Amina Patterson on how to address challenges facing SA’s early-stage startups
Amina Patterson, a seasoned startup ecosystem builder in South Africa, speaks on how to address the challenges facing the country’s early-stage startup ecosystem. With a decade of experience in the South African startup ecosystem, Amina Patterson’s work has seen her engage and collaborate with over 60 startups. In her role as head of business operations at AlphaCode, one of the country’s leading accelerators, she acquired hands-on and first-hand experience in the challenges facing startups. From that experience and insights, she has continued her ecosystem-building work as founder of Solve4x, a firm focused on helping corporates efficiently support startups. She is also an entrepreneur-in-residence at the Allan Gray Orbis Foundation, assisting startups with business model validation and commercial resource accumulation as well as facilitating market, funding introductions, and ecosystem progression. On this episode of Ask An Investor, TechCabal caught up with Patterson to learn more about her work as well as the state of the early-stage startup ecosystem in South Africa. TechCabal: Please share more about your journey in the SA startup ecosystem AP: Over the past decade, my journey in the South African startup ecosystem has been a dynamic and transformative one. I’ve had the privilege of designing innovative solutions for corporates aimed at supporting and empowering small and medium-sized businesses. This experience has allowed me to witness first-hand the immense potential and creativity that startups bring to the market. At the core of many ground-breaking solutions are startups that possess an unwavering dedication to addressing the most pressing challenges faced by their customers, all while maintaining a strong client-centric focus. It’s this spirit of innovation and tenacity that has consistently inspired me throughout my career. In 2018, I took a pivotal step in my journey by becoming deeply involved with the AlphaCode Incubate Programme. This decision marked a turning point in my career, as it allowed me to immerse myself in the world of startups more intimately than ever before. Since then, I’ve never looked back. Working closely with AlphaCode and its startups has been an incredibly enriching experience. Over the lifespan of my career, I’ve had the privilege of collaborating with more than 60 startups across various sectors. This hands-on involvement has given me valuable insights into the challenges and opportunities that startups face in South Africa’s dynamic business landscape. It’s been a journey filled with learning, growth, and an unwavering commitment to nurturing the entrepreneurial spirit that drives our nation’s innovation. Looking ahead, I’m excited to continue my work in the South African startup ecosystem, leveraging my experience to support and mentor the next generation of visionary entrepreneurs. I firmly believe that startups are the lifeblood of innovation, and by empowering them, we can collectively contribute to the growth and success of our nation’s economy. What motivated you to pursue a career in the ecosystem? AP: I’ve always been deeply captivated by the world of entrepreneurship. It’s a realm that’s defined by its roller-coaster ride of highs and lows, its potential to transform communities and nations, and the unwavering mindset required to build a business from the ground up. From a young age, I found myself drawn to the stories of visionary individuals who dared to dream big and take risks. What truly ignited my passion for the ecosystem was the realisation that being a part of it grants you access to some of the brightest minds on our continent. These entrepreneurs, driven by their boundless creativity and determination, are on a mission to tackle pivotal socio-economic challenges head-on. Their resilience and innovative thinking inspire me every day. I chose to pursue a career in the ecosystem because I wanted to contribute to the remarkable journey of these entrepreneurs. I wanted to play a role in helping them turn their ambitious visions into reality. It’s not just about fostering economic growth; it’s about being a catalyst for positive change and progress. Over the years, as I’ve worked closely with startups and witnessed their transformative potential, my motivation has only grown stronger. I’ve seen first-hand how nurturing and guiding these entrepreneurs can impact their businesses, the broader community, and the nation. The satisfaction of being a part of this journey and witnessing the ripple effects of their success is what drives me every day. In essence, my career in the ecosystem is a testament to my unwavering belief in the power of entrepreneurship as a force for good. It’s a journey that keeps me inspired, motivated, and deeply committed to supporting the brilliant minds that shape our future. What is your favourite part about the work you do? AP: Being exposed to exciting solutions that challenge the status quo. Meeting new entrepreneurs and working with them to overcome the hurdles in achieving product market fit and building thriving, scalable businesses. What is the most challenging part about the work you do? AP: The most challenging aspect of my work is witnessing promising businesses grapple with market access hurdles due to outdated corporate processes. Startups often face lengthy sales cycles as they strive to validate their concepts, significantly impacting their time-to-market. Additionally, the fragmented nature of support within the startup ecosystem, coupled with similar mandates, can create competitiveness. We need to re-evaluate the value chain of support that can be offered to growing startups. Entrepreneurs become jaded by receiving the same kind of support over and over again. Early-stage investments are still hard to come by in SA. What do you think needs to be addressed to increase the level of pre-seed/seed investing in SA? AP: To foster greater pre-seed/seed investing in South Africa, we must address the risk-averse nature of current investment mandates. These mandates often prioritise maximising returns and lack flexibility. A fundamental mindset shift is required among LPs (Limited Partners) and corporate sponsors, primarily institutional or international investors with limited knowledge of the South African startup ecosystem, to overcome this challenge. More flexible, patient- and milestone-driven funding models are needed. These models should accommodate the unique market dynamics and challenges faced by startups in South
