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  • February 14 2025
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Carbin Africa takes on the ‘messy middle’ in Lagos’ car market

Despite soaring inflation and a crumbling local currency, car dealer Precious Okoedion says no week goes by without a car sale at any one of his three dealerships across Lagos State, Nigeria. Okoedion says many of these sales—over 30 since 2023—have been facilitated through the auto tech platform, Carbin Africa.  Launched in 2023 by two ex-Cars45 employees, Femi Oriowo and Fawaz Abdul, Carbin Africa is digitising car inventory and sales processes for car merchants and dealerships in Lagos, Nigeria’s biggest car market.  Before joining Carbin Africa, Okoedion says he was just a “street trader working with Cars45,” where he first met and established a relationship with the Carbin Africa co-founders. Since joining the platform, a wide variety of merchants, dealers and their inventory have since opened up to him. “A client will walk in here and say, okay, he wants [a Lexus] RS350, I don’t have it. I can quickly log into Carbin Africa and get what I want,” says Okoedion, in the Yaba outlet of his business, Okopi Auto Limited. Beginnings Oriowo’s path to founding Carbin Africa began when he was an OLX merchant serving as a middleman between Computer Village vendors and end buyers. He recalls passing by several car dealerships to and from the popular computer hardware market on the Lagos mainland, and thinking that selling cars on an online marketplace was not too far-fetched.  Once, buoyed by youthful courage, he entered into one of the dealerships and asked the owner if he could list the inventory on OLX and earn a commission.  “I was really confident in those days,” Oriowo says in his office in the heart of Yaba, Lagos’ famed tech cluster. The dealer agreed to the arrangement, providing him with photos and specifications of the inventory.  Within a week, he’d sold his first car, he said.   In a complete move towards car sales, Oriowo joined Cars45 after it launched in 2016 and built a merchant network with classmates from the University of Lagos where he was studying to become a geophysicist. He says they spread out at Cars45’s five retail centres across Lagos and he set up a corporate bank to process their sales centrally. Then they “started to sell cars aggressively,” he says, at least 25 per month.  Eventually, because of the traction they had, Oriowo says he secured a 30-car monthly consignment deal from Cars45 management at the time. The deal was contracted on condition that he could find a physical lot for the consignment.  Fawaz Abdul and Femi Oriowo launched Carbin Africa after participating in 54Collective’s Gen F Venture Studio program Together with his crew, the dealership initially operated from Abdul’s grandmother’s backyard before Cars45 offered to co-fund a proper car showroom. But before business could fully kick off there, COVID-19 lockdowns happened, followed closely by management changes at Cars45, summarily ending the agreement. Oriowo says they adapted by reducing inventory with the capital they had and partnering with dealers to sell their inventory for commissions—₦50,000 per car. “They (dealers) really loved it because they only had to worry about buying the cars; they did not have to worry about selling,” Oriowo says.  It was this collaboration with dealers combined with previous experience working as merchants on Cars45 that revealed challenges and market gaps which ultimately led to Carbin’s founding, Oriowo says. Unique selling point Carbin Africa is one of several online platforms that have launched since 2010 to ease the buying and selling of cars in Nigeria.  To buy a car in Nigeria prior to 2010, you needed to visit any of several small and medium sized dealerships, or find listings in a newspaper, or attend a car auction, or know someone who had a car they were looking to sell. Marketplaces like Cheki—whose Ugandan and Kenyan operation Cars45 acquired in 2021, OLX, and  Jiji facilitated the move online connecting anyone who wanted to buy or sell a car. Later startups like Cars45—which launched in 2016 and was acquired by Jiji in 2021—introduced, as its standout feature, verification and inspection services which were sorely needed in a low-trust market prone to fraud. In Lagos, the car market relies heavily on middlemen, according to Richard Odoboh, one such middleman who has been using Carbin Africa since it launched. These middlemen, or auto merchants as Carbin refers to them, know where you can find a good Nigerian-used Toyota Camry or who deals in good UK-used vehicles—used vehicles, valued at an estimated $1.24 billion, comprise about 90% of the car market in Nigeria. In the best case scenario, they know how to verify the authenticity of car vehicles or where to avoid buying a car. In 2018, five West African countries made up the top 10 importers of used light duty vehicles from Europe in 2018. Source: Compiled by UNEP based on data from the European Commission- Eurostat Comext Database, 2019 Their operations though, like your neighborhood tuck shops, are highly fragmented. It is unclear, for instance, how many of such middlemen there are exactly in Lagos. Oriowo says there’s likely around 10,000 across the country with a large percentage stationed most of the time in Lagos.  These middlemen or auto merchants are Carbin Africa’s prime target customers. Oriowo argues that while end users might make a purchase, on average, once every few years, a middleman might sell two or three cars per month.  By bringing together car dealers—which Carbin Africa defines as established brick and mortar dealership with at least five cars in their inventory and a dedicated staff to interface with the startup—Carbin Africa makes available to the them a large variety of cars to trade in.  “I get cars from Carbin and then clients from Jiji,” Odoboh says, adding that he’s sold about 15-20 since joining the platform in 2023. He says he’s made as little as ₦50,000 and as high as ₦1 million in individual commissions. The platform is also solving for what Oriowo says remains a challenge for middlemen or auto merchants who use existing marketplaces: obsolete listings

