Why Yemisi Isidi is championing mentorship for early-stage founders
Yemisi Isidi moved back to Nigeria from the UK in 2017, and after seeing how difficult it was for businesses, especially women-owned ones, to scale, she decided to do something about it. At first, she started helping small business owners utilise social media to grow their businesses until that seemed inadequate, and then she moved into providing micro-loans through a company she started, Triift Africa. After a while, even that became inadequate as she discovered that beyond finances, entrepreneurs required a lot of structure and good management to thrive, and so she decided to step up to that. Yemisi, who graduated from Aston University in Birmingham with a degree in Accounting and Business Management started to provide advisory services to business owners. In the last two years, Yemisi Isidi has been involved in the disbursement of over $10 million to early founders and business owners. She has also been invested in providing technical advisory to enterprise programs, as well as mentorship and access through various accelerators and incubation programs like the She Leads Africa program and The Future Female Business School which was set up by the UK-Nigeria Tech Hub to support young female tech founders. Some alumni of these programs include Medsaf, Shuttlers, and Auto Girl. For Centre Stage, TechCabal had a chat with Yemisi on the role of mentorships in building sustainable businesses. How would you describe yourself outside of the work that you do? Yemisi Isidi: I am a very driven and passionate person. I care deeply about seeing things grow, whether it’s a business, idea, or community and this shapes whatever it is that I do. I like to see people live better lives and a lot of times I am grateful that I get to contribute to that through my work. At an event some weeks ago, you mentioned that you didn’t agree with the narrative of female founders being over-mentored. Please can you speak about that some more? YI: The popular saying is that female startup founders are over-mentored and underfunded. I agree with the underfunded path and I’ve seen a lot more effort in that regard with programmes intentionally focused on putting money in the hands of female founders, whether startup founders or SME business owners. But when we say female founders are over-mentored, then I don’t agree. Mentorship covers a lot of things, including operational advice. If you have an investor who gives you money, but isn’t holding you accountable and doesn’t understand your industry enough to give you professional advice or access to a valuable network, then there’s a very high chance of you failing, despite the money and this is applicable to both male and female founders. Startups that were part of local incubation or accelerator programmes are more likely to succeed, and it’s not just about money but also access to a network and accountability structure that supports their growth. We’ve seen startups that were on the brink of folding but were resuscitated by their local investors. Not just with money, but also with them being able to rally and provide management with the support that they need to pull them through the process. Underfunded and over-mentored just sounds like “Give me the money and leave me alone to do the work.” But there are bigger questions that need to be answered to build a sustainable business, questions like if they know how to do the work and if they’re always going to be motivated when doing the work. There needs to be additional support beyond funding that makes it easier for people to build profitable and sustainable businesses, and this is a gap that mentorship covers. So yes, women are underfunded, but there is still room for mentorship. What are some of the benefits of mentorship to early-stage founders that people don’t pay attention to? YI: There are so many benefits, but I will share two. First, it gives you access to a network community, which makes it easier to get external funding, especially when you’re part of a recognised mentoring programme. But most importantly, it makes it easier to bootstrap to generate internal funding. Perhaps the mistake here is when we think about funding, we’re thinking of another person who is not a customer giving you money, but there’s funding that is your business being profitable and having healthy cash flow, and I’ve seen how these mentorings and training make it possible for businesses to achieve this more quickly. Another investor spoke to us about startups not necessarily requiring a huge investment to start operations in the early days. What do you think about that? YI: Businesses do need money for operations, licences, research, etc, depending on what they’re building. Finding investors early makes it possible to focus on building the business rather than trying to look for other streams of income to