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👨🏿🚀TechCabal Daily-A $2 million blueprint
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy pre-Friday The climate finance scene is sizzling hot. The African Development Bank recently launched a fresh $1 billion fund to fast-track climate financing for youth-led businesses across Africa. Don’t keep this news to yourself; share it with your friends. In today’s edition Bolt to deploy $685,000 in Kenya for electric mobility Itana raises $2 million to build a digital free zone Betting firms in Kenya face additional taxes Bayobab Group lands long-distance operator license The World Wide Web3 Event: The Moonshot Conference Opportunities Mobility Bolt to deploy $685,000 in Kenya for electric mobility Image source: Zikoko Memes Bolt is expanding it fleet of electric vehicles in Kenya. The taxi-hailing company currently has 40 electricity-powered bicycles (e-bikes) being used for deliveries in Nairobi. It plans to deploy at least KES100 million ($685,000) to include electric cars within the next 12 months. Electric partnerships: Per Nation, the company will work with electric car manufacturers and banks to enable the financing of electric vehicles. This coincides with Kenya’s renewed efforts to embrace e-mobility; the country has set up a task force to develop a roadmap and potential economic incentives like tax breaks to boost the adoption of electric mobility. Zoom out: As the worldwide automotive industry plans to transition toward electric vehicles, the Kenyan government has unveiled plans to roll out electric motorbikes across the country. Last week, Uber also launched an electric motorcycle in Kenya—One Electric— but is only available in Nairobi for now. Get a working card from Moniepoint With the Moniepoint personal banking app, you get reliable payments every time and a card that always works. Enjoy seamless payments powered by the infrastructure that 1.5 million businesses trust. Download the app. Funding Itana secures $2 million to build a digital free zone Image source: TechCabal Itana, formerly Talent City, has raised $2 million in a pre-seed round to build a digital city. The round was led by LocalGlobe, Amplo, Pronomos Capital, and Future Africa. Founded by ex-Andela and Flutterwave co-founder Iyinoluwa Aboyeji, Luqman Edu, and Coco Liu, Itana said the funding will be used to build a digital free zone in Africa. Sidebar: A digital free zone typically refers to a specific geographical area or region where various digital businesses are exempt from certain taxes, regulations, or restrictions. Itana says its other incentives include business visas, banking, capital repatriation, supportive legislation for businesses, and insulation from all effects of socio-economic instability in Nigeria. ICYMI: Last year, Itana launched a digital residency program for people to try out the e-governance system, global connectivity, and the promise of a strengthened digital economy in Africa. It also partnered with Binance and the Charter Cities Institute to build a 72,000-square-meter charter city to house 1,000 residents and 2,500 remote workers. The digital free zone will serve businesses that are mostly online without requiring them to have an extensive physical presence in the physical free zones in Lagos, Nigeria. Zoom out: Another initiative, Silicon Zanzibar, is also making its move to lure both local and international African innovators back to the continent. It does not have a snazzy digital persona like Itana or Afropolitan—another digital society—but it shows innovators are still trying to create a hub for innovation in Africa. Policy Betting firms in Kenya face additional taxes Image source: Zikoko Memes Kenya’s betting regulator, Betting Control and Licensing Board (BCLB), has proposed a new gambling tax in the country. Betting firms will now pay 15% of their gross gaming revenue and 1% monthly levy. This is in addition to existing requirement to withhold 20% of the winnings paid out to bet makers. Why? Betting is a lucrative industry in Kenya, and it looks like the more the government taxes the firms, the more money the betting firms make. Last year, the Kenya Revenue Authority gained about KES6.64 billion ($44 million) in excise taxes from the the KES88.5 billion ($605 million) bets Kenyans placed in 2022, up from KES5.1 ($34 million) billion gained in the previous year. Zoom out: The government is set to launch its own betting firm, National Lottery. It is expected to generate KES34.52 billion ($238 million) in taxes. The country will channel the bulk of the new gambling taxes to be channelled to the Sports Fund. Unlock new opportunities for your business Unlock new opportunities for your business with Vesicash! Seamlessly expand into emerging markets using our secure, all-in-one and cost-effective payment infrastructure. Contact Vesicash via our website www.vesicash.com or reach out to our dedicated team at info@vesicash.com Telecom Bayobab Group lands long-distance operator license Image source: TechCabal Bayobab, previously known as MTN GlobalConnect, has received regulatory approval in Nigeria for its National Long-Distance relationship (NLD) Operator License. What is an NLD licence? It is a licence that allows operators to provide long-distance voice and data services within Nigeria more accessible even in villages where there are little to no telecommunications infrastructure. Sidebar: In 2018, MTN Nigeria and Huawei commercially deployed a similar low-cost long-distance voice and mobile broadband services for remote local rural areas. Zoom out: The NLD license is a significant opportunity for the company to grow its business and contribute to the development of Nigeria’s digital economy. Crypto Tracker The World Wide Web3 Source: Coin Name Current Value Day Month Bitcoin $25,719 + 0.00% – 11.76% Ether $1,629 + 0.43% – 11.09% BNB $215 + 0.33% – 11.33% Cardano $0.25 + 0.23% – 11.71% * Data as of 12:22 AM WAT, September 7, 2023. Elevate your business with One Liquidity’s seamless integration. Choose from 10+ services to craft a custom solution. Join Obiex, Wewire, and others in providing trading, liquidity & compliance services. Start now with zero upfront fees. One integration. One solution. One Liquidity. Events The Moonshot Conference Early bird tickets are still selling out fast for Moonshot by TechCabal! If you’re an international fan eager to be part of this incredible event, the time has come for you to secure your
