Investors ask for logical valuations from Nigerian startups
On the second day of the NITDA Digital Conference investors asked for logical valuations and more local involvement in Nigeria’s VC industry. On Wednesday, at the NITDA Digital Conference, Kashifu Abdullahi, the director general of NITDA, shared that the tech ministry is using a Massachusetts Institute of Technology research framework to determine how to collaborate with the private sector. “Our major strategy is resetting our mindset and what I mean by resetting mindset is that we need to remove the dichotomy or demarcation between the government and private sector,” Abdullahi said. Abdullahi also referenced how the current tech minister, Dr. Bosun Tijani, comes from the private sector. “In an ecosystem, we need to have collective ownership,” he said. Nigeria’s tech ministry has been on an increased acknowledgement drive in the months following Bosun Tijani’s appointment. Since the minister’s appointment in August, the ministry has announced a plan to train 3 million tech talents and a ₦5 million artificial intelligence research grant for 45 startups. Both programmes are organised by NITDA and Abdullahi shared the agency’s plans for these incentives. “We intend to place 1.5 million (fellows) in the local ecosystem, and [for the other] 1.5 million, give them the opportunity to live in Nigeria and work for international organisations or the global ecosystem,” Abdullahi said. Investors ask for logical valuations and increased local participation At a panel session at the conference, Janade Du Plessis, the managing partner of Launch Africa Ventures, a prolific VC firm in Africa, advised Nigerian startups to base their valuations on “logic”. He added that founders should not base their valuations on Nigeria’s population but rather on “business ratios.” “If you split Nigeria out across the entire continent in our portfolio, the average valuation is $5.5 million. When you add Nigeria, that goes up to $12 million,” Du Plessis said. “My advice to founders is: what are you basing that on and have a logical argument when you talk to investors. Whether it be revenue multiples or you have a certain path for your LTV. I often see that in this ecosystem, it seems to be a train to have a high valuation,” he added. Satesh Melwani, an investor in African startups, said that there needs to be more local investment in Nigeria’s VC industry. He said this can help the Nigerian tech ecosystem survive the global VC downturn. “I think that there has to be a real education for Nigerian investors to get them [to invest in Nigerian startups],” he said. Melwani also advised startups to make proper corporate governance a solid part of their strategy to raise money, as investors expect more information from startups. “The market is evolving and changing to a situation where people are expecting real corporate governance.”
Read MoreSA startup WhereIsMyTransport is shutting down, cites lack of funds
SA mobility startup WhereIsMyTransport is shutting down after failing to raise new funding. South African mobility startup WhereIsMyTransport is shutting down, citing an inability to raise new funding. Founded in 2016 Devin De Fries, the startup raised over $27 million in funding and had 140 employees. “Having failed to raise our round, we’ve stopped operations. Thank you to the investors who backed us along the way – without you, our work would not have been possible. Thank you to the team who gave the best of themselves to support our mission,” wrote De Fries. WhereIsMyTransport mapped formal and informal public transport networks and used the data to improve the public transport experience, claiming to make commuting safe and accessible. The startup licenced some of its data to governments. South African mobility startup WhereIsMyTransport raises $14.5million for expansion In May 2022, the startup announced that it had mapped 50 cities across Africa, Latin America, Southeast Europe, and Asia. Some of its clients included the World Bank, which used its data to examine access to job opportunities via public transport in 12 African cities. The startup was also an alumnus of the now-defunct Naspers Foundry, having raised $3 million from the fund towards its $14.5 million Series A extension. Its other investors included Cathay AfricInvest Innovation Fund, Japan’s SBI Investment, Wuri Ventures, Capria Ventures, Nedbank, Global Innovation Fund, Goodwell Investments, Google and Toyota Tsusho.
