- August 16 2023
Investors react negatively after Jumia’s tepid Q2 results
Investors baulked after Jumia’s Q2 results showed the company lost 1 million active customers despite reporting its lowest loss in four years. After Jumia shared its financial results for the second quarter of 2023, investors reacted negatively, causing its shares to close at a 17% low on Tuesday. Jumia reported a 15% decline in revenue, with other metrics also declining. Gross Merchandise Value (GMV), number of orders and active customers declined compared to Q2 2022. Jumia also lost 1 million active customers between Q2 2022 and Q2 2023. Jumia’s stock price fell following the release of Q2 results One big positive in Jumia’s report was that it reduced its losses to the lowest in four years. Reducing its losses is significant if the company becomes profitable. Yet there are many other worries. Its lower operational losses came from a massive reduction in sales and advertising spend. A significant reduction in its workforce also reduced its General and administrative expenses. While lowering costs is one part of the lever, increasing revenue is the second, and this is where Jumia fell short in Q2. Macroeconomic headwinds across many of its African markets have made business difficult. Inflation in key markets like Nigeria, Ghana and Egypt and currency devaluation continues to hinder growth; it contributed 14 basis points to the reduction in the company’s GMV. The biggest challenge remains the slow growth of these economies and the decline of the purchasing power of citizens. It remains to be seen if Jumia can be profitable despite the economic terrain. One thing is clear: Jumia is throwing the kitchen sink at it in search of revenue growth. It has done an about-face on its strategy of focusing on groceries and everyday items. Jumia also insinuated that the theory that selling groceries and everyday items would improve stickiness may not be accurate. “We continue to recalibrate our product and service portfolio, moving away from the most profitable categories with limited consumer lifetime value,” said the company’s CEO, Francis Dufay. Critically, one effect of reduced consumer purchasing power is that people cut down on non-essentials or switch to cheaper alternatives. Even if Jumia offers groceries, it may not have the more affordable alternatives many customers can find offline. Jumia is betting on JumiaPay, citing “strong development potential to process payments on behalf of third-party merchants.” Dufay added, “In line with our objective of making JumiaPay an even more effective e-commerce enabler, we are significantly increasing the penetration of JumiaPay in both our physical goods and food delivery platforms.”
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- August 16 2023
Entering Tech #38: How to grow with internships
And pitfalls to avoid. 16 || August || 2023 View in Browser Brought to you by Issue #38 How you can grow with internships Share this newsletter Greetings ET people In last week’s edition, we dove into the exciting world of internships We shared how tech internships worked, and how they’ve helped techies like Binjo Adeniran, Jesimiel Williams, Ajiri Omafokpe and Joyce Imeigha. In today’s edition, the concluding edition for this two-part series by Reneé PR’s Oluwatoyosi Adebusuyi, we’ll talk about what you can get from internships—other than just money—and how to avoid pitfalls. Let’s dig in. by Timi Odueso. Tech trivia Some tech trivia to get the brain juices flowing. Which company’s internship program is renowned for offering its interns “hackathons” where they spend all night coding and developing? GitHub, a platform commonly used by tech interns, was acquired by which major tech company in 2018? What you can get from internships Internships continue to be a key driver in propelling careers forward. With an increasing number of startups embracing the concept of hiring and training interns, people find it easier to embark on their career journeys, particularly those transitioning into new professional paths. An internship can provide the clarity needed to fully comprehend and navigate a new industry or job role. Joyce Imeigha Joyce Imiegha embarked on an exciting career transition from public relations to product management. Haven taken several product management courses, she secured a valuable internship opportunity at Stax where she gained hands-on experience, and made significant contributions to the success of the product. Impressively, within six months of her internship, Joyce’s performance earned her a promotion to the position of Associate Product Manager. She attributes this achievement to the unwavering support of her manager and colleagues, as well as the company’s inclusive and supportive work culture, enabling her to transition smoothly and flourish in her new role. Many interns working in Nigerian startups have also enthusiastically shared how their internships have left a lasting impact on their personal and professional lives, setting a strong foundation for their career success. Chidinma Okechukwu, a marketing intern at GoMoney has found clarity in her marketing career. She shares, “I’ve grown so much here, feeling confident as a digital marketer.”Ayomide Ogunsiakan, a growth intern at Stears Insights, talked about how kindness has played a significant role in her internship experience. Despite initial challenges, the nurturing environment has contributed to her progress, and she feels reassured by the feedback she gets, knowing they trust her work. Boluwatife Olajubu Boluwatife Olajubu loves being part of Love Box, a startup, because