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How early-stage South African startups can survive the VC crunch
South African venture capital ecosystem experts explain how startups can survive the difficult environment startups exist in. With the VC funding crunch nearing its second year, African startups which have for the last six years enjoyed some access to venture capital, have had to adapt to a negatively charged environment. The lack of free-flowing VC capital, with its stringent growth expectations is not necessarily a bad thing, especially for founders looking to build businesses that will be robust enough to survive any funding environment. That’s the sentiment echoed by the ecosystem players TechCabal spoke to for this article. According to Clive Butkow, CEO of Johannesburg-based VC firm Kalon Ventures, this epoch is making founders focus on what they have always needed to focus on: sustainable growth. “You had a case where founders were raising capital, even when they could have bootstrapped their way to some significant traction,” Butkow told TechCabal. “ They ended up having to give away a huge chunk of the business because they had very limited leverage.” Butkow adds that instead of prematurely pursuing venture capital and falling under the “growth at all costs” spell, founders should rather consider bootstrapping as well as funding via the business’s revenue. The current funding environment, according to Butkow, is helping founders to execute their visions more independently, in the process building strong businesses in which they have decision-making and execution powers. Amina Patterson is the co-founder of Solve4x, a South Africa-based firm focused on helping corporates design programmes for early-stage startups and also led the operations of one of South Africa’s most prominent accelerators, AlphaCode. From her experience working with over sixty startups, most startups that embarked on the VC-raising journey were not ready for the hustles and bustles that came with the process. “I would say between 80% and 90% of startups I have worked with wanted to raise capital but what we saw after doing the requisite due diligence was that perhaps 10% of them, at most, were ready to raise that type of capital,” she told TechCabal. She adds that in most cases, founders failed to have important conversations before raising capital. These include conversations on equity dilution which, as the business grows and gets more investors, might lead to misalignment and eventually, arguments about shareholding. To address this lack of education on how venture capital works, Patterson believes that accelerators have a role to play. The VC funding raising culture had permeated the ecosystem so much that those conversations, important as they are, were secondary to the fundraising process. “Unfortunately with a lot of accelerators, they provide programmes for upskilling entrepreneurs and do some business development but rarely do they focus on getting to the nitty-gritty of what is in a term sheet. How does this link back to your existing financials and your go-to-market strategy? How does this link to your future ambitions of raising capital at a later date?” Patterson added. One accelerator trying to address this knowledge gap is the Johannesburg-based I’M IN Accelerator. The firm makes preseed investments in early-stage startups, with a particular focus on black-founded startups. According to Palesa Tabai, program lead at I’M IN, the accelerator has investor readiness frameworks in place which they use to gauge startups’ readiness to raise venture capital. She adds that with most startups trying to raise funding, they are unable to prove beyond reasonable doubt that their product will meet venture-level growth trajectories. That is where the readiness frameworks assist. “We assess a startup’s market, business and technology readiness level through working with our in-house experts in the due diligence process. This helps founders to really understand what they are getting themselves into if they decide to take VC investments and help them gauge whether they are ready or not,” Tabai told TechCabal. Tabai adds that through the due diligence process, most founders come to the realisation that it would be more practical and efficient to either bootstrap the business or pursue alternative funding avenues, including grant competitions. With the VC downturn showing no signs of slowing down, startup founders have to get themselves familiarised with the new operating environment. According to Will Green, co-founder of Co-Labs, African founders hold an advantage in that prior to the availability of venture capital, founders still built strong businesses with strong fundamentals. “Compared to the rest of the world, venture capital is a relatively new concept in Africa. We have founders who were building even prior to the VC rush,” Green told TechCabal. “I believe new-age founders can benefit extensively from the experiences of those founders who were building tech startups before the VC boom of recent years.” Green believes that like the dotcom bubble of yesteryears which saw the likes of Google, Apple and Amazon come out with stronger and more resilient business models, the current VC crunch will in retrospect see the emergence of such sustainable businesses on the continent. As the saying goes, pressure makes diamonds and at the moment, the African venture capital ecosystem is under a significant amount of pressure in the VC crunch. Contrary to 2021 when funding announcements were a daily occurrence, nowadays, layoffs, and shutdowns have become the daily occurrence. Through all this, most ecosystem experts TechCabal spoke to believe that this “market correction”, undesired as it is currently, will produce resistant entrepreneurs and companies which will stand the test of time in the future. Currently, there has to be a collective effort between founders, investors, and other stakeholders to ensure that the crunch does not swallow even the promising startups. The new batch of founders, used to using venture capital to achieve moonshot growth targets, have to familiarise themselves with the concept of building businesses whose unit economics make sense. Investors and accelerators have to play the role of providing reality checks for founders. Due diligence before writing checks can help founders, who are sometimes overtly confident in the capabilities of their startups, avoid giving away equity way too much equity way too early in the