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Updated SRD R350 payment dates for October 2023
In an effort to provide clarity and assistance to clients, the South African Social Security Agency (SASSA) has released the updated payment dates for October 2023 for those approved for the R350 SRD SASSA payment. The SASSA body understands the importance of timely and predictable payments for their clients, and thus, are committed to keeping them informed about the latest developments. New SRD SASSA payment dates Payments for clients who have been approved for the month of October 2023 will be processed from October 25 to October 31, 2023, for the R350 SRD SASSA payment. SASSA has streamlined its payment schedule to occur during this specific week, ensuring that recipients can anticipate their funds with confidence. This approach is designed to improve the efficiency of the payment process and make it more convenient for beneficiaries. All SRD clients are to stay informed and monitor their payment status diligently for the R350 SRD SASSA payment. You can do so by visiting the SRD website, where you will find the exact date when your payment will be reflected in your bank account. The website portal provides you with real-time updates and ensures that you are well-prepared for the arrival of your funds. Note to SRD SASSA beneficiaries It’s important to note that after the processing of payments from October 25 to October 31, it may take approximately 2-3 business days for the funds of the R350 SRD SASSA payment to reflect in your bank account. Factors such as your banking institution and other logistical considerations can impact the exact timing of fund availability. Therefore, SASSA advises clients to plan accordingly and not be alarmed if the funds do not appear in their accounts immediately after the processing period. Final thoughts These updated payment dates for October 2023 are part of SASSA’s ongoing effort to provide clarity, predictability, and reliability in their services for the R350 SRD SASSA payment. SASSA remains dedicated to serving their clients with the utmost professionalism and care. For further information and inquiries about the R350 SRD SASSA payment, please visit the SASSA website or contact their helpline for assistance.
Read MoreNigerian Fintech Week Day 2: How failure drives innovation in Nigerian fintech
Written by Stephen Agwaibor In the keynote address on the second day of the Nigerian Fintech Week, the message was clear: despite challenges, failure is a “learning opportunity” in the fintech sector. The keynote speaker, ‘Deremi Atanda, MD of Remita, emphasised the importance of failing fast and viewing it as an opportunity for rapid learning and innovation. He highlighted the need to embrace experimentation, foster a risk-tolerant culture, and reframe failure as a chance to learn. Atanda reinforced his point, stating, “Today’s big names leveraged their failures. Remita, once a failed project, now processes over $50 billion and millions of transactions, thanks to our tier-one licence from a failed project in 2005, our bid for the pension project.” He emphasised the capacity to innovate despite setbacks, urging fintech companies to accept their failures, learn from them, listen to feedback, assess market conditions, and build resilience. Reimagining AI for the future of payments In another session, Premier Oiwoh, MD and CEO of the Nigeria Inter-Bank Settlement System (NIBSS), discussed the future of payments with AI. Nigeria’s progress in areas like mobile penetration (around 89%) and a 64% financial inclusion rate has led to growth in e-commerce, with a forecast of digital payments reaching $24 billion by 2027. To make payments seamless and enhance open banking inclusivity, Oiwoh stressed that AI will play a pivotal role. Aiwoh outlined AI’s applications in payments, including improving security and fraud protection, AML features, providing credit and virtual loans, algorithmic trading, process automation, and personalised customer experiences with humanoid cast services. However, challenges in AI adoption exist, such as the desire for real human interactions, risks of malicious actors exploiting AI systems, and data quality concerns. To solve these challenges, Oiwoh noted, requires multi-factor authentication, improved regulations, continuous AI training, and efficient data warehousing. Aiwoh emphasised that data should complement AI, not compete with it. The fireside session, led by Tiwa Osazuwa of AELEX, discussed AI regulatory frameworks in Nigeria. While some guardrails like the Nigeria Data Protection Act (NDPA) exist, there is a need for more comprehensive regulation regarding intellectual property, data