of its small and close-knit team. As a new product designer, the company actively supports her career goals. She expresses, “It is refreshing to work in a company that understands and actively helps me exceed my limits.” What to look out for Internships undoubtedly offer great experiences, but they do come with their share of challenges that need to be addressed. One significant challenge faced by some interns is the lack of a well-defined structure in their internships. This can result in reduced productivity and confusion about roles and responsibilities, leaving interns feeling disoriented and uncertain about their tasks. To ensure a meaningful and productive internship experience, organizations should strive to establish clear guidelines and support systems for their interns. Another issue revolves around the prevalence of unpaid or low-paid internships, where some unfortunate situations even lead to interns being denied compensation based on an unjust perception of being undeserving. Additionally, limited or inadequate mentorship can hinder interns’ professional growth and overall experience, as they may struggle without proper guidance and support. The misconception that internships solely benefit interns seeking experience is far from true, as these programs also hold considerable value for startups, presenting opportunities for talent acquisition. Managers are also very essential in internships, and Olabinjo Adeniran gives credit to Mark Essien for his growth and learning. Despite being an intern, Mark ensured he made the most of the entire experience. He expresses, “Mark’s patience and specific feedback helped me focus on essential aspects aligned with our growth objectives.” Oluwafemi Akinola Managers like Wendy Okeke and Oluwafemi Akinola acknowledge the fresh perspectives and positive contributions interns bring to their teams. Wendy Okeke, a marketing and communications manager revealed that “an impact that is hard to miss is the fresh perspectives interns bring—working with people that have little or no knowledge but can form an opinion about a product or brand is an intangible value.” Oluwafemi Akinola, a frontend engineer, emphasises how interns contribute to startups by providing support on projects, fostering diversity and inclusion, and serving as a talent pipeline. He advocates for startups to develop impactful tech internship programs due to these reasons. Jesimiel Williams reinforces this sentiment stating, “Investing in grooming and training fresh minds is truly rewarding, as many of the remarkable talents often begin as interns.” Onyinyechi Nneji stresses the need for companies to adopt clear learning pathways and personalised guidance during internships, while Ajiri Omafokpe recommends conducting reviews and matching interns with mentors to enhance their experience. The experiences of these professionals and the invaluable contributions of interns make it evident that internships play a pivotal role in shaping one’s career and professional development. They open doors for aspiring individuals to pursue their passions, gain real-world experience, and thrive in their careers. Embracing the value of internships for individuals and organisations is vital to moulding the next wave of tech leaders and uplifting the tech workforce. By making internships even better, nurturing talent, and providing guidance, startups, HRs and team managers hold the key to shaping the future generation of tech stars. Attend The Web3 Lagos Conference Web3 Lagos Conference is a 3-day physical and virtual event comprising of the hackathon, workshops, networking, career fair and panel sessions. The Conference will hold between August 31 and September 2, 2023, at The Zone, Gbagada, Lagos State. The Web3Lagos conference is powered by Web3Bridge in Conjunction with Ayagigs. Register for free at event.web3bridge.com Ask a techie
Read More- August 16 2023
What is the next frontier for Africa’s creative sector?
In recent years, Africa’s creative sector has grown significantly, with African music and movies reaching a more global audience and creators raking in millions of dollars. For experts who spoke at a panel session on the creative economy at the second Africa Social Impact Summit, the continent has only scratched the surface. Depending on who you ask, the global creative economy is a billion-dollar industry. Yet, Africa’s share of the pie remains significantly low. Compared to their global counterparts who are raking in millions of dollars annually by monetising their craft, African creators don’t earn much from their craft, accounting for only around 2.9% of global creative goods exports. The reason isn’t far-fetched. According to the United Nations Development Programme (UNDP), Africa’s creative sector is faced with challenges such as inadequate infrastructure, limited access to funding and markets, intellectual property issues, and a dearth of enabling regulations. In truth, a number of home-grown solutions are addressing the monetisation problem. Selar, for instance, paid over $4.5 million to African creators last year, and over 70,000 creators across the continent have used the platform. But there is little that individual platforms can do. Industry players argue that fundamental problems—infrastructure, funding, and regulations—must be addressed. This is a major takeaway from the panel session on the creative economy at the second edition of the Africa Social Impact Summit hosted by the Sterling One Foundation and the United Nations Nigeria. The panelists were Sam Onyemelukwe, Senior Vice President of Global Business Development at Trace; Obi