Cashlinq wants to foster financial inclusion in Zimbabwe. Here is how
A conversation with Tendai Mugovi, co-founder of Zimbabwean fintech startup Cashliq which offers banking as-a-service products. He speaks on the origins of the startup, challenges they have faced in its operations and how they have working their way through the challenges. Cashlinq is a Zimbabwean fintech startup that offers core banking services to banks and other financial institutions including telcos. The startup hopes that by offering such services, it help facilitate financial inclusion across the country as well as its other markets which include Zambia. TechCabal caught up with Tendai Mugovi, co-founder of Cashlinq, to learn more about its product offering, challenges it has faced, as well as future growth ambitions. Tell us about Cashlinq and the problem the startup is trying to solve. Tendai Mugovi: The idea for Cashliq started when I and two other co-founders were working as management consultants with one of the leading consultancy firms in the country. We were doing consultancy work around digital transformation products, and go-to-market strategies around those. While working there, the main challenge was having to come up with a brilliant project idea, seeing it approved by the board and then seeing it falter at the implementation stage. Reasons for them not being implemented were mostly around the fact that the core banking systems were either too expensive to use or the infrastructure did not really support the project. After seeing this problem across the board in the banking sector, not only with local banks but also international ones, we realised that it was worth trying to solve. We then came together to build a core banking platform from the ground up. In short, Cashlinq aims to provide African financial institutions with a flexible and affordable banking solution so that they address the unique opportunities and challenges in our continent. Explain exactly how Cashlinq works. TM: It is a suite of applications and currently, we have about 18 modules. So we have core banking which comprises web-based and cloud-based applications. This is the application where your account and wallets sit. It does all your bookkeeping and integration with the national banking systems so that wallet holders can be able to send and receive money and also do bill payments. We also have channel applications where we have internet banking, mobile banking as well as USSD and WhatsApp applications. Basically, it’s a suite of web and mobile applications that are used to run like a digital bank. What challenges have you faced in trying to solve this problem? TM: I think the main challenge has been proving ourselves. The organisations were are trying to service are big with billions of dollars in revenue so as a fairly small outfit, having them trust us is a big ask. But we have been adding more clients so thats great, though that barrier to entry still exists. Our product is a core banking application which is the backbone of any financial institution soo because of that, there is obviously a lot of due diligence needed before you can onboard a new service. How we’ve been traversing it is that with our first client, which happened to be a mobile network operator, we initially offered a free trial because we were quite confident that if they genuinely wanted a solution, ours was that. So we had them run our solution for two months and that trial was successful because we went on to sign contracts with them. Additionally, we have also been pushing for media coverage so we can build strong brand equity and I think that has also gone a long way in helping us establish ourselves. How much traction has Cashlinq garnered so far? TM: We are now operational in Zimbabwe and Zambia and will soon deploy our solution in Mozambique and Malawi. This is actually by extension of one of our Zambian clients who is also present in those countries. In terms of client base, we currently have four onboarded including one of the three telcos in Zimbabwe. We also have two banks onboarded. In Zambia, we have a neobank that we are also working with. We also have two pilots with one of the biggest brands here in Zim for a new wallet. What role is Cashlinq playing in trying to facilitate access to financial services not only in Zimbabwe but also in other markets? TM: I think in many of these markets, there are a lot of economic fundamentals that are not in place. This means that if core banking services are not available, then the main business of banking is also not available. In our markets, banks normally work by getting deposits, investing them in the market, giving out loans and getting interest from those. They also charge transaction fees. But in other countries like New Zealand, there are zero transaction fees, which is impossible in an economy like ours because the only avenue for banks to make money is to charge transaction fees which have become high as the cost of doing business goes up. That further demotivates people from getting into the financial system, to begin with. So with our solution, knowing the fundamentals of the market and being very open in terms of our pricing modules, I think we offer relatively affordable services compared to what’s on the market. We are providing an opportunity for banks to include a lot of people who wouldn’t otherwise afford banking services. Also with our modules, banks can pick and choose what they want to pay for. For example, a bank can pay for our remittance banking module and not an agent banking module. That flexibility saves them a lot because they don’t have to pay for services they are not going to use. It allows them to be more innovative to the realities of the market. What’s next for Cashlinq? TM: We definitely want to scale across many African countries and that’s going to require some fundraising so that’s what we want to work on next. Editor’s note: Interview
