- June 20 2023
TechCabal Daily – Airtel launches 5G in Nigeria
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Here’s your reminder that you can win Showmax subscriptions, merch, shopping vouchers and more if you refer TC Daily to your network. All you have to do is share the unique link in the referral section of this newsletter. In today’s edition Airtel Nigeria launches 5G CBN relaxes limits on dom accounts Glade loses $214,000 to hackers France to help SA battle cybercrime The World Wide Web3 Event: The Moonshot Conference Opportunities Telecoms Airtel Nigeria launches 5G Airtel Nigeria has joined the 5G gang. Airtel has launched its 5G network in four states in Nigeria—Lagos, Ogun, Abuja, and Rivers states, per Nairametrics. The network operator is the third-largest in the country, following MTN and Globacom. It bought the 5G spectrum and additional spectrum for its 4G in January from the Nigerian Communications Commission (NCC) for $316.7 million. Image source: Giphy What does this mean? According to Airtel, 5G is 20–30 times faster than 4G. So, Airtel’s customers, about 27.1% of Nigeria’s population, can download HD movies, and 4K videos in just a few mere seconds. And gamers can play high graphic games with much less lagging. At least theoretically. Late to the party? Airtel is joining the race towards 5G network deployment in Nigeria, months after MTN and Mafab Communications did. Both Mafab and MTN announced that they had purchased theirs in February last year. In September of that same year, MTN commercially launched its 5G service. Mafab Communications launched its own in January. MTN, on the other hand, has reportedly rolled out 588 5G sites and brought the 5G network to 5G-enabled smartphones. 5G-enabled phones? Yes, not all phones or iPhones can tap into the 5G spectrum. You can find out if your phone can by checking its mobile data settings. Moniepoint ranked 2nd fastest-growing African company Moniepoint is Africa’s second-fastest growing company, as shown in FTs latest report. We also processed 1 billion transactions worth $43 billion in Q1 alone. Read all about it here. Economy Nigeria’s central bank relaxes limits on domiciliary accounts Image source: Zikoko Memes If your wallet is feeling a little funny, it’s probably because it has heard the news. The Central Bank of Nigeria (CBN) has directed deposit money banks (DMBs) to allow customers to withdraw or transfer up to $10,000 every single day! Per Techpoint, it has also removed the restrictions on deposits into domiciliary accounts. There are strings attached: With all of these changes are coming more responsibilities for banks. For example, the CBN requires banks to provide returns containing the purpose of the transaction. A wind of change: It’s just one of the many changes that have been swirling around like a tornado ever since President Bola Ahmed Tinubu took the stage. The government has floated the naira and reintroduced the “Willing Buyer, Willing Seller” model at the I&E Window. This will allow banks to sell dollars at any price a customer is willing to buy, just like the Bureau de Change does. Outside banking, Tinubu’s government has also pulled the plug on fuel subsidies, sending the price of fuel soaring. Cybercrime Nigerian fintech, Glade, loses $214,000 to hackers Glade has joined the list of Nigerian financial service providers that have had a not-so-merry encounter with hackers. This time, $214,000 was lost. According to insiders familiar with the matter, the breach happened sometime in 2022, and the perpetrator of the sneaky act was a former company employee who is currently on the run. Glade Co-founders Victor Liyi and Temitope Hundeyin How did it happen? The company’s CEO, Liyi Victor, confirmed the breach and stated that the perpetrators hacked the company’s backend infrastructure and made away with the funds. The case has since been reported to law enforcement agencies. A leadership challenge? The startup also bade farewell to its co-founder, Temitope Hundeyin, who left the company after the breach happened. Hundeyin voiced her frustration with being sidelined in the management of the business. In response, Victor defended his decision to part ways with Hundeyin, highlighting the company’s need to adopt leaner operations as the rationale behind his choice. Despite Victor’s assertions, a current employee who asked to remain anonymous revealed, “Liyi runs Glade all by himself. He answers to no one and even gets into brawls with investors.” A series of hacks: Last month, crypto startup, Patricia, lost a whopping $2 million to hackers in 2021. There were also reports of a hack at another Nigerian bank, Globus. Other companies hacked include MTN’s MoMo, and fintech unicorn Flutterwave. Cybersecurity France aids South Africa in battling cybercrime Image source: YungNolly South Africa and France have partnered to improve the Special Investigation Unit’s (SIU) ability to investigate and address cybercrime effectively. Justice Minister Ronald Lamola and French Minister for Europe and foreign affairs, Catherine Colonna, signed the partnership on Monday. Measures taken: The agreement sets the stage for the establishment of an anti-corruption academy in Tshwane, which will address the requirements of the SIU, as well as law enforcement and anti-corruption agencies within the Southern African Development Community (SADC), both in Commonwealth and non-Commonwealth nations. Zoom out: South Africa leads the continent in the number of cybersecurity threats identified in the country, according to INTERPOL’s 2022 African Cyberthreat Assessment Report. In 2022, the country had 230 million threat detections in total. In second place was Morocco at 71 million. By joining forces, the partnership is expected to enhance South Africa’s skills and capabilities in dealing with cybercrime within the country. Crypto Tracker The World Wide Web3 Source: Coin Name Current Value Day Month Bitcoin $26,951 + 1.99% + 0.33% Ether $1,731 + 0.38% – 4.67% BNB $242 – 0.38% – 21.87% Solana $16.04 + 3.30% – 20.85% * Data as of 05:25 AM WAT, June 20, 2023. The UK’s crypto and stablecoins law has been approved by the House of Lords. CoinDesk reports that the Financial Services and Markets Bill which stands to recognise crypto as a
Read More- June 19 2023
Inside Haul247: The Nigerian logistics startup offering “Airbnb for trucks”