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  • February 14 2025
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“Success speaks louder than stereotypes”–Norrsken22’s Lexi Novitske and Precious John-Adeyemi on bridging funding gap for female founders

Scaling a startup requires capital to invest in technology, hire talent, and achieve product-market fit. Many entrepreneurs rely on investors to fund this vision, but female founders find it more difficult to secure capital compared to men due to systemic challenges including biases in venture capital decision-making and the limited number of female founders pursuing high-growth opportunities.   In 2024, female CEOs raised just $48 million—four times less than the previous year, according to the Big Deal. This is the lowest figure since 2019. In contrast, their male counterparts raised $2.2 billion. Norrsken22, a growth fund that invests in African startups, has backed female-led companies across Africa including Credrails, a fintech company, led by Pauline Wanjiku Githugu, and Sabi, a Nigerian B2B e-commerce platform led by Anu Adasolum.  TechCabal spoke with Lexi Novitske, General Partner at Norrsken22, and Precious John-Adeyemi, Investment Analyst at Norrsken22, about the challenges of female entrepreneurs and bridging the funding gap. This interview has been slightly edited for length and clarity.  What are the barriers female founders face in accessing funding? Lexi: Networking. Everyone struggles with it but female founders often connect more within their circles, while the investment world is still very male-dominated.  Precious:  Women start businesses in sectors that VCs often perceive as less scalable or less profitable. Even though these businesses leverage technology, they frequently operate in legacy industries such as consumer goods, education, or healthcare—sectors that, despite their economic significance, do not always fit the high-growth profiles favoured by VCs. Additionally, limited access to networks makes it more challenging for women to establish relationships necessary for business growth. This is why we must be intentional and proactive in supporting female-founder-focused communities and programs. By fostering more inclusive networks and ensuring greater representation in funding and decision-making, we can help bridge this gap. How would you say these challenges have evolved over the past five years? Lexi: More women are leading funds and joining investment teams, which helps. The bigger shift? Investors have seen enough female-led companies scale and deliver serious returns, so the bias is tilting in a more positive direction. Success speaks louder than stereotypes.   Precious: Well, there has been progress in addressing these challenges. Gradually, we are seeing more recognition of the funding gap, leading to the rise of female-focused VC funds, accelerators, and grant programs. More investors are now tracking gender diversity metrics in their portfolios and making conscious efforts to back female-led companies. Norrsken22 is very proactive about it; we track the number of female-led startups that come in through our pipeline. And it’s hopeful to see a lot of VCs picking up on that as well.  What values do venture capital firms typically look for when evaluating startups and do you think it’s missing in female-led startups? Lexi: VCs care about the fundamentals—unit economics, traction, market size, and scalability. Beyond that, we look for a team that can retain top talent, build strong governance systems (key for scaling big), and even sometimes the kind of ambition that makes profitability a later problem, not a new problem.  Precious: VCs evaluate startups based on several core factors, with the most essential being market size, execution capabilities, and exit opportunities. Another critical consideration is monetisation strategy, as investors seek clear and scalable revenue models. These factors are not inherently missing in female-led startups but may be perceived differently due to biases in the investment process. Addressing these biases is crucial for creating a more equitable investment landscape that fully recognises and unlocks the potential of female founders. Are there specific financial or operational milestones that female founders should prioritise to increase their chances of securing funding? Lexi: Same as for any founder—black, white, male, female, Ivy League, or self-taught. Show strong traction, repeat customer engagement, attractive unit economics, and predictable growth. No special playbook—just execute well.   Precious: Prioritise strong revenue growth, healthy unit economics, and a clear path to scalability. VCs look for businesses with consistent traction, high gross margins, and efficient customer acquisition & retention strategies. A clear path to exit (profitable exit) increases investor confidence, positioning the business as a high-potential investment opportunity. What trends should female founders focus on to increase their chances of securing funding? Lexi: We don’t chase hype, but real opportunities are out there—stablecoins making cross-border payments seamless, fixing fragmented supply chains, Pan-African banking, and the like.   Precious: AI is indubitably a major focus in the investment landscape right now. But beyond the LLMs, generative AI, and other headline-grabbing innovations, I believe the real opportunity lies in leveraging AI to drive efficiency, automation, and transformation in legacy industries. For example, in healthcare, AI can enhance diagnostics, personalise treatments, and streamline administrative processes, making healthcare delivery more accessible and cost-effective. That is something I would like to see.  What common mistakes should female entrepreneurs avoid when pitching to investors?  Lexi: One: Not being concise. Learn from existing pitch templates and nail a clear, compelling story. Two: Not knowing exactly how much money you need, what you’ll use it for, and the KPIs that will prove its worth.   Precious: Female founders should not be afraid to sell—not just their product, but their vision, their market opportunity, and their ability to scale. Too often, women pitch with a focus on operational excellence, risk mitigation, and sustainable growth, while male founders tend to emphasise bold ambitions, market dominance, and high-reward potential. Investors want to back businesses that can generate significant returns, and that requires founders to confidently articulate a big vision and the path to achieving it. Selling isn’t just about revenue, it’s about convincing investors that the business has the potential to become an industry leader. This means owning the numbers, confidently projecting future growth, and making a strong case for why the company is the right bet. Women should embrace the same level of conviction, storytelling, and scale-driven thinking that often defines the most successful fundraising pitches. The ability to sell is not just a skill; it’s a necessity for securing capital and building high-growth businesses.