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👨🏿🚀TechCabal Daily – Break in transmission
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning We might have a date for the Muskerberg event: August 26. Or at least that’s the date Mark Zuckerberg suggested to Elon Musk who has been tweeting about how he’s lifting weights in preparation for the fight. Don’t hold your breath though, Zuck says Musk—who tweeted that he, Musk, might need surgery soon—is yet to confirm. In today’s edition Internet slows in SA Kenya seizes Worldcoin’s machine Meet the African startups in Y Combinator S23 Autocheck expands to SA The World Wide Web3 Event: The Moonshot Conference Opportunities Internet South Africa’s internet slows after undersea cables break This week, South Africans will have to deal with load shedding and slow internet speeds. On Sunday, two undersea cables that connect South Africa to the global network broke. The cables are the West African Cable System (WACS) and the South Atlantic 3 (SAT–3). What caused the break? Using a tool called the Coherent Optical Time Domain Reflectometer, the distance measured showed that the break was caused by a rockfall in the Congo Canyon. The break also happened between the Democratic Republic of Congo (DRC) and Cameroon, The SAT-3 break happened on Sunday morning, while the WACS cut out later that evening. The Leon Thevenin, Orange Marine Repairs are underway through a ship, Leon Thevenin, which was designed for laying cables and has been dispatched to carry out repairs in deep water. MarineTraffic reports that the vessel arrived in Mombasa, Kenya, yesterday, completing a 10-day journey from Cape Town. Zoom out: South Africans have experienced the frustration of sluggish internet speeds before, as the country faced disruptions in mobile and landline data speeds across the nation due to outages in the two undersea cables during the lockdown period. Secure payments with Monnify Monnify has simplified how businesses accept payments to enable growth. We are trusted by Piggyvest, Buypower, Wakanow, Fairmoney, Cowrywise, and over 10,000 Nigerian businesses. Get your Monnify account today here. AI/Crypto Kenya seizes Worldcoin’s machine Kenya isn’t letting up on Worldcoin. Yesterday, Kenyan law enforcement officials raided a warehouse situated on Mombasa Road, Nairobi, and seized machines that they suspect contained data collected by the crypto project Worldcoin. They shipped the equipment to the directorate of criminal investigations headquarters. ICYMI: Until a few days ago, about 350,000 Kenyan residents queued up to have their eyes scanned in exchange for 25 Worldcoin tokens (worth $50), a token named after the Worldcoin project. The project is focused on developing a World ID ecosystem that uses iris scans to verify that users trying to access financial services are human beings and not robots. Worldcoin scanning in Kenya. Image source: Odhiambo Ogola So what happened? Privacy experts stepped in and raised some serious red flags. They’re worried that these enthusiastic individuals might be unknowingly trading away their precious eye data without fully grasping the potential consequences. They also worried that the scanned irises might get into the wrong hands. Last week, Kenya’s Interior Cabinet Secretary of Kenya, Kithure Kindiki, suspended the firm’s activities. Is Worldcoin illegal? TechCabal has confirmed that the parent company of the project, Tools for Humanity, is actually a registered data processor in Kenya. However, Immaculate Kassait, the Data Commissioner of the Data protection office which had previously registered Worldcoin’s parent company (Tools for Humanity) as a data processor, said Tools for Humanity failed to disclose its true intentions during registration. So far, nothing much is known about criminal investigations into the firm’s activities, or if there even is one, but it is still suspended in Kenya. Discover Trends with Smile Identity Download the Smile ID State of KYC in Africa Report on the latest trends in identity verification across Africa, highlighting the power of biometric verification and document verification in combating fraud. It is a must-read for any business looking to acquire users across Africa and keep up with fraud trends. Startups Meet the startups in Y Combinator Summer 23 Image source: Y Combinator Y Combinator has published three African startups selected for the Y Combinator Summer 2023 class. This includes Vault Pay, a payments infrastructure company from DRC Congo that helps telcos to directly distribute banking services, Nigeria’s food delivery startup ChowCentral, and Rwanda’s health insurance startup Eden Care. Y Combinator is taking a few steps back: This year’s selection is much fewer than the last. In 2022, eight African startups got accepted into Y Combinator’s summer batch—six of which were fintech, and the other two were food delivery startups. YC’s Summer 2021 batch had 15 African startups, while the Winter 2021 batch had 24 startups from the continent. African startups for this year’s Y Combinator’s summer class cohort signal that the accelerator is focusing on narrower bets and is thinking deeply about the companies it backs. But at least, Y Combinator is still optimistic about food delivery in Africa. Expansions Autochek launches financing arm in South Africa Autochek executives, including founder