Haul247, a Nigerian end-to-end logistics platform connecting businesses to haulage and warehousing assets, is reimagining the logistics space through its Airbnb-for-trucks model. Here’s how the startup is paving its own way in the logistics space. “247” is a popular slang that means constant availability of a thing throughout the entire day, all seven days of the week. In the context of business, It emphasizes the idea of unceasing efficiency, productivity and effectiveness. These are some of the qualities that Haul247 prides itself in, according to Sehinde Afolayan, the CEO of the logistics startup. “For logistics, generally, there is no idle time,” he says. During a conversation with TechCabal, Afolayan shares the inside story of Haul247—which he believes has the potential to become the Nigerian equivalent of Airbnb for trucks—and what makes them stand out from established players in the field like Lori and Kobo360. In the past few years, the Nigerian logistics startup ecosystem has grown tremendously, with the advent of food delivery startups like Jumiafoods and last-mile delivery services like Gokada as well as end-to-end logistics platforms like Lori, Kobo360 and now Haul247. These startups are breaking the barriers of inadequate road networks, traffic congestion, and limited warehousing facilities and making logistics more seamless for businesses. Haul247 offers large companies the opportunity to book trucks and warehouses for their logistics needs across multiple Nigerian geolocations. According to Haul247’s CEO, they chose to work with large FMCG multinationals such as Unilever, PZ, etc due to their possession of a global vendor registration licence, which allows Haul247 to not only capture a huge market share in Nigeria but to also establish a presence in other countries. However, Haul247 has plans to make its services available to smaller businesses in the future. According to Afolayan, Haul247’s secondary distribution feature—a warehousing offering for businesses—sets it apart from pioneers like Lori and Kobo360. Many FMCG manufacturers in Nigeria primarily operate from a single manufacturing hub, with a significant portion of their production activities concentrated in Lagos. From there, their products are distributed to various cities throughout Nigeria. But to Afolayan and Haul247, this system is flawed. “We felt that kind of arrangement was not efficient because there were a lot of externalities as a result of the distance. Unilever, for example, is sending a product from Agbara to Maiduguri—more than 1000km distance—and they can’t possibly guarantee the actual time that the product will get there because there are a lot of externalities as a result of the distance. Why can’t we just manage all your distribution centers in all these regions and all you have to do is ship to the distribution centers in those regions?” Afolayan said, explaining Haul247’s solution to this issue. Haul247 acts as an intermediary between different warehouse owners across the country and companies looking to store and distribute their products. As an intermediary, Haul247 does not own any warehouses or trucks. “We don’t own anything, we just ensure that the supply and demand are efficient,” Afolayan told TechCabal. “Companies just have to request for a truck or a warehouse via our website, give its specifications; area, location, size, and then we pick it up from there.” Haul247’s proprietary software enables individuals, enterprises, manufacturers, and FMCGs to book logistics or warehousing services. The software takes an order request from a shipper, attaches a quote, and then matches the request with the most suitable truck and warehouse for efficient fulfillment. Additionally, the system allows shippers to track the status of their goods until they reach their destination. Generating revenue and expansion plans Haul247 generates revenue through the commission they earn from leasing out warehouses to companies. Per a statement seen by TechCabal, Haul247 has over 1,000 trucks on its platform and about 200 warehouses covering over 151,000 square meters of space across various locations in Nigeria. Buoyed by a recent $3 million seed round—a mix of equity financing from Alitheia Capital through its Umunthu Fund in partnership with Goodwell and a $ 1 million debt capital—Afolayan told TechCabal that Haul247 is looking to scale and is setting its sights on expansion into Ghana and Uganda. “We want to grow in a sustainable way,” said Afolayan, remarking that they have learned valuable lessons from pioneers in the space. “We are really very concerned about growth that cannot be sustained, we want to grow at a level that can be sustained while giving a very strong service to our customers,” he said. “We don’t want to grow in a way that we are not now focusing on the unit economics or on the value that we’re creating.” Challenges abound but Haul247 is optimistic for the future According to Afolayan, lack of talent has been the greatest challenge for the logistics startup. “Talent is the biggest threat to us, especially tech talents. It is always very tough to get them, you have to be mindful of keeping them,” he said. Afolayan also cites the irregularities of some stakeholders—such as truck drivers and warehouse owners—within the logistics ecosystem as a huge barrier to Haul247’s operations. “We have experienced multiple pushbacks from truck drivers- who are a moving part of Haul247’s business model,” he said. “Some of these drivers do not keep up to appointment and usually disappoint.” To curb this challenge, Afolayan says Haul247 organises sensitization programmes to teach warehouse owners how to make the best use of their warehouses. Haul247 also incentivizes drivers, organises regular phone call checkups, and imposes a driving time limit to ensure driver safety. Despite challenges and a market dominated by powerful competitors, Haul247 is optimistic for the future. “Expect a unicorn in the coming years,” the Haul247 CEO remarked. “Expect a company that is genuinely run by seasoned entrepreneurs that understand how to run a business. We are not going to be all over the place in terms of growth pattern, we will be steady and we will keep growing.” What do you think about our stories? Tell us how you feel by taking this quick 3-minute survey.