sustain it, so money is essential in making growth happen faster. However, it is not always straightforward. I think that a lot of money stifles innovation and problem-solving, especially when there is no accountability. Corporate Governance is already a big issue in our ecosystem. Too much money where there is no solid foundation, assured integrity or product market fit can be a problem. Even when you have a clear path to success, we have a very unpredictable market so it’s important to think about how to build sustainably from the beginning. What are some of your most important wins in the past years? YI: Over the past two years alone, have been involved in enabling access to over $10 million in funding for early-stage startups and businesses across six African countries. I’ve also worked with about 700 entrepreneurs across Africa to build investment-ready and profitable businesses and aided them in accessing available funding opportunities. In 2017, I organised the Illorin Digital Summit which had over 1000 people in attendance from different states across the North Central and Western parts of Nigeria. That work has now evolved to become Cirkle Labs which is an
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👨🏿🚀TechCabal Daily – Angola’s apex bank escapes hack
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy salary week Our sister company, Zikoko, is hiring some content creators. So if you’re a wizard at creating vox pop content but hate being called a TikToker, here’s your chance to make magic happen. Apply here. In today’s edition Angola’s apex bank escapes hack Kenya warns Airtel and Telkom Telecom Egypt to launch 5G in three months Nigeria to hold first rate meeting in February What’s the average African startup to unicorn time? The World Wide Web3 Events Cybersecurity Angola’s central bank escapes hack GIF Source: GIPHY Last week, Angola’s apex bank revealed that it escaped an attempted hack on January 6, 2024. The news: Banco Nacional de Angola (BNA) says there’s nothing to worry about. Per its statement, the bank’s security systems caught the cyber threat quickly and prevented any major damage to its computers or data. They were able to keep their online services running safely and efficiently, although maybe a bit slower than usual. It’s more common than you think: While cyberattacks on commercial banks and fintechs raise eyebrows, silent alarms are often ringing at central banks across Africa. The governor of the BNA José de Lima Massano, in May 2023, said that the apex bank records about 350 attempts per day. In December 2022, the South African Reserve Bank (SARB) was, ironically, alerted by the FBI to a breach it still denies to this day. Months before the SARB hack, the Bank of Zambia had fallen victim to a hacker collective called Hive which had ransom demands. That same year, the Bank of Gambia suffered two separate cyberattacks. More recently, in December 2023, the Central Bank of Lesotho suffered an attack that crashed inter-bank transactions in the country. African governments take action: In the face of rising cyber threats, 33 African nations, including heavyweights like Nigeria, South Africa, and Egypt, have taken the first step by enacting cybersecurity legislation. The bad news is that this may be one of those things where the tech is two steps ahead of the legislation. A 2018 hack on Bangladesh’s apex bank account left regulators and operators dumbfounded. The hackers made away with $81 million using SWIFT, the financial service used by over 11,000 institutions globally. Since then, no major legislation has been made to prevent another hack, but the IMF suggests that international cooperation is key to stopping these hacks. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Telecoms Kenya warns Airtel and Telkom over poor service Image source: Zikoko Memes Kenya’s phone regulator, the Communications Authority of Kenya (CA), has slapped Airtel and Telkom Kenya with warning notices and fines for failing to meet quality of service (QoS) standards. This action by the regulator indicates that customers on these networks have likely faced issues like dropped calls, slow internet speeds, and inconsistent coverage across various regions. Side bar: The CA regularly tests mobile networks against benchmarks for call success rate, internet speed, and coverage. To be considered compliant, networks must score at least 80% on these key performance indicators (KPIs). In the latest report covering June 2023, Safaricom, the market leader, exceeded expectations with 90%, but Airtel and Telkom significantly missed the mark with 79% and 65%, respectively. This reflects a broader trend of declining service quality in the Kenyan telecoms industry, with the average score dropping from 82.3% in 2022 to 72.4% in 2023. Why it matters: Poor mobile network quality directly impacts people’s lives—just consider the