protection, automation, and ethical issues related to the use of AI. The panel highlighted the immense potential of AI but stressed the importance of oversight to prevent misuse. Another takeaway point from this discussion was that it’s still early days, with a call to action for African tech enthusiasts foraying into the AI to not just dwell on the downstream but aim higher as there’s still opportunity for Africa to position itself as a leader in this fast-growing niche. Other matters relating to generative AI and presentations highlighting AI’s role in the creative economy—such as the creation of music—were on display, providing a glimpse into the endless possibilities available with AI that extend beyond fintech. Other highlights In a session on economic inclusion and fintech’s role in bridging the gap, led by Funsho Oyelohunnu, CEO of Horizonpay, embedded finance was highlighted as one way to integrate financial services into non-financial sectors, fostering economic inclusion. By embedding features like payments, lending, rent, insurance, and savings for underserved populations, more people can access services previously out of reach. They noted that trust issues in traditional banking still contribute to a high unbanked population despite mobile phone ownership of 81% of adults population. Fintech platforms were tasked with education and awareness creation, developing diverse products for marginalised groups, and instituting aggregator structures in remote areas. Partnerships with regulators to onboard unbanked individuals and trust-building through safety nets to reduce charges for low-income earners were recommended. The conference also touched on fintech’s future roadmap, featuring input from consulting firms like McKinsey, Deloitte, KPMG, and EY in a fireside session led by Jameelah Sharrief-Ayedun, CEO of CreditRegistry. The state of VC funding on the continent was discussed, with a forecast of reduced funding in the near to medium term due to economic challenges, policy flexibility, the Silicon Valley Bank’s crash, and its impact on the fintech ecosystem, all of which, they revealed, contributed to a 49% dip in funding year on year. Despite these challenges, the panel expressed optimism, noting that pockets of fresh investment signal a positive long-term outlook, hinging on efficiency, lean practices, and policy nudges to regulators to attract foreign direct inflows to Nigeria and the broader African continent.
Read MoreBotswana looking to technology to boost diamond industry, says president
Botswana is the largest diamond producer in the world. But with global advancement in innovation, President Masisi has called on diamond-producing nations to invest in technology to ensure the sustainability of the industry. The President of Botswana, Dr Mokgweetsi Masisi, has stated the need for diamond-producing nations to incorporate technology into the sector to foster sustainability. President Masisi was speaking at the FACETS Conference in Gaborone, Botswana. Botswana is the world’s largest diamond producer by value. The FACETS Conference was initiated by the Antwerp World Diamond Centre (AWDC) in 2022 to provide a platform for inclusive dialogue between industry players from across the value chain to address challenges and opportunities set to drive the industry in the future. Delivering his address, Masisi stated that diamond-producing nations should invest in research and development efforts that would minimise the impact of diamond mining on the environment. “From drone-assisted surveying to advanced water management systems, these innovations are not just investments; they are our commitment to preserving the natural world for generations to come,” he said. Additionally, to tackle the problem of conflict diamonds finding their way into markets, President Masisi stated the need to employ blockchain technology for diamond tracing. “Blockchain technology, with its immutable ledger, can provide consumers with the guarantee that their diamonds have been ethically sourced,” he added. “Emerging technologies, such as nanotechnology, [also] hold promise in diamond processing. Nanodiamonds, tiny diamond particles, have a range of applications from medical imaging to quantum computing.” Early this year, President Masisi’s administration announced plans to purchase a 24% stake in Belgium-headquartered diamond manufacturer HB Antwerp which describes itself as “Antwerp’s savoir-faire with the power of technology to create a whole new ecosystem for the natural diamond trade”. Some of its proprietary technologies include an automated diamond polishing robot, a blockchain-based diamond tracker, and a stereo microscope for diamond observation.