Read More- June 19 2023
Nigerian fintech, Glade, loses $214,000 to internal hack
This Techstars-backed startup joins the list of fintechs that have suffered losses from breaches to their technology. Techstars-backed fintech startup, Glade, was the victim of a breach that led to the loss of $214,000. The company’s CEO, Liyi Victor, confirmed the breach to TechCabal but did not comment on how much was lost. Liyi said that the perpetrators hacked the company’s backend infrastructure and made away with the funds. The case has been reported to law enforcement agencies. Glade’s hack is the latest in the series of hacks that Nigerian financial service providers have suffered in the past year. Last month, in a story first reported by TechCabal, the crypto startup Patricia lost $2 million to hackers in 2021. The company said this week that it would arraign the hackers to court soon. There were also reports of a hack at another Nigerian bank, Globus. The long list of companies hacked also includes MTN’s MoMo and Flutterwave. Glade was part of the Techstars Toronto spring program in 2022, where it graduated alongside six African startups and raised $435,000 on demo day. TechCabal asked Techstars if it knew of the breach, but it appears the accelerator had been kept out of the loop. Sources close to the situation also told TechCabal that the breach at Glade happened in 2022 and involved a former employee. The company also shared that the ex-employee is on the run. Beyond the hack, the company’s co-founder, Temitope Hundeyin, has also left the company. A contentious co-founder’s exit Temitope Hundeyin, Glade’s ex-co-founder, told TechCabal that she was sidelined in the running of the business. “Victor Liyi, the CEO, oversees investors, partnerships, and corporate governance.” Hundeyin left the company after the breach. Liyi pushed back against the claims and told TechCabal that he fired Hundeyin because Glade needed to run leaner operations. He also denied the claim that he makes all the decisions at Glade. “[We have] a management team responsible for the day-to-day running of the company, and some independent advisors that provide objective oversight of the management team.” But five sources who have worked with Glade disagree with Liyi. One current employee who asked to remain anonymous told TechCabal, “Liyi runs Glade all by himself. He answers to no one and even gets into brawls with investors.” What do you think about our stories? Tell us how you feel by taking this quick 3-minute survey.
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- June 19 2023
Next Wave: How to flip Africa’s depressing trajectory
Cet article est aussi disponible en français <!– In partnership with –> <!— –> The short answer is to fix the political leadership. The long answer (for African/Africa-facing entrepreneurs) is what we’re more concerned about. It is a conversation we should all be having, that is, if you are not already. As the population and youth unemployment grow side by side and disposable incomes fall, Africa’s need for stable, visionary and effective political leadership at all levels has never been more acute. But Next Wave is not a very political economy newsletter. We’ll leave that for others. Instead, let’s focus on what the broad technical features of what building a business despite the dreariness might look like. Why is this important? If you’re reading this you are very likely interested in Africa’s technology and venture capital ecosystem. You have likely also read a few of the rosy projections of a soon-coming $180 billion or so digital economy. By the same token, if you’ve had your finger on the pulse of African streets, you will likely also have felt the dreary chill in household consumer expenditure as household incomes come under pressure across middle-class and low-income market segments in Africa. Not too long ago, if you mentioned emerging markets as an investment destination, some African countries would feature prominently. Today, not so much. A few African countries still make emerging market lists, but only politely. Some of the then-exciting economies in Africa have reversed growth trends and fallen (or are on the road to) frontier market status or less. Today, Southeast Asian countries like Indonesia, and Bangladesh, and emerging markets in Eastern Europe and Latin America command more attention. Occasionally even more than even South Africa (when it is not sacrificing trade agreements on the altar of foreign policy). There is a lot the governments can do. Unfortunately, the political theatre we see across the continent does not inspire much hope. Africa’s political elite do not seem capable of consistently linking their policies (in practice and posture) to economic improvement. On the other hand, if you run any form of enterprise you can choose to do one of three things. Resign yourself to the flow like dead fish. Align yourself with the political wind. Arm yourself with the knowledge that seats here are limited and the competition do not make any claims to innocence or gentlemanly dealing. Fight to maintain your “clean hands” AND embrace cold pragmatism. If you choose options 1 and 2, you can close this email and move on with your life. If you however pick option 3, you will have to add a few tools to your armoury. A lot of what follows is probably familiar to you. But it bears repeating. Partner Content: Infinix brings all-round fast charge technology to the NOTE 30 Pro The face in the mirror is not the fairest of all. Or even rated in the “Fairests of All” Let’s start with the latest McKinsey report “Reimagining economic growth in Africa: Turning diversity into opportunity”. One point it makes abundantly clear is that we have to acknowledge our economic and social underperformance if it will make any meaningful step forward and away from it. Compare this most recent report with this hopeful one (also from McKinsey) in 2010 and this in 2017, and the reality of how much we have failed just hits you in the face. One of the most unfortunate truisms today is that: Africa is still very poor. And Africans (collectively) are doing little to get out of the status quo. Individually, a lot of the people are brilliant. But collectively, the African destiny seems resigned to the ebbs and flows of global events. Like rising or falling commodity prices, a war in Ukraine, overhyped neo-colonial enemies that are useful for domestic political deflection or directly attacking countrymen or residents who have more or less melanin (depending on what part of the continent you are on). In the few occasional pockets of brilliance, it appears that prosperity for African economies may develop along regional or intercontinental corridors. Some of the investment inflows and inter-country relationships we see appear to be toeing this line. If you’ve been paying attention, you will notice that a Gulf-to-North-African-to-Indian-Ocean corridor is developing, increasingly driven by investment from Gulf countries like the UAE and Dubai-headquartered business concerns. The UAE, for example, is the fourth-largest investor globally into Africa—after China, Europe and the United States. Some of that investment even finds its way into stable but smaller economies like Rwanda who may not be on the coast, but are hitting some of the notes GCC investors want to hear. China is often the focus in conversations about non-Western investment (and business relationships) in Africa, but the eastern flank of Africa has always had its unique connections with Asia. These age-old relationships are being refined as Asian firms and investors from Singapore, for example, test Africa’s commercial waters. Even the Japanese are shaking off some of the decades-old reticence and looking beyond Tokyo into Africa. Granted, a lot of it is directed at finding and pocketing their slice of the African pie. But we already know that the world does not run on altruism, unfortunately. Irrespective of the ultimate motivation, the direction of interest of some of this investment also contains ingredients and signals investors and entrepreneurs who want to build a thriving business should pay attention to. To see and properly capture these opportunities, both governments and private sector players in Africa will need to… Stop fantasising about GDP growth Looking back 10 years, per capita consumption in Africa’s largest 3 economies is mostly stagnant. Chart by Tomisin Bamidele, TC Insights. Source: Trading Economics Depending on your market, you may need to pay attention to an entirely different set of economic indicators. While GDP indicators are useful macro snapshots, you will quickly realise that income and per-capita consumption spending habits are better indicators. This is not to excuse lackluster economic growth of course. It is
Read More- June 19 2023
SA government planning on holding onto Telkom stake
The South African government is planning to hold onto its stake in telecommunications company Telkom despite the tabling of above-market-value offers from bidders. According to reporting by the Sunday Times, the South African government has no plans of selling its stake in mobile network operator Telkom. The government currently holds a 40.5% stake in the company. Numerous sources tell Sunday Times that minister of communications and digital technologies Mondli Gungubele is opposed to the government reducing its stake, stating Telkom was still a strategic entity helping South Africa leverage connectivity on the African continent. He further voiced his opposition to any deal that would see the government rallying behind any prospective majority shareholder. Telkom currently has an offer from investment consortium AfriFund, led by former Telkom CEO Sipho Maseko and, its international partner, Axian Telecoms of Madagascar, in the form of R46 a share for a 35% stake in the company. Although the company’s shares were trading at R33 at market close on Friday, the Telkom board believes the offer is too small as it believes the telco has a lot of intrinsic value to be unlocked. Telkom CEO Serame Taukobong states that the company will not be entertaining offers below R60 per share. Contrary to the government’s stance, Taukobong is open to a transaction for Telkom, stating that “the market says we see an appetite for a transaction for Telkom but it has to be at a credible price” and that Telkom is “open to any conversations and any partnerships but will not compromise on the Telkom value position — whatever value has to be reflected on what we think the Telkom price should be at”. Additionally, the consortium seems to have the support of the Public Investment Corporation, which owns 14.1% of Telkom, and now the decision with regard to the government stake rests with the cabinet. Telkom recorded a 76.6% dip in headline earning per share (HEPS)—from 575.3 cents to 134.6 cents—according to its latest annual financial results, with the company blaming inflationary pressures and load shedding for the dip.