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  • February 14 2025
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Kenyan banks race to cut lending rates as Central Bank threatens daily fines

Kenyan commercial banks are racing to cut lending rates in response to a directive from the Central Bank of Kenya (CBK), which has threatened financial institutions with daily fines for non-compliance. The regulator is cracking down on lenders that have been slow to adjust their rates following successive Central Bank rate cuts to ease the cost of credit for businesses. According to Kenya’s Banking Act, the CBK can impose fines of KES 20 million ($154,619) or three times the monetary gain on banks that fail to comply with industry regulations. Lenders also face a daily penalty of KES 100,000 ($773) per violation, while bank officials may be fined up to KES 1 million ($7,730). Leading banks, including KCB Group, Equity Group, Cooperative Bank, I&M, and DTB, have cut interest rates by one to four percentage points. CBK wants to stimulate economic activity and support struggling households and businesses. Equity Bank’s latest rate cut this week marks its third reduction in six months, making it the only major lender to have consistently lowered borrowing rates in response to CBK’s monetary policy adjustments. “The regulator wants recent monetary policy decisions to be passed down to borrowers, which the banks have not,” said a senior CBK official who asked not to be named to speak freely. “If banks don’t comply, they will be penalized.” The CBK has increased surveillance of banks with an onsite inspection to ensure lenders price their loans pegged on their risk-based models and the falling central bank rate. Other banks that have not complied are expected to cut their rates to avoid unnecessary financial penalties. “All we are asking is for banks to be fair and to act in the same way that they were quick to raise lending rates when the policy rate was increasing and the treasury rates were increasing,” CBK Governor Kamau Thugge said on December 6. “I think it’s in banks’ interest to lower their lending rates. If they continue on this path it will be a no-win for anyone and the economy will not be able to perform,” Thugge said. Between November and December 2024, Thugge summoned bank executives and urged them to lower borrowing costs to support the economy. Only a handful of lenders, like Equity, complied with the directive. Despite three successive rate cuts, the gap between the central bank rate and lending rates has widened to a near three-year high, raising questions about the low transmission of monetary policy changes to customers. The average interest rate hit 17.22%, an eight-year high, cutting private sector credit growth by 1.4%. Since August 2024, CBK has cut the benchmark rate by 2.25 basis points to 10.75, with the latest being February 5, 2025.

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  • February 14 2025
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Quick Fire 🔥 with Timi Odueso