Read MoreShipbubble wants to help Nigerian e-commerce deliver everything, everywhere, on time
Shipbubble is eliminating logistics problems for e-commerce in Nigeria while helping local businesses sell internationally with ease. As Nigeria’s small and medium-sized enterprises (SMEs) continue to grow, contributing about 48% of the GDP, Nigerian entrepreneurs face the pressing challenge of delivering goods to customers on time and well. The logistics challenges range from concrete problems like the absence of infrastructure to abstract ones like lack of trust, or tardiness on the part of delivery companies. Shipbubble, a logistics and e-commerce aggregation company, is solving this problem. Co-founded by Jordan Ajibola, the CEO, and Ayodeji Abon, the CTO, Shipbubble is creating a one-stop API integration that allows e-commerce businesses to harmonise all their logistics needs on one platform, eliminating the need for multiple logistics partners. The e-commerce industry is projected to reach $3.64 trillion in revenue by the end of 2023. Only $9.02 billion (0.24%) of that amount is projected to be in the Nigerian e-commerce space. With a pressing logistics problem, Nigeria may fall behind, or fail to boost revenue in the e-commerce sector. Ajibola and Abon sat with TechCabal at our office in Lagos to demonstrate how Shipbubble works. Ajibola was quick to mention that Shipbubble is helping companies “locate the perfect logistics partners based on cost, proximity, and performance, allowing for logistics partner assignment without the hassle of text messaging”. A 2021 World Bank report notes that the cost of moving goods (per unit distance) domestically in Nigeria is about 5.3 times higher than in the US. Meanwhile, Shipbubble claims its aggregated platform will allow traders to have options to choose from a wide range of affordable companies that have been vetted for quality service delivery by the company, cutting costs and earning trust in the process. This is in addition to creating a tracking page for each business, allowing traders and customers to follow the goods from start to finish accurately. Abon says an easier way to think of what Shipbubble is doing today is to think of Paystack and other payment aggregators, and how they helped e-commerce businesses to sell faster by supporting online stores with instant accounts where payments are validated within seconds. “Shipbubble is like that, but for logistics,” he says. Shipbubble’s 10,000 steps to expertise Ajibola and Abon built the Minimum Viable Product (MVP) in 2021, fully transitioning from an earlier version called GetDelivery to Shipbubble by May 2022. The founders then participated in the Startup Wise Guys accelerator program from October 2022 to March 2023, further honing their expertise. Shipbubble has since secured support from angel investors and venture capitalists, including Microtraction, a venture firm that invests in pre-seed startups. As of October 2023, ₦267 million worth of products have been shipped via Shipbubble. But they’re still far from their destination. One of the fundamental aspects of Shipbubble’s approach, according to Ajibola, is “helping businesses scale internationally and having more options”. To do this, they need to onboard more logistics companies internationally; this will need more time and more money. The founders are confident that their product will attract the right funding to scale and bring in more partners. Esther Ulueme, 28, a Nigerian entrepreneur spends her nighttime tracking orders and her daytime talking to clients for her skincare and perfumery brand, leaving her little space for adequate rest and to scale. Ulueme is optimistic about Shipbubble’s solution. “Putting logistics companies under an umbrella like Shipbubble’s will keep them in check,” she tells TechCabal over WhatsApp. “You won’t have to worry much because you’re sure the logistics companies under Shipbubble would have gone through checks and won’t tamper with or lose your product.” Abon assures business vendors like Ulueme that “[Shipbubble’s] streamlined approach means that entrepreneurs can set up e-commerce ventures with ease with Shipbubble, and Shipbubble will handle everything from inventory management to sales and distribution.” He is confident that this approach will help small businesses scale faster with fewer resources. Ulueme, who is keen on expanding globally, tells TechCabal that knowing that Shipbubble has logistics companies that can deliver outside Nigeria will help vendors sell internationally without stress.