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- June 19 2023
TechCabal Daily – Heritage Bank denies $83 million fraud
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning It’s a new week and we’ve got a new survey for you. How has our storytelling been this year? Is there more you think TechCabal—not TC Daily—should be doing? Let the team know here. In today’s edition Heritage bank denies $83 million fraud Kenya greenlights its smart city Meta appeals Kenyan judgement TC Insights: What’s next for cleantech? The World Wide Web3 Event: Africa Tech Summit London Job openings Crime Heritage Bank denies $83 million fraud More African banks are suffering fraud. This time, Nigeria-based bank, Heritage Bank, is at the centre. Last week, reports surfaced that ₦49 billion ($83 million) had been stolen from the bank’s accounts. A Heritage Bank branch An inside job: Sources close to the bank revealed that a member of the bank’s IT department head “Akin” allegedly diverted the money into private accounts across six commercial banks. The sources also allege that the perpetrator conducted several counts of insider fraud. On Friday, in an email to TechCabal, the bank denied all allegations, labelling the claims wrong and defamatory. In a statement signed by the bank’s corporate community manager, Ozena Utulu, the bank notes that the accusations are a “fictitious narrative”. Layoffs and restructuring: The bank, however, revealed that it’s creating a long-term sustainability plan that will involve restructuring and layoffs. Customers aren’t swayed, though. Several report struggling with poor customer service, delayed transfers, inability to move depositor funds, and failure of the bank’s apps. At least two customers confirmed this to TechCabal. One notes that he had been unable to withdraw his funds from Heritage Bank for the last seven days, while another claims that the bank’s “network issues” have made it difficult for her to withdraw funds. Zoom out: Meanwhile, another Nigerian bank, Globus Bank, last week revealed that it suffered a hack in 2022 in which hackers took advantage of a USSD glitch to withdraw over ₦1.75 billion ($2.9 million) in customer funds. The bank has reportedly recovered ₦817 million ($1.3 million) of the funds, but over ₦962 million ($1.6 million) remain unrecoverable. Moniepoint ranked 2nd fastest-growing African company Moniepoint is Africa’s second-fastest growing company, as shown in FTs latest report. We also processed 1 billion transactions worth $43 billion in Q1 alone. Read all about it here. IoT Kenya greenlights smart city The land is green in Kenya…or at least it will be greener. Last week, in presenting the country’s budget for the 2023/2024 financial year, the country allocated Ksh15.1 billion ($109.6 billion) to fund its smart city Konza Technopolis. An illustration of Konza Technopolis What’s Konza Technopolis? Konza Technopolis—formerly called Konza Tech City—is a sustainable and futuristic city under construction on Nairobi’s outskirts. The city was first announced in 2008, almost 13 years ago, as part of Vision 2030, a government-led development blueprint with the stated aim of turning Kenya into a “middle-income country providing a high-quality life to all its citizens by the year 2030.” Unfortunately, successive governments have failed to kick off Kenya’s tech city. Since his election, however, President William Ruto has renewed the country’s zeal towards ICT. The city has also been receiving support from South Korea, which is also developing KAIST in collaboration with the Kenyan government. A breakdown: Of the amount, about Ksh4.8 billion ($35 million) has been allocated to the Horizontal Infrastructure Phase I at Konza City, Ksh 1.2 billion ($8.7 million) for the Konza data centre and smart city facilities, and Ksh 5.7 billion ($41.38 million) for the construction of Kenya Advanced Institute of Science and Technology (KAIST) at Konza Technopolis. Big Tech Meta appeals Kenyan judgement Image source: GIPHY Meta, like mercy, is saying no. What’s happening? On June 2, Kenya’s Employment and Labour Court ruled that Meta and its content moderation partner Sama would have to complete their contracts with all Kenyan content moderators. Throughout the year, content moderators have been in a legal battle with Meta and Sama after the big tech company dissolved its partnership with Sama over workplace harassment claims Sama received in 2022. Earlier this year, over 180 content moderators went to court to prevent Meta and Sama from firing them, and on June 2, the court ruled in favour of the content moderators. No jobs for moderators: Now, Meta is appealing the decision. In an email to TechCabal, the company states that the ruling is “confusing and contradictory” as Sama has exited the content moderation business and has no work for the content moderators. The big tech will also argue that the content moderators are not employees of Meta. Sama, which the court described as an “agent for Meta,” told TechCabal that the ruling was confusing. The company laid off the moderators in January 2023 after its contract with Meta had expired. The ruling now means that despite having no existing contract with Meta, it must keep the moderators employed. Zoom out: In the email to TC, Meta also states that it cares deeply about the health of its content moderators and has invested in providing for their needs, a contradictory statement given that Meta has been accused of poor treatment of content creators in Germany and other countries. In 2020, in the US, the company paid $52 million as compensation for moderators who suffered PTSD from the work they did. Experience Viva Technology Tune in to Europe’s biggest Startup and Business event here. TC Insights What’s next for cleantech? Africa’s energy demand is projected to double by 2040. Yet, according to a report by PwC, only 9% of the energy it generated in 2021 came from clean energy sources. While North Africa has the largest clean energy capacity on the continent, Central Africa’s capacity is set to almost double, given its 15,201MW worth of under-construction projects. Image source: Ayomide Agbaje/TechCabal Cleantech has the potential to scale the decelerating economic growth of Africa. So, there is a pressing need for African countries to expand their energy supply and prioritise their
Read More- June 17 2023
Nigeria’s unified FX rate will change how startups report revenue