numerous times you’ve found yourself asking “Can you hear me?” this year. Dropped calls can disrupt business; slow internet hinders productivity and access to information; and inadequate coverage leaves people unconnected in rural areas. Are penalties working? Between 2015 and 2021, Airtel coughed up KES85.9 million ($540,000) as a bitter reminder of its QoS shortcomings. Telkom has also forked over KES59.3 million ($373,000) in penalties for its bad behaviour coverage. In fact, CA has fined Kenyan telecoms over KES500 million ($3.1 million) in the past five years for poor coverage, but the telecoms keep disappointing their 86 million mobile subscribers. This raises questions about whether the current penalty structure is strong enough to incentivise lasting change. Secure payment gateway for your business Fincra payment gateway enables you to easily collect Naira payments as a business; you can collect payments in minutes through cards, bank transfers and PayAttitude. Create a free account and start collecting NGN payments with Fincra. Telecoms Telecom Egypt to test 5G within three months Mohamed Nasr, MD and CEO of Telecoms Egypt. Source: Telecoms Egypt Talk about a quick turnaround time. Egypt’s government-owned telecom has announced that citizens can expect 5G this year. The news: Telecom Egypt (TE) has begun testing 5G services in five locations across the country, aiming for a full rollout later in 2024. This follows the company’s recent acquisition of Egypt’s first 5G licence for $150 million last Wednesday. In an interview with Asharq Business, the company said the tests will span three months, followed by a nationwide rollout. Mo’ spectrum, mo’ subscribers: 5G has the potential to be a significant revenue stream for TE, attracting new customers for its 13 million subscriber base and boosting its bottom line. TE trails behind Vodacom and Orange which have 46 million subscribers and 28 million subscribers respectively, and it thinks 5G will bring more Egyptians to its table. CEO Mohamed Nasr expects the financial impact to be evident by the end of 2024. Already the telecom saw a 48% net profit in 2023, and more subscribers means even better margins, especially with the $150 million hole in its pockets. Will it though? Out of Egypt’s 97.5 million devices, only 8%, or about 7.8 million, are 5G-enabled, as admitted by Nasr earlier this month. While Nasr expects that the numbers will increase in the coming months, it’s unlikely that
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Next Wave: Trading second-hand shares in African startups does not make money anymore. That’s good?
Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner Join us for TechCabal Battlefield, Moonshot’s startup competition where you can showcase your startup idea to a global audience and an esteemed panel of judges and stand a chance to win up to 2.5 million naira in funding for your business! Click to register for TC Battlefield First published 21 January, 2024 Secondary selling—also known as secondhand trading—exists everywhere. The markets of Lagos, Kinshasa and De Villiers Street in Johannesburg are full of traders and buyers haggling over bales of “pre-loved” clothing. A significant number of iPhones and laptops sold in Africa are “London-used”. Even luxury brands are not spared: Richemont, LVMH and Rolex all walk the fine line between maintaining demand via waitlisting and pushing desperate luxury shoppers to the grey secondary markets for pre-owned watches and other luxury items. Secondaries happen everywhere. One can argue that this secondary market is the real market. Trading shares of publicly listed companies on a stock exchange, for example, is simply a series of parallel secondary transactions at scale. When people talk about the financial market, this is the market they are usually referring to. It is the same for the parts of the bond market, commodities, and (maybe) even the market for financial derivatives built on top of secondary trades. TechCabal’s Muktar Oladunmade and I have written about how secondary transactions in Africa’s technology space made founders, startup employees and early-stage investors rich. We also pointed out that the heyday of secondary transactions seems over as people struggle to shed shares in private venture-backed technology startups in Africa. Sure founding teams and angel investors may have abused secondary transactions by selling dressed-up burnt potatoes to newer investors and cashing out. But unless almost every primary investment made in the four years between 2018 and 2022 is a smouldering wreckage about to explode in flames, the secondary market in Africa shouldn’t be frozen. It also should not be about making easy wealth à la 2021 and 2022. Instead, it should be playing a role in creating a market-clearing (for want of a better word) valuation for African startups now that the peculiarities