Asika, Convener, Omniverse; Brenda Fashugba, Lead, Creative Economy Sub-Saharan Africa, British Council; and Victor Okhai, National President Directors Guild of Nigeria and Vice Chairman, Federation of Heads of Nollywood Guilds and Associations. Streaming as the next frontier Thanks to the influx of streaming platforms in Africa, creators—musicians, filmmakers, and the like—can reach a more global audience and make more money from their craft. In recent years, movie streaming giants—Netflix, Prime Video, and Showmax—have made inroads into the continent. The direct-to-streaming route has put even more money in the pockets of filmmakers: Netflix, for instance, pays Nigerian filmmakers between $10,000 and $90,000 for streaming rights per film on average. Home-grown platforms like Wi-flix are also looking to capitalise on their ability to serve the African market amid the intense competition. On the music side, streaming has been a game-changer too. Nigerian musicians made over ₦11 billion from Spotify in 2022, a pointer to the growth of Afrobeats in the global music market. “The scope is massive. On the flip side, I think for creators and content owners, there is a faster and easier route to market distribution. It is forcing them to increase the quality of what they are doing to be able to compete on a global stage,” Trace’s Onyemelukwe said, saying there is a chance to develop a truly African streaming business. For Asika, Big Tech dominates the streaming market on the continent because of its large budgets and algorithms which the indigenous platforms don’t necessarily have. He added that for Nollywood to break more barriers and reach more countries, for instance, attention must be paid to domestic television in Nigeria. “What everyone is looking for is more access, more platforms, more distribution. That’s still something that could happen in terms of curation and AI. Algorithms and attention make people understand that this is a serious business. A lot of time in Africa, we looked at this thing like it’s vocational and sidelined conversation. It’s the main conversation,” he said. Grow from home Lack of investments is a more pressing challenge to building up Africa’s creative sector. And yet, Africa’s potential as a creative powerhouse is huge. Enter the need for significant and sustainable investments in the sector. To address the myth that Africa’s creative landscape is impenetrable, Brenda argues that investors must invest in research and build strategic relationships with stakeholders to understand the realities. She said, “Quite a number of investors don’t do due diligence and as a result, they end up in partnerships that are weird and funny. If you aren’t invested in the local ecosystem, how will you know the problems?” Asika shares a similar view, pointing out that the creative industry in Nigeria has disconnected markets. “The biggest opportunity whilst we’re going worldwide remains the domestic opportunity in Nigeria. Let’s put pressure on the funders to go do some work and bring out the money to fund the sector,” he noted. For Okhai, there is a need for a change in the perception of the creative sector, citing the age-long myth that Nollywood actors are jesters. “If we are talking about changing the narratives and creating impact locally and globally, I think that there is a need to look at this particular industry. The creative sector is the second largest employer after agriculture. Until we become intentional, we will be missing out on the gold that is sitting before us,” he said.
Read More- August 16 2023
Kenyan Assembly receives petition to ban TikTok
Kenya’s National Assembly considers a petition to ban TikTok. The petition, submitted by Bob Ndolo, CEO of Bridget Connect Consultancy, cites inadequate regulation and concerns about explicit content. Kenya’s National Assembly is considering a petition to ban the social media platform, TikTok. Bob Ndolo, CEO of the digital consulting firm Bridget Connect Consultancy, submitted the petition to the assembly. According to Ndolo, the country’s Communications Authority has failed to regulate the social media platform, which he claims is promoting violence, explicit sexual content, hate speech, and offensive behaviour among the youth. The news has been received with mixed reactions from Kenyans. The assembly is considering the petition but has suggested that a complete ban may be impossible due to the growing socioeconomic significance of the platform among young people. [ad] In his petition, Ndolo says that the lack of regulation and the app’s addictive nature could cause a decline in academic performance and a rise in mental health issues among Kenya’s young people. He also referenced the scrutiny the company is facing in the U.S., where the company has been fined for illegally collecting data and accused of sharing a significant amount of data on its users, including information about their devices, locations, and browsing history, with third-party companies without users’ consent. The news has sparked mixed reactions in Kenya. On one side of the fence, some stand with Ndolo, the petitioner referencing a trend of Kenyan TikTokers, making sexual videos on TikTok lives at night. “Switch to LIVE videos (from 10 pm onwards) and you’ll see children, men, and women exposing themselves,” one Kenyan tweeted. Meanwhile, there’s another camp that believes the assembly might be chasing shadows. They think that instead, the government should redirect its energy to advocating for the ban of pornography sites like the Pornhub ban in Kenya or just focus on salvaging the economy. “They can’t ban