- October 10 2024
African startups need financial backing for global ambitions, says VCs
African startups can build solutions that are scalable across the global market, investors who spoke at Moonshot by TechCabal on Thursday said. They need support in terms of funding, access to networks and market knowledge to achieve global ambitions. In Africa, the idea of expansion is mostly centred around launching in one of the “Big 4” markets and scaling from there. In recent years, African startups like TymeBank, Flutterwave, and Moove have set up shop in markets like Southeast Asia and North Africa. Penetrating foreign markets requires startups to have a clear idea of what it takes to succeed in different countries. This clear picture of the market comes from having investors who can back the founders’ ambitions. “It seems obvious but what works in African markets might need significant tweaking to work in markets like LatAm and Southeast Asia,” said Sadaharu Saiki, founder & GP at Sunny Side Ventures. Startups like TymeBank, which launched in South Africa and is now present in the Philippines, Vietnam, and Indonesia, often cite the similar macroeconomic conditions in Africa and Southeast Asia But it takes more than just similar market dynamics to build a successful product. This is where partnerships with local players come in handy. “There will always be someone who knows the market more than you. Leverage that knowledge through well though partnerships,” added Aaron Fu, director of venture investments at DCG. As the African market becomes highly competitive and somehow saturated, foreign markets are becoming increasingly attractive. To reach their potential of penetrating these markets, it will take a combination of “patient capital,” deep knowledge of the markets and partnerships with significant synergies.
Read More- October 10 2024
Interoperability critical to the future of payment solutions in Africa
Favourable demographics, economic growth in the past decade, and innovation in payments infrastructure are working to define the future of payments in Africa. African businesses, whether small traders or large corporations need reliable payment solutions tailored to their specific needs. In the past decade, payment startups have attempted to solve challenges facing the continent’s payment ecosystem, with many wins and a few drawbacks. African fintechs have come a long way, but much more still needs to be done, according to payments experts during a panel discussion at Moonshot by TechCabal in Lagos on Thursday. “All these African financial systems should work together to give customers seamless transactions across borders. For instance, you should be able to use mobile money while in Ghana and Kenya,” said Unini Campbell, BudPay chief commercial officer. Despite the regulatory headwinds, funding drought, and security breaches, African fintechs have shown resilience, building platforms that respond to local challenges. However, the panelists said, that interconnection and interoperability, which should help integrate various payments systems on the continent to deliver seamless cross-border transactions, is still low. Egypt, Ghana, Kenya, Nigeria, and South Africa—have all managed the transition to digital payments faster than the rest of the continent. The five have delivered the appropriate infrastructure and policies that are driving the growth of e-payments. Yet, transacting across the borders of the continent’s biggest payments markets is still a challenge. While Nigeria has made progress in card payments, travellers have reported cases where their cards get rejected. In some African countries like Sierra Leone, P2P, and C2B payments can take up to five days, slowing trade. “We are very good at creating policies in Africa, but how are we adapting the policies to ensure that if you have a license in Nigeria, you can use it across the other markets in Africa,” said Tolulope Adeyinka, MasterCard’s fintech business development lead, West Africa. “African fintech companies are very audacious and resilient. They have worked to solve problems with localised solutions. If policies are right, then we will be able to attract capital and talent.” It is projected that by 2025, both domestic and cross-border payment volumes in Africa will hit 200 billion. This growth will be driven by young, urbanised consumers. “The growth of domestic payments like Verve in Nigeria has been great. We are heading there, despite the challenges that the sector is facing,” said Wiza Jalakasi, Ebanx director of Africa market development.