Timi Odueso is a content strategist who’s spent the past decade helping media and arts companies across Africa craft, manage and grow compelling narratives. When he isn’t obsessing over content or growth questions, Timi can be found writing fiction and playing League of Legends. Coincidentally, and purely so, he’s been writing/editing TC Daily since 2021 and is partly responsible for all bad puns since. Explain your job to a five-year-old. Imagine you have a big box of colourful storybooks, and you want to share them with friends. My job is to help find those friends, make sure they know the storybooks exist, and get them excited to read them every time a new one comes out. I also help make the storybooks fun, easy to read, and interesting, so all our friends keep coming back for more stories! You studied law. What drew you to media products? At first I was afraid, it was part of my job as a journalist.  And then, it offered me the opportunity to learn a lot of things and learn them fast. There’s product management, yes, but there’s also front-end development, UX/UI design, performance marketing, and content strategy. I’ve even done a couple of expense sheets.  Plus law and products are similar in the sense that you can do both in any sector and any company.  What’s one major lesson you’ve learned from running a newsletter that most people wouldn’t expect? One key lesson I’ve learned is that the best newsletters have a face—or a voice. You know exactly who’s behind the words. For example, I remember Casey Newton’s newsletter before I remember that it’s called The Platformer. When I read Morning Brew, I can vividly picture Dan Toomey delivering the news in a TikTok-style rundown, and with Jay Acunzo, it’s like I’m listening to his podcast all over again. Great newsletters work because email is inherently personal. Unlike social media, where reactions are visible to everyone, your response to a newsletter is private—just between you and the writer(s)—even when, like Morning Brew, it’s a bunch of people. When that voice feels right, it’s like getting a note from a friend. And that’s why they succeed. What makes a great newsletter stand out from the noise in today’s crowded media space where readers have options? Like everything creative, people can smell the inauthenticity miles away. So make your newsletter authentic. Look, if you’re going to stand out, you need to have your voice, and be intentional with writing/creating things that matter to you.  How do you measure the success of a newsletter—beyond just open rates? It depends on the objective of the newsletter. For a newsletter with an objective to redirect leads or readers outside the product itself, the metric of success is not an open rate but a click-through rate. The value here is not how many people open, it’s how many people click.  Open rates are super critical; I’d say they’re the primary measure of success but look, they’re just percentages, and percentages can be misunderstood.  For example, a newsletter recording an increase in open rates from 35% in January to 40% in June is not necessarily a good thing. In January, the newsletter may have had 100,000 readers which would mean a 35% open rate is 35,000 active readers. In June, they may have dropped to 80,000 which means just 32,000 active subs at a 40% open rate. The percentage increased, sure, but the real numbers tell us that numbers are dropping. That’s why it’s essential to go beyond percentages and focus on the actual numbers, whether it’s clicks, conversions, or another metric, to truly measure your newsletter’s success. If you could give one piece of advice to someone launching a newsletter in 2025, what would it be? Be consistent—this is the hardest part. I always like to say that newsletters are hungry-hungry babies. They require consistent attention or they will fester away into irrelevance.  Crafting newsletter products for Africans comes with its peculiarities. Can you share some of these peculiarities and how you’ve navigated them?  The biggest is that we’re still navigating is email literacy. Over the past five years, across every company I’ve worked with, we’ve consistently found that our target audiences aren’t as email-literate or email-conscious as we’d like. This gap makes growth tougher by limiting the number of high-quality leads we can generate. For example, you might run an ad and capture 4,000 leads, but only around 400 of them will consistently read the product—many might not even remember clicking the sign-up link. To address this, we’ve tightened our sign-up process with a double opt-in. This ensures that only genuinely interested readers subscribe, even if it means a narrower funnel. The funnel is so thin it only reinforces my theory on email literacy. I think we continue to grossly overestimate just how many people use email for their day-to-day tasks.  Can anybody make a long-term career out of building newsletters and products for media companies? Is this something you see yourself doing for a long time? I’ll let you know the answer to the first in ten years, haha.  On a more serious note, I follow several media product leaders from Alex Lieberman of Morning Brew to the Heads of Newsletters at The Economist, The Telegraph and others. There is a long-term career out there given that media companies, over the past decade, have realised that email is the only social space they can actually own. And it’s not just newsletters, media companies build products out of podcasts, videos, games (hello Wordle), even webpages; it’s why the NYT, Washington Post and a few others have their own apps. If it’s consistent, has a defined audience and is monetisable, then it’s a product.  I like to do interesting stuff (even when they get monotonous), and building products in less funded sectors like media and arts means I often have to wear many hats and do different tasks. It keeps me engaged so yes, I am here for

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  • February 14 2025
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👨🏿‍🚀TechCabal Daily – Layoffs at Max