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Investors not keen on funding northern Nigerian startups, new study reveals
The Nigerian tech ecosystem is one of the fastest growing in the world as more founders have built innovative solutions to some of the most pressing issues across various sectors from finance to agriculture, logistics and e-commerce, among others. Between 2015 and 2022, about 400 tech startups in the country raised a combined sum of over $2 billion. This is higher than funding raised in any other country in Africa. So far, the Nigerian tech ecosystem makes up about 30% of funded startups on the continent. While this growth is impressive, it has so far materialised mostly in Lagos state, southwest Nigeria, where most startups and corporate businesses are headquartered. Founders in other parts of the country struggle to build thriving startups like their counterparts in the southwest. This has been due to a variety of reasons, ranging from poor government policies to lack of capital. In October, TechTank Labs (TTL), a venture studio in Kano, released a report on the state of the tech ecosystem in northern Nigeria. The aim was to identify the challenges and opportunities that startups and stakeholders face in the region in order to provide actionable insights and recommendations for a more vibrant and sustainable ecosystem. Challenges facing startups in northern Nigeria Image credit: TT Labs Between 2017 and 2021, Nigeria’s population surged by 15.01 million, with the north alone contributing to 68.7% of this number. Current estimates place the population of northern Nigeria at approximately 128 million, 58% of the entire country’s populace. This population size offers startups opportunities to scale as there is already a large market available for products and services. Regardless, this has not been the case as the majority of startups in the region still struggle due to a number of challenges. Lack of access to funding stands out as the most pressing challenge for startups in northern Nigeria. There are not enough VCs in the region, and founders have a difficult time attracting funding from outside the region as investors are typically wary of investing in startups outside Lagos. Also, of all the startups surveyed, 46 reported a shortage of skilled workers. According to Maryam Shittu who is an executive at Nigeria Sovereign Investment Authority (NSA), the biggest challenges facing the tech ecosystem in the north are closely tied to the availability of digital talent and funding. “Without skilled talent and the necessary financial backing, it’s difficult for the ecosystem to grow and compete on a national, let alone global, scale. This is reflected in our investment activities; we have not yet invested in any startups from the north-east, northwest, or north-central regions,” she shared. Idris Ayo Bello, the founder of Loftylnc Capital, shared that the company has a portfolio, Afropreneurs Fund 3, which has so far invested $500,000 into northern Nigeria. Opportunities for startups in northern Nigeria For the report, TTL surveyed 188 startups across diverse niches including agriculture, health, education, and finance. Of the startups sampled, 15% generated over ₦5 million ($6,200) in the last fiscal year, with some exceeding ₦500 million ($628,000) and even ₦1 billion ($1.2 million). The most profitable sectors in the region are fintech, edtech and agritech, with over ₦500 million ($628,000) in revenue. While the majority of these startups are currently profitable, only 5.9% of founders surveyed reported having access to grants or VC funding. So far, there are 39 key ecosystem entities operating in northern Nigeria, including seven VC firms, seven incubators, and 25 innovation hubs spread across different states, with notable concentrations in Kano, Abuja, and Kaduna. These organisations, however, still have funding problems as they do not have enough for all startups in the 19 states that form the region. VC firms and tech hubs in northern Nigeria 1. Agriculture and Manufacturing Agricultural activities in Nigeria are more widespread in the north, due to land availability and favourable soil and climate conditions. The north has more smallholder farmers than any other part of the country, which presents a notable opportunity for startups to leverage technology to enhance agricultural practices, streamline supply chains, or improve food processing. Investing in agri-tech solutions that address local challenges can yield significant returns. According to the report, some of the opportunities exist in areas like: – Precision agriculture – Remote sensing – Agricultural drones – Smart irrigation systems – Crop insurance and agricultural extension services 2. Edtech With the global shift towards online education, edtech startups in northern Nigeria have the potential to reshape the educational landscape. Investing in platforms that offer localised content, teacher training, or innovative learning tools can be highly beneficial. Similar to the agricultural sector, the edtech space also has an outlier with over X1 billion in revenue. 