Read More“Facebook’s contractor forced me to work alongside my rapist”
This story was contributed to TechCabal by Mukanzi Musanga and first appeared in Open Democracy Facebook’s former content moderation firm has been accused of shielding an employee who allegedly raped two colleagues and sacking one of his victims to protect the company’s reputation. Two former employees in Sama’s Kenyan office have told openDemocracy that managers fostered an unsafe work environment by ignoring or minimising their allegations of rape against one of their colleagues. The allegations, which have been reported to the police but are not part of any ongoing legal challenges, are the latest made against Sama by its former African employees. The US-based tech firm is being sued – along with Meta, which owns Facebook – in Nairobi for unlawful redundancy and blacklisting after laying off all 260 of its content moderators in Kenya in March, having ended its contract with Facebook. Hope Mandi, one of the women alleging rape, moved from South Africa to Nairobi in May 2021 after landing a job at Sama. In the same month, Mandi moved into an apartment complex on the Imara Daima estate. She says that weeks later, she was raped by a colleague who lived nearby and had come to her apartment in what appeared to be a friendly visit. Mandi said they were chatting when he first tried to kiss her and then raped her after she asked him to stop. Mandi said that after the man left: “My immediate thought was to report him to Sama. The first person I confided in was a colleague, who informed the management of the assault.” She was taken to a hospital chosen by Sama’s in-house counselor. Once there, the counselor handled all the paperwork. Mandi claims Sama was trying to control everything and keep a lid on the rape. Having only recently moved to Kenya, Mandi assumed Sama would assist her in filing a local police report. But she says a senior manager instead told her not to involve police. “Afterwards, there was no further action from the company. They went quiet except for the calls from the counselor, who repeatedly tried to persuade me to forgive him,” she said. In one instance, Mandi told openDemocracy, she was on the phone with the counselor when, without warning, they added her alleged rapist to the call so that he could apologise – despite her having already refused to meet with him face-to-face. Mandi also feels she was compelled to suppress her emotional distress at work and continue to sift through Facebook content “where people were being sexually violated”, while her own assailant sat a short distance away. “He attacked and raped me but faced no consequences despite me reporting him to Sama,” she said. Sama’s global service delivery vice-president, Annepeace Alwala, told openDemocracy that the organisation provides “a safe and respectful environment” for employees and treats all allegations of misconduct seriously. Alwala alleges that Mandi withdrew the sexual assault complaint that she initially provided. “We can state that in this first instance, which took place outside of work, the only witness recanted their statement, and therefore we had no way to action any allegations of wrongdoing.” Mandi refutes this, claiming she never withdrew her statement. “That is such a lie,” she said. A second attack Another former Sama employee told openDemocracy that, just over a year after Mandi’s alleged attack, she was assaulted by the same man. Zani Mazwai also worked in Sama’s Kenya office and moved into Mandi’s apartment building in August 2022. Just after 4 a.m. on 11 September, Mazwai was awoken by a call from the man, who still lived nearby. The man said he needed Mazwai’s help and came to her door. Although half asleep, she was concerned about him and let him in. She says he pounced on her and raped her, then fled. “I was in so much shock that I couldn’t process what had just happened,” said Mazwai. “I was able to call Mandi, who immediately came over and took me to her apartment.” Mandi took Mazwai, who was “crying and distraught”, to the hospital for a medical examination. Mazwai says officials at Sama wanted to handle the alleged attack internally through a disciplinary hearing for the colleague she said attacked her. She claims they told her she’d need to be in the same room as him to “give an account of what happened.” “I felt uncomfortable about this, so I decided to file a police report instead. I also told my whole family about it,” she said. “The senior officials were not happy that I filed charges because they wanted to handle it internally.” Mandi then revealed to Mazwai that the man had raped her too, and also recorded a formal statement with the police. Two months later, in November, Mandi said she was falsely accused of “coming to work drunk and unable to walk or talk.” She was fired the following month and given a severance payment of 50,000 Kenyan shillings ($350) earlier this year. “That was less than a month’s salary,” she said. “I was so angry about everything at that time so I didn’t dispute it. I didn’t want anything to do with Sama.” When asked about this, Alwala from Sama declined to respond, citing a need to protect “employees’ privacy and confidentiality”. Mandi believes Sama got rid of her to protect their image. “Firing me was an attempt to cover up the fact that they had sheltered a serial rapist, who had previously assaulted me, then done the same to another moderator. This looked bad for them,” she said. Meanwhile, Mazwai was given some time off work after her assault but was soon asked to go back, and her request to work from home declined. In March, she was among the 260 content moderators let go by Sama and is now a party to the lawsuit alleging unlawful redundancy and blacklisting. Alwala stated that the company suspended and sacked the alleged assailant after becoming aware of Mazwai’s police report. Getting justice After Mazwai filed a police report, an arrest warrant was issued for
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👨🏿🚀TechCabal Daily-Leatherback won’t fold