In partnership with Lire en Français اقرأ هذا باللغة العربية TGIVD If you got the acronym in our welcome message, congratulations on finding love.  You can show us some of that Valentine’s love in a couple of ways.  Follow us @techcabal on TikTok and help us compete with Bella Poarch and all the other TikTok dancers.  Share our pitch call with all the brilliant feature writers you know.  Fill out the form at the bottom of this edition to let us know how we’re doing.  Thank you! Quick Fire with Timi Odueso MAX laid off 30% of its workforce in January as it pursues EV goals Nigerian government takes over Keystone Bank after court ruling Funding Tracker World Wide Web 3 Events Features Quick Fire with Timi Odueso Timi Odueso is a content strategist who’s spent the past decade helping media and arts companies across Africa craft, manage and grow compelling narratives. When he isn’t obsessing over content or growth questions, Timi can be found writing fiction and playing League of Legends. Coincidentally, and purely so, he’s been writing/editing TC Daily since 2021 and is partly responsible for all bad puns since. Image source: TechCabal Explain your job to a five-year-old Imagine you have a big box of colourful storybooks, and you want to share them with friends. My job is to help find those friends, make sure they know the storybooks exist, and get them excited to read them every time a new one comes out. I also help make the storybooks fun, easy to read, and interesting, so all our friends keep coming back for more stories! You studied law. What drew you to media products? At first I was afraid, it was part of my job as a journalist.  And then, it offered me the opportunity to learn a lot of things and learn them fast. There’s product management, yes, but there’s also front-end development, UX/UI design, performance marketing, and content strategy. I’ve even done a couple of expense sheets.  Plus law and products are similar in the sense that you can do both in any sector and any company. How do you measure the success of a newsletter—beyond just open rates? It depends on the objective of the newsletter. For a newsletter with an objective to redirect leads or readers outside the product itself, the metric of success is not an open rate but a click-through rate. The value here is not how many people open, it’s how many people click.  Open rates are super critical; I’d say they’re the primary measure of success but look, they’re just percentages, and percentages can be misunderstood.  For example, a newsletter recording an increase in open rates from 35% in January to 40% in June is not necessarily a good thing. In January, the newsletter may have had 100,000 readers which would mean a 35% open rate is 35,000 active readers. In June, they may have dropped to 80,000 which means just 32,000 active subs at a 40% open rate. The percentage increased, sure, but the real numbers tell us that numbers are dropping. That’s why it’s essential to go beyond percentages and focus on the actual numbers, whether it’s clicks, conversions, or another metric, to truly measure your newsletter’s success. If you could give one piece of advice to someone launching a newsletter in 2025, what would it be? Be consistent—this is the hardest part. I always like to say that newsletters are hungry-hungry babies. They require consistent attention or they will fester away into irrelevance. Crafting newsletter products for Africans comes with its peculiarities. Can you share some of these peculiarities and how you’ve navigated them?  The biggest is that we’re still navigating is email literacy. Over the past five years, across every company I’ve worked with, we’ve consistently found that our target audiences aren’t as email-literate or email-conscious as we’d like. This gap makes growth tougher by limiting the number of high-quality leads we can generate. For example, you might run an ad and capture 4,000 leads, but only around 400 of them will consistently read the product—many might not even remember clicking the sign-up link. To address this, we’ve tightened our sign-up process with a double opt-in. This ensures that only genuinely interested readers subscribe, even if it means a narrower funnel. The funnel is so thin it only reinforces my theory on email literacy. I think we continue to grossly overestimate just how many people use emails for their day-to-day tasks.  Collect payments Fincra anytime anywhere Are you dealing with the complexities of collecting payments in NGN, GHS or KES? Fincra’s payment gateway makes it easy to accept payments via cards, bank transfers, virtual accounts and mobile money. Get started now. Startups MAX laid off 30% of its workforce in January as it pursues EV goals Image source: MAX Nigerian mobility financing startup MAX has made a bold bet on electric vehicles (EVs), but not without casualties. In January, the company laid off 150 employees—30% of its workforce—as it transitioned to exclusively financing EVs across Nigeria, Ghana, and Cameroon. The move is part of MAX’s ambitious plan to finance 120,000 EVs, triple the number of vehicles it supported in 2024. However, the layoffs have raised concerns among employees, some of whom claim the terminations were abrupt and lacked severance packages. MAX insists the restructuring was necessary, offering support measures like job placement assistance. Beyond workforce cuts, the company has introduced cost-saving measures, including reduced energy consumption and a push for cleaner energy sources at its offices and battery swap stations. MAX is also scaling its EV charging infrastructure, securing a $10 million partnership with PASH Global in November 2024. Despite its aggressive pivot, MAX faces huge financial demands. Since 2019, it has raised $63 million in equity and debt financing, but with EVs costing up to $900 per unit, securing additional capital will be critical. The mass job cuts signal that the mobility financing startup is on a path to becoming cost-efficient. Nigeria’s EV

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  • February 13 2025
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MAX laid off 150 employees in January amid EV push

Metro Africa Xpress (MAX), a Nigerian mobility financing startup, laid off about 150 employees, 30% of its workforce in January, according to two people familiar with the company’s operations.  The cuts come as MAX kicks off plans to finance 120,000 electric vehicles (EVs) across Nigeria, Ghana, and Cameroon—thrice the combined number of electric and internal combustion engine (ICE) vehicles, motorcycles, and tricycles it financed in 2024. A MAX spokesperson told TechCabal that the restructuring was necessary for the company’s transition to exclusively financing EVs.  Previously, MAX offered a mix of electric and ICE vehicles, some priced around ₦2 million (about $1,280) in 2024, and used a rent-to-own model with daily subscription fees.  “This decision was not made lightly,” the company wrote in an email, emphasising its appreciation for affected employees and outlining support measures including health insurance and job placement assistance. However,  MAX declined to comment on the number of jobs impacted. One laid-off employee told TechCabal that the termination email vaguely cited performance reviews, suggesting individual performance issues. “It wasn’t until later that I realized it was a mass layoff,” said the employee who asked not to be named to speak freely.  The terminations were effective immediately and no monetary severance packages were offered. Beyond the layoffs, MAX has implemented cost-saving measures, including reduced energy consumption and generator usage at its offices, according to a highly placed staff who asked not to be named as they are not the spokesperson for the company.  The company confirmed these measures, stating the aim is to minimise its carbon footprint for the sake of the environment. “We are investing significantly in energy sources to power our business locations and battery swap stations,” MAX said in an email to TechCabal. In November 2024, MAX partnered with PASH Global, a renewable energy and impact investment firm, to invest $10 million to develop a network of EV charging stations across urban centres in Nigeria.  MAX, which previously manufactured its electric motorcycles, now sources them from original equipment manufacturers (OEMs) like Spiro. One vehicle costs as much as $900, the highly placed MAX employee told TechCabal. With a target of 120,000 vehicles, MAX faces significant capital demands to support its expansion. Since 2019, MAX has raised about $63 million, a mix of equity and debt financing, to fuel its growth. In 2020, the startup floated a ₦10 billion multicurrency bond ($22 million at the time) from which it secured a ₦400 million ($1 million) one-year fixed-rate note. Its last disclosed raise, in 2022, saw the company secure $24 million via a private placement under SEC Rule 506(b), allowing it to raise capital from “sophisticated investors” without public solicitation. Raising debt financing has allowed the company to minimize dilution. Founded in 2015 by Guy-Bertrand Njoya, Adetayo Bamiduro, and Chinedu Azodoh, MAX has undergone several strategic pivots. Starting as a delivery service, it later expanded into ride-hailing and now focuses on vehicle financing. This evolving strategy reflects the company’s efforts to adapt to the rapidly changing mobility landscape. Adetayo Bamiduro on how MAX achieved their 100 million-kilometre mark