corruption but are so concerned about an app that some folks are depending on as their source of income. They should prioritize reviving industries, creating jobs for the youth, and locking up those corrupt leaders. It’s an absolute garbage of an idea,” argues Miruthi, another Kenyan. Then there’s Samuel Ochanji, who waves off the TikTok ban petition as a futile exercise. According to him, even if it’s outlawed, Kenyans will just leapfrog the restrictions using VPNs. Ndolo’s petition was heard about two weeks after Kenya’s ICT Cabinet Secretary Eliud Owalo promised to work with the National Assembly to regulate night TikTok live sessions that have been flagged for airing immoral content. Ndolo also reportedly hinted at a plan to amend the Computer Misuse and Cyber Crimes Act to protect Kenyans from pornographic content shared on TikTok. However, Majority Leader Kimani Ichung’wah has suggested that a complete ban on TikTok would result in thousands of young Kenyans losing their livelihoods. The World Population Review (WPR) shows that 27 percent of the Kenyan population of 54,027,487 is on TikTok, and many of them are creators, publishing entertaining content for direct or indirect financial gain or selling their products and services online. Minority Leader Opiyo Wandayi explained that banning the app would be a step backwards in an increasingly digital age. The assembly seems to be leaning towards heavily regulating the platform instead. Kirinyaga Woman Representative Jane Njeri said, “I use [TikTok] to impact the children. Young people on the platform are making a living, and we cannot entirely do away with the content. Perhaps what we can prioritize is the regulation of social media platforms, including TikTok.” The Kikuyu MP has advised Ndolo to petition instead for the regulation of the platform, including the age limit and the content. He has also suggested fines for anyone who shares explicit content. In Kenya, there are mixed reactions to the news. While some side with the petitioner, Ndolo. “When you switch to LIVE videos (from 10 pm onwards), you’ll see Kenyan children, men/women exposing themselves.” Others think the assembly is barking up the wrong tree. “They can’t ban corruption but are so concerned about an app that some folks depend on as their source of income. They should prioritize reviving industries, creating jobs for the youth, and locking up those corrupt leaders. It’s an absolute garbage of an idea.” Another Kenyan, Samuel Ochanji, says the petition to ban TikTok is an exercise in futility as Kenyans will still access the app via VPN.
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- August 16 2023
TechCabal Daily – Kenya probes TikTok
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Kenyan lawmakers are probing TikTok. A private citizen “Bob Ndolo” reportedly petitioned the lawmakers to look into the social media platform because it’s “a threat to the cultural and religious values of Kenya”. Ndolo told lawmakers that if TikTok is not banned in Kenya, it could lead to a decline in academic performance, and mental health issues amongst youth. Kenya’s Public Petitions Committee will now review the issue and report back in 60 days. In today’s edition Telecom Egypt records $217 million profit Jumia records lowest losses in 4 years CBK increases Airtel Money’s limits MTN wants to sell 30% of its fintech arm The World Wide Web3 Event: The Moonshot Conference Opportunities Telecom Telecom Egypt records $217 million profit in H1 2023 Image Source: Capacity Media. Telecom Egypt has released its financial report for H1 2023. The company recorded a net profit of E£6.7 billion ($217 million) in H1 of 2023, a growth driven by its 75% year-on-year growth in wholesale revenue and strong retail performance. The financial results: Per the report, Telecom Egypt’s total revenue grew to E£28.1 billion ($909 million), a 38% growth compared to H1 2022. There was also an increase in its customer base across the board. It reached 12.6 million mobile customers during this period—a 7% year-on-year growth. The number of fixed voice subscribers and fixed-broadband internet customers increased by 5% and 8% respectively. The company’s EBITDA for the first half of the year reached E£11.96 billion (~$387 million), marking a significant 48% increase from the previous year’s E£8.06 billion ($278 million). The company also achieved a high margin of 42.5%, compared to the previous margin of 39.5%, which was attributed to an improved revenue mix. ICYMI: In May,Egypt sold a 9.5% stake in Telecom Egypt for $121.6 million as part of a move to raise revenue from privatising state-owned firms to meet a series of foreign debt obligations. Until the recent sale, the government held 80% of the Egyptian Stock Exchange-listed company, with the rest in free float. Zoom out: Telecom Egypt owns 45% of Vodafone Egypt, the largest mobile network operator in Egypt by active subscribers, with a 42% market share in the mobile carrier space. 