of the market are better known. We’ve spoken about local tech IPOs, but it will remain a pipe dream if the private market for secondary transactions continues to jealously guard valuations that are improbable. In the world of venture capital, secondary market transactions happen because investors are desperate to buy stakes in “hot” companies, or want to consolidate their gains in what they feel is a portfolio winner. Or maybe they just want to keep founders and key employees happy by allowing them to taste some of the paper wealth they’ve accumulated. It’s a much different world today. There are fewer “hot” startups to chase after, regardless of how much marketing and PR arsenal is deployed. Valuations are too steep for anyone remotely interested, and layoffs are all too common. The State of Tech in Africa Q3 2023 By the end of the 3rd quarter of 2023: Two African countries gave crypto a greenlight. 738 tech workers were laid off in Africa. 7 acquisitions were reported. And energy/climate tech related companies took the spotlight. Plus a lot more! Download the full report to revisit one of last year’s most notable quarters Get it in your inbox But in many ways, a tighter secondary market is a beast of its own making. Like any market, selling “second-hand” shares in a company will be difficult if there are no buyers or sellers, or when buyers and sellers cannot agree on a price. Since venture funding is at a 3-year low in Africa, I suspect it’s a mixture of no or few buyers, creating a wide gap between the price buyers offer and what sellers want. This standoff is unnecessary because it is prolonging a much-needed rebalancing in the world of African venture. And it is disreputable to pretend as if this rebalancing is not already happening. While it is undoubtedly deserved in most cases, it is not a stretch to think that some good companies will be destroyed in this unforgiving market correction. A lot of that value destruction will happen because existing investors are too timid or blinded by fear to stand by their convictions. But some of it will happen because VCs are already writing down the value of companies in their portfolio to zero mentally. Writing down a company to zero mentally means the investor lacks the mental or operational bandwidth (not necessarily funds) to support a portfolio company. When an investor mentally writes down huge swathes of their portfolio, the investor (and the investee) automatically become deadweight to each other. It is either the investor made colossal mistakes with the ventures they backed. Or they are making one with that unconscious decision to give up on the hidden gems within the company. An active secondary market was the exciting place where riches were to be made. Now it will have to be the painful and useful place where portfolios are rebalanced and expectations are reset. Tweeting and WhatsApping about it will not change anything. Now that the quick flip method of going to the secondary market to extract high prices for poor investee companies is not working, startup investors (who still have cash to deploy) may fare better if they approach the deadlocked secondary market as an opportunity to scour the market and rethink what they are best placed to support and what exits in that sector should mean. Do you have a message for Africa’s tech leaders, policymakers or the leading workers building the continent’s startups? Talk to us to find out how we can help share your message on this newsletter. Email bizdev@bigcabal.com to start. Send an email. Instead of hoping for secondary transactions that will “reward” early investors and founding teams. Investors may find that is better to take advantage of current deep discounts to rebalance portfolios that were damaged by
Read MoreNigeria Central Bank bows to pressure, sets interest hike meeting date for February
Nigeria’s Central Bank has bowed to pressure and is scheduling its first rate hike meeting for February 26-27, 2024. It will be the first rate meeting since July 2023. In December, the Central Bank Governor Yemi Cardoso said monetary transmission mechanisms had rendered the rate meetings “largely ineffective.” According to a calendar released by the bank today, the CBN is proposing six rate meetings throughout 2024. Monetary Policy Committee meetings, which set interest rates, is an instrument through which the CBN controls inflation. Nigeria’s inflation has soared all through 2023 to a 27-year high. While experts who have spoken to TechCabal on inflation figures have predicted interest rate hikes, Yemi Cardoso has held out, failing to call any meeting since his appointment. Adedayo Bakare, an investment analyst at Money Africa, believes raising interest still holds the key to curbing inflation. “MPR is not ineffective; the CBN has broken the transmission of MPR to the financial markets and the overall economy,” Bakare said.
