- September 26 2023
Exclusive: Risevest completes the acquisition of digital trading fintech Chaka
Months after conversations began between both companies, TechCabal can now confirm that fintech startup Risevest has fully acquired digital trading startup Chaka. Tosin Osinbodu, Chaka’s founder and Eke Urum, the founder of Risevest, confirmed the deal was concluded and approved on Tuesday morning. “We’re excited, especially from the perspective of people; high level and strategically, this deal makes sense,” said Osinbodu. “I’m excited about how Chaka’s product will evolve and how we’re going to learn from the Risevest team.” While both companies declined to comment on the transaction’s cost, they told TechCabal that Chaka and RiseVest will remain separate products. Per Eke, while Chaka’s ownership and cap table will get updated, “everything else remains; the team stays the same.” Both companies will continue to work on their product roadmaps and collaborate to improve products. According to Eke, deals like this are essential to Nigeria’s tech ecosystem and present an opportunity for collaboration. One person familiar with the matter said that both companies hold complimentary licences, providing a glimpse into why the acquisition was perfect for RiseVest. Eke and Osinbodu declined to comment. Founded in 2019, Chaka calls itself an “investment passport” for users. With the Chaka app, users can buy shares of publicly traded companies in Nigeria and the United States for as little as $2. Users can also buy fractional shares, reducing the cost of entry to investing. Chaka has had an interesting existence and faced an existential scare in December 2020 when the Security and Exchange Commission (SEC) banned the company from operating and advertising to customers in Nigeria. The SEC said Chaka did not have a licence for the service it was promoting. Yet after engagement with the regulator, Chaka became the first trading startup to receive a digital sub-broker licence in March 2021. How the deal happened Eke told TechCabal that a mutual investor first suggested the idea of a deal to him early in the year. Informal talks began in March 2023; Tosin and Eke shared that they got along quickly and joked about how they could have been cofounders in a different life. “The first conversation we had about this was: this is where Chaka is trying to go; I wonder if this could happen. Investors on both sides have also always been aware. To my knowledge, all investors bought in when we spoke to them about this deal.” “Knowing how much we have put in, the investors understand that we’re committed to it. I think the investors are really glad about this outcome and what the future holds,” Osinbodu concluded.
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- September 26 2023
How incubators and accelerators can propel innovation in Africa
Noel K. Tshiani is the founder of the Congo Business Network, an organisation committed to building the rising startup ecosystem in the Democratic Republic of Congo. As a fervent advocate for innovation, he actively drives transformation across a diverse spectrum of sectors including fintech, edtech, medtech, agritech, insurtech, and regtech, both in Kinshasa and abroad. Africa is a continent full of young people with business ideas and creative solutions. However, turning these ideas into real, growing businesses often comes with many challenges. This is where incubators and accelerators play a crucial role. These programmes provide a holistic environment that fosters learning, mentorship, and access to essential networks. They bridge the gap between ideation and implementation, enabling startups to leap from concepts to market-ready solutions. By offering a blend of resources, expertise, and industry connections, incubators and accelerators play a pivotal role in amplifying the impact and sustainability of startups. One clear example is the story of African fintech startups. They have grown partly because of helpful programmes that guide and support them. These fintech ventures have gone on to ease financial access, propel financial inclusion, and foster a culture of innovation in a banking sector traditionally resistant to change. The ripple effect of their success reverberates across various sectors, demonstrating the power of a well-nurtured startup ecosystem. Moreover, incubators and accelerators serve as conduits attracting global investments into the African startup scene. They are the touchpoints for international investors seeking to tap into the boundless potential that African startups offer. By showcasing the high-quality products and services that come from their programmes, these incubators and accelerators are essentially attracting a lot of foreign investment, which is essential for startups to survive and grow. As the narrative of Africa continues to shift from a continent of challenges to a hub of innovation, the role of incubators and accelerators