Read More- October 10 2024
Open banking is ready for Nigeria, but CBN’s approval stands in the way
The Central Bank of Nigeria (CBN) needs to give the green light for open banking to become operational in Nigeria, panelists at Moonshot by TechCabal said on Thursday. Open banking in Nigeria was conceptualised in 2017 with strong backing from key players like Sterling Bank, Flutterwave, Paystack, and banking executives, the CBN’s approval is the missing piece in the puzzle. “All we need is CBN to blow the whistle to open banking,” said Adedeji Olowe, founder and CEO of Lendsqr, in a fireside chat with Uzoma Dozie, CEO of Sparkle. In 2023, the CBN released the first draft of a regulatory framework for open banking. Olowe, a Trustee of Open Banking Nigeria, admitted that developing systems, regulations, and syncing participating financial institutions and regulators have been challenging, contributing to why open banking is yet to kick off in Nigeria. Yet, it makes sense why open banking has picked up the pace in Nigeria over the last seven years; it has been tested in the U.K. as a tool to offer a level playing field for its leading lenders. Besides being one of the first countries to implement open banking regulations, open banking is also guided by the General Data Protection Regulation (GDPR), which provides a robust legal framework for data protection to ensure that users have control over their personal information. That same approach would be essential for Nigerians, especially groups accessing credit, said Dozie. With open banking, banks and other financial institutions share customer data with third-party providers like fintechs. This would allow the development of innovative financial products and services that benefit consumers, such as cheaper loans and personalised budgeting tools. It is particularly important to Lendsqr, a digital credit management startup that strongly believes that credit can be cheaper if lenders can access banking information through open banking. “Lenders want to know if they will get their money back. Open banking will ensure that they know who they are giving their money to,” Olowe said, arguing that pricing risk in credit due to little access to information about borrowers makes lending expensive. Both Dozie and Olowe believe regulators have locked in the most sensitive part of open banking: data privacy. The National Data Protection Commission (NDPC), Nigeria’s data privacy regulator, has been at the forefront of ensuring that open banking operates within the framework of the Nigeria Data Protection Regulation (NDPR). This regulation safeguards consumer data and is essential for the success of open banking initiatives in Nigeria. “
Read More- October 10 2024
Trust and partnerships key to unlocking the next level of Africa’s e-commerce
To unlock the next stage of growth in Africa’s e-commerce sector, issues like fragmented payments, lack of trust for digital platforms, and regulatory bottlenecks must be addressed. This was the major takeaway from a panel discussion at Moonshot by TechCabal on Thursday. According to recent data, the African e-commerce market is projected to reach $75 billion from 478 million consumers by 2025. Despite the growth, e-commerce penetration on the continent is currently at less than 40%, showing the potential for further growth. ` Addressing the trust deficit is a key step: e-commerce platforms must bridge the gap between consumers and traders. “If there is a trust deficit, the e-commerce provider has to address it because trust determines the success of any transaction,” said Sunil Natraj, CEO of Jumia Nigeria. According to Natraj, to ensure trust, e-commerce platforms have to ensure that they keep the service promises that they make to consumers. Partnerships between industry players are also essential to unlock the growth opportunities in Africa’s e-commerce sector. Tappi, a Nigerian e-commerce company that helps small businesses onboard onto the internet, partnered with telcos in West Africa to leverage their distribution channels. “Scaling is based on distribution and instead of trying to reinvent the wheel, you can utilise the reach of existing players to get to your target market,” said Kenfield Griffith CEO of Tappi. The company has also explored partnerships with banks to extend credit financing to SMES. While partnerships are important in unlocking the next level of e-commerce in Africa, startups must prioritise building a good product for customers. Because of the highly customised nature of e-commerce businesses, identifying synergies with potential partners can end up being a distraction away from a company’s core mission. “Consider partnerships only after figuring out the market,” said Anu Adedoyin Adasolum, CEO of Sabi. “Being able to scale through referrals should be a prelude to any partnership.” The market potential for e-commerce in Africa is vast, but so are the hurdles to be overcome before that growth can be realised. Navigating the route to that growth will take a collective effort to address issues of lack of trust, less-than-ideal infrastructure and tough regulatory and compliance frameworks across the continent.