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. E-commerce Jumia records lowest losses in 4 years GIF source: HelloGiggles Jumia is still on a long road to profitability. The company’s Q2 financial report shows a reduction in losses—the lowest reported in four years. Its operating losses slowed to $23.3 million thanks to a massive reduction in sales and advertising expenses. While Jumia spent $22.2 million on advertising in Q2 2022, it spent only $5.8 million in Q2 2023. Its general and administrative expenses and technology expenses were also lower compared to Q2 2022. The company said, “Usage performance continued to be affected by the difficult operating environment with record levels of inflation impacting consumers’ spend as well as sellers’ ability to source goods.” Hit with a blow: Jumia was affected by worsening macroeconomic conditions in Nigeria, one of its biggest markets. Nigeria’s inflation rate has remained above 20% throughout the year, driven by high food prices. Critical but complex reforms such as the removal of fuel subsidies continue to put a strain on the purchasing power of consumers. Yet, the struggles go beyond Nigeria.Ghana’s inflation rate also hit 43%, while Egypt’s rose to around 35%. Across all of Jumia’s markets, the average inflation rate is 14%, and currency depreciation in nine of its ten markets shows the difficulty of its goal of moving towards profitability. Zoom Out: Overall, the task of figuring out profitability during one of the worst economic periods hangs heavily on the company’s neck. Late last year, it overhauled its board, and co-CEOs Jeremy Hodara and Sacha Poignonnec stepped down as the company renewed its focus on profitability. 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. Fintech CBK increases Airtel Money transaction limit GIF Source: 4GIFs Yesterday, the CBK granted Airtel Money approval to increase its transaction limits. This follows Monday’s announcement where M-PESA was allowed to increase its transaction limits from KES150,000 ($1,043) to KES500,000 ($3,477) per day. Now, Airtel Money has joined the approval list. Its customers can now hold up to KES500,000 ($3,477) in their wallets, and conduct transactions of the same amount daily. Similar to M-PESA, the limit per transaction for Airtel Money will be KES150,000 ($1,043) which will allow customers to conduct multiple transactions up to the daily limit of KES500,000 ($3,477). Airtel Money states that the increase will “provide them with the flexibility to conduct larger transactions and manage their finances more effectively”. Zoom out: Both Airtel Money and M-PESA are popular in Kenya. However, M-PESA remains a dominant force with a market share of 96.5% in the mobile money space. Airtel Money comes second with a modest 3.4%. Fintech MTN wants to sell 30% of its fintech arm MTN is up for sale. If you read yesterday’s newsletter you’d know that Mastercard agreed to buy a minority stake in MTN’s fintech arm. Now, the telecom has announced that it is looking for more investors to buy as much as 30% of its fintech segment. They are particularly on the lookout for strategic investors. Image source: YungNollywood Strategic investors? Yes. This means that investors have to bring more than just money to the table. For example, Mastercard has an international payment infrastructure that MTN needs to facilitate cross-border payment. In 2021, the payment processor partnered with MTN’s MoMo
Read More- August 15 2023
The long road to building sustainable food systems in Africa
Food is expensive in many African countries and not enough for everyone. It has caused political revolutions in Egypt, Sudan, and Tunisia. And it was the inspiration for the 1985 hit, ‘We Are the World,’ courtesy of Lionel Richie and Michael Jackson. Yet the problem is far from being solved. Technology companies are stepping into the ring of entities duelling with this problem, and they have a chance to show that aggregating smallholder farmers with technology and farming support can make a dent. South Africans spend a third of their income on food. In 2021 Egyptian families reportedly spent up to 45% of their monthly expenditure on food. In Kenya the figure rises to 46.7%, Cameroonian families spend 45.6%, and in Algeria, food gobbles 42.5% of monthly expenditure. In Nigeria, Africa’s most populated country, 56% of every naira earned is spent on food. It is an unlikely problem given that Africans are more likely to work on a farm than any other job. In 2020, almost 44% of Africans were employed in the agriculture sector, according to Statista. Other sources put the figure much higher. Despite the agricultural sector providing work for more people than any other sector, 37 African countries (out of 54) face “hunger levels that are ‘Stressed’ or higher,” per the 2022 Global Hunger Index, an annual report from Concern Worldwide and Welthungerhilfe. For many decades, the hunger problem negatively defined Africa in Western media. A lot of that negative coverage has been reduced on the back of local and global criticism over the portrayal of Africa as a hungry continent. Fewer Africans are hungry relatively speaking and in absolute terms. However, while the number of people starving has reduced, the number of people who are one shock away from hunger has increased. In the last months of 2022, more than two-thirds (70%) of people most affected by the global food crises lived in just three East African countries—Ethiopia, Kenya, and Somalia. Persistent insecurity in Africa’s backyards does more to undermine local and international aid efforts to improve agriculture and deliver help to affected populations, together with drier-than-normal weather the violence forces farmers to allow fertile fields to lie fallow or give up harvests. Russia’s invasion of Ukraine is a pain African countries could do without. But the bigger effect of the unfortunate war has been a cut in aid from Europe that supported hunger alleviation programs. Still, local conflict is a more pressing challenge to building up Africa’s fragile agricultural ecosystems. Usually, the people who suffer the most are smallholder farmers in places affected by both a changing climate and violence. They usually depend on the food they produce to