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning It is Africa Climate Week, so Kenyan President Ruto has been using an all-electric fleet for his motorcade. Even his security team traded in their internal combustion engine motorcycles for electric ones from local EV upstarts like Roam, Ampersand, Spiro, and KiriEVs. But will they keep driving green after the summit lights dim? In today’s edition Leatherback denies rumours of financial losses Nigeria to clear $10 billion FX backlog in two weeks Bitcoin nonprofit acquires Qala Amazon and Vodafone team up to challenge Starlink The World Wide Web3 Event: The Moonshot Conference Opportunities Fintech Leatherback denies rumours of financial losses Image source: Zikoko Memes Leatherback, a UK-based cross-border payments startup, has denied rumours of financial losses to SDQ Facilitators. The company says that its bank accounts are fully functional and that all client funds are safe. What are the rumours? The rumours, which have been circulating online, allege that Leatherback lost money to SDQ Facilitators, a Nigerian currency trading company and that transactions with SDQ Facilitators had exposed the fintech to an ongoing investigation that has left its bank accounts frozen worldwide. However, Leatherback CEO Toheeb Ibrahim has denied the rumours and said “It’s terrible and laughable.” Ibrahim claims that Leatherback has no relationship with SDQ Facilitators and adds that Leatherback’s accounts are fully functional. Zoom out: The rumours about Leatherback are circulating after we exclusively reported that Float, a fintech company originally founded to help startups with cashflow management, dabbled into currency trading instead. In a series of transactions that eventually went wrong, the startup lost money and could not pay at least $6 million in client deposits. Get a working card from Moniepoint With the Moniepoint personal banking app, you get reliable payments every time and a card that always works. Enjoy seamless payments powered by the infrastructure that 1.5 million businesses trust. Download the app. Banking Nigeria to clear $10 billion FX backlog in two weeks Image source: Zikoko Memes Nigeria is rolling up its sleeves to tackle a multi-billion dollar backlog. Nigeria’s acting Central Bank Governor, Ade Shonubi,has announced that the central bank will clear the backlog of foreign exchange (FX) demand in two weeks. What is FX backlog? FX backlog is when investors and importers still need foreign currency that they haven’t gotten yet. Currently, a backlog of about $10 billion has been weighing on the economy. Shonubi said that the CBN will be working with local banks to fix the problem as they currently contribute three times more FX than the central bank. Zoom out: The backlog of foreign exchange demands has reduced investor confidence in Nigeria, with rightful fears that investors might not be able to recoup any profits they make in Nigeria. Acquisition Bitcoin nonprofit acquires Qala Image source: TechCabal ₿trust, the non-profit company formed by Block CEO Jack Dorsey and American rapper and entertainment mogul Shawn Carter, popularly known as Jay-Z, has acquired Qala, an organisation that trains African Bitcoin and Lightning engineers. More about Qala: The company sources, trains, and matches African software developers with leading Bitcoin companies from across the world. With its latest acquisition by ₿trust, Qala has the needed resources to build the next generation of African Bitcoin talent pipeline. Unlock new opportunities for your business Unlock new opportunities for your business with Vesicash! Seamlessly expand into emerging markets using our secure, all-in-one and cost-effective payment infrastructure. Contact Vesicash via our website www.vesicash.com or reach out to our dedicated team at info@vesicash.com Internet Amazon and Vodafone team up to challenge Starlink Image source: TechCabal Starlink has gotten a new competitor. Yesterday, Amazon and Vodafone teamed up to bring 4G/5G to more customers in Europe and Africa using Amazon’s Project Kuiper’s satellite network. What is Project Kuiper? It is an initiative to bring fast, affordable broadband to unserved and underserved communities around the world. Project Kuiper claims to connect cellular antennas in remote areas to Vodafone and Vodacom’s core telecom networks, allowing them to offer 4G/5G services in more locations without the need for expensive fibre or fixed wireless links. Amazon expects to begin beta testing Project Kuiper services with select customers by the end of 2024, and Vodafone and Vodacom plan to participate in this testing as part of their collaboration. A competitive landscape: Starlink has faced regulatory challenges in some African countries, making Project Kuiper’s collaboration timely and potentially advantageous. In August, the Senegalese government arrested people selling Starlink in the country after shutting down the internet for the second time in two months, citing violations of the country’s telecommunications laws. Last week, the Zimbabwean government warned that it is illegal to use or resell Starlink equipment in the country. Unless they secure requisite licenses, they are breaking the law by using and providing the service. Crypto Tracker The World Wide Web3 Source: Coin Name Current Value Day Month Bitcoin $25,732 + 0.01% – 11.38% Ether $1,631 + 0.52% – 11.07% BNB $214 – 0.20% – 11.69% Cardano $0.25 + 0.81% – 12.27% * Data as of 10:25 PM WAT, September 5, 2023. Elevate your business with One Liquidity’s seamless integration. Choose from 10+ services to craft a custom solution. Join Obiex, Wewire, and others in providing trading, liquidity & compliance services. Start now with zero upfront fees. One integration. One solution. One Liquidity. Events The Moonshot Conference Early bird tickets are still selling out fast for Moonshot by TechCabal! If you’re an international fan eager to be part of this incredible event, the time has come for you to secure your seat and get an exclusive discount. Be part of the gathering of the most audacious players in Africa’s tech ecosystem and get your early birds ticket now. Get your ticket today. Opportuinities Want to build a successful tech business? Sign up for this 5-week training programme and gain access to resources worth over $15,000. Apply by September 10. The SaaS Accelerator Programme: Africa 2023 has opened applications for
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Light on details, CBN governor claims FX backlog will be cleared in two weeks
Nigeria’s apex bank. Image Source: CBN Mr. Ade Shonubi, the acting governor of the Central Bank of Nigeria (CBN), told reporters at an event in Lagos that the apex bank will clear the backlog of foreign exchange (FX) demands in two weeks. At a press conference in Lagos on Monday, Mr. Ade Shonubi, the acting governor of the CBN, said that as a result of a partnership between local banks and the CBN, the current backlog of foreign exchange (FX) demand would be cleared in two weeks—estimated at $10 billion. “The local banks have been working with the Central Bank on various structures to clear [the backlog],” Shonubi said. The FX backlog refers to the foreign exchange demand by investors and importers that has not been met. Shonubi claimed that “a large amount” of foreign exchange demand has already been met by Nigerian banks, adding that the banks contribute three times more FX than the central bank. This appears to be consistent with the CBN’s recent transition from a regular player in the foreign exchange market to receding into a regulatory background. He added that the bank’s involvement in the FX market was a result of the restructuring with the banks and that the backlog would be cleared in “the next one or two weeks.” In recent weeks, the CBN has tried different approaches to stabilising the FX rate and clearing a backlog of demand requests for the greenback. The CBN had previously tried to use a $3 billion loan secured by the Nigerian National Petroleum Corporation to inject liquidity into the foreign exchange market but the plan fell through as investors developed cold feet, leaving the African Export-Import (Afrexim) Bank as the sole provider. Clearing the backlog of FX demand would boost investor confidence in Nigeria and bring stability to the FX rate, which is very important to investors. After floating the Naira, the official market rate quickly shot up from $1/₦462 to $1/₦700 and as high as ₦920 on the parallel market. If an investor took a loan at the former rate, they would have to pay back a higher amount in Naira to repay the same amount in dollars. This rapid devaluation has led to severe economic difficulties and is hitting startups that raised money in dollars hard, with some founders saying that most businesses might shut down as a result. As Africa’s struggling currencies hinder growth, should startups fundraise in local currencies? Shonubi also said that the backlog did not affect the CBN’s ability to make foreign currency available to banks. Regarding media reports that the CBN owed JP Morgan $7 billion, Shonubi clarified that the CBN did not have any outstanding balance with JP Morgan, calling claims of a $7 billion debt “misinformation”. The backlog of foreign exchange demands has reduced investor confidence in Nigeria, with rightful fears that investors might not be able to recoup any profits they make in Nigeria. With as much as $812 million in revenue stuck in Nigeria, foreign airlines have arguably been the most affected by the backlog of demands. But in recent weeks, many airlines have begun to withdraw their funds from Nigeria, a sign of the progress the CBN has made. According to the CBN, other foreign investors have also been able to repatriate over $5 billion worth of dividends from the country between October 2022 and March 2023. CBN floats the Naira as banks offer $1 for N700
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3 ways to check 2023 NSFAS status using ID number
The NSFAS is instrumental in offering financial support to South African students who are pursuing further education. If you’ve applied for NSFAS 2023 funding and want to check the status of your application, you can do so easily using your ID number. In this article, we’ll guide you through the steps to check your NSFAS status. 1. Ensure you have the needed data Before you begin, make sure you have your South African ID number and your NSFAS application reference number ready. You will need both of these to check your status. Step 2: Visit the NSFAS Website Open your web browser and go to the NSFAS website (https://www.nsfas.org.za). This is the official platform for all NSFAS-related services. Step 3: Navigate to the MyNSFAS portal and log in On the NSFAS homepage, locate and click on the “MyNSFAS” tab or link. This will take you to the MyNSFAS portal, where you can access various services related to your NSFAS application. Then since you already likely have an account on the MyNSFAS portal, log in using your credentials. Step 5: Access your NSFAS profile using your ID Once you’re logged in, you’ll have access to your NSFAS profile. Here, you can view the status of your application, among other information. Step 6: Check your NSFAS status Look for the option that allows you to check your application status. This may be labelled as “Application Status” or something similar. Click on it. Step 7: Enter your ID number You’ll be prompted to enter your South African ID number. Ensure that you input it correctly. Step 8: Submit your ID number for NSFAS status check After entering your ID number, click the “Submit” or “Check Status” button. The system will process your request and display your NSFAS application status on the screen. Step 9: Review your NSFAS status after you check with ID number Your NSFAS status will be presented on the screen. It will typically indicate whether your application is approved, pending, or rejected. If you encounter any issues or need further information, the portal will provide contact details for NSFAS support. Step 10: Save or print If you want to keep a record of your NSFAS status, consider saving or printing the page for future reference. Other ways to check your NSFAS status using your ID number While the above option most likely works for most applicants, there may be website downtime sometimes. In such instances you can use the following ways: You can check your NSFAS status on WhatsApp using your ID number. Just message the number +2785198006, and follow the prompts. You can also check using USSD. Simply dial *120*67327# Final thoughts on checking NSFAS status using your ID number Checking your NSFAS status using your ID number is a straightforward process that ensures you stay updated on the progress of your financial aid application. Remember to check your status regularly and take any necessary actions to secure your funding for your education.