Etop Ikpe (middle) in 2021 Nigerian automotive tech startup, Autochek, is working towards making car ownership and transportation more attainable and cost-effective across Africa. As part of Autochek’s efforts, the company has established its financial services arm in South Africa to offer various vehicle financing options to individuals and businesses across the entire African continent. A little backstory: After Autochek’s successful launch in 2020, the company announced the launch of its financial arm, Autochek Financial Services, to double down on vehicle financing in 2022. Vehicle financing is when you borrow money to buy a car and pay it back in instalments over time. Following its inception, Autochek has grown by acquiring automotive marketing ventures in multiple African countries, including Nigeria and Ghana. The company has collaborated with over 70 financial institutions and over 2,000 dealerships, facilitating the handling of over 100,000 car loan applications. Revenue generation: Autochek earns revenue by partnering with dealerships, finance firms, insurance providers, vehicle service centers, and tracking companies. Its financial services division also gains from various income sources,
Read MoreDRC Congo’s Vault Pay is the third African startup in Y Combinator’s Summer 2023 batch
Vault Pay, a payments infrastructure company, has been selected for the Y Combinator Summer 2023 class, making it the third African startup selected for the cohort. Vault Pay, a payments infrastructure company from DRC Congo, is the third African startup selected for the Y Combinator’s 2023 summer class. The payments company joins Nigeria’s food delivery startup ChowCentral and Rwanda’s Eden Care in this year’s cohort. Per a statement published on Y Combinator’s website, DRC-based Vault Pay is building core payments infrastructure for Central Africa. The startup was founded in 2023 by Ntambwa Basambombo and Christel Ilaka. With its infrastructure, the startup offers instant payments, convenient banking services, and personalized solutions delivered through telcos’ networks. According to its founders, Vault Pay aims to “enable seamless integration and unprecedented opportunities by empowering telcos to directly distribute banking services.” Challenges with electricity and internet infrastructure have made financial inclusion a problem. According to the IMF, key inclusion metrics such as account ownership at a financial institution, ownership of debit or credit cards, or borrowing from a financial institution in the region are among the lowest in Africa. Y Combinator is scaling down on African startups The selection of three African startups for this year’s Y Combinator’s summer class cohort signals a significant shift in the accelerator’s bet on the African tech ecosystem. In 2022, eight African startups got accepted into Y Combinator’s summer batch—six of which were fintechs, and the other two were food delivery startups. Last week, TechCabal reported that Y Combinator is bullish on food delivery in Africa. YC’s summer 2021 batch had 15 African startups, while the Winter 2021 batch had 24 startups from the continent. It is worth noting that the size of each YC cohort has also reduced since 2021, and this overall reduction suggests that the accelerator is focusing on narrower bets and is thinking deeply about the companies it backs. *This is a developing story
Read MoreKenya police raid Worldcoin warehouse and confiscate equipment
Kenyan law enforcement officials raided a warehouse belonging to Worldcoin in Nairobi, seizing equipment amid an ongoing investigation into the company’s operations and data collection practices. Kenyan law enforcement officials seized machines that they suspect contained data collected by Worldcoin from a warehouse situated on Mombasa Road, Nairobi. According to Capital News, the team transported this equipment to the Directorate of Criminal Investigations headquarters for further analysis. It comes after the Kenyan government suspended Worldcoin’s operations and began investigating the company. Worldcoin had been scanning the irises of Kenyan residents, in exchange for 25 World tokens. But after privacy experts raised concerns that sensitive data gathered from scanning a person’s iris might get into the wrong hands, the Interior Cabinet Secretary Kithure Kindiki suspended the firm’s activities. It also increased the government’s scrutiny of the company. The Worldcoin (WLD) token is eponymously named after the project Worldcoin. The project is focused on developing a World ID ecosystem using iris scans to verify the identity of users accessing financial services. World ID ensures that individuals using these services are human beings and not automated robots. The Worldcoin project is under the leadership of an organization known as “Tools for Humanity.” This organization was co-founded by Sam Altman, the founder of Open AI. Notably, the project has attracted investments from prominent venture capital firms, including Andreessen Horowitz’s crypto arm, a16z. Altman, who founded Open AI, which built chat bot ChatGPT, says he hopes the initiative will help confirm if someone is a human or a robot. Worldcoin says it chose Kenya as the first African country to launch the platform because of the already booming tech space, and the more than four million Kenyans who are already trading in crypto. Per the report, Immaculate Kassait, the Data Commissioner of the Data protection office which had previously registered Worldcoin’s parent company (Tools for Humanity) as a data processor, said Tools for Humanity failed to disclose its true intentions during registration.