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Watershed report: How to unlock value in a funding winter
An optimistic way to think of 2023 is to consider it a seminal year for stakeholders in the African tech ecosystem. On the one hand, the global economic climate made it a challenging year for fundraising, especially among African startups that recorded an unprecedented 36% decline in funding from the previous year for reasons that have been well documented. On the other hand, the challenges have led to deeper thinking among investors, who are now looking at novel ways to adapt and build resilience for 2024. One such way is through the predicted rise of mergers and acquisitions. Another is a renewed focus on secondary markets for liquidity lifelines. These ideas and more have been captured in our newly released 2023 Watershed Report, which provides startups with the unique opportunity to solve huge problems using innovative solutions. Here are a few highlights from the report: A decade that has seen startups raise close to $20 billion in funding Prospects of an emerging local venture capital market Contending with economic headwinds vis-a-vis evolving regulatory directions New ways to unlock value Leveraging data and an informal approach backed by empirical evidence To get actionable insights from this report, please visit: https://techcabal.com/report/watershed-report-building-for-2024/
Read MoreShowmax steps up streaming battle with Premier League on mobile plan
After taking over Africa’s market mantle from US streaming giant, Netflix, in 2023, South Africa’s Showmax is turning to smartphones to tap into a wider pool of football fanatics. The MultiChoice-owned streamer has introduced mobile-only subscriptions for Premier League content as part of a new package for its second iteration- Showmax 2.0, launching in mid-February. “Showmax Premier League is a game-changing product that gives individuals a ticket to the football they love, wherever they are, on the device they always have with them, at a price that’s impossible not to love,” said Marc Jury, CEO of Showmax, in a statement. Mobile subscribers will pay US$3.69 (R69) per month for ‘the world’s first standalone Premier League plan for mobile.’ which is about 10 times cheaper than monthly DSTV subscriptions offering Premier League plans. The Premier League plan offers all 380 Premier League games live from SuperSport, as well as fan content, talk shows, interviews and more, on mobile only, said Showmax on its new website. “There are currently just over 450 million smartphones in the hands of individuals across Africa … and more than 250 million avid football lovers on the continent,” said Jury. Premier League Chief Executive Officer, Richard Masters said in the statement that Africa was incredibly important to the league and its clubs, with about 20% of television audiences on any given match day coming from Africa. Subscribers also have a choice to bundle up the Premier League with another new offering, the company’s Entertainment plan, which includes hit international and trending local series and movies, kids’ shows and more on mobile only. Alongside the Premier League, the new Showmax offering will introduce 21 new Showmax Originals that will see the streaming platform produce more than 1 300 hours of Showmax Originals by the close of 2024, representing a significant 150% increase in production output, compared to 2023. It has scheduled a migration plan to its new app and website for existing customers, from January 23 to mid-February, 2024. Showmax’s new platform is built on NBC Universal’s Peacock streaming platform, following a partnership with Comcast’s NBCUniversal and Sky in 2023. The partnership has given Showmax fresh muscle to maintain its lead as Africa’s largest streaming platform, in a very competitive market. In November 2023, tech research-based firm, Omdia Research showed that Showmax accounted for 40% of Africa’s streaming market, while Netflix controlled 35% of the eyeballs. Research firm, Digital TV said last year that Africa’s streaming video-on-demand sector has evolved into a battle between Netflix and local player Showmax, with the two expected to play a significant role in attracting 10 million new subscribers on the continent by the end of 2030. By the end of the review period, the African market is projected to have a total of 18 million streaming video-on-demand (SVOD) subscribers.
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👨🏿🚀Techcabal Daily – Amazon Prime hits pause in Africa