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What it takes to build and scale a business in Africa
This article was contributed to TechCabal by Sapna Shah, partner at Novastar Ventures. Earlier this year, we hosted our annual investor advisory committee at our Nairobi office. We took the opportunity to visit some of our portfolio and pipeline companies and the customers they serve. For a few years now, with COVID-related travel restrictions, experiencing this first hand hasn’t been easy for our investors and the only way they could appreciate the realities on the ground was via reports and on screen. The visit reminded me of a few themes that we have seen play out with our portfolio companies and some of the lessons we have learnt along the way about what it takes to successfully build and scale businesses in Africa. First, the evolution of our market is such that if you’re an entrepreneurial team that wants to move and scale fast, you’re going to need to build many parts of the value chain yourself. Each of our companies has ended up doing things they could never have imagined in adjacent parts of their business model because plug-and-play tech solutions that address a single problem rarely work in contexts where so many value chains are broken. To successfully scale, companies often need to build full stack, end-to-end solutions. International investors who aren’t familiar with the continent might look at this and say: “You need to focus.” But until our markets are more mature, doing one narrow thing isn’t going to work at scale. The good news is, if the entrepreneurs can figure this out, they’ve inevitably built a strong moat around their company, with high barriers to entry in a market where competition still isn’t too high. Take NewGlobe, a company transforming learning outcomes for children. When it was opening a school a week in Kenya, no construction company could keep up and it had little choice but to build its own schools. Or BasiGo, Africa’s leading electric bus platform, that has to build electric bus charging and service infrastructure and simultaneously provide a pay-as-you-drive financing option, all in order to revolutionise the public transport sector. Or TradeDepot, which started out thinking it could just build software to connect FMCGs and informal retailers but soon learnt that it had to handle logistics as well—everything from warehousing to deliveries—so the customer could be effectively serviced. Building end-to-end solutions takes more time, more capital and is enormously complex operationally. It means that when entrepreneurs come to pitch to us, we know if they say they’ll need $5 million for the next stage of building their business, they will likely end up needing much more. And it will take them a longer time to get there. Managing the larger teams this operational complexity demands is tough. At a middle management and leadership level it requires a lot more multi-skilled generalists. At a junior level, it’s the sheer power of numbers. And while there’s no shortage of people to hire in, let’s say, sales, the success of the business comes from how you then manage the team and inculcate the culture. That leads me to my second theme: culture. With every passing year, it’s a topic I become more passionate about. Good systems make a big difference when managing a fast-growing organisation, whether it’s simple checklists, automation or training. But we know the softer side of the culture is equally, if not more, important. We’re increasingly asking our entrepreneurs: how much time are you spending on building culture? What are you doing around hiring, retention, communication? A great example of this working is pan-African healthtech company, mPharma, where Greg Rockson, CEO, has instilled an open feedback culture, creating loyalty among his teams, despite having grown very rapidly into nine countries in a few short years. When culture goes wrong it’s horrible to watch. A few years ago, one of our portfolio companies scaled its sales team rapidly, but without either the systems to manage the workforce or the culture to create coherence, everything just fell apart. The sales team in our markets is crucial. Sales here doesn’t happen via an app; most transactions remain face-to-face sales—that’s how most customers still prefer to buy. That means companies need sales teams representing them in communities, and ultimately driving sales. That’s quite different to many Western markets, where customers don’t like this sort of high-touch approach. In markets where people have less disposable income, a high level of trust in the product or service they are purchasing is required. If it’s a Penda clinic, and I’m going to spend $10 that I don’t have, I need to trust I’ll get the service I need. If I am investing in a bag of fertiliser from iProcure, I need to know the product will work. This trust is built into transactions with sales representatives in the community. The brand and culture lives in these people, and it is what attracts new recruits to the company too. Finally, co-founder relationships are key. Similar to our VC peers in other parts of the world, we prefer to invest in co-founding teams because of the thought partnership and support co-founders can provide each other. But we’re more pragmatic now: we know that co-founder relationships might not last forever. If and when there is a breakdown, it’s not only about being there for the founders, but also learning how to spot the warning signs early. You might start to see co-founders going off and focusing on a particular aspect of the business, or doing different things on their own, or connecting less with one another than they used to. These signs can be challenging to discern, but over our years of investment, we are learning to spot the red flags early. We founded Novastar in 2014 to power an entrepreneurial revolution that transforms African markets and sectors, creating lasting value for the many, not just the few; for people and the planet—for good. Fast forward nearly a decade and VC funding on the continent has grown an astonishing 26x, despite significant