For startups that operate in Nigeria and report their revenue to investors in US dollars, the recent unification of exchange rates in Nigeria might be a new hurdle. On Wednesday, the Central Bank of Nigeria (CBN) confirmed Nigeria’s move to a unified exchange rate. The unification immediately caused the Naira to lose 36% of its value and drop to a record low of $1/₦750. While the markets reacted positively to the announcement, Nigerian startups were not as enthused. For startups that raised capital in foreign currencies and reported revenues to investors in USD, a unified FX rate might be a new hurdle. Before now, many startups reported revenues using Nigeria’s official exchange rate of $1/₦462. It means that while $1 million in revenue two months ago was around ₦462 million, today it is ₦656 million. That increase (₦196 per dollar) is significant for startups that gain revenue in Naira. Although it was a common practice to report revenue using the official rates, some startups reported at the parallel rate (₦750). Startups that reported revenue to their investors using the former official exchange rate would be the most affected by the single rate. Nnamdi Ifechi-Fred, a digital economy analyst, told TechCabal that he thinks that startups that reported revenue at the official rate, would see “something change for them.” Some startup founders who spoke to TechCabal said that despite these changes, they will not be hurrying to the drawing board to rewrite their revenue targets for the year. For startups that had been reporting revenue in Naira before the unification, not much has changed. “We have been reporting our revenue in Naira for over two years. We didn’t agree on targets with investors based on dollars or euros,” said Romain Poirot-Lellig, the CEO of Kwik Nigeria, a mobility startup. “For me, it is important that when reporting, you are as close as possible to the local economy.” Adedeji Olowe, founder of Lendsqr, a lending SaaS fintech, told TechCabal that a unified FX rate will affect the previous valuation of startups and could “make them go very bad”. “I think things will cross-correct down the line because startups are still raising money. In truth, there is nothing startups can do about this,” he added. The multiple rates also dampened investor confidence because it was difficult for investors to repatriate their profits. Nigeria’s international bonds surged after rumours of a unified rate on Monday. Olowe told TechCabal that the unification of the FX rate could improve investor confidence. “If things continue this way, two things could happen: the FX could get better and investment could become easier for everybody.” Poirot-Lellig told TechCabal that the unified FX rate could be a good thing for businesses in the long run because it brings stability to the market. “The key thing when growing a business is operating in a predictable environment as much as possible. If you know that you will be able to access foreign currency regularly, then you can adapt your financial and economic planning accordingly.” Although the multiple rate system caused confusion for startups, it had its advantages. By reporting operating expenses at the official exchange rate and converting dollars at the parallel rate, startups could benefit from the multiple rates. For Mathew Saunders, head of investments at Future Africa, a venture capital firm, the unification of the FX rate “is an important step towards enhanced financial transparency for Nigerian startups, particularly when reporting to investors.” He added that while this measure could momentarily affect operational costs for most startups, it will ultimately benefit the ecosystem by cultivating an environment marked by more trust and clarity. For many Nigerian startups, the shift to a unified FX rate necessitates a reevaluation of their approach to making money. As founders navigate the changing landscape, they will need to find innovative solutions and create strategies to ensure continued growth and success in the face of evolving economic policies. Ultimately, the impact of this exchange rate unification on Nigerian startups remains to be seen, but it undoubtedly presents both challenges and opportunities for the tech ecosystem.
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- June 17 2023
Meta’s case in Kenya drags on
Lire en français Read this email in French. Editor’s Note Week 24, 2023 Read time: 5 minutes Hello Here is a few of this week’s most interesting tech stories from accross the world this week. Pamela Tetteh Editor, TechCabal. Editor’s Picks Meta’s case in Kenya drags on A June 2 court ruling found that Meta is the principal employer of 184 content moderators. Sama, its former content partner, is caught in the middle while Meta appeals the ruling. Learn more. Globus Bank gets hacked Through a sneaky USSD glitch, hackers wiggled their way into Globus Bank’s system and made off with ₦1.755 billion ($3.7 million) from unsuspecting customers’ accounts. Learn more. 45 Fluterwave accounts frozen in Kenya Nigerian fintech company, Flutterwave, has been sued by 2,468 Nigerian nationals in a Kenyan court, for allegedly being the medium through which they were defrauded of Ksh1.6 billion ($12.04 million). Learn more. MTN caught in a crossfire in Cameroon The bank account of MTN’s branch in Cameroon, which contains 14 billion CFA francs ($22 million) has been seized in the middle of a fight that MTN has nothing to do with. Now it’s affecting all of MTN’s operations in the country. Learn more. No dividends for Multichoice shareholders The dividends of Multichoice’s shareholders are taking a detour this year. The company is diverting all that money to funding of its streaming platform, ShowMax, because it believes that ShowMax can bring in blockbuster returns. Learn more. Green city gets half of Kenya’s ICT budget The Kenyan government has allocated $110 million for the ICT industry. However, nearly half of that amount will be used to develop Konza, a green city outside Nairobi Learn more. Kenyan Hustlers get more funding Still on the subject of budgets, Kenya has allocated Ksh. 10 billion ($72 million) to Ruto’s Hustlers Fund. This fund was launched in 2022 to support Kenyan SMEs and has reportedly reached 16 million people so far. Learn more. Next Wave Want to stay ahead of curve and get futuristic analysis of the business of tech in Africa? Then Sign up to the Next Wave Newsletter to get started. Sign up now. Nigeria unifies exchange rate Nigeria’s Central Bank (CBN) has floated the naira in a bid to loosen its control of the exchange rate, and eventually unify it. Learn more. Proposed content creator tax down to 5% Cue the sigh of relief! Content creators in Kenya won’t have to pay 15% tax anymore. Just a week after President William Ruto issued his command to review Kenya’s proposed content creator tax, the tax has be cut down to 5% Learn more. YouTube relaxes monetisation rules YouTube is relaxing the rules for its partner program, so new creators can start earning as early as possible from their video-making careers. However, it is still not rosy for new content creators. Learn