for numerous companies, including the pioneering startup incubator, CcHUB. Founded in 2010 by Bosun Tijani—now the minister of communications, innovation and digital economy—and his colleagues, CcHUB played a pivotal role in Yaba’s development. It gained momentum and collaborated with the government to install fibre optic cables in Yaba, which has now played a crucial role in creating what is arguably Africa’s most organic tech cluster, with CcHUB becoming Lagos’ leading tech innovation centre. Abuja gears up for tech city: In more technological advancements, Nigeria’s federal government has signed a Memorandum of Understanding with Domineum/Edenbase UK to develop a state-of-the-art tech hub—Abuja Tech City— in the capital city of Nigeria. The project seeks to replicate the success of London Tech City, valued at over £61 billion ($77 billion) in its fifth year of operation. Notably, the same consortium responsible for developing London Tech City will be behind the construction of Abuja Tech City. The Abuja Tech City project, originally conceived as Abuja Tech Village during the tenure of former President Olusegun Obasanjo, has received renewed attention under the current administration. A standout feature of the Abuja Tech City is its designation as a Free Trade Zone, offering a conducive environment for tech-driven startups, industries, and innovation initiatives, with a vision for a smart and green city. Clearing the Path for Progress: To pave the way for development, the government has directed illegal occupants to vacate the Pyakassa area of Abuja, where the Tech City will be built. The indigenous community had already received compensation in 2015, making the current step essential for taking full possession of the land and starting construction. Zoom out: Other regions are catching up. Kaduna, in the north, which boasts of CoLab, the city’s first tech hub, has also partnered with the state government to establish Kaduna Technology City. Secure payment gateway for your business Fincra’s payment gateway enables you to easily collect Naira payments as a business; you can collect payments in minutes through bank transfers, cards, virtual accounts and mobile money. Create a free account and start collecting NGN payments with Fincra. Fintech Mastercard partners with MTN to launch MoMo Virtual cards Millions of Africans will enjoy greater access to digital payments thanks to a multi-market partnership between MTN Group, Africa’s largest mobile network operator, and Mastercard, a global payment processing company. The deal will introduce a prepaid virtual card specifically designed for MTN’s MoMo customers, enabling them to access over 100 million acceptance points globally. This initiative will impact MoMo’s active monthly wallets, totalling 60 million across its expansive presence in 13 African
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