3. Fintech Despite its large population, northern Nigeria has the lowest financial inclusion rate in the country, with only 34% and 24% of adults in the north-east and north-west, respectively, having access to bank accounts. There is an increasing need for more innovative tech-enabled financial solutions in this region. So far, fintech startups in the region have aimed to bridge the financial inclusion gap, providing services like mobile banking, peer-to-peer lending, and digital payments. Some of these startups, like Sudo, have done revenues as high as ₦500 million ($628,000), according to the report. Northern Nigeria has a strong informal economy which is also an opportunity for startups and investors. A Central Bank of Nigeria (CBN) survey in 2021 revealed that the region had the highest rate of cash transactions in the country, with over 70% of all POS transactions paid in cash, compared to 55% for the rest of the country. Other opportunities in the financial space include: – mobile payments – microfinance – digital insurance solutions – investment platforms – blockchain technology applications The tech ecosystem in northern Nigeria has the potential to become one of the most burgeoning ecosystems in the country, but not without the active participation of all key stakeholders. There are huge gaps for government participation and investors to fill in building the ecosystem, and until
Read MorePatricia insists on November repayment date after DLM Trust abruptly ends partnership
Patricia inisists it will repay customer funds after DLM Trust abruptly ended its partnership with the crypto company. Nigerian crypto company Patricia has said its plan to repay customer funds will proceed despite the withdrawal of its escrow trustee, DLM Trust. On Tuesday, Patricia announced that it had engaged DLM Trust to handle the repayment of $2 million in customer funds that it lost to a hack. One day after that announcement, the SEC-licensed trust company said it had ended all engagements with Patricia and would not be proceeding with the disbursement of refunds. The company cited “multiple breaches in the terms and conditions of agreement and trust.” According to a person with direct knowledge of the matter, DLM Trust abruptly withdrew from the partnership due to media backlash. Patricia told TechCabal it was shocked by DLM Trust’s sudden decision to terminate the partnership without prior notice. The crypto company maintained that it observed “all due processes, including fulfilling our financial commitments to consummate the contractual agreement.” “It is therefore astounding to us that not only have DLM Trustees chosen to renege on our agreement, but that they failed to issue us a notice or extend the basic courtesy of a prior discussion, in stark disregard for the clearly spelled termination clause in our contract. We not only categorically reject this false claim, but we also challenge DLM Trustees to substantiate the allegations,” Patricia said in the statement. DLM’s about-face comes two days before Patricia’s virtual town hall meeting to discuss the partnership with its customers. This turn of events means that Patricia will have a harder time convincing frustrated customers who want access to their money after the trading platform lost $2 million to a hack last year. Since April, customers have been unable to withdraw funds from the Patricia Plus app which triggered a bank run. Patricia scrambled to control the panic by freezing withdrawals, blocking customers from accessing their assets. The company’s attempt to salvage the situation was to unilaterally convert its customer assets to tokens, an action it took without users’ consent, which raised legal concerns. While Patricia has held town hall meetings and shared several plans around repaying customers, it has been met with skepticism. More recently, some customers started discussing plans to stage peaceful protests to demand refunds of their withheld funds.
Read MoreAfrica’s cloud market is small but growing fast, and everyone wants a slice
Amazon recently announced it was launching its e-commerce service in South Africa—its second dedicated African market. But like its other big tech rivals, Microsoft and Oracle, the group’s heart is in Africa’s fast-growing cloud services market. Sales of cloud services are slowing down in North America the world’s biggest cloud market. Amazon’s cloud computing unit has been particularly affected and is losing market share to Google Cloud and Microsoft Azure among others. Africa is one of the global regions where a significant portion of demand for cloud services is expected to come from. According to digital research consultancy, Xalam Analytics, demand for cloud computing services in Africa is growing at between 25% and 30% annually. This compares favourably with Europe where compound annual growth rates (CAGR) is estimated at 11.27% between 2023 and 2028. In North America, the figure is 10.34%. Elastic cloud computing is the technology at the heart of cloud computing. Elastic computing refers to virtual server programs that allow users to rent units of storage space, network connectivity, and computing power from clusters of data centres globally. Created by a small Amazon team in Cape Town, South Africa in 2003, the service that has become AWS, Amazon’s largest subsidiary accounted for half of Amazon’s operating profit in 2022 and helped reduce heavy losses incurred by Amazon’s e-commerce business, investments and movie streaming platform last year. AWS has been described as Amazon’s profit engine. But this profit engine is slowing down in the most developed markets and showing signs of promise in smaller markets that are rapidly adopting digital technology. African banks, insurance companies, airlines and airports are moving their data and IT