Read MoreBuguard raises $500k in seed round to fund growth
Egypt-based cybersecurity startup Buguard has raised a $500,000 Seed funding round to protect clients against dark web cyber attacks and fund expansion plans. Buguard, an Egypt-based cybersecurity firm, has raised $500,000 in seed round. The funding round was led by A15, the leading MENA venture capital firm, with participation from angel investors. Buguard will use the funds to grow its team, focusing on product, sales, and channel partnerships. Founded by Youssef Mohamed In 2021, Buguard offers offensive security services that protect its clients against dark web cyber attacks—including penetration testing and vulnerability assessment, phishing simulation, compromise assessment, threat intelligence and red teaming. Youssef Mohamed, Founder and Chief Technology Officer of Buguard, while speaking on the raise said: “We are delighted to announce our fundraise, and I thank A15 for its great support. The world of dark web cyber threats is very real, dynamic and growing. Any company can be a victim and one must be prepared. Our team at Buguard is hand-picked and includes some of the world’s leading security researchers and engineers, coupled with a subscription-based, SaaS product—Dark Atlas—that goes broader and deeper than existing alternative solutions. Remote working responsible for surge in cybersecurity threats in Africa, according to report Africa has not been immune to the surge in global cyber attacks. As of February 2023, approximately 90% of African businesses were operating without cybersecurity protocols in place, making them increasingly vulnerable to cyber threats like hacking, phishing and malware attacks. Per data from IBM, the average data breach cost is $4.35 million—an all-time high. Use of stolen or compromised credentials represents the most common cause of a data breach. “We have been very impressed by the domain expertise exhibited by Buguard’s security researchers and engineers and are very excited to partner with Youssef and Buguard’s best-in-class team. Threats posed by ever evolving cybercriminal tactics are a serious threat to businesses, both large and small. It is becoming increasingly important to take proactive measures to protect against these threats. Buguard does just that through its security services and Dark Atlas.” Karim Beshara, A15 General Partner, commented. According to a statement seen by TechCabal, Youssef Mohamed, Founder and Chief Technology Officer of Buguard asserts that the company’s current focus is to strengthen its presence in the GCC region first, before considering any expansion plans. “We are already globally facing with clients across the world, but our immediate strategy is to grow even stronger in the GCC. We look forward to expanding into Saudi Arabia during 2023 and using our proceeds to help fulfill our significant growth potential,” he said.
Read MoreContent creation is booming in Botswana but monetisation remains a puzzle
With a youth unemployment rate of 38%, young Batswana are turning to content creation to create employment for themselves and their fellow citizens. For Marang Selolwane, a Gaborone-based content creator with over 275,000 followers across Facebook and Instagram, her work goes beyond the confines of the definition of “content creation.” This ethos has seen Marang score deals with some of Botswana’s leading corporates, including telcos, commercial banks, and insurance companies. “I consider myself a connector or a storyteller. My partnerships are with corporates because my brand ethos is simplifying complex services for everyday Motswana,” she told TechCabal over a call. Despite having one of the most expensive internet costs on the continent, content creation and consumption in Botswana has boomed in the last few years. Fuelled by a youthful population with an insatiable appetite for social media platforms like Facebook, Instagram, YouTube and TikTok, content creators like Marang have carved out a niche by creating content for an audience that is always hungry for more. Maatla Ephraim Basha, a content creator with over 700,000 subscribers across his YouTube and Facebook pages, says he’s sometimes surprised about the extent of his reach. “When I do nationwide tours with some brands, we visit remote villages which I never even knew existed. I often think no one knows me here, but I see young and old people reenacting some of my skits when we get there. That shows me how much content in Botswana is appreciated and relatable to our people,” he told TechCabal. Going beyond social media Although content creators have enjoyed exponential audience growth, monetisation is still a struggle. Triccs is an award-winning comedian who started creating skits on his social media pages. Despite having over 43,000 followers on his Facebook page, he could not monetise that audience, leading to him exploring other routes. “Most platforms like Facebook and YouTube don’t have monetisation options for Botswana-based content creators because of our small population. So even if you have a lot of followers who engage with your content, you still cannot directly monetise it on the platforms.” According to Triccs, working with corporates as an alternative to directly monetising his audience on social platforms has limitations. The main limitation is the tendency of corporate marketing not to give creators enough room to lead content ideation. “Most corporates don’t use the creatives for their creativity but for their numbers. In my opinion, that is killing the game because, as a creator, I have to do subpar content which was ideated by the corporate’s marketing team without much input from me. That then affects my brand because the audience will associate that work with me,” he added. This point is further reiterated by Selowane, who notes with concern that for a significant number of corporates in the country, marketing campaigns are done by staff in head offices usually based in South Africa. These departments, she adds, sometimes don’t have the context to understand the kind of content that resonates with a Botswana audience. “Sometimes you find that local marketing departments have very little say in deciding the type of content that local content creators will provide. As a creator, you have to work directly with the head