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية TGIF We’re excited to bring you a comprehensive roundup of funding, acquisitions, and significant developments in Africa’s tech ecosystem for Q4, 2023. Yes, we’re launching the State of Tech Report for Q4 2023 on Friday, January 26, 2023. Want to attend? Click this link to register. In today’s edition Amazon Prime is scaling back its Africa operations A $1 billion UNDP fund Globacom gets an extra 21 days to pay interconnect fees Egypt leaps into 5G Openview attacks DStv’s monopoly Funding tracker The World Wide Web3 Job Openings Streaming Amazon Prime lays off staff and pulls back from Africa Amazon Prime is scaling back its operations in Africa. The streaming platform is restructuring its business, reducing local content production and laying off staff in Africa and the Middle East to focus on European markets. This comes after Amazon Global announced that it was laying off hundreds of employees across its Prime Video and MGM studio teams. Although Amazon will still be present in Africa, it will only concentrate efforts on areas that “drive the highest impact and long-term success”. Ambitions take a turn: Amazon Prime’s retreat comes after big plans to become the top streaming platform on the continent. Marked by a hiring spree and inked partnerships with at least four local production studios, the platform had set up dedicated teams for their two biggest markets: Nigeria and South Africa. In 2021, the streaming platform was estimated to have 575,000 customers in sub-Saharan Africa, and they were projected to hit 1.9 million by 2026. Africa’s streaming market: Tech-focused professionals are financing and creating Nollywood content for international platforms, with Netflix’s The Black Book as an example, which was watched more than 70 million times in less than three weeks on Netflix. While Africa’s streaming market has seen growth, challenges persist. IrokoTV, Africa’s oldest streaming service, had only 46,000 active users in December 2022, a 76% decline from the beginning of the year. Last year, Netflix with its 1.2 million subscribers, also lost its market leader position to Showmax, MultiChoice’s streaming service, which now has 1.4 million subscribers on the continent. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Venture Capital Timbuktoo, the $1 billion UNDP fund Image Source: UNDP The United Nations Development Programme (UNDP), Rwanda, and seven other African countries have joined forces to launch the Timbuktoo African Innovation fund which will invest $1 billion in 1,000 tech startups across the continent in the next 10 years. Timbuktoo? Timbuktoo will invest in African startups across pre-seed, seed, and pre-Series A stages. Of the $1 billion funds earmarked for investment, the Timbuktoo Fund will contribute $350 million of risk-tolerant capital which it hopes will attract an additional $650 million from private investors. Timbuktoo will also provide financing for accelerators and venture builders from the $1 billion fund. Spread of the funds: Timbuktoo is taking a targeted approach to disbursing the funds across the continent, in various sectors: Morocco (hospitality and tourism), Senegal (edtech), Nigeria (fintech), Ghana (agritech), South Africa (creative economy), Kenya (green tech), Rwanda (health tech), and Egypt (trade, logistics, and e-commerce). Secure payment gateway for your business Fincra payment gateway enables you to easily collect Naira payments as a business; you can collect payments in minutes through cards, bank transfers and PayAttitude. Create a free account and start collecting NGN payments with Fincra. Telecom Globacom gets an extra 21 days to pay interconnect fees Meme source: Tenor Glo users can rest now. The Nigerian Communications Commission (NCC) has granted the telecom a 21-day extension to settle interconnect fees owed to MTN, delaying a planned phased disconnection. Sidebar: Interconnect fees are the charges paid by one network operator to another for handling and terminating calls on the receiving network. ICYMI: Globacom reportedly owes MTN about ₦6 billion ($6.7 million) in interconnect fees, which led the NCC to approve the partial disconnection of Globacom from MTN Nigeria on January 8. The disconnection would have been implemented yesterday, but the commission extended the grace period after both telecoms agreed to work things out within the next 21 days. Had the phased disconnection proceeded, Globacom’s 61.39 million subscribers would have been unable to call MTN users, but MTN users would still have retained the ability to reach Glo users. A persistent dispute: Although Glo reportedly denied owing MTN any outstanding fees, this ongoing dispute over interconnect fees has persisted for over 15 years, with previous threats from MTN to disconnect Glo. In 2019, MTN disconnected Globacom for five days, resulting in Glo paying ₦2.6 billion ($3 million), out of a total ₦4.4 billion ($5.1 million) owed, in interconnect fees. During the same period, Airtel also issued threats to disconnect Glo. Telecom Telecom Egypt Secures 15-Year $150 Million 5G licence from NTRA Image source: Daily News Egypt In more telecom news, Egypt has taken the first leap into 5G. The National Telecommunications Regulatory Authority (NTRA) of Egypt has awarded the nation’s first 5G licence to the state-owned Telecom Egypt. The announcement follows the Egyptian government’s plan, unveiled two months ago, to issue 5G licences. The $150 million licence isn’t exclusive, though, and the NTRA could award more 5G licences in the future. The future of 5G in Africa: While over a dozen African countries have launched 5G, it’s mostly in select cities or test projects. Building the full networks takes time, so even though Nigeria, South Africa, Tanzania, and Kenya have officially started 5G, 4G will likely rule for a while longer. According to a report from Ericsson, from the present until 2029, 4G subscriptions are projected to constitute 49% of total mobile subscriptions in the region. In contrast, 5G subscriptions will make up 16% of all mobile subscriptions by that time. 4G is expected to remain the dominant technology for the foreseeable future due to its broader