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  • February 13 2025
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👨🏿‍🚀 TechCabal Daily – Zambia takes a hike

In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning Our friends at Mind Capital have just launched a programme targeted at helping first-time and aspiring founders learn how to launch their startups better and faster by equipping them with the skills and knowledge they need to get started, such as knowing how to identify real market opportunities and having a repeatable system for startup success. The programme is totally free, and is remote as well. It also doesn’t need founders to have started building anything. All it needs is the founder’s commitment to learn. If you’re interested, apply here. Nigerian fintechs and the allure of remittances USAID shutdown: A $100 million setback for Kenyan startups Zambia hikes interest rate to 14.5% to curb inflation World Wide Web 3 Events Fintech Nigerian fintechs and the allure of remittances Image source: TechCabal For many Nigerian fintechs, the temptation of processing FX-based transactions has been impossible to resist. And you can’t fault them. FX-based transactions offer a lifeline of stable revenue to hedge against relentless naira devaluations. The market data is certainly tempting. In July, the country saw a record-breaking $553 million in remittance inflows—a 130% jump from 2023. With take rates of 1-1.5%, processing even a tiny fraction of that can significantly boost a startup’s bottom line.  While this predictable revenue line can allow startups to stay afloat and re-strategise on their market approach after macroeconomic challenges, the eventual race to the bottom will leave few winners. As bigger, well-funded startups and global giants like Wise and TapTap re-enter Nigeria, already thin margins will further erode. Data from Flagship Partners, a global fintech advisory firm, shows a 20-30% dip in FX transaction margins over the last six years. Deep-pocketed players can also afford to spend $60-$120 to acquire each user, biding their time until the volume of transactions offsets those costs. Operating in multiple regions requires painstaking regulatory approvals, expensive compliance teams, and liquidity buffers. Stablecoins might help one day, but that reality is still far off. Smaller fintechs without scale face a steep uphill climb. Muktar Oladunmade, our fintech reporter, argues in his article that serving niche remittance corridors—like China-to-Francophone Africa—offers opportunities as low liquidity in those corridors brings higher margins. Fintechs can also add complementary services with remittance transactions to acquire and retain customers. It’s a high-stakes game, and only the most strategic will come out on top. But for now, the collective push into remittances will benefit consumers through more options and a possible price war. Afincran Connect: A Fintech Mixer by Fincra Fincra is hosting an exclusive fintech mixer on 12th February 2025 in Nairobi, bringing together industry leaders for networking, conversations, and connections. Nairobi | 18:00 – 21:00 EAT Limited spots—RSVP now. Economy USAID shutdown: A $100 million setback for Kenyan startups Image: USAID U.S. Agency for International Development [CC BY-SA 2.0], via Flickr. Alternative funding sources have long been essential for the growth of African startups. Given the continent’s relatively nascent tech ecosystem, there is less conviction about what strategies work, especially as customer behaviours continue to evolve.  This uncertainty creates room for experimentation. However, experimentation requires capital, and institutional investors—the gatekeepers of venture capital—have increasingly turned their attention to a select few tech-heavy startups demonstrating strong revenue traction (typically those generating $1 million or more). In this context, alternative financing options have served as a form of “patient capital” that allowed these experiments to thrive, providing crucial support for startups. The recent shutdown of USAID funding has dealt a significant blow to Kenya’s startup ecosystem. This move has removed over $100 million in non-dilutive funding, which had been instrumental in scaling ideas and proof of concepts (PoCs) across critical sectors like healthcare, agriculture, and clean energy (climate tech). For over a decade, USAID’s Development Innovation Ventures (DIV) provided grants of up to $6 million to over 30 Kenyan startups, including BasiGo (electric buses), Maisha Meds (medical supply distribution), and SolarGen Technologies (solar-powered water purification). For many founders, especially those in impact-driven sectors that struggle to attract venture capital, this funding was a lifeline. Now, the funding gap created could push innovative startups into investment programmes that pressure them to scale prematurely, potentially setting Africa’s tech ecosystem back decades. USAID’s exit could stifle growth in sectors like climate tech, which had been attracting increased investment.  Some might argue that risky capital is better than none, but for Kenyan founders, the aid cut-off means a tougher fundraising environment and a need to explore new financing models, such as local investors, African-focused funds, or alternative lending. The bigger question is: with USAID gone, who will fill its role in Africa’s tech ecosystem? Accelerators and tech hubs have tried, but recent exits, like Techstars, raise concerns. How Paystack protects your business from cyber fraud Discover Paystack’s many security features and best practices for fraud prevention. Learn more→ Economy Zambia hikes interest rate to 14.5% to curb inflation Image Source: Google On Wednesday, Zambia’s Central Bank raised benchmark interest rates by 50 basis points (bps) from 14% to 14.5% in a bid to curb inflation and fight the devaluation of its free-falling currency, the Kwacha. The move, the first rate hike since November 2024, comes as Zambia battles its worst drought in over a century, which has driven up food and electricity costs. Inflation remains stubbornly high at 16.7%—well above the central bank’s 6%–8% target range—and is expected to average 14.6% in 2025. The ongoing depreciation of the Kwacha, which has lost 8% of its value this year, is worsening inflationary pressures by making imports more expensive. For businesses and consumers, the rate hike means borrowing costs will rise, affecting everything from business expansion plans to household loans. Higher interest rates also aim to stabilise the currency, potentially easing import costs in the long run. However, with inflation expected to stay above target for at least two more years, the economic squeeze will persist. For investors, the rate hike signals Zambia’s commitment to tackling inflation and

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  • February 12 2025
  • BM

Fintechs rush for FX transactions will only benefit customers and startups with scale

Nigerian fintechs, drawn to the stability of dollar-based transactions, are increasingly building consumer-focused cross-border (FX) transaction products. While this collective push will benefit consumers through more options and a possible price war, it will erode already slim margins for FX-based transactions as startups compete in an over-saturated market.  “Given the explosion of the different types of competitors (in the remittance space), we have seen a bit of a margin erosion in the take rates,” said Anupam Majumdar, partner at Flagship Partners, a fintech consultancy firm. “The margins have come down 20-30% in the last six years.”  For fintechs, processing FX transactions provides stability in dollar terms, crucial for companies reporting revenue in dollars after multiple naira devaluations. To match 2023’s dollar-equivalent revenue, startups needed to grow their Naira earnings by over 66% in 2024. FX transactions are also growing. In August 2024, the Central Bank of Nigeria (CBN) reported that remittance inflows hit $553 million in July, a 130% increase from 2023 and the highest monthly total on record. Processing a fraction of this amount with take rates ranging from 1 to 1.5% represents a healthy revenue line for any fintech.   While this predictable revenue line can allow startups to stay afloat and restrategise on their market approach after macroeconomic challenges, the eventual race to the bottom will leave few winners. “In the short term—say, two to three years—it makes sense. But in the long term, building a sustainable, scalable business in FX is very challenging,” said Kay Akinwunmi, a former founder of Zazuu, a defunct fintech marketplace for remittances.  Regulatory uncertainty once presented Nigerian remittance startups with an opportunity as global companies left the country, but the CBN’s 2024 reforms—mandating naira payouts and adopting a willing seller, willing buyer model—have erased that wedge.  With the regulatory gap closed, global players like Wise and TapTap have reentered Nigeria, intensifying competition against well-funded growth-stage startups like Lemfi, Nala, and Flutterwave. These startups serve many remittance corridors which increases their revenue base and creates a stickier user base. Customers often remain loyal if they see a company as a one-stop solution for sending money to different countries. For smaller startups, the capital requirements to set up operations in multiple countries are significant, especially in a sector prone to fraud. Multiple countries mean multiple licenses and highly experienced legal and compliance staff to handle reporting and compliance with regulators, which are costly. The need to partner with a foreign Paystack-like payment processor that can charge as high as $10,000 monthly to collect payments abroad also adds to a startup’s expenses.  Exclusive: How Float’s lucrative but risky FX trades led to ₦5 billion in losses  An oversaturated market strains unit economics. Spoilt with options, customers are expensive to acquire, and they remain fickle, willing to switch to competition with lower pricing. “In the long term, the big players are likely to win because they can sustain extended periods of offering discounted fees, which naturally attract customers,” Akinwunmi, now the CEO of CSL Pay, a Pan-African payment network, told TechCabal. “They can acquire customers for as much as $60–$120 per user and wait longer to recoup the customer’s lifetime value (LTV). For smaller fintechs, competing at that level is extremely difficult.”  Smaller fintechs also have to deal with securing liquidity. For remittance transactions to work, startups have to be connected to two different financial institutions that can debit the sender and credit the receiver.  “To successfully operate in cross-border remittances, a new startup must ensure it is connected to all major financial institutions—not just the top three or four in each market. Gaining access to as many as possible is critical for maximum reach on the recipient side,” Majumdar said.  Obtaining liquidity for foreign currency payouts is expensive, particularly for smaller fintechs. Liquidity costs directly impact exchange rates offered to customers. If a fintech secures liquidity at a high cost, its rates become uncompetitive, pushing customers toward cheaper alternatives. However, partnering with aggregators or third-party providers like Kora or Fincra can help fintechs access multiple accounts through a single integration, allowing them to reach multiple accounts through a single integration. Stablecoins can solve this problem and larger startups like Stripe are betting on them to power payments but a reality where stablecoins can fully power transactions is still quite far off.  Startups entering the remittance market can thrive by operating in niche markets or adding a complementary fintech service to processing FX transactions. Targeting specific corridors—such as China-to-Francophone Africa—can be a strategic move, as low liquidity creates higher margins. “For startups to stay competitive, they need to focus on niche corridors rather than trying to compete head-on with larger players,” Satoshi Shinada, a partner at Verod-Kepple, told TechCabal. “Even major players may not always have deep liquidity for certain niche currency routes, creating opportunities for smaller, more agile fintechs to gain an edge.” Startups can also process business-focused transactions as these offer higher margins due to increased regulatory scrutiny for large cross-border transactions but also come with higher compliance costs. The cost of KYC checks for onboarding a business can reach $50, according to a fintech executive who asked not to be named to speak freely.  While Nigeria’s large consumer market might seem tempting for new entrants, a larger fintech like Moniepoint or OPay creating a remittance product can easily dominate the market due to their massive scale. Current market realities demand that smaller entrants focus on niche corridors or bundle FX offerings with other services to create stickiness and higher margins rather than build vanilla remittance products where scale wins and margins vanish.