feed their families and sell the excess to earn some money. When they cannot go to their farms, everyone suffers. From a big-picture perspective, things seem to be getting better—marginally and slowly. Farming practices have improved ever so slightly due to land reforms in some African countries. And more modern farming approaches are taking root. Showing that some of the problems facing efforts to provide sufficient food for Africans are more solvable than stopping gunfights. Importantly Africa’s growing class of tech entrepreneurs who typically focus on digital payment technologies are finding the opportunity to solve these problems attractive. Take ThriveAgric for example, a Nigerian startup that combines financing with market access support for smallholder farmers. In the last 3 years, Thrive Agric has built a network of 500,000 farmers that it supports with financing for farm inputs. The company has also entered partnerships with commodity boards to help it find markets for the farmers they support. Earlier this year, Thrive Agric announced that it had hit a milestone of $100 million in credit lent to farmers in its network. Thrive Agric is not paid back in cash. It loans against expected crop yield, works with the farmers to improve yield and manage farming operations and sells the harvest to a network of off-takers. Profits are shared with farmers, Oshone Anavhe, Thrive Agric’s VP of operations explained. This creates an interesting model that effectively aggregates smallholder farmers and lends Thrive Agric the scale of a commercial player—albeit with more people employed. It was not always a smooth ride for Thrive Agric. It originally began life as a crowdfunding platform that funded farmers and split 80% of profits between farmers and subscribers and kept 20% for itself. But Covid-19 pandemic restrictions changed that and almost sank the startup before it managed a turnaround and opted to pursue a model that relied on institutional funding instead of flighty short-term loans from multiple subscribers. The untold story of how ThriveAgric survived a turbulent 2020 The firm has since raised money from Nigeria’s central and commercial banks, Ventures Platform, the World Food Program, and USAID. Startups like Thrive Agric may be key to resolving one of the big problems facing agriculture across the continent. Which is that most of Africa’s farms are too small to produce much more than the farmer’s family will eat for the farming season. Aggregating these smallholder farms with technology and input support is one way to derive some of the efficiencies of large farms without actually owning a large farm. South Africa, the continent’s leading agricultural producer, is a model of agricultural efficiency for the rest of the continent. It has both the largest agricultural land on the continent—96 million hectares—and the largest concentration of commercial farmers at 32,000. Between 5,000 to 7,000 of these farmers produce four-fifths of the country’s agricultural produce, according to the US International Trade Administration. Agricultural production in South Africa is complemented by a strong agro–processing industry that represents 18% of the manufacturing output of South Africa yearly. Processing raw produce from South African farms is second only to auto-manufacturing in terms of gross value added. The country’s agricultural sector more than doubled in value and volume since 1994. It is one of the bright spots in South Africa’s economy despite the broader economic woes and even through Covid–19. “At
Read More- August 15 2023
Driven by food prices, Nigeria’s headline inflation hits 24% in July
Data from Nigeria’s Bureau of Statistics show that Nigeria’s headline inflation hit 24% in July. Data from Nigeria’s Bureau of Statistics showed that headline inflation for July hit a high of 24.08%. It is an 18-year-high after last June’s inflation figure reached 222.79%–Nigeria’s inflation rate has stayed above 20% all year. According to the NBS, prices rose 2.9% month-on-month. July’s inflation was again driven primarily by an increase in the prices of food and nonalcoholic beverages as food inflation for the month also climbed to a worrying 26.98%. According to the NBS, “The rise in food inflation on a year-on-year basis was caused by increases in prices of oil and fat, bread and cereals, fish, potatoes, yam ad other tubers.” Kogi, Lagos and Bayelsa had the highest food inflation figures. Housing, water, electricity and gas also contributed to rising prices, while transportation was the fourth biggest driver of inflation, showing the effect of removing fuel subsidies. While fuel subsidy removal did not impact June’s figures much, its effect is now being felt in consumer prices. While Nigeria’s Central Bank has so far focused on stabilizing the exchange rate under the Bola Tinubu administration, it has continued to do a poor job of keeping inflation under control. In last month’s MPC meeting, the bank elected to raise interest rates by 25 basis points. It followed Godwin Emefiele’s decision to raise interest rates twice before he was suspended as CBN governor. Today’s inflation data again highlights the need for the Central Bank to prioritise policies to bring inflation under control. So far, increases in interest rates have not worked. Additionally, despite the Federal Government’s announcement of a plan to arrest food inflation, it is unclear when those plans will be rolled out. Forming a commodity board is at the heart of the government’s intervention plans, but history suggests that commodity boards are ineffective and instead encourage corruption.