Read More- October 10 2024
Energy and AI are the future of commerce, experts say at Moonshot
To capitalise on growing opportunities in global trade, Africa needs to focus on opportunities like energy transition and artificial intelligence, Anu Adasolum, CEO of Sabi, a startup that builds digital tools that enable trade, said at Moonshot by TechCabal on Wednesday. Demand for sustainability is surging due to rising consumer awareness, stringent regulations, and a growing emphasis on environmental responsibility. Africa is well-placed to plug into these evolving dynamics. “We have the minerals and the agricultural commodities. [We need] flows and solutions that enable businesses to plug into this demand,” Adasolum said in a fireside chat with Mudiaga Mowoe, CEO of Matta, a marketplace where manufacturers can source chemicals and other raw materials. Artificial intelligence also presents an opportunity to rethink the way we solve problems in the value chain of commerce. “One of the biggest problems you have when dealing with the informal sector is communication and engagement. AI bridges this gap,” Adasolum said. Businesses do not have to change their fundamental technology to integrate AI into their processes. In communication, there are AI bots that customers can interact with on WhatsApp, a communication platform many already use. AI can be overlaid with familiar technologies to make subcomponents of the process like placing orders and tracking supply more efficient. The technology also provides a standardization that can improve traceability—transparency in how goods and services are sourced. “With AI, our data structures can be a lot more flexible.” By exploring these opportunities, the continent has the potential to not only catch up but lead the way in the global trade value chain. logy can be overlaid on familiar communication technologies to make subcomponents of the process like placing orders and tracking supply more efficient. The technology also provides a standardization that can improve traceability—transparency in how goods and services are sourced. “With AI, our data structures can be a lot more flexible,” By exploring these opportunities, the continent has the potential to not only catch up but lead the way in the global commerce value chain.
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- October 10 2024
TechCabal Daily – AI for Africa, by Africa
In partnership with Lire en Français اقرأ هذا باللغة العربية Happy pre-Friday! It’s Day 2 of Moonshot by TechCabal and we’re still buzzing from yesterday’s explosive kick-off! 4,000 visitors from across the globe joined us at the Eko Convention Centre where we had an awesome experience discussing AI, cross-border payments, cleantech, and lots more. Our lineup for day 2 is the reason you absolutely need to be here. Sunil Natraj, CEO of Jumia Nigeria, Tosin Eniolorunda, CEO of Moniepoint, and creators Layi Wasabi and Fisayo Fosudo will discuss commerce, the creator economy, and building companies that last. Remember to come along with your conference tags so you can check-in without hassle. We’ve also outlined the program schedule so you can plan around it. We kick off at 9 AM GMT. See you soon! AI conversations dominate Moonshot day one Africa’s payments market has a technology problem Carbon credit financing can boost clean energy funding in Africa The World Wide Web3 Opportunities AI AI conversations dominate Moonshot day one Image Source: TechCabal Day one of Moonshot was filled with conversations around AI. From TED-style AI talks to product demos and panel sessions, AI was on the lips of almost every speaker—at least on the main stage. Even Nigeria’s tech minister, Bosun Tijani, joined the conversation. “We would have failed our people and the future generations if we sleep on artificial intelligence because these are a set of technologies that will control what you think, how you think, and how you do everything,” Bosun Tijani said during a fireside chat. After the Minister’s fireside chat, Bayo Adekunmbi, a professional with over 22 years of experience in AI, gave a powerful TED talk on how Africa can export the next generation of AI talent. In an age where global companies are falling over one another to secure AI talents, Africa may be the biggest winner. Bayo’s argument has also been echoed by different AI professionals we have spoken with in the past including Nigeria’s tech minister. Although data has been the biggest challenge in AI adoption on the continent, other challenges, like digital literacy also hinder the application of the technology. However, panellists at this session think there might be a way out—using voice data. This workaround is currently being employed by startups across the continent. Startups now employ agents to gather audio recordings from users. While the continent continues to find ways to fill its AI data deficit, Yemi Keri, CEO of Heckerbella believes it is the responsibility of you and me to upload and contribute data for AI systems. How? By talking about your culture and languages on social media. Imagine a LinkedIn post talking about your state of origin and culture! Overall, we had an enjoyable time learning about how AI is shaping personal and business interactions. Tomorrow, the creative economy takes centre stage and we’ll be having creators like Layi Wasabi, Editi Effiong, and Jade Osiberu. See you around! Read Moniepoint’s Case Study on Funding Women After losing their mother, Azeezat and her siblings struggled to keep Olaiya Foods afloat. Now, with Moniepoint, they’re