why.. Who brought the money this week? Nigerian communications-as-a-service startup, Termii, raised $3.65 million in pre-seed funding. Egyptian logistics company, Trella, received $3.5 million in an undisclosed funding round from private equity fund, Avanz Capital Egypt. South African agri-tech company, Maltento, raised $3.3 million in an undisclosed funding round from Sand River Venture Capital. Nigerian logistics company, Messenger, raised an undisclosed amount in pre-seed funding. The round was led by Nama Ventures, with participation from Aidi Ventures and other angels. What else to read this weekend? As war rages in Sudan, small startups are helping people find food, money, and flee. WhatsApp Channels arrive fashionably late to the chat apps party. Nigeria’s new president has approved a new law which provides a legal framework for data protection. As LagRide drivers push for lower daily repayments, it’s time to ask if vehicle financing is right for Nigeria. Written by: Ngozi Chukwu & Written by: Hannatu Asheolge Edited by: Pamela Tetteh 18, Nnobi Street, Surulere, Lagos, Nigeria Unsubscribe from TC Weekender
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- June 17 2023
Flip app users can’t access funds as new owner, Blockfinex, blames slow migration
Users of Flip, a B2C crypto platform by Fluidcoins, have been unable to access their funds for months. Fluidcoins’s acquiring company, Blockfinex, acknowledges the problem and is working towards a resolution while planning to shut down the Flip app in order to prioritise Fluidcoins’ B2B potential. Users of Flip, an app developed by crypto startup Fluidcoins, have been facing persistent issues accessing their funds for several months now. These users, some of whom are in Flip’s Telegram group with over 300 members, have expressed frustration over the perceived indifference of Flip’s operators towards their plight. Blockfinex, a crypto exchange company that acquired Flip’s parent company Fluidcoins, told TechCabal that it is actively working to address these issues. They also shared plans to completely shut down Flip and focus on serving businesses instead of individual users. Lamide*, a product manager told TechCabal that he had difficulties accessing his funds in October 2022 due to a KYC (know-your-customer) process. In his conversation with TechCabal, he stated, “I deposited $100 into Flip [which promised a 6% annual yield]. However, in October last year, I realised that I couldn’t access my money because I failed to complete the KYC successfully.” He initially contacted Flip on Twitter, and they provided him with some steps to follow. But, despite diligently following the instructions, months passed without him being able to access his funds. Eventually, Lamide emailed the founder, Lanre Adenowo, who directed him to join the earlier-mentioned Telegram group. It was within this group that Lamide discovered other users facing similar issues and a variety of other problems with the app. According to Lamide, the Telegram group currently has around 333 individuals, including users and some employees of Fluidcoins. The range of problems reported by group members varied, from the inability to access their savings to the inability to retrieve funds from expired virtual dollar cards. Lamide emphasised: “Aside from users expressing their complaints and asking unanswered questions about the status of their funds, the company rarely communicates any information on the channel, but they keep making posts on Twitter.” A screenshot of said Telegram channel shows over 300 members and some users complaining. Image source: Lamide* Blockfinex, the company that acquired Flip’s parent company Fluidcoins last year, has confirmed that users are experiencing difficulties accessing their funds. Danny Oyekan, founder and CEO of Blockfinex, insists that only 20 out of the 34,000 users inherited from Flip may be facing these problems and that the money held up may be about $5,000. He explained, “The issues arise from technical and financial challenges that were unknown to us during the acquisition. To resolve them, we are currently migrating customers from Flip’s original wallet to another wallet.” Oyekan informed TechCabal that a migration form has been shared with users to facilitate the transition to Blockfinex’s new wallet. TechCabal has confirmed that such a form was actually shared on Twitter. In the post, which was made on May 5, the company said it will migrate the stablecoins—$TUSD, $USDT, or $BUSD—from their Flip wallet to Blockfinex’s wallet within 14 days. However, that did not happen. Conversations with customers indicate that some individuals still do not have access to their funds despite having completed the migration form. One customer however told TechCabal that the form does not cater to people who had pending withdrawals from their accounts. “I requested a withdrawal of 50 USDT from my Flip to my local bank on May 11 and till now the transaction has been pending, even though it has been deducted from my Flip. Now my balance is just 0.22 USDT and there is no provision for that issue in the form. There is someone whose money has been pending since April too. We raised this matter on the Telegram channel but got no response.” The screenshot shows pending a withdrawal on the Flip app. Image source: Flip app user Oyekan acknowledged the communication gap on Telegram, stating, “We have primarily been engaging with users who reach out to us on Twitter, inadvertently neglecting those on Telegram.” He also explained that “The migration is taking so long because Flip’s wallets are indexed wallets so we have to go through them one by one to match them to each user and migrate them manually. Today, the previous management tried a bit to help us fix the issue. ” A source close to the matter revealed to TechCabal that the delay may be due to inadequate information transfer from Flip’s former operators. The source suggested that the situation might have been different if the former operators had been more helpful with the migration. Given the complexities of the acquisition of Fluidcoins, it is understandable that there might have been communication gaps between the previous owners of Flip and Blockfinex. However, Lanre who initially founded Fluidcoins, and spoke to TechCabal, confirmed ongoing communication with the Blockfinex team and presented emails as evidence. He stated, “I am unsure if a migration is taking place, but I have been and still am available to help with any issues they reach out to me about.” Oyekan, on the other hand, told TechCabal that the migration is indeed taking place. “We are determined to quickly resolve the matter and eventually shut down the Flip app. We acquired Fluidcoins for the B2B aspect and not the B2C,” he said.