Read More- August 15 2023
How Congo Business Summit can help Kenyan startups expand to Kinshasa
Noel K. Tshiani is the managing director of Congo Business Summit, a flagship conference and expo organised by Congo Business Network. The network works with startups, corporations, and government officials in the Democratic Republic of Congo and abroad. With a profound dedication to innovation, the organisation is passionate about nurturing and advancing the country’s startup and tech ecosystems, recognising the transformative impact they can have on the country’s economy. There is no better time than now to draw attention to the underexplored opportunities for Kenyan tech startups in the Democratic Republic of Congo (DRC). Set to take place at Pullman Kinshasa Grand Hotel from October 12 to 13, 2023, Congo Business Summit is the largest gathering of startups, innovation leaders, and investors in the DRC. It provides an unparalleled environment for engaging discussions, strategic networking, and fostering partnerships. The event will feature exhibitions, panels, and workshops on topics related to startups, entrepreneurship, investments, and technology. And it promises significant media visibility and direct access to investors for participating startups from Kinshasa, Lubumbashi, Goma, and Matadi. The DRC, a vast country with a population of over 100 million people, has been experiencing steady economic growth and digital transformation. As a result, an abundant and untapped landscape ripe with opportunities awaits Kenyan tech startups eager to explore new markets and drive unprecedented growth. The DRC’s strategic location, bordering nine countries, offers an additional potential consumer base of around 250 million people – a prospect too significant for any ambitious startup in Nairobi to overlook. For years, the narrative about Congo-Kinshasa has been dominated by its natural resources, valued at nearly $24 trillion. However, this perspective significantly underestimates the vast business opportunities that the country presents beyond just the mining sector, especially for tech startups ready to dive into international expansion. The DRC’s youthful and large population, reasonable labour costs, and massive consumer market provide a wealth of opportunities for growth and scale. That is why Kenyan tech startups need look no further than their homegrown success stories for inspiration. Equity Bank, as a prime for example, expanded into the Democratic Republic of Congo and has since merged with Banque Commerciale du Congo. The bank has since achieved remarkable success, with more than one million customers. Innovative startups in Kenya in sectors such as fintech, edtech, agritech, insurtech, and medtech can find a dynamic and receptive market in the DRC. The country’s technology infrastructure is constantly improving and there is a growing demand for innovative solutions to everyday challenges, from financial inclusion to access to quality education, healthcare, and sustainable agriculture. Congo Business Summit, with its diverse representation of various sectors, provides a unique platform for Kenyan tech startups to connect with Congolese counterparts, potential business partners, and government decision-makers. It is a rare opportunity to gain first-hand knowledge and insights into conducting business in the DRC, navigating regulatory requirements, understanding consumer behaviour, and forging business partnerships. Kenyan tech startups should approach the DRC market not only as an opportunity for business growth, but also as a chance to contribute to the socio-economic development of both countries. By introducing innovative solutions and services, Kenyan tech startups can help to address key challenges, create jobs, improve living standards, and promote mutual prosperity. The DRC is ready and open for business, and for Kenyan tech startups looking to grow and expand, the opportunities are limitless. As we look forward to the upcoming Congo Business Summit in October, I encourage Kenyan tech startups to explore the untapped potential in the DRC. Kenyan entrepreneurs can in fact break new ground, disrupt industries, create value, and drive sustainable development across borders. The future is here, and it is full of promise in the heart of Africa: the Democratic Republic of Congo.