will only become more seminal. To encourage more new ideas, these programmes need to change to address the special challenges and opportunities found in the different African markets. It is very important to have a more tailored approach when creating and launching these support programmes. Additionally, fostering a culture of collaboration over competition among incubators and accelerators could unlock a treasure trove of synergies beneficial to the startup ecosystem. Creating a community where people share knowledge, good methods, and connections can make a bigger positive impact together. It is up to people within and outside of Africa to work together to provide more support, resources, and policies that will help incubators and accelerators be more effective and reach more startups. As we continue to track the success of African startups, we need to make sure that the support systems they rely on are also improving. This will help African innovation to be heard around the world. Here are some specific recommendations for how incubators and accelerators in Africa can drive the next wave of innovation in countries such as Nigeria, Kenya, South Africa, and the Democratic Republic of Congo: 1. Tailor programmes to the unique needs of African markets Incubators and accelerators should take a contextual approach to their programs, taking into account the specific challenges and opportunities faced by startups in different African countries and industries. 2. Promote a culture of collaboration Incubators and accelerators should work together to create a supportive ecosystem for startups. This could involve sharing resources, best practices, and business networks. 3. Attract institutional investors Incubators and accelerators can play a key role in attracting foreign investment into the African startup scene. By showcasing the high-quality startups that emerge from their programmes, they can help to build trust and confidence among international investors in Europe and America. 4. Support startups throughout their journey Incubators and accelerators should provide startups with support not only during the early stages of development, but also as they grow and scale. This could include mentorship, access to funding, and help with market entry into French-speaking Africa. By taking these steps, incubators and accelerators can play a pivotal role in driving the next wave of innovation in Africa going forward in a way that leads to economic growth and improvements in social living conditions. Have you got your tickets to TechCabal’s Moonshot Conference? Click here to do so now!
Read More- September 26 2023
inDrive in talks with regulators as Botswana taxi association calls for its ban
inDrive has responded to calls for its banning in Botswana following complaints by local public transport operators. On September 26, members of the Botswana Kombi and Taxi Association asked the Department of Road Transport and Safety (DRTS) to ban the ride-hailing platform inDrive. The taxi association claimed that inDrive, launched in Botswana in December 2019, is operating without the necessary licences. While Kombis and taxis in Botswana pay operating fees to the DRTS, inDrive has sidestepped those fees as most of its drivers use their cars. Their use of private cars means they don’t fall under the mandate of DRTS which specifically regulates public transport. The taxi association argues that inDrive operators should be subject to the same regulations; the DRTS confirmed that it is investigating the complaint. inDrive told TechCabal that it is aware of the complaints levelled against the service. “The Ministry of Transport in Botswana currently does not have a specific registration requirement for companies operating under this particular mobility category,” Vincent Lilane, the company’s business development rep for Southern Africa, said. “However, once such regulations are established, inDrive is fully committed to complying with all registration and operational standards.” Lilane added that although inDrive has not received formal notice of the complaint from the DRTS, it is in talks with the relevant stakeholders to address the complaints. The taxi association also filed a complaint with the Botswana Police Service, asking that inDrive drivers be charged for piracy. Piracy is the operation of public transport services without licensing from DRTS. “We are currently in dialogue with all relevant stakeholders, including the Botswana Police Service, to establish clarity around our operations,” inDrive said. inDrive launched in Botswana in December 2019 and has recently proven to be a hit with drivers and commuters. It is currently the only ride-hailing platform available in the country. For drivers, the attraction is the fact that the platform still does not charge a commission for rides while for commuters, the service provides an alternative to expensive and unreliable public transportation.