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Habari Pay’s profits demonstrate GTCO’s bet on retail banking
According to GTCO’s half-year financial statements, Habari Pay reported a profit of ₦1.3 billion after tax. A breakdown of GTCO’s operating segments shows retail banking is its second-biggest revenue-generating segment. Habari Pay, the fintech arm of Guaranty Trust Holding Company (GTCO), posted profits of ₦1.3 billion in the first half of 2023. That’s a 312% jump compared to the previous year, according to GTCO’s half-year financial statements. Habari Pay’s growth shows promising adoption of the bank’s digital payments business as it looks to bolster its hold on the fintech sector. The fintech arm closed June 2023 with a cash balance of ₦3.6 billion. GTCO launched Habari in 2018 as a super-app that provides everything from streaming content to an e-commerce marketplace. The bank, with its ecosystem of small business customers, wanted to create a marketplace hub to support vendors across different industries. Though it was created by one of Nigeria’s biggest banks, it didn’t focus on providing banking services, and it struggled to gain traction among digital users. But in 2020, the lender announced its broader push into digital payments with a corporate restructuring that would make Habari a separate company wholly owned by the bank. In June 2021, Guaranty Trust Bank transitioned into a holding company from its standalone commercial banking structure. It made Habari Pay a standalone business offering payments, a marketplace, and small business services. HabariPay’s flagship product, Squad, combines a payment gateway and e-commerce platform with a Point-of-Sale business. Habari Pay recorded a profit-after-tax of ₦836 million last year, according to GTCO’s 2022 financial report. The two-year-old Habari Pay competes with established payment providers like eTranzact and Moniepoint. eTranzact profits rose to ₦1.01 billion in the first half of 2023—representing a 149% increase compared to the previous year. TechCabal Insights projects that the transaction value of the Nigerian digital payments market will reach N580 billion by the end of the year. Retail banking is GTCO’s second-largest revenue-generating segment GTBank, the holding company’s commercial bank, reports performance across six segments—corporate banking, commercial banking, business banking, retail banking, SME banking, and public sector banking. Per the financial statements, the corporate banking segment reported ₦118.5 billion in revenue, followed by retail banking with ₦72.8 billion, representing 67.6% of the revenue and 20.5%, respectively. Similarly, the corporate banking segment declared a profit-after-tax of ₦47.9 billion, while the retail banking segment recorded ₦19.1 billion. One thing is clear: GTCO will continue to bet on its market relevance to compete with other large banks and fintechs such as Palmpay, Kuda, and Fairmoney. With the entrance of Moniepoint, formerly TeamApt, the retail banking market is expected to become more competitive. Have you got your tickets to TechCabal’s Moonshot Conference? Click here to do so now!
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Jay-Z and Jack Dorsey-funded Bitcoin nonprofit acquires Qala
The Jay-Z and Jack Dorsey-funded Bitcoin non-profit acquires Qala, in an undisclosed deal to support next generation of Open-Source Bitcoin Developers ₿trust, the non-profit company formed by Block CEO Jack Dorsey and American rapper and entertainment mogul Shawn Carter, popularly known as Jay-Z, has acquired Qala, an organisation that trains African Bitcoin and Lightning engineers. Following this acquisition, Qala has rebranded into ₿trust Builders Programme. ₿trust, a 500BTC ($21.5million) endowment fund was formed in February 2021 to “fund #Bitcoin development, initially focused on teams in Africa & India.” Qala, founded in 2021, sources, trains, and matches African software developers with leading Bitcoin companies from across the world. With its latest acquisition by ₿trust, Qala has the needed resources to build the next generation of African Bitcoin talent pipeline. Speaking on the acquisition, Bernard Parah, Co-Founder and Director of Qala, said their goal was to build African engineers with deep understanding of Bitcoin’s capabilitites, and that the aquisition further strengthens the goal. It costs up to $200 million a year to keep Bitcoin’s code maintained and functioning. Several developers around the world write and maintain code for the Bitcoin blockchain, however, African developers make up a small fraction of these developers. Since its launch, Qala has added more than 100 community members across seven countries. “Qala is a programme designed to train the next generation of Bitcoin and Lightning Network developers from across the African continent. The goal is to find, upskill and match African developers with Bitcoin companies from around the globe,” a statement on the website reads.
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