systems to virtual servers and shuttering costly self-operated data centres. Even telecommunications giants in Africa like MTN Group are not left out. In March, the telco announced it had deployed the core service for its 5G service on Microsoft’s cloud platform Azure. South Africa’s Old Mutual, shut down its physical data centres to move its workloads almost entirely to the cloud. At TechCabal’s Moonshot conference, Osahon Akpata, Ecobank’s Head of Consumer Payments, noted that the pan-African bank was progressively moving assets to cloud platforms. African startups which continue to raise billions in funding from investors are naturally built on cloud platforms. Potential market built on a handful of big spenders While Africa represents an opportunity for cloud service providers, the market is still small. The German research service, Statista predicts that revenue from public cloud services in Africa will reach ~$8.3 billion by the end of 2023. By comparison, public cloud revenue in India last year reached $6.2 billion, market intelligence firm International Data Corp reported. Unlike more mature markets where cloud services like AWS face growing competition, slowing investment into technology startups will not significantly affect the growth of cloud computing services in Africa. “Our priority customers are enterprise businesses with deep pockets and $100 million in annual revenue,” a cloud engineer at AWS told TechCabal. Startups are a distant second in terms of revenue, and video streaming is beginning to make its mark in cloud service demand. Senior AWS staff who spoke with TechCabal say digital content including video streaming from local media outlets, like Arise News, is helping grow demand for cloud services in Nigeria. But the big cloud service providers have not cracked Africa’s public purse yet. Governments are hesitant to move data to public cloud platforms. On-premise data systems or contracts with smaller cloud service providers continue to dominate government cloud spending. Moreover, new data localisation rules threaten to constrain the private cloud market, where some of the biggest customers are financial institutions. Concerns about data localisation requirements were partly behind AWS’s decision to open a Local Zone in Lagos earlier this year. A race to win early market share In their latest report released during Mobile World Congress in Kigali in October 2023, the GSM Association (GSMA) says smartphones will account for 88% of total mobile connections in Africa (with the exception of North Africa) by 2030. In the same year, they expect 200 million new unique mobile subscribers to join the growing number of Africans who use mobile phones. The variable but growing use of digital platforms for government services, private businesses, and personal life in Africa is forcing IT companies to find dynamic ways of serving this demand. Cybersecurity concerns and the ability to quickly ramp up services to respond to brief spikes in service demand increase this pressure. For example, when a central bank demonetisation program forced Nigerians to use digital money transfer options earlier this year, the money transfer services offered by Nigerian banks were frequently down and failed transactions were a common complaint. Fintechs with cloud capability were better able to handle the spike in digital transactions and grabbed valuable market share as a result. As digital financial services providers and other technology startups begin to become an embedded part of African economies, cloud platforms are in a race to grab market share. Almost all of AWS’s staff in Lagos—about 20 in total—are involved in sales and marketing. Flutterwave recently announced a 5-year partnership with Microsoft that will see the $3 billion (at last valuation) fintech process payments for its global merchants on Azure. Oracle, on the other hand, is leveraging its existing relationships with clients who use other Oracle products to cross-sell its cloud service. Last year South African retailer began the process of moving its digital operations to Oracle’s Retail Merchandising Cloud Services. The retailer shed its internal inventory management system for the costly change which was completed in March 2023. “We needed to modernise our retail infrastructure and leverage cloud technology to establish a sustainable and stable application foundation for our high volume processes,” Kim Sim, Chief Information Officer, Mr Price said. “Our vision is to be the most valuable retailer in Africa and we know that Oracle’s proven cloud platform can help us meet the needs of our growing community.” The transition to the cloud did not come without
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👨🏿🚀TechCabal Daily – MTN Nigeria to pay $72.6 million in back-taxes