Read More- September 26 2023
Exclusive: Logistics startup Sendy enters into administration after failing to find a buyer
Sendy has been facing a financial crisis with up to $1 million in monthly burn rate, and going into administration is the only way it can protect itself from total collapse. Sendy, a logistics startup based in Kenya, has entered into administration, TechCabal reliably learned. Going into administration means that the company is facing financial difficulties and is seeking protection from its creditors while developing a restructuring plan. TechCabal could not verify the company appointed as Sendy’s administrator at the time of this report, and attempts to contact Sendy’s co-founder were unsuccessful. In August, TechCabal reported for the first time that Sendy was actively seeking new buyers for its business. Amidst the negotiations, this publication attempted to reach out to interested parties to ascertain the buyout status. People with first-hand knowledge of the talks said the e-commerce companies Sabi and Wasoko were involved in those talks, although both companies declined to comment. Those talks fell through; one person with first-hand knowledge said potential acquirers were reluctant to take on Sendy’s liabilities. Founded in 2014, Sendy showed great promise and attracted $1m in funding from Spark Fund, an investment vehicle by Safaricom. In 2018, Sendy raised $2 million in a Series A drive and closed a Series B round in 2020 at $20 million. Afterward, the COVID-19 pandemic started, and many companies began bleeding money. Lockdowns, travel restrictions, and reduced consumer spending impacted logistics. Supply chain disruptions also affected the manufacturing and retail industries, the sectors with most of Sendy’s clients. Eventually, Sendy was forced to cut costs and adjust its business model to survive. Last year, Sendy began prioritising end-to-end fulfillment and stopped its operations in Nigeria. It made similar changes in Kenya, where 20% of its staff was laid off. Sendy also announced plans to connect online buyers with suitable logistics providers. This shift allowed the logistics company to move away from its asset-heavy model in Nigeria, which it adopted in late 2021 while maintaining its fulfillment services in other markets. Despite securing an undisclosed investment from MOL PLUS in late 2022, Sendy continued to burn cash. During its most challenging period, Sendy’s monthly burn rate hit $1 million. According to a source who spoke to TechCabal, this high burn rate was driven by fuel price increases throughout 2022 and the August 2022 Kenyan elections, which created widespread uncertainty. The source told TechCabal, “Most manufacturers scaled down production,” emphasising the reduced shipment volumes for Sendy amid higher fuel expenses. Given the logistics industry’s reliance on economies of scale, handling smaller volumes presented significant challenges, including increased expenses and extended delivery times.
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- September 26 2023
TechCabal Daily – EBANX banks on Africa
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy salary week If you’re looking for someone—or some thing—to run ideas by, then ChatGPT is here for you. Yesterday, OpenAI announced that it’s rolling out updates to the artificial intelligence chatbot that will allow paid users use voice commands and have voice chats with ChatGPT, or even upload a picture for a specific purpose—yes, just like Google Lens. The feature will be available to the bourgeoisie paid users in two weeks, while the rest of us proles will get it “soon”. In today’s edition EBANX expands to eight more African countries Kenyan convicts can now apply for pardons with tech Court rules against Safaricom in IP case Klasha acquires licence in Sierra Leone The World Wide Web3 Opportunities Fintech EBANX expands to eight African countries GIF Source: Tenor EBANX, a Brazilian unicorn that provides payment solutions for emerging markets, is expanding its presence in Africa. The company initially launched in Africa in September 2022. Earlier this week, during its seventh Payments Summit in São Paulo, Brazil, the tech company announced its strategic expansion into the Ivory Coast, Egypt, Ghana, Morocco, Senegal, Tanzania, Uganda, and Zambia. This expansion allows EBANX to facilitate local payments for global merchants in these countries, bringing its total presence in Africa to 11 countries, covering Northern, Western, East, and Southern Africa. There’s more: EBANX is also expanding its payment services to more countries in Latin America and the Caribbean, including the Bahamas and Jamaica. This increases its coverage to 17 Latin American countries and 29 countries globally, including the recent inclusion of India. Zoom out: In an interview with TechCrunch, Wiza Jalakasi, EBANX’s director of Africa market development, emphasised the company’s collaborations with multiple African payment providers and global merchants. In Nigeria, they offer bank transfers, card processing, and USSD options, while in Kenya, they collaborate with M-PESA, and in South Africa, they work with Ozow. They also work with global merchants in e-commerce, SaaS, and gaming, with a focus on the gaming sector due to its growth potential and cost-effective digital content production. This expansion provides African consumers with more payment options for online shopping, especially benefiting those without access to traditional banking services. 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. Government Kenya launches website for offenders seeking presidential pardon Kenya is using tech to help convicts find mercy. Through its Power of Mercy Advisory Committee (POMAC), Kenya has launched a website to allow offenders seeking presidential pardon to seek a petition. The platform will increase efficiency in service delivery and transparency of the organisation’s processes, according to Felix Koskei, POMAC’s chief of staff and head of public service. The four steps to redemption: The website, stylised as Power of Mercy Petitions Management Information System (ePOMPMIS) is already available for public use. Image Source: ePOMPMIS Site On the website, offenders seeking presidential pardon will complete a four-step procedure. First, offenders apply by filling out their details which include the prisoner’s number, petition number and name. Afterwards, applications are reviewed by stakeholders before being assented by the President. If an offender is pardoned, their petitioner will be notified and the offender