office in a different country, mostly South Africa, which limits your ability to create genuine content that you know will appeal to your Botswana audience,” she said. Despite that challenge, she adds that it is essential as a creator to stay true to your voice and brand because that is what your audience is following you for. Straying from that to close an endorsement deal will likely alienate them in the long run and decrease their level of engagement with your content. Basha expounds on the concern around the trend of not-so-good content getting preference for endorsements over well-thought-out content. “I think it’s just about the shock factor and not necessarily good content nowadays. Sometimes you get people who “blow up” on social media because they say and do wild things, and suddenly, they are all over brand endorsements. I’m always happy for people to get their money from brands, but it paints a bad picture about the overall state of content creation in the country,” he added. A startup offering monetisation alternatives to creators Aurora Media Group is a multimedia streaming platform whose mandate is to “allow Africans to have a platform in which they can put their content out there without the constraints imposed by most content distribution companies.” According to co-founder Moagi Onkabetse, current content distribution and monetisation models take a lot from the creators without offering much in return, and Aurora wants to disrupt that model. “With Aurora Television, our video-on-demand and live TV platform, creators can submit their content in two categories, either as a finished product you licence to us, and we share dividends through that product’s lifetime. Alternatively, we allow people to submit their scripts, and we facilitate the production, marketing and distribution,” Onkabetse told TechCabal. According to him, interest in the platform from Botswana creators has been significant, with over 400 submissions received after the product’s launch in May 2023. Numerous licensing deals have been struck from those submissions, and a couple are still in the negotiation phase. Onkabetse adds that despite limited budgets, the submissions they have received have been good, showing the potential that content creators in Botswana have. “In my opinion, the talent in this country in content creation is immense. If these creators were to be given the right distribution and monetisation opportunities as well as the right funding to take on larger projects, they could contribute significantly to this country’s export mandate. I say this because Botswana content is unique and can appeal to a wider continental and even global audience,” he added. Still a lot of work to be done According to Masego Mohwasa, award-winning director and founder of 27 Pictures, a production house whose product offerings include short films, TV shows and commercials, there is also a lot of work that creators
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👨🏿🚀TechCabal Daily – Small changes at Big Cabal Media
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning The Barbieheimer weekend is over, but f you’re looking for something interesting to watch in coming months, look no further: Muskerberg is coming. Billionaires Elon Musk and Mark Zuckerberg are still serious about their cage fight, and over the weekend, Musk announced that the fight will be live-streamed on Twitter X. We don’t know when the fight is scheduled for, but we can anticipate the biggest reality TV show since Survivor. In today’s edition BCM cuts its workforce by 19% South Africa considers licensing streaming platforms Ministerial nominee Bosun Tijani speaks on past tweets The future of Africa’s EV markets The World Wide Web3 Event: The Africa Social Impact Summit Job openings Layoffs BCM cuts its workforce by 19% BCM Leadership team in 2022 More layoffs are happening across the ecosystem. Last Friday, media startup Big Cabal Media—parent company to TechCabal and Zikoko—laid off 19% of its staff. Per the company, the layoffs are due to the harsh market conditions the business is facing this year. This comes a year after it raised $2.3 million to expand its digital products. The company reportedly grew its revenue by 180% year-on-year by the end of H1 2023, but this significant growth still did not match its budgetary expectations. Scaling down Citizen: The company also revealed that it is scaling down Zikoko Citizen, its new governance and politics publication which launched late last year. “In a different business environment, we intended for Citizen to have 12–18 months to figure out sustained revenue streams,” Big Cabal shared in company-wide communications. As a result of this, majority of the Citizen team were let go, while a few including EIC Akinyemi Muhammad were moved to other units within the company. The big picture: Affected employees will receive two months’ severance pay in lieu of notice. The company also shared that it will recommend the outgoing employees to other businesses, writing letters of recommendation and assisting during the transition period. In H2 2023, the company will focus on becoming a self-sustaining business, doubling down on TechCabal and TechCabal Insights. Secure payments with Monnify Monnify has simplified how businesses accept payments to enable growth. We are trusted by Piggyvest, Buypower, Wakanow, Fairmoney, Cowrywise, and over 10,000 Nigerian businesses. Get your Monnify account today here. Streaming South Africa considers licensing streaming platforms South Africa’s streaming service platform is getting bigger. And now, the South African government is considering licensing these platforms. Last week, the department of communications and digital technologies released a white paper that seeks to create broader regulations for streaming services in the country. Image source: Zikoko Memes Backstory: Last year, the country became the first African country to get Disney+, and one of the few African countries Uganda where AppleTV is available. This proliferation means that local streaming services like MultiChoice or eTV have seen their subscribers decline in recent times. In fact, MultiChoice—in June—reportedly lost over 100,000 subscribers, a loss it attributes to competition from streaming platforms like Netflix. While local streaming