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  • February 12 2025
  • BM

Madica invests $800,000 in four startups, expands footprint into North Africa

Madica, an Africa-focused early-stage investment firm, has backed four African startups with $800,000 in pre-seed funding. The investment comes as investors shift their focus toward businesses with strong revenue traction after early-stage African startups secured 9% of total venture funding in 2024. The selected startups include Medikea, a Tanzanian startup that provides access to instant healthcare services through its first-line clinics; Motherbeing, an Egyptian healthcare chat-based app for nursing mothers to get answers to health-related questions; Pixii Motors, a Tunisian e-mobility startup that builds electric motorcycles with swappable batteries; and ToumAI, a Moroccan startup that uses AI-powered voice analytics to help businesses extract insights from customer interactions. Each startup will receive $200,000. With the latest investment, Madica has funded eight startups since 2022, investing $1.6 million across its portfolio companies. The four startups will also receive hands-on mentorship, and their founders will participate in immersion trips to key local and global tech ecosystems. “What’s particularly exciting is that we set out to build a portfolio with at least 50% gender diversity in their leadership teams,” said Emmanuel Adegboye, Head of Madica. “We are currently exceeding that goal in addition to a significant portion of our portfolio having female CEOs.” Launched in December 2022 by global venture capital firm Flourish Ventures, Madica offers equity funding to startups with a minimum viable product (MVP) and founders working full-time on their ventures. Madica plans to invest $6 million in 30 African startups by 2025. Madica’s investments in Egypt, Tunisia, and Morocco mark the first time the investment firm is casting its net into the North African corridor. It previously only had Southern and West African startups in its portfolio, including NewForm Foods, Kola Market, GoBeba, and Earthbond. The investments in healthtech, e-mobility, AI, and SaaS startups demonstrate Madica’s focus on high-growth businesses working with emerging technologies and startups applying these technologies in established industries. Its other investments in quick commerce, food-tech, renewable energy, and B2B e-commerce also proves this. For Madica, success in these markets could open the door to profitable exits.

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  • February 12 2025
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USAID shutdown: A $100 million setback for Kenyan startups

President Trump’s executive order to shut down USAID has halted essential aid to vulnerable populations worldwide and cut off a significant stream of non-dilutive funding to African startups. Over the past decade, USAID’s Development Innovation Ventures (DIV) invested more than $100 million in Kenyan startups, supporting innovations in healthcare, agriculture, and clean energy. With the shutdown, that opportunity is now lost for many promising ventures. The DIV program has been a vital source of funding for over 30 Kenyan startups, providing grants ranging from $500,000 to $6 million to help scale operations and prove the viability of their ideas. For example, Pula Advisors, a Kenyan insure-tech startup, received a $1.5 million USAID grant in 2023 to expand its insurance offering to smallholder farmers in Kenya and Zambia. On January 24, the US State Department issued a directive to cut all aid, which could end grants vital for founders who face challenges securing venture capital. This is particularly concerning for those in the Kenyan startup ecosystem who have long relied on foreign development funding. Kenya, Africa’s ‘Silicon Savannah,’ has emerged as one of the continent’s leading startup hubs. In 2024, the country secured around $638 million in venture capital funding.  However, assistance from development agencies like USAID has been integral to the growth of many Kenyan startups. This support has largely gone untracked, but its loss will be felt deeply across the ecosystem. BasiGo, an electric bus company, secured a $1.5 million USAID grant to expand to Rwanda, and Maisha Meds received $5.25 million to develop a platform for distributing medical supplies. Similarly, SolarGen Technologies received a $2.5 million grant to develop solar-powered water purification systems. As the ecosystem adjusts to the USAID funding cuts, another concern is the potential shutdown of the International Development Finance Corporation (DFC), which has also provided grants and loans to African startups. For instance, Ilara Health received a $1 million loan from DFC in January to improve its diagnostic platform, while other companies like M-KOPA and Twiga Foods have benefited from DFC debt financing.  The USAID shutdown comes as the African startup ecosystem is undergoing a shift. In 2024, venture capital funding in Africa moved away from the dominance of e-commerce and fintech to climate tech—a sector that has seen increasing interest from impact investors. However, the Trump administration’s stance on climate change and environmental conservation may undermine these gains, threatening the growth of climate tech startups.

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