will receive the President’s recommendation. Zoom out: Kenya’s new move is a first on the continent. However, some states in the US, like Alaska, use online systems to allow individuals to apply for bail or pretrial release. These systems often allow for electronic submission of bail applications and related documents. These online systems often reduce errors associated with paperwork and can often lead to fairer outcomes. Events Get early-bird tickets for the Moonshot Conference! Tickets are still selling out fast for the gathering of the most audacious players in Africa’s tech ecosystem. You and your friends can get an exclusive discount to secure your seats if you haven’t yet. Get your tickets today. Telecoms Safaricom at crosshairs in IP infringement battle Image Source: Zikoko Memes Safaricom has its hands in hot water. A Kenyan high court has overruled the telecom’s bid to halt an intellectual infringement (IP) court case between the telecom giant and a Kenyan entrepreneur, Peter Nthabi Muoki. What happened? In 2021, Muoki approached representatives of Safaricom on a partnership to build a ”M-Teen account”, a financial product for teens and children aged 10 to 17 years old. However, in November last year, Safaricom launched M-Pesa Go, a similar product to Muoki’s M-Teen account. Upon learning about this Muoki filed for a court case and sued Safaricom and Huawei Technologies (Kenya) for copyright infringement. A $67.8 million compensation: Muoki wants compensation for profits obtained from the product. He has demanded a Ksh10 billion ($67.8 million) compensation for the infringement of the product. Zoom out: While Safaricom had sought to cancel the hearing of the case, the Kenyan high court will commence a new hearing between both parties on October 31. This is not the first time the telecom giant will be caught up in the web of IP infringements. Last month, after a nine-year battle, a Kenyan court ordered the telco to pay artiste Bamboo Ksh4.5 million ($30,000) for illegally using the artist’s songs to generate revenue. Fintech Klasha acquires licence in Sierra Leone Image source: Klasha Klasha, a global cross-border payments company, has secured a financial services licence from Sierra Leonean regulatory authorities. The licence enables Klasha to commence operations and introduce its fintech services within the country, signifying its participation in the Bank of Sierra Leone’s Regulatory Sandbox Program. This will make it easier for Sierra Leoneans to send and receive money internationally, and it will also make it easier for businesses in Sierra Leone to sell their products and services to global customers. This comes three months after Klasha acquired a Money Services Business (MSB) licence to operate in Canada in June 2023. Zoom out:
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- September 25 2023
Exclusive: Why uLesson shut down its physical learning centres months after launch
uLesson’s founder, Sim Shagaya, explains why the company launched physical centers in 2021 and its quick decision to shut them down. Launched in 2019, uLesson focuses on the K-12 learning category and was initially available through an Android app and a USB dongle. Students could plug the dongles into devices and access educational content without any internet connection. It seemed like the perfect online and offline strategy in a low-income market where affordable and reliable broadband connectivity remains challenging. It then went a step further, setting up physical learning centres in July 2021; it closed those centers in December of the same year. Two years after the short-lived experiment, Sim Shagaya, uLesson’s founder and CEO, told TechCabal that the physical centres were created to reduce the upfront cost of a parent acquiring or using its service. “So we would rent the space, provide the tablets, and then students can come and learn.” It rented spaces in Lagos, Port Harcourt and Asaba, using part of its Abuja office as another learning center. The learning centers were supposed to be an improvement on the dongles uLesson sold at launch. Complaints from the users suggested that the chips on these dongles were vulnerable to viruses transmitted from smarphones and laptop computers used by students, the source said.. This technical challenge meant that a lot of support time was spent solving issues for customers. Eventually, the dongles were phased out. Enter physical centers. Physical centres and running costs Most Nigerians who are in the University are familiar with tutorial centers that help students pass admission exams like West African Examinations Council (WAEC) and Joint Admissions and Matriculation Board (JAMB). uLesson’s physical centres were partly based on these established models. One crucial difference was that uLesson’s physical centres were less about interacting with subject teachers and more about interacting with the tabs. For a while, the centers were a smash hit. “During holiday periods, the centres would get filled up [as] people would come to drop their kids off,” Shagaya told TechCabal over a virtual call. “The numbers would make sense.” As the experiment continued, the company realised that its “revenue couldn’t carry the cost,” Shagaya explained. “Holidays in an academic term are about two weeks, and in a year, we would get about five to six weeks. In a year, we would get about two to three months of full capacity. [But] the fixed cost of rent, the electricity, all just for one student. The revenue couldn’t carry the cost,” Shagaya explained. Apart from life after the holidays, uLesson probably underestimated one cultural challenge: parents did not warm up to the idea of a learning space where young students are left with tabs and the internet. Usually, it could take businesses a long time to cut their losses on experiments like this but meeting customers in person helped the company make a quick decision. The company’s offline strategy is now a learning bundle that ships a uLesson tab with a subscription that means students don’t have to worry about additional internet costs. It also introduced a buy now pay later option for students, allowing them to pay for the tab on monthly. According to Shagaya, uLesson Group is now cash flow positive, perhaps suggesting that its new strategy was a step in the right direction. In the end, Shagaya’s conviction that a physical component is essential for a compelling academic experience hasn’t changed. Only the form of delivering the experience has. Have you got your tickets to TechCabal’s Moonshot Conference? Click here to do so now!