Read MoreAmazon Prime to layoff staff and stop producing African content
Amazon Prime, the global streaming giant, is laying off staff and scaling back its local content production in Africa and the Middle East, according to a new report by Variety. The streaming platform, the third largest in Africa, is restructuring its business model to focus on its European market. Barry Furlong, the vice president of Prime’s EMEA division, told staff in an email that the decision was made to focus “on the areas that drive the highest impact and long-term success.” It’s unclear how many employees will be affected. Approved shows like “Ebuka Turns Up Africa” will still be rolled out as Amazon will still be present in Africa, but the platform will stop approving local shows in sub-Saharan Africa, the Middle East and North Africa. Africa’s streaming market is projected to have at least 18 million paying streaming customers by 2029, up from 8 million customers last year. With a combined 75% of the streaming market, Netflix and Showmax are the market leaders. Despite this growth, streaming penetration remains low, as most of these customers are in South Africa and Nigeria. By 2029, only 7.7% of African households would be paying for at least one of these platforms. Amazon Prime was estimated to have 575,000 sub-Saharan customers in 2021, which was projected to reach 1.9 million in 2026. From lofty goals to a retreat Amazon Prime had lofty goals of being the biggest streaming platform in Africa, as it quickly hired lots of staff and signed at least four partnerships with local production studios when it landed in Africa in December 2021. Prime has two dedicated teams for Nigeria and South Africa, its two largest markets. While the Nigerian team operates out of London, the South African team works in Cape Town and Johannesburg. “We now have a dedicated local content strategy for the continent across the board, from originals to be developed and produced by Amazon Studios to an exciting licensing slate with top-tier producers,” Ned Mitchell, Prime’s head of originals for Africa, said in February. By then, Prime had announced multi-year partnerships with Nigerian studios like Anthill, Inkblot, and Greoh. But it was its partnership with Jade Osiberu’s Greoh that stood out. The three-year deal would allow all of Osiberu’s movies and shows to be exclusively available on Amazon Prime and the first movie out of this partnership, ‘Gangs of Lagos’, broke multiple records. Within two months, it was the 9th most watched non-English title on Prime. Its success also inspired the creation of a new film-financing firm, Capital Films. Prime scaling back its presence on the African continent also offers a new challenge to a new business model where tech-focused professionals are increasingly financing Nollywood movies or even creating them to sell to international streaming platforms. This business model has seen successes like Netflix’s ‘The Black Book,’ which was watched more than 70 million times in less than three weeks on Netflix. African streaming platforms have also struggled in recent years, as Video Play, Telkom One and Kwese TV have all shut down. In November, TechCabal reported that IrokoTV, Africa’s oldest streaming service, had only 46,000 active users in December 2022, a 76% decline from the beginning of the year. IrokoTV’s CEO, Jason Njoku, shared that the service had invested $30 million in Nigeria but had yet to profit from the country. First review of the new Showmax: A big leap forward with content & UI
Read MoreExclusive: How Timbuktoo, the UNDP-backed $1bn innovation fund will work
On Tuesday, the United Nations Development Programme (UNDP), Rwanda, and seven other African countries announced the launch of Timbuktoo, an initiative that hopes to invest $1 billion over 10 years into 1000 tech startups across Africa. Touted the largest ever startup fund in Africa, Timbuktoo Africa Innovation Fund will commit $350 million of risk-tolerant capital to help attract an additional $650 million from private investors, Eleni Gabre-Madhin, Chief Innovation Officer at UNDP Africa told TechCabal via email. “What we’re trying to do is make it more attractive for domestic capital to come in at earlier stages… venture capital in Africa needs to be riskier,” Gabre-Madhin said at the launch event in Davos. Timbuktoo will provide financing for accelerators and venture builders from the $350 million, including investments of up to $800 million in venture firms in 8 African countries alongside private partners. These details have not been previously reported. The funds will “make pre-seed, seed, and pre-Series A investments on an equity basis to startups,” Gabre-Madhin said. In Casablanca, Morocco, funds from Timbuktoo will target tourism and hospitality startups, in Dakar, Senegal it will target edtech. In Lagos, Nigeria, Timbuktoo