services face regulatory hurdles to operate in the country, international services have been exempted from obtaining a licence in the country. That could change soon. An unfair advantage: Per South Africa’s communications department, international streaming services have created an unfair playing field for everyone in the market. The white paper aims to establish a more comprehensive regulatory description encompassing all content services transmitted via electronic communications networks, such as fixed and mobile broadband networks, digital satellite broadcasting networks, and terrestrial distribution networks. The communications department proposes a fresh licensing framework in South Africa that distinguishes between linear and non-linear services while ensuring fair competition among various service providers, as outlined in the draft. Discover Trends with Smile Identity Download the Smile ID State of KYC in Africa Report on the latest trends in identity verification across Africa, highlighting the power of biometric verification and document verification in combating fraud. It is a must-read for any business looking to acquire users across Africa and keep up with fraud trends. Ecosystem Bosun Tijani speaks on past tweets Last week, Nigeria’s tech ecosystem received a boost when Bosun Tijani, founder and CEO of CcHub, a long-standing accelerator, was nominated as the country’s new minister of communications and digital economy. Shortly after Tijani’s nomination, however, old tweets where the founder criticised the Nigerian government began to resurface. An expensive country? In one tweet from 2019, Tijani said, “‘Nigeria’ is a bloody expensive tag to have against your name. Leave patriotism for a minute – that tag is a bloody waste of energy. A second foreign passport isn’t sufficient to clean the ‘sin.’” At his ministerial screening on Saturday, the founder was quizzed by senators at the Nigerian parliament. Tijani at the Ministerial screening Tijani’s response was that taken alone, the tweets did not paint the entire picture. For instance, he shared that he made the tweet about Nigeria being an expensive tag after an incident at the Chinese Embassy because of his Nigerian passport. “I am a patriotic Nigerian. “I believe so much in this country and I won’t do anything to undermine the integrity of this country,” he said. “The tweets online don’t represent me at all. As a young man born and bred by Yoruba parents, tender my sincere apology. I am profusely sorry.” Senate President Godswill Akpabio accepted the apology on behalf of the Senate after some Senators spoke in Tijani’s defence citing his impressive credentials. The tech ecosystem has also rallied in support of Tijani with several key players like Andela founder Iyin Aboyeji, ex-CEO of Printivo Oluyomi Ojo, and Lifebank CEO Temie Giwa-Tubosun tweeting in support of the founder. At this time, Tijani, who also apologised for the tweets, is yet to be confirmed as the minister. TC Insights The future of Africa’s EV market Electric mobility in Africa is still in its development stage. Although the sales of electric vehicles (EVs) on the continent have
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Next wave: Providing liftoff for Tunisia’s tech talent
Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner TopBanner_END–> First published 6 August 2023 In Tunisia, raw talent and a tight-knit community of builders, entrepreneurs and tech workers could create Africa’s axis for deep tech. But not before a few important and urgent changes. This is the third edition of our ecosystem reviews on Next Wave. Read #1 and #2. It is 1:34 a.m. in Kigali and I am reading the New York Times profile of Morris Chang, founder of Taiwan Semiconductor Manufacturing Company (TSMC) which is today, the world’s leading fab (maker) of nanoscopic transistors etched into silicon wafers. I am also typing out (some of) the words you are reading for this edition of Next Wave. Reading Morris’ profile puts me in the right headspace for today’s ecosystem review of the small African nation nestled between Algeria, Libya and the Mediterranean Sea–Tunisia. With almost 5,000 students registered, Tunisia has the most number of student members in the Europe, Middle East and Africa region of the Institute of Electrical and Electronics Engineers. That is a stunning 1900 increase from 2011 when the country had only 263 student members. By total membership, Tunisia is the only African country in the Top 10 ranking of IEEE chapters in the EMEA region. IEEE membership numbers do not necessarily mean technology prowess. Israel has a total of 1,300 members (including students). But Tunisia’s numerical representation in the IEEE is a useful proxy for discerning how seriously the country takes STEM education. What’s more? It’s a proxy I like. “Everybody knows everybody” This concentration of talent is not new. In the last 40 years, manufacturing formed the basis of the Tunisia’s GDP growth. From subcontracted operations for labour-intensive, low-value-added manufacturing for European companies, Tunisian firms have moved up the value chain into segments such as aeronautic component manufacturing. Several multinationals such as Benetton and Airbus tapped the country’s base of skilled engineers and opened wholly-owned production plants in the country, analysts at Oxford Business write. With almost half of Tunisia’s manufacturing destined for overseas markets, the country’s globally oriented production focus has not been in doubt. Tunisia’s small, but growing tight-knit ecosystem is built around this concentration of technology talent. And as a technology ecosystem takes shape, this massing of engineers, developers and other academics are beginning to coalesce into an entrepreneurial force of its own. There are not many African countries where there is a dedicated effort to connect technology ecosystems with academic and research institutions, but Open Startup Tunisia is a shining example of this startup-academic bridge in action. Co-working spaces dot the city. One of them, The Dot, is a veritable watering hole for the tech workers, founders, investors and venture builders working in Tunis. <!–Chart section 1 Naira-USD spreads have narrowed dramatically following FX policy reforms and the removal of Nigeria’s unorthodox central bank governor, Godwin Emefiele. | Chart: Ayomide Agbaje — TechCabal Insights. Chart end–> Partner Message Download the latest Smile ID State of KYC in Africa report on the most recent trends in identity verification across Africa, highlighting the power of biometric verification and document verification in combating fraud. It is a must-read for any business looking to acquire users across Africa and keep up with fraud trends. Download report here In 2018, Tunisia famously passed the first Startup Act in Africa, leading to a scramble to pass startup laws in other African countries, including Senegal, Nigeria, Rwanda, Kenya and South Africa. New incubators, accelerators and startup labs have been born since 2016 to help catalyse entrepreneurial growth from the natural tech advantage. While investments into Tunisian startups have increased, especially following the passage of the Startup Act in 2018 and the further surge in global venture investments in the last five years, Tunisia has not realised the expected boom from its concentration of tech talent, research institutions and growing entrepreneurial ambition. Tunisia has talent. Its government just needs to help them fly—mostly by getting out of the way—and supporting entrepreneurs to recreate the successes of the country’s auto-industry in the startup scene. Show me the money Everyone I spoke to last week for this piece, described a variant of the need for and lack of funding opportunities as one of the primary challenges Tunisia’s startup ecosystem has to deal with. True, the Startup Act of 2018 successfully spurred technology entrepreneurship. Especially as it offered a full-year stipend for up to three co-founders in any startup accepted into the programme. But the government capital only went so far. It provided the seed, but an accompanying full liberalisation of the market in order to create an enabling environment for scaling locally domiciled startups is yet to happen. One of the results is an abundance of early-stage startups, with working products and some traction, but not enough liftoff power to overcome gravity. A secondary effect of this is the easy out—a proliferation of marketplace applications hoping to grow enough to find viability outside of Tunisia and into Gulf countries. There has been unmistakeable progress in Tunisia’s ecosystem growth. But it is far from the potential of the ecosystem that produced InstaDeep and Expensya. Infographic: Ayomide Agbaje for TC Insights While InstaDeep’s exit brought a lot of attention to Tunisia, it was not sufficient to spur investment into startups domiciled in Tunisia. If anything, it probably demonstrated the benefit of building technology with global market reach. As Yassir Idrissi, former Careem entrepreneur and co-founder of the Egyptian food supply startup Nomu, told Al-Monitor earlier this year, “The [InstaDeep] exit is a step in the right direction but not really a game-changer in itself,” adding, “It could have been, but the market is so difficult that it will continue to drive investors away.” Partner Message Hey! It’s money here , and I am tired of working for you. Why don’t you try working with me, so you can save and invest in dollars and access the best rates on your investments? 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Read MoreBosun Tijani apologises for past tweets during ministerial screening
During his ministerial screening on Saturday, Bosun Tijani, the CEO and co-founder of CcHub, apologised over some controversial tweets he made in the past. His apology has raised questions on the right of citizens to be critical of the government because of future political ambitions. Bosun Tijani, the CEO and co-founder of CcHub, apologised for some tweets he made in the past during his appearance before the Nigerian Senate for screening as a ministerial nominee on Saturday. Tijani’s nomination has excited many in the tech ecosystem given that he leads one of the most influential tech incubators on the continent. But just as the news broke, some of his critical tweets about Nigeria’s politics and politicians resurfaced. Some of the senators quizzed Tijani about these tweets during his screening. “Nigeria is a bloody expensive tag,” read one of the tweets, cited by Senator Abdulfatai Buhari who is representing Oyo North Senatorial District. Tijani’s response was that taken alone, the tweets did not paint the entire picture. For instance, he shared that he made the tweet about Nigeria being an expensive tag after an incident at the Chinese Embassy because of his Nigerian passport. “I am a patriotic Nigerian. “I believe so much in this country and I won’t do anything to undermine the integrity of this country,” he said. “The tweets online don’t represent me at all. As a young man born and bred by Yoruba parents, tender my sincere apology. I am profusely sorry.” Senate President Godswill Akpabio accepted the apology on behalf of the Senate after some Senators spoke in Tijani’s defense citing his impressive credentials. In his earlier remarks, Tijani thanked President Bola Tinubu for nominating him to serve in a “crucial capacity”. The chances are that he will likely serve as the Minister of Communications and Digital Economy—a big win for the Nigerian tech ecosystem that has long clamoured to have one of its own at the table. “Many of the prosperous nations that we admire have been built on a strong foundation of innovation. We are blessed as a nation with a significant young population which is a critical resource for harnessing the opportunities offered by Technology and Innovation in support of Mr. President’s stated goal of building a prosperous Nigeria for all,” the CCHub boss said. The censure question While Tijani’s apology might ensure that he’ll scale the ministerial screening, the Senate’s decision to question him over his past tweets will raise questions about censure. On one hand, many argue that his tweets were a reflection of the frustration of the average Nigerian about the state of the polity and the leaders. They also argue that such criticism shouldn’t be considered to represent unpatriotism. In the end, the argument is pretty straightforward: when critics are offered a chance to serve in the government, they should be judged by their competence and pedigree—and not their critical opinions.