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- September 25 2023
Telcos in Africa are rushing to adopt e-SIM cards
This story was contributed to TechCabal by Conrad Onyango via bird story agency. Africa’s telcos have begun an aggressive push to replace traditional plastic subscriber identity module (SIM) cards with virtual alternatives to tap into the fast-growing Internet of Things (IoT) market. MTN and Airtel are the latest to expand this offering to their subscribers in South Africa, Nigeria and Kenya. In the past month month, MTN South Africa has expanded access to eSIMs to all its subscribers and signed a long-term contract with global IoT connectivity solutions provider, Eseye, to help the telco standardise a global eSIM and IoT platform offering. “Our strategic partnership with Eseye will enable us to sell diverse IoT services such as connectivity, IoT bundles, and value-added services to help our customers meet their IoT global needs,” said MTN Business Head of IoT Solutions, Lawrence Juku in a joint statement. The multi-year agreement with Eseye covers South Africa and 18 African countries including Nigeria, Rwanda, Uganda, Sudan, Botswana and Zambia where MTN operates—an indication of a pan-African IoT deployment in the offing. After enhancement of its existing IoT SIM management capabilities with additional layers to power Global SIMs and manage multi-IMIS, the operator with a customer base of 36.5 million said it is eyeing millions of IoT devices. MTN introduced eSIM to its subscribers in 2019, but exclusively for post-paid customers. It is now available to prepaid customers, too. The same year, Kenya’s Safaricom also introduced its pre-paid customers to an “embedded SIM” but has since suffered low uptake. Safaricom’s parent company, Vodacom also opened eSIM support for its South African subscribers. In early February, Airtel, with a presence in 14 African countries, also launched an eSIM in the market. Handset makers like Apple and Huawei spin-off, Honor, have announced intentions to launch into Africa high-end mobile phones and devices that come with embedded SIMs—their first market on the continent being South Africa. While Apple launched the iPhone 15—which can support up to eight eSIMs at a ago—earlier in September, Honor is also eyeing the market with a portfolio of IoT devices including headsets, smart screens, tablets and laptops. UK-headquartered research firm, Juniper has reported that the global eSIM market will increase from US$4.7 billion in 2023 to US$16.3 billion by 2027, driven by the adoption of eSIM-enabled consumer devices. The research singled out Apple’s recent release of an eSIM-only iPhone 14 as the kind of hardware-driven “push” factors that will trigger accelerated adoption. “Total number of smartphones leveraging eSIM connectivity will increase from 986 million in 2023 to 3.5 billion by 2027 (globally) with manufacturers such as Google and Samsung developing an equivalent eSIM-only Android device to compete with Apple and maintain their global market positioning,” according to the report. Another report, the IDC Worldwide Semi-annual IoT Spending Guide, shows worldwide spending on IoT could pass US$1 trillion by 2024, listing South Africa among the fastest-growing IoT markets in the Middle East and Africa. Have you got your tickets to TechCabal’s Moonshot Conference? Click here to do so now!