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية It’s almost Friday At Moonshot 2023, TechCabal unveiled the Future of Commerce Trends Report which captures the most interesting growth trends in African e-commerce, payments, and logistics and speaks to the implications or outlook for the future. Want to know why 67% of MSMEs in Nigeria, Kenya and South Africa are using social media for their businesses? Or why the social commerce trade in Africa and the Middle East will reach $41.9 billion by 2021? Then download the Future of Commerce Trends Report. In today’s edition World Bank loans SA $1 billion to fix energy problems MTN Nigeria to pay $72.6 million in backtaxes Fidelity Bank blocks transfers to Opay, Moniepoint and PalmPay South African Airways set to relaunch after three-year hiatus Ghana gets new electric bikes The World Wide Web3 Events Economy World Bank grants $1 billion loan for South Africa’s energy reforms Image source: Google The World Bank has approved a $1 billion development policy loan to support electricity market reforms and decarbonisation in South Africa. The loan will be used to restructure the power structure, unbundle Eskom, and redirect resources toward investments in transmission and plant maintenance. The loan will also support private investment in renewable energy and strengthen carbon pricing instruments. Global support: This is the third policy loan that South Africa has received since it signed a Just Energy Transition Partnership with several developed countries. In November 2022, the French and German development banks, ADF and KfW, each extended €300 million ($318 million) in loans to South Africa. Collaboratively funded by the World Bank, the African Development Bank, KfW, and the government of Canada, the loan aligns with South Africa’s development priorities, including the Energy Action Plan to combat loadshedding and the Just Energy Transition. The Wrold Bank’s loanaligns with the South African government’s confirmation of nearly $3.5 billion in additional pledges for the Just Energy Transition Investment Plan (JET IP). It also anticipates the approval of the JET IP implementation plan which will be presented before Cabinet ahead of the upcoming COP28 climate talks in Dubai from November 30 to December 12. Zoom out: The World Bank announcement comes as South Africa experiences its worst year of power outages. In July, Bloomberg reported that regular outages since January have lasted as long as 12 hours a day, but eased up in May after South Africa managed to boost its generating capacity. Per Eskom, the situation is expected to worsen in 2024. 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. Telecom Tribunal orders MTN Nigeria to pay $72.6 million fine GIF source: Tenor MTN is finding fines everywhere it goes. The telecom’s Nigerian subsidiary has received a demand from a Lagos-based Tax Appeal Tribunal to pay $72.6 million for unpaid taxes and penalties. Backstory: In October 2018, the Office of the Attorney General of the Federation (OAGF), after investigating MTN’s tax payment history from 2007–2017, found the telecom to have an outstanding balance of ₦242 billion in value-added taxes (VAT). By 2021, the Federal Inland Revenue Services (FIRS)—Nigeria’s federal tax collection agency—issued a VAT assessment of $72.6 million to MTN, and another $21 million for penalties and interests accrued. MTN rejected the assessment, and in April 2022, the FIRS issued a new assessment consisting of $47 million in VAT, and $87.9 million in fines and penalties. MTN, again, rejected the assessment, and approached the Tax Appeal Tribunal for a review. Now, the Tribunal, after more than a year of reviews, has ruled in favour of the FIRS and ordered MTN to pay the initial VAT assessment of $72.6 million. It, however, cancelled the $21 million penalty the telecom was charged. What now? MTN Nigeria says it is reviewing the decision and will give a response on Friday, October 27, the same day it releases its trading statement. This new charge comes three years after the telecom, in 2020, won a 16-month-long battle against the Nigerian government which levied a $2 billion claim for back taxes against it. Meanwhile, MTN’s Ghanaian arm has also been hit with fines for back taxes recently. In January, the Ghana Revenue Authority (GRA) lobbed a $773 million fine at MTN Ghana for outstanding tax obligations from 2014—2018. While the claim by the GRA has been withdrawn, it does beg the question: why does it take so long for federal tax agencies to identify these tax gaps, and what are the true costs to the economy? Fintech Fidelity blocks transfers to OPay, Moniepoint, and Palmpay Image source: Zikoko Memes Fidelity bank, a Nigerian commercial bank, has blocked transfers to Nigerian neobanks, Opay, Moniepoint and Palmpay over rising fraud and customer verification concerns. Zoom in: One week ago, a small number of customers noticed that several neobanks were no longer listed on the list of approved financial institutions in the Fidelity Bank app. While the bank claimed that the restrictions were related to an app upgrade, sources with direct knowledge of the matter gave different responses: the banks were removed for KYC violations. Five sources told TechCabal that the transfer restrictions began at least two weeks ago due to rising concerns about fraud and customer verification. Fidelity Bank, on its own, did not share the specific KYC concerns it had to these neobanks. Nigerian banks and fintechs have lost billions of naira to cyberattacks and fraud since the start of the year, according to three banking industry experts. Fraudsters often move stolen funds through neobanks and traditional banks. In March, Flutterwave reportedly lost ₦2.9 billion in a hack, which the company denied. The company, however, placed restraining orders on 107 bank accounts in 27 banks that allegedly received money from the illegal transfers. Lights out: Fidelity’s move raises the question of whether other traditional banks are considering following suit. While traditional banks may be concerned about the
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