transforming Nigeria’s local buka scene. Click here for a deep dive into how Moniepoint is helping her and other women entrepreneurs overcome their funding challenges. Fintech Africa’s payments market has a technology problem Moyo Sodipo, co-founder/COO Busha, Benjamin Dada, publisher at BenDada.com (Moderator), and Guy Stiebel, VP Product Cedar Money/Image Source: TechCabal Cross-border payments are evolving in Africa. Every day, there is a different pitch from startups springing up, introducing one way or the other for people to send and receive money across borders. Stablecoins; virtual wallets; or using API integrations to make a difference. Coupled with the growing digital commerce activity on the continent, simplifying cross-border payments is the next bit finance players must crack. While we’ve come a long way since the days of Hawala and slow wires, high costs, limited coverage, and complexities with fiat currency conversions still exist. Tighter regulatory oversight and enhanced due diligence have rightly been made part and parcel of moving high-value transactions in and out of borders for any reason. During a Moonshot panel on Wednesday, experts in the payments ecosystem argued that it is not the regulatory hurdles in Africa, but limited technology to build solutions that allow faster data exchange during these payments, that will slow the development of better cross-border solutions. “Fintech is what happens when financial systems fail. Cross-border payments, historically, have been plagued by inefficiencies, and that’s where technology companies see a chance to make a difference,” said Guy Stiebel, VP Product of B2B cross-border payments fintech Cedar Money. On the other hand, “old school” traditional banking players seem slow to catch on to what is trending in cross-border payments, but they might hold the key for this development that we seek. There is an opportunity in a hybrid approach that combines fintechs’ agility and tech solutions with traditional banks’ reliability and regulatory knowledge. During the Builders Summit that happened in May, fintech operator and investor Iyin Aboyeji noted, “If the government’s business is your business, they’ll never shut you down. The government also has to make money from what you’re doing.” Banks have better relationships with regulators because they make the government money. Fintechs arguably have better technology. When fintechs and cross-border payments players start building in ways to align government interests—and that will likely involve traditional finance players—it will reduce regulatory pushback. Experts remain optimistic that more innovations will happen, despite regulatory dynamics on the continent. Issue USD and Euro accounts with Fincra Whether you run an online marketplace, a remittance fintech, a payroll, a freelance platform or a cross-border payment app, Fincra’s multicurrency account API allows you to instantly create accounts in USD and EUR for customers without the stress of setting up a local account. Get started today. Cleantech Carbon credit financing can boost clean energy funding in Africa Image Source: TechCabal With cleantech startups poised for explosive growth, carbon credit financing could be a game-changer for
Read More- October 10 2024
African startups and tech media must find a common ground in reporting
African startups and the tech media must find a way to coexist. In a fiery panel discussion at Moonshot by TechCabal on Wednesday in Lagos, founders and media specialists presented conflicting reasons why the relationship has been frosty. The African tech ecosystem has grown in the past decade, so has the media that covers them. Homegrown publications like TechCabal have expanded, covering the industry with authority, integrity, and accuracy. While TechCabal’s journalism has won applause in the ecosystem, some of its work has put it on a collision course with a section of stakeholders. Oo Nwoye, founder and director at TechCircle, said that media publications have failed to differentiate between bad actors and the rest of the ecosystem. “If one bad apple commits fraud, they write it like all founders are fraudsters,” Nwoye said. Over the past year, stories covering startups like Dash, Brass, Ponatshego and Hohm Energy have rocked the ecosystem, exposing the behind-the-scenes of tech startups’ operations and failures. TechCabal’s editor-in-chief Olumuyiwa Olowogboyega said that completeness and fairness of coverage are what the media aims for. “If we are going to call anyone’s reputation into question, we make sure that we have our facts straight,” he said. Olowogboyega said founders have to understand that accurate media coverage contributes to that ecosystem growth, and there has to be a way to work with founders around the issue. In their reporting, journalists usually reach out to founders for the “right of response” to get their side of the story. In a perfect work, founders can use the right of reply opportunity to chronicle their version of events, but according to Jessica Hope, founder of PR firm Wimbart, most founders do not take advantage of this opportunity. “If you do not make your version of events clear, you create an information vacuum which can be filled by assumptions from readers,” Hope said. As Africa’s tech ecosystem continues to grow, the stories which are covered by the media have to be of substance. This will require tech journalists to ask hard questions and for founders to provide insights into the challenges and opportunities of building in Africa.