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- September 25 2023
Next Wave: Africa’s investors have their work cut out for them
Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner First published 24 September 2023 <!– Standfirst Smallscale modern retail in Africa will not completely replace open markets in Lagos, souks in Cairo, or storied markets like Karatina in central Kenya. But a subtle shift that can become a major marker of African retail is underway. Warning. Long read ahead. Please find a comfy seat, some coffee and relaxing music. It’s Sunday after all! One of the biggest news stories last week, at least in Nigerian tech circles, was my colleague’s (Ngozi Chukwu) reporting about Payday, the virtual card app. Per her reporting, Payday which announced a $3 million pre-seed earlier this year is now seeking a buyer after a potential deal with Moniepoint fell through amidst internal strife and customer complaints. Like Payday, two other fintechs, Dash and Float, raised significant sums which were subsequently lost or misappropriated. Stories like this, where startups raise significant sums only to go bust months down the line, inevitably get a lot of attention. The businesses involved usually have thousands of customers and interested stakeholders from investors to regulators. A sample of African startups that have gone from raise to bust. | Infographic by Victoria Olaonipekun, TC Insights The stories are a reflection of the inflection point Africa’s startup and startup investing industry has come to. Namely, the age of accountability. Not just accountability for founders, but accountability for a venture investing model where the proper signals have been overwhelmed by the noise of the herd and the momentum of hot deals. It is not an African thing. Globally, the venture capital industry appears to be at a junction where its most potent narrative—that it funds breakthrough innovation no one else will touch, and generates superior returns—is wearing out. Startup busts are expected given the nature of the market. But not fraudulent implosions. In short, venture investors are being held liable for the implosion (especially where fraudulent) of apparent portfolio winners. Don’t believe me? Talk to any limited partner (LP) worth their salt, or call your general partner friend and ask for an honest summary of how conversations with their fund’s investors are going. Investing in private untested businesses is supposed to be difficult. In Africa, due to the lack of widespread and efficient formal systems, the uncertainty inherent in mostly informal markets raises the difficulty level a notch, or several notches higher. This means that both entrepreneurs and investors take a mutual oath to fight through the risks of building anything on the continent. It also means African VCs, more than their American, European or Asian counterparts, have to fight the tendency to groupthink. Leaving the in-group For an asset class whose name and preferred origin narrative celebrates anti-pattern matching, venture investing is susceptible to herd thinking. Following the herd is not always a bad thing. But this is typically only true when the herd is following established and clear standards. Where the herd is trying to find a way, everyone doing the same thing and kissing the ring of Lord Average raises the risk premium for the group. The last 18 months are perhaps the best illustration of the capital-destructive power of groupthink and how it can affect even the most respected venture firms. As a result, following the herd is now (at least on social media) openly railed against. What is bigger than the schadenfreude (of which there’s not too much because somehow everyone was touched) is the lesson that for venture capital to be taken seriously. It ought to be reoriented around clear standards. At first glance, this looks like it’s opposed to be anti-herd thinking. But it is not. Venture capital suffers from an acute lack of standard definitions and methodologies in much the same way startups need to come clean about what “revenue” means. In this scenario, leaving the in-group can simply mean doing the hard work even if it clashes with the latest trend. Take a minute and think about what doing venture investing this way can mean for Africa where areas like financial inclusion have been squeezed for every ounce of milk? Partner Content: Cenoa, the dollar account for emerging markets, launches in Nigeria Momentum is one of the reasons a herd of buffalo is not something you want bearing down on you. We’ve heard stories from investors and entrepreneurs alike of how much momentum crushed term sheets and upended cap tables (much later). However, momentum investing is not a viable venture capital strategy. Again, this is a global problem. To quote Professor Aswath Damodaran, Wall Street’s Dean of Valuation: While there are a few exceptions, venture capitalists for the most part are traders on steroids, riding the momentum train, and being ridden over by it, when it turns. In Africa, it can be the precursor to startup death, and capital destruction that will (unlike the Americas) be difficult to rebuild and recover from. Dumping the fluff Narrative is powerful. Narrative properly harnessed can create a world of difference and value. But in the finance world, narratives only last so long. The