Read More- August 15 2023
After M-PESA, Airtel Money increases wallet limit to $3,400
Airtel Money has received approval to increase mobile money limits to KES 500,000 ($3,400). Customers will also transact up to KES 500,000 daily, up from KES 300,000 ($2085). Yesterday, Safaricom announced it had made some adjustments to its M-PESA wallet, reporting a limit increase from KES 300,000 ($2,085) to KES 500,000 (a little over $3,400). The company further shared that the daily transaction threshold had also been raised to KES 500,000 from its previous mark of KES 300,000. Today, Airtel Money has joined this conversation, matching the higher limits after receiving approval from the Central Bank of Kenya (CBK). This means that Airtel Kenya’s mobile money users can now hold up to half a million Kenyan shillings within their wallets and conduct transactions of the same amount daily. However, just like M-PESA, the limit per transaction will remain limited at KES 150,000 ($1,043). Anne Kinuthia-Otieno, Airtel Money’s managing director, said the company was “elated about the CBK’s decision as this change will significantly empower our customers and partners by providing them with the flexibility to conduct larger transactions and manage their finances more effectively.” Expanding the daily transaction cap will likely bring advantages to a diverse customer base, including governmental entities and other stakeholders. In terms of market share, Airtel Money is no match to market leader M-PESA. As of March 2023, M-PESA commanded a market share of 96.5% in the mobile money space. Airtel Money came in second position with a modest 3.4%, trailed by Telkom Kenya’s T-Kash with just 0.1%. The central bank of Kenya and other agencies have been trying to level the playing field in the mobile money sector. Yet, these efforts have not been favourable to smaller companies. M-PESA stands as a dominant force in Kenya’s payment services landscape. While Safaricom has denied its dominance, M-PESA still captures most payment service avenues. These avenues have been made interoperable in recent times. However, the biggest boost could stem from agency interoperability. This development could empower customers to use Airtel Money and T-Kash more by tapping into M-PESA’s extensive agency network. This has been partially accomplished; M-PESA’s tills and pay bill numbers have achieved interoperability with Airtel Money and T-Kash, yet this has not yielded significant shifts in creating a level playing field for other contenders. Conversations have also surfaced about the potential opening of M-PESA’s agency network to its competitors, potentially expediting other participants’ growth. However, this development has not been formally announced, possibly due to delays. Considering the substantial resources invested in its development, Safaricom might be hesitant to share its network, especially with entities that did not contribute to its growth.
Read More- August 15 2023
Jumia Q2 2023 report: Active customers decline by 1 million as company slows losses
Jumia’s Q2 financial report shows a reduction in losses as the company continues to talk about the importance of “progress towards profit.” Its operating losses slowed to $23.3 million in Q2 2023, the lowest reported in four years, thanks to a massive reduction in sales and advertising expenses. While Jumia spent $22.2 million on advertising in Q2 2022, it spent only $5.8 million in Q2 2023. Its general and administrative expenses also reduced because of layoffs earlier in the year, while technology expenses were also lower compared to Q2 2022. Despite these positives, Jumia was affected by worsening macroeconomic conditions in Nigeria, one of its biggest markets. That resulted in revenues of $48.5m for the quarter, down from $57.3m in Q2 2022 and a lower order volume of 6.5 million vs 10.3 in Q2 2022. Its active customers also reduced by 1 million, with 2.4 customers in Q2 2023. Gross Merchandise Value, the value of all goods sold on the Jumia platform, also fell to $202 million. The company said, “Usage performance continued to be affected by the difficult operating environment with record levels of inflation impacting consumers’ spend as well as sellers’ ability to source goods.” Nigeria’s inflation rate has remained above 20% throughout the year, driven by high food prices. Critical but complex reforms such as the removal of fuel subsidies continue to put a strain on the purchasing power of consumers. Yet, the struggles go beyond Nigeria. Ghana’s inflation rate also hit 43%, while Egypt’s rose to around 35%. Across all of Jumia’s markets, the average inflation rate is 14%, and currency depreciation in nine of its ten markets shows the difficulty of its goal of moving towards profitability. Moving away from being the everything app? In 2021, Jumia began a critical move towards delivering grocery and everyday items. With the tagline “your every day delivered,” the company slowed its focus on high-ticket items, believing that groceries and food would improve stickiness. But that strategic shift has been reversed. The company said, “JumiaPay app services, combined with the FMCG category, which includes grocery products, accounted for 45% of the decline of items sold and 32% of GMV decrease during the quarter. In contrast, we are encouraged by the early signs of growth in some of the priority categories, such as Appliances, where our efforts to rebuild supply are paying off.” As a result of this strategic shift, the company’s average order value reached $31, an 18% improvement year-over-year. Yet, declining orders overall meant that this increase in order value was insufficient to improve Gross Merchandise Value. The introduction of Buy Now Pay Later (BNPL) services through third parties may be enough to boost order volume, with Jumia planning to roll it out in Egypt, a market already at ease with BNPL. Overall, Jumia has the unenviable task of figuring out profitability during one of the worst economic periods and doesn’t have an unlimited timeline. As of June 30, 2023, the company had a liquidity position of $166.3 million, comprised of $61.0 million of cash and cash equivalents and $105.3 million of term deposits and other financial assets.
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