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Banks are winning the opportunity to facilitate cross-border payments for Africa’s small businesses
Small and medium businesses in Africa sell to and depend on imports from suppliers in other countries to meet their local production, sales or reexport goals. This significant trade flow between African countries and between Africa’s top trading partners globally may well be an overlooked opportunity for business payment facilitation. In 2017, Nigeria’s central bank opened a special facility to provide up to $20,000 per quarter for small and medium businesses who struggled to access the forex they needed to finance imports. Similarly, last year, small-scale importers in Kenya were hit hard by a scarcity of forex that forced banks to impose $1500 to $2000 daily limits. Despite these setbacks, a significant percentage of small businesses in Africa that sell to or buy from international suppliers still prefer local banking partners. This is according to a recently published report by Duplo, a Nigerian business payments automation firm. In countries like Kenya, Ghana and Nigeria, small businesses may source for foreign currency at parallel markets, but they may still have to settle vendor invoices by bank wires or electronic transfers. While Duplo’s report does not offer insight into the value of cross-border business payments, a cursory look at import-export numbers provides a snapshot of the value of cross-border transactions at the small business level. For example, roughly 90% of all manufacturing companies in Nigeria are small businesses. In the last 3 months of 2022, for example, Nigerian businesses sold N5.3 billion ($7 million) worth of shoes, umbrellas, sunshades and headgear to other countries, data from the Nigerian Bureau of Statistics shows. In the same 3-month period, Nigerian businesses (and individuals) imported more than N25 billion worth of shoes, umbrellas, sunshades and headgear. That is the rough equivalent of $33.6 million at prevailing parallel rates in December. Both figures only represent 0.02 and 0.10 of Nigerian exports and imports in the last quarter of 2022, but they also represent a snapshot of the value of cross-border transactions made by businesses (mostly small and medium businesses) in Africa’s largest economy. Banks are still the preferred business payments partner of African SMEs Of more than 1200 businesses surveyed in Nigeria, Ghana, Kenya and South Africa, 61% engage in cross-border payments. Almost half (48.4%) of these businesses pay their foreign suppliers and vendors through local banking partners. Only 19.5% of surveyed businesses make cross-border payments with fintech solutions. In all countries, banks are the preferred payment channel for cross-border transactions, by a significant margin. In Nigeria, Ghana and Kenya, fintech platforms come second—a consequence perhaps of the foreign exchange pressures the three economies have come under in recent years. But it also signifies how quickly cross–border payments on fintech apps have grown and overtaken the bureau-de-change and offshore banking channels. What fintechs can learn from banks While banks dominate, they have also failed to translate the benefits of their scale across the multiple African markets they operate in. Capital controls and onerous rules sometimes mean that the owner of a United Bank for Africa bank account in Nigeria, for example, cannot make payments or withdrawals to that account in another UBA branch in Kenya—even if they wanted to make those payments in foreign currency. UBA has branches in at least 20 African countries. These sorts of barriers have not allowed pan–African banks like Ecobank, for example, to benefit from their scale across Africa. Duplo says businesses may prefer banking partners because of existing business relationships and trust in traditional banking systems. If this is the case, it shows how banks have been able to leverage their local primary business relationships with small businesses to manage cross-border payment transactions. That playbook is something African fintechs may want to explore. Fintechs usually focus on local business banking or providing cross-border payment services. The lesson from banks is that providing only one of the two services may be too narrow of a focus. They cannot do this quickly enough. Access Bank, Nigeria’s largest lender by assets is strategically growing it’s presence in Africa. And it has a retinue of fintechs in tow. Including a majority stake in eTranzact, a leading payments provider with operations in operations in Nigeria, Ghana, Kenya, Zimbabwe, South Africa, Cote d’Ivoire, and the UK.
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