simpler the narrative, the easier it is to become folklore. But the worst thing about narrative-driven financials is that in an environment where knowledge is dreadfully imperfect, the best storytellers (not necessarily the best businesses) win. Look, narrative investing is cool, maybe even fun. But it can also suffer from an inadequacy to demonstrate substance when cattle dung hits the fan. That is not to say an investment thesis or term sheet that can be distilled into a story is bad. The point is that over-indexing on this type of substance is a great way to get caught up in the buffalo herd stampede. Partner Content: Tech Studio Academy celebrates five years of empowering tech enthusiasts with ₦5 million scholarship Whether you are trying to raise from local LPs or hitting up DFIs and foreign LPs, it is only a matter of time before reality catches up with the
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- September 25 2023
TechCabal Daily-Kenya signs $60 million deal with the US
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning! Take a moment to send love and light to the people in South Africa who have been enduring escalating power outages and the mounting chaos surrounding the selection of a new CEO of Eskom, the country’s electricity provider. After whittling down 150 candidates to three, Eskom board’s chosen CEO candidate was rejected. Find out why. In today’s edition Kenya signs $60 million deal with the US Nigeria pushes for tech startups listing on NGX Starlink’s African challenge The World Wide Web3 Event: Moonshot Conference Job opportunities Mobility Kenya signs $60 million deal with the US Image source: The US embassy in Kenya The United States Millennium Challenge Corporation (MCC) has inked a $60 million deal with Kenya. This agreement, known as the “Kenya Urban Mobility and Growth Threshold Program,” will support four mobility projects: the Integrated Transport Planning project, the First and Last Mile Connections project, the Detailed Land Use project, and the Bus Rapid Transit (BRT) project. If this feels like déjà vu, you might be recalling the time in March when the European Union (EU) and Kenya entered a Ksh 50 billion ($378 million) financing agreement to integrate zero-emission electric (BRT) buses into the public transport network in Nairobi, the capital city. Much like that agreement, this recent deal with the US will also finance the purchase of climate-friendly vehicles powered by electricity, hybrid, and biodiesel for the BRT network. This announcement comes on the heels of the African Climate Summit, recently held in Nairobi. During the week-long summit, Kenyan President William Ruto showcased electric vehicles by driving an electric car, accompanied by an all-electric fleet for his motorcade consisting of electric motorcycles from local electric mobility startups. Kenya is going green fast. The country is committed to transitioning fully to zero-emission vehicles by 2040. So it has been welcoming a lot of mobility startups that are providing motorcycles, cars, shuttles, and buses. This includes Roam, Ampersand, Spiro, KiriEVs, and others. There are also charging stations, and battery swap stations popping up across the country. Later in the year, the Kenyan government is set to publish an e-mobility policy that will set the framework for the development of the required infrastructure. Zoom out: Some other East African countries are taking this zero-emission challenge just as seriously as Kenya. Rwanda for instance has tax breaks for purchases of electric vehicles. However, per Ventures Africa, South Africa is the current leading market for EVs in the continent. 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. Markets Nigeria pushes for tech startups listing on NGX Image source: TechCabal The Nigerian government, through the Ministry of Communications, Innovation, and Digital Economy, plans to team up with the Nigerian Exchange Limited (NGX) to encourage startups to go public on the new NGX Technology Board. Sidebar: The NGX Technology Board is a board on the Nigerian Stock Exchange tailored for tech-based companies to list and raise capital from retail and institutional investors.Like the foreign board, National Association of Securities Dealers Automated Quotation (NASDAQ), The board was introduced months ago to give tech startups access to the exchange with less stringent requirements. The board also aims to replicate the conditions that attract Nigerian tech companies to foreign initial public offerings (IPOs) and, in doing so, provide entry and exit opportunities for local investors. However, local startups still prefer foreign exchanges. This preference is due to these exchanges offering access to foreign retail and institutional investors who often have a larger investment appetite. For example, startups like OPay and Flutterwave are seeking listings in foreign markets while primarily operating in Nigeria and other African markets. The Minister of Communications, Innovation, and Digital Economy, Bosun Tijani, called for more investments in these startups, saying Nigeria has been too cosy with oil, and it’s time to spice things up and boost productivity in other sectors. He stated that his ministry will work to make this happen by creating fintech-friendly regulations, facilitating access to funding, improving