and its commercial fund partners will focus on fintech startups, while in Accra, Ghana it will focus on agritech. In South Africa, Capetown’s hub will target creatives, with Greentech being the focus in Nairobi, Kenya. The Rwandan hub in Kigali will focus on health tech. Trade, logistics and e-commerce will be the fund’s focus in Cairo, Egypt. The fund will work with local universities to support tech ventures. Foreign development banks are major contributors to the venture capital African startups have received. Institutions from the International Finance Corporation and the European Investment Bank have backed first-time fund managers in Africa like Ventures Platforms, and Atlantica Ventures. Managers of Boost Africa, a venture capital facility run by the European Investment Bank are currently in the final stages of talks with the European Union over a new €159 million facility, Déborah Vouche, a private equity investment officer at the bank told TechCabal. Kigali’s rising fortunes as a financial centre The fund will be managed from Rwanda, a boon to Kigali’s financial centre Ambitions. Established in 2017, Kigali International Financial Centre is the #3 financial centre in Africa, only behind Casablanca in Morocco and Mauritius according to the latest ranking from the Global Financial Centres Index. At the launch event on Tuesday in Davos, Rwanda’s president, Paul Kagame made the first public commitment of $3 million to the fund. “The decision to domicile the Timbuktoo Africa Innovation Fund within KIFC reaffirms our attractiveness as an international financial services hub,” Jean Marie Kananura, Chief Investment Officer, Rwanda Finance Limited, the parent company of the Kigali International Centre told TechCabal. Leading fintech firms like Flutterwave, Chippercash and Onafriq have opened offices in the country and say they plan to make Kigali their payments hub for East Africa.
Read More“The masses are expensive to serve”: Why Sparkle skipped retail for private banking
Nigeria’s retail banking market is dominated by traditional banks valued at trillions of Naira and fintechs with deep war chests, but Sparkle MFB, a digital bank that provides financial, lifestyle, and business support services to Nigerians, isn’t bullish on the mass market. Instead, Sparkle launched in 2019 and licenced as a microfinance bank, wants to be the one-stop shop for private banking, which refers to personalised financial services for high net-worth individuals (HNIs). “From a cost perspective, the masses are expensive to serve,” argues Uzoma Dozie, Sparkle’s CEO. “You have to think of how much it costs to acquire customers. What is the cost of servicing these customers? What’s the revenue per customer?” Sparkle is uninterested in metrics such as transaction value and number of customers but instead obsesses over value proposition. The digital bank wants to create long-term customer relationships and earn loyalty. But some of those numbers matter anyway. Sparkle claims it processes 11,000 daily transactions for its 220,000 customers. Its app offers a mix of banking services for individuals and businesses. While individuals can use features like savings, bill payments, and money transfers, businesses can access inventory and invoice management, a payment gateway, tax advisory, and employee management. These offerings are because of partnerships with Visa, Microsoft, and PricewaterhouseCoopers (PwC) Nigeria. Yet, the startup wants to do more and is keen to introduce insurance, securities, and investments on its platform. It will need more partnerships to provide these services. There’s also Sparkle loans, a small-interest loan product with interest as low as 17% per annum. “We are going to lend at rates the banks do and at the speed of digital banks.” For Sparkle, lending is based on willingness and ability to pay. The digital bank will rely on data points from transactions on its platform for loan decisions. Private banking is also a contested space Many traditional banks offer private banking services to HNIs, but Sparkle, which raised $3.1 million from entirely Nigerian investors in 2021, is confident it can “handle private banking better than traditional banks” using artificial intelligence (AI). Dozie also believes his experience as a core banker is crucial. “I think the benefit that I have that everybody doesn’t have in this space is that I have done banking for 20 years. While I was at Diamond Bank, we worked with fintechs to provide digital solutions.” The digital bank is developing an AI chatbot that will act like a personal advisor or lifestyle concierge to its customers. “The chatbot can process the data and give the customers an informed decision. It is more intelligent than any relationship officer you will have in any bank because you have access to global information, and it is available 24 hours a day.” Dozie says Sparkle’s philosophy is to serve startups and small businesses that prefer digital banking. “We believe that digital is the future, and as infrastructure improves and people are pulled out of low-income, their only choice is digital. We are positioning ourselves for that,” he said.
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