Read More- October 9 2024
African startups advised to adopt “cautious” fundraising strategies
African startups should adopt a cautious approach to fundraising in the current climate. That was the consensus of fintech players who spoke during a fireside chat on “Innovating in Payments and Tech” at Moonshot by TechCabal on Wednesday. The session included Francis Nwoboshi, CCO Sochitel Group; Wole Ayodele, CEO Fincra; Ahunna Ogunedo, an investment manager with 54 Collective; and Vivian Mbene, COO, The Tonic Technologies. “Startups should start by raising a very small amount of money to help them properly understand their solution,” said Ogunedo. This approach, she said, allows African startups to validate their ideas before seeking larger rounds of funding, potentially putting them in a better position for long-term success and avoiding the pressure of expectation that comes from raising a large round. The discussion also touched on various aspects of fintech innovation, from blockchain adoption to regulatory frameworks and strategies for startup expansion. As Ayodele noted, “Every transfer you’re making today to a driver, someone at a fast food restaurant, a delivery person, to an open account, or a wallet, is a case for fintech.” He added that fintech had encroached into high-risk spaces like retail and consumer lending which traditional banks shy away from, which he says is a testament to how fintech has become a positive disruptor. Blockchain technology, in particular, was highlighted for its potential to improve trust. “With blockchain adoption, it improves security and transparency. I know in Nigeria, we tend to suspect anything and everyone. We say ‘shine your eyes’ or ‘no gree for anybody’,” explained Vivian, emphasizing how blockchain could eliminate those fears for financial transactions. On regulation, Ahunna noted that approaches across the continent vary, with some countries adopting a risk-based approach and others preferring a bank-led model. “For fintechs, the first thing is to identify how the regulatory landscape in your market works, whether bank-led or risk-led.” According to her, fintech operators need not have an antagonistic mindset toward regulators but should work in lockstep with them and stay up to date with the latest compliance standards. For startups looking to expand, the panel emphasized the importance of strategic partnerships. As Francis noted, “If you want to go fast, go alone, but if you want to go far, go together. So one of the things I would recommend for a startup is if you must expand and you must go to new markets, do your research and find partnerships that could help you leapfrog certain processes and stages.” The panelists also spoke on financial inclusion. While progress has been made, they agreed that more needs to be done, with building trust and combating fraud identified as crucial steps in accelerating financial inclusion. Collaboration between banks and fintechs was seen as a key driver of innovation. “Collaboration is a win-win situation for everybody,” said Vivian. As fintech continues to grow in Africa, regulators and players must continue to collaborate to ensure there’s a level playing field rooted in a foundation of trust, which would ultimately breed innovation.
Read More- October 9 2024
Africa’s AI ambitions stunted by data scarcity
When you ask ChatGPT for something of African origin, it often gives a scant and less nuanced answer. Sometimes you get a made-up answer. This is in part because AI models are trained on little datasets from Africa. To address this data deficit, African countries must curate their datasets and make them accessible online, according to panelists at Moonshot by TechCabal on Wednesday. While most Africans leverage already built large language models (LLMs) from global organizations, those LLMs are trained on little data from Africa—for instance, only 2% of world healthcare data is from Africa. This is partly attributable to the lack of documentation for some cultures and languages. Uploading African data online comes with challenges. There is a lack of documentation for some African languages. Uploading the datasets online can also be expensive for Africans who struggle with poverty and the cost of living crisis. The biggest challenge perhaps might be Africa’s widespread digital literacy challenges. Bayo Adekanmbi, Founder, of Data Science Nigeria proposes workarounds including using voice-to-text to document data. Some African startups like Intron Health, a Nigerian AI company are already leveraging this. Intron Health allows doctors to professionals enter medical records by converting speech into text. To collect voice data, startups across Africa are employing agents to gather audio recordings. However, capturing voice data in African contexts presents unique challenges, as many Africans incorporate pidgin or Yoruba into their speech patterns. To accommodate this, Bayo Adekanmbi suggests that startups consider code-switching in their AI models. To achieve outsized documentation of African languages and culture, Lavina Ramkisson, AI Board, GSMA, believes that global partnerships in infrastructure and skill are needed. Olumide Okubadejo, Head of Product at Sabi, agrees that public and private partnerships are a great way to improve data collection to improve AI adoption on the continent.