digital infrastructure, and supporting the export of tech products and services—all factors that will enhance startups’ scalability and profitability. The NGX has also promised to further soften listing rules and improve the board for startups. Unlock your startup potential Grow your networks, gain visibility, and secure funding for your early-stage tech startup. Apply for this year’s MEST Africa Challenge #pitchcompetition and unlock the next stage of your startup’s growth. Apply by 9th October 2023. Apply today! TC Insights Starlink’s African challenge Image source: TC Insights In January 2023, Starlink, the satellite internet service owned by Elon Musk’s SpaceX, commenced operations in Nigeria, marking a significant milestone as the first African country to receive the service. Since then, it has expanded its reach to four additional African nations, including Rwanda, Mozambique, Mauritius, and Sierra Leone, with plans to launch in nineteen more African countries by 2024. Mobile internet penetration in Africa remains at 43%, below the global average of 66%. Starlink’s emergence in Africa heralded promises of broader connectivity with download speeds up to 220Mbps. However, real-world performance is subject to variables such as latency and weather conditions. Recent Q2 data from Ookla, an internet and connectivity intelligence firm, paints a nuanced picture of Starlink’s global performance. Starlink has demonstrated promising download speeds in Africa, but its upload speeds present a mixed scenario. Starlink’s median upload speed of 13.72Mbps in Nigeria surpasses the combined average of 10.6Mbps from other providers, enhancing its value proposition. Conversely, in Rwanda, Starlink’s upload speed lags behind other ISPs, averaging just 6.88Mbps compared to 10.05Mbps. Ookla observes that Starlink’s upload speeds generally align with the company’s expectations, falling within the 5 to 20 Mbps range. This area remains a focal point for improvement if Starlink aims to solidify its presence in Africa.
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- September 23 2023
Access Bank fails to double profits in H1 2023, despite 52% growth
Access Bank’s profits grew 52% in the first half of 2023. But it failed to double its profit like its peers. Access Holdings Plc posted profits of ₦135 billion in the first half of 2023. That’s a 52% jump compared to the half year of 2022, according to the bank’s half-year financial statements. Compared to other tier-1 banks like First Bank, GTCO, and Zenith who doubled their profits in the same period, and tier-2 banks like Fidelity and Stanbic, Access Holdings results are not exactly impressive. GTCO recorded ₦280 billion in H1 2023 as profits from ₦77 billion in June 2022. First Bank recorded ₦187 billion from ₦56 billion in June 2022. Zenith Bank recorded ₦291 billion in H1 2023 as profits from ₦111 billion in June 2022. Fidelity recorded ₦61 billion from ₦23 billion in June 2022 while Stanbic recorded ₦67 billion from ₦30 billion in June 2022. Blessing or curse? Access Holdings has been in an acquisition spree for more than a year now, trying to deepen its reach across the continent. In May, the lender received regulatory approval from the Central Bank of Angola to proceed with the purchase of a majority stake in Finibanco Angola. In July, it acquired the sub-Saharan subsidiaries of Standard Chartered Bank for an undisclosed sum. On its balance sheet, those acquisitions seem like a curse and blessing. Between December 2022 and June 2023, both Access Holdings’ total assets and total liabilities have surged 39%. Its total assets is ₦20 trillion in June 2023, from ₦14 trillion in December 2022, less than six months. The liabilities are following closely behind, as it currently stands at ₦19 trillion in June 2023 from ₦13 trillion, six months ago. This has made the bank vulnerable to credit risk exposures. For instance, its loans and advances grew to ₦6.7 trillion in June 2023, as against ₦5.1 trillion recorded in December 2022. A note from the bank said the directors are confident in their ability to continue to control exposure to credit risk which can result from both its loans and advances portfolio and debt securities. Have you got your tickets to TechCabal’s Moonshot Conference? Click here to do so now! The Ghana problem But that is not all. Currently, the Ghanaian government is struggling with bankruptcy over failure to pay billions of dollars it owes to international creditors in December. Access Holdings is one of the government’s creditors as Ghana’s sovereign debt has impacted the bank’s position. “The fair value for Ghana sovereign debts in the books of the Access Holdings amounts to ₦615.18 billion (December 2022: ₦348.15 billion),” the note read in the lender’s financials. (You can read about this on page 79 or 81 of Access Bank’s financial statement.) Nonetheless, Access Bank has demonstrated growth in its corporate and investment banking drive which creates the bulk of its revenue, growing almost double to ₦469 billion in June 2023 from ₦266 billion in June 2022. Its net fee and commission income grew 59% to ₦88 billion in June 2023. Similarly, its net interest income was up 14% in H1 2023. Have you got your tickets to TechCabal’s Moonshot Conference? Click here to do so now!
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