Read More- June 17 2023
Giants of e-commerce in Africa: The case of Jumia
This guest article was contributed to TechCabal by Osinachi Ukomadu. Seven years ago, Tunde began using Jumia to sell goods. He only had a little capital or experience, but he saw potential in the platform and decided to take a chance. Tunde began by selling small items like phone cases and chargers. Still, as he gained more customers and positive reviews, he expanded his inventory to include smartphones and other important phone accessories. In addition, he spent countless hours researching trends and negotiating with suppliers to ensure he could always offer competitive prices. Despite the challenges of running his own business, Tunde persevered. He dealt with demanding customers, shipping delays, and cash flow issues but never gave up. One of his biggest challenges was when someone tried to sabotage his business by leaving fake reviews. He contacted Jumia’s support team and worked tirelessly to dispute the false claims. Soon enough, the competitor’s reviews were removed. After a few years of hard work and several improvements from Jumia, Tunde’s business enjoyed success. He could hire employees, grow his inventory, and expand with a physical store. Jumia pioneered e-commerce in Nigeria and is one of Africa’s largest e-commerce companies. In 2022, they celebrated 10 years of e-commerce in Nigeria, and currently, they are active in nearly a dozen countries in the continent. They are also often called the Amazon of Africa because of their giant strides in the industry. Many people try to disparage them by saying they tried to copy the Amazon model; whether that is true or not is inconsequential. However, it is undisputed that putting something on the ground when they launched was a feat. This was when all the necessary infrastructure was not in place to establish a thriving e-commerce business in Africa. So, give them some credit for building a frontier. Jumia created its e-commerce business in the face of a lack of infrastructure and the right resources to foster growth. It was challenging, and they’re still facing such challenges today as they spread e-commerce across Africa. It’s been a case of establishing in some locations and quickly closing and moving to other places if it doesn’t work. However, it is crucial to note that just because a structure worked in the US, such as the Amazon model, doesn’t mean it will work in Africa. Every country and continent are beginning to adopt and localise technology and technology-enabled businesses in their climes. Adopting the Amazon model Before now, there was Internet 1.0, a copy-and-paste model, where everyone tried to do a version of an American company in their locality. However, people are beginning to realise that such ideas hardly scale because the local needs and challenges differ entirely from the locations they are copying those business ideas from. That’s the challenge that Jumia ran into and is still struggling through. This is because many things that make e-commerce work in Africa differ entirely from what makes e-commerce work in the US. The social nature of commerce in Africa, the payment rails, the logistics infrastructure, and the trust gap are critical missing pieces. They tried to solve all of these using the model that Amazon had mastered. However, they encountered challenges and had to develop ingenious solutions to handle some of the issues. It is challenging to change the culture that has prevailed in society for a long time. You have to ride the wave of that cultural norm while introducing a new way of doing things. E-commerce 2.0 and E-commerce 3.0 will drive this change. E-commerce 2.0—or B2B e-commerce and the like—is what Alerzo and Marketforce are operating, and it is enormous. E-commerce 3.0, on the other hand, is a peer-to-peer kind of e-commerce currently taking place in social commerce. So much of that will drive what e-commerce will be in Africa, and the big players will either figure out how to adapt to these new models or keep playing the old game to their detriment. Growth of Jumia The first-mover advantage of Jumia The first-mover advantage was indeed a real advantage for Jumia. They gobbled up a lot of customers when they came in initially, which helped them gain ground. They figured out how to bring goods into the country that ordinarily were challenging to get locally or, if available locally, were prohibitively expensive. Previously, someone would have to travel out of the country by obtaining a visa, buying a plane ticket, flying out, finding a supplier, buying the items they need, putting them back on a plane, and bringing them back into the country. In most cases, they would double the item prices compared to the price they paid in order to cover their expenses. In comparison, Jumia brings these things into the country in volume leveraging economies of scale, and you, an ordinary trader, can’t compete with their economy of scale. The economy of scale was a great advantage for them in bringing in items like phones and other consumer electronics to sell at reasonable prices compared to what was sold in the local market. Access to adequate funding Being well-funded and having the right people at the helm of leadership was critical to Jumia’s growth. They could build the kind of infrastructure that was not available; the logistics infrastructure, payment capabilities, etc. They also innovated with a pay-on-delivery system, which was a creative solution to payment issues. This helped them get many customers because trust was a huge challenge. The trust deficit is still there, but they lowered that barrier of trust with cash on delivery. This helped them win the hearts of many customers. However, they’re currently pulling away from that payment model because it’s become quite expensive. Some customers place an order only to reject the order upon arrival. This costs time and money in the fulfilment process. However, compared to the local market, they still have more variety, quality products, and better prices than most. More opportunities for growth The local market is getting smarter, and they are figuring out
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