Read More- October 9 2024
Growing Africa’s digital economy requires more than policy
With Africa’s digital economy projected to reach $180 billion by 2025, African governments are racing to implement policies that encourage innovation and provide guardrails that ensure fair use of the technology. Sandboxes, startup acts, and other policies have been developed across the continents to enable more innovations, but policymakers on a panel discussion at Moonshot by TechCabal on Wednesday, say there is a need for additional steps to fully capitalize on the potential of the digital economy. “In the way that love is not enough [for a relationship to grow], policies are not enough for the digital economy,” said Victoria Manya who moderated the discussion which featured Kashifu Abdullahi, the director general of Nigeria’s National Information Technology Development Agency (NITDA), Dr Augustina Odame, CEO of Ghana Chamber of Technology, and Marine Kane, Director of Innovation at the Ministry of Digital Transformation in Mauritania. The digital economy needs more infrastructure The infrastructural deficit makes founders spend funding on resources that would be cheaper if availed by the government, according to Dr. Odame. “It’s a bit difficult to justify entrepreneurs spending huge sums of money to source critical things like data when there’s certain data that sits with government agencies that could easily be cleaned,” Augusta said. Instead of building this market infrastructure from scratch, businesses can optimise their limited funds to fine-tune their products or do other important things. Odame acknowledged that certain infrastructural needs, such as broadband and electricity, may be beyond the capabilities of governments alone. She advocated for partnerships with the private sector and development partners to leverage their resources and create investment vehicles. “We’ve seen a lot of private-public sector partnerships go south, but we need it. It’s a key way that we are going to finance some of this huge capital infrastructure necessary for development.” Even with existing infrastructure, leaks remain prevalent in sectors like broadband and electricity. This often leads to unnecessary expenditures, such as repeated repairs of poles and infrastructure. For example, Ghana’s telecommunication sector reported losses of over $6 million due to fiber cuts in the first half of this year. For the digital economy to grow, measures that prevent redundant investments and promote a more efficient allocation of resources should be put in place. The digital economy also needs to look within While Africa is brimming with innovative startups, not all the countries have the characteristics necessary for long-term success. Infrastructure is a vital component of economic growth, but it’s equally important to focus on the capabilities of the businesses driving the digital economy. Manley talked about how Sierra Leone is equipping innovators with the skills necessary to attract and effectively utilize investments. ”We set up Tech City, to train tech operators in business development, financial management, and other things on how to run a business to make them market-ready.” Governments across Africa are also extending similar trainings to citizens especially ICT trainings on key skills that make them employable locally and internationally. In Nigeria for instance, NITDA organizes ICT trainings. It also supports the Ministry of Communications, Innovation and Digital Economy’s Three Million Technical Talent programme (3MTT). “According to the World Bank by 2030 there will be 85 million talent deficit, which, if left unaddressed, could lead to $8.5 trillion dollars in unrealized annual value,” Abdullahi said. “Looking at our young population, we can harness that population and position ourselves to become the global talent factory to bridge this gap deficit.“ No one should be left behind Manley emphasized the importance of supporting marginalized groups, such as the disabled and women, in acquiring skills and accessing funding for their ideas. He also acknowledged that other groups may face similar challenges and require additional attention. “When we are identifying exclusion in terms of the digital economy, we’re talking about things like lack of access to connectivity,” he said. Stakeholders need to identify other forms of marginalisation and figure out a way to collaboratively address them. While policy plays a crucial role, it alone cannot create the digital economy Africa envisions. Moonshot ideas and collective commitment are essential to bridge the gap between vision and implementation and shape the future of tech on the continent.
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