TechCabal wins ReportHer Award for promoting gender-balanced reporting
TechCabal’s success at the maiden edition of the ReportHer Award shines a spotlight on its commitment to gender-balanced reporting TechCabal walked away as the winner of the digital category of the maiden edition of the ReportHer Awards for gender-balanced reporting. At an event held in Lagos, Nigeria, Africa’s most important tech publication was cited for breaking barriers and making a resounding impact with influential articles and reports that have shaped industry conversations. TechCabal’s win Hannatu Asheolge and Ngozi Chukwu, two young journalists, were successful in their application for the ReportHer Award in the digital category for TechCabal. Asheolge said she hoped the award would propel the tech industry to pay greater attention to women and their noteworthy achievements as they are an integral part of the ecosystem. She credits TechCabal’s win to a dedicated team of brilliant, diligent editors and reporters willing to write impactful stories. In a similar vein, Chukwu described the win as “empowering”, inspiring TechCabal to authentically shed light on the frequently overlooked narratives of women as “creators and users of technology”. About ReportHer Award The ReportHer Awards is a gender-balanced reportage award that recognises media organisations and journalists who actively report on women and gender-related issues, give them prime time and strive for gender-balanced coverage. The award is an initiative of Women Radio 91.7FM in partnership with the Wole Soyinka Centre for Investigative Journalism (WSCIJ) and sponsored by UN Women and the Canadian government. With over 104 entries across five categories: television, radio, print, digital, and journalist, TechCabal emerged as the winner in the digital category while Ripples Nigeria emerged as the runner-up. One of the judges, Lanre Arogundade, executive director of the International Press Centre (IPC) highlighted that the judges evaluated various parameters, such as the inclusion of women as sources in the reports and the aim for equal representation of men and women in the stories. Arogundade also added that they looked at “the extent to which the story uses data, cite sources and looked at presentation and effectiveness and the extent to which media institutions that submitted their entries, and journalists, meet the professional standards portraying women.” For TechCabal’s editor in chief, Adrian Ephraim, “The awards may be new, but TechCabal’s reporting on women in tech is not. It’s good to see gender reporting acknowledged in this way, and we’re extremely proud of Ngozi and Hannatu who have spearheaded our coverage. Well-deserved.”
Read MoreAfrica VC funding dips by 54% in H1 2023, as accelerators lead the way in cheque-writing
VC funding of African tech startups dips by 54% in H1 2023 as funding crunch continues. According to data from research firm MAGNiTT, VC firms invested $951 million in the African tech ecosystem in H1 2023. It’s a 54% drop compared to H1 2022. VC firms also completed 214 deals, a 50% decline from the 2022 numbers. Exits continue to be few and far between in 2023 with only 15 exits so far. Fintech continues to be the VC darling even in a downturn, with fintech startups clocking 29% of the total funding. Ecommerce and transport and logistics startups complete the top three receiving 12% and 11% of the total funding respectively. By country, Nigeria lead the pack in terms of deal volume, followed by Kenya and South Africa. In terms of deal value, Egypt leads the continent, mainly driven by the $260 million MNT Halan deal in February, followed by South Africa which saw a 3% reduction in deal value and Nigeria. Interestingly, accelerators, and not VCs, led most of the cheque-writing by volume in this half of the year, accounting for five of the top 10 investments in the time period. Accelerators made up the top 4 of the most active investors, with ARM Labs Lagos, Catalyst fund, The Baobab Network, and Norrsken Global leading the way with 13, 19, 9, and 8 deals respectively. In terms of value, the entire top 10 comprise international investment, with Chimera Capital, Tencent, Blue Earth Capital, Sumitomo Corporation, and Apis Partners leading the way. Exits wise, 15 represents 25% of the entire 2022 total of 60 exits on the continent , with Kenya leading the way with four exits. As the VC funding crunch continues, investors seem to be focusing their attention on making early-stage bets, with 57% of all investment into the continent going to early-stage startups, a 5% increase compared to 2022 figures.
Read MoreWhy DRC will soon be a major player in global tech scene
Noel K. Tshiani, founder of Congo Business Network, shares his vision for tech startups in the Democratic Republic of Congo, based on his conviction that the country has the potential to emerge as a major tech hub in Central Africa. He is optimistic about the future of the DRC’s startup and tech ecosystem, believing that with improved policies and increased investments, Kinshasa can become a major player in the global tech scene. When we think of the world’s most prominent tech startup ecosystems, places like Silicon Valley, New York, Paris, Lagos, or Nairobi might come to mind. But what about the Democratic Republic of Congo in Central Africa? Despite some challenges, this country, with a vast reservoir of natural resources estimated at $24 trillion and a population of 100 million, has significant potential to build a vibrant startup and tech ecosystem. I want to share my vision – a future that requires the public and private sectors to be ambitious, innovative, and persistent. Startups are the engines of innovation, job creation and economic growth. They bring fresh ideas to market, disrupt established industries, and push the boundaries of what is possible. I came to the United States in 1996 and have since seen the American economy transformed by tech startups like Google, Amazon, LinkedIn, Twitter, and YouTube. In the DRC, we need this kind of dynamism now more than ever. The DRC’s young population is one of its greatest strengths. Nearly 60% of Congolese are under the age of 25. With the right support and opportunities, these young people can be the creators of startups and tech solutions that will drive the country’s economy forward. One key support mechanism that cannot be overlooked is the exposure and learning opportunities that come from attending international tech and business events such as the Consumer Electronics Show (CES) in Las Vegas, Viva Technology in Paris, or Ambition Africa in Paris. These major events allow entrepreneurs to interact with potential investors, business partners and journalists, expanding their professional networks and opening doors to growth opportunities. They also provide an opportunity to learn about the latest trends in the global technology landscape, an invaluable asset in an industry characterised by rapid change and innovation, such as the rise of artificial intelligence. Interestingly, a few countries in Africa have already passed startup laws, which are legal frameworks designed to support the growth and development of startups. These countries include Tunisia (2018), Senegal (2019), Nigeria (2022), Democratic Republic of Congo (2022), Côte d’Ivoire (2023), Ghana (2023), Kenya (2023), Rwanda (2023), Ethiopia (2023), and Uganda (2023). This is particularly noteworthy because very few of these countries-Tunisia, Senegal, and the Democratic Republic of Congo-are in French-speaking Africa. The law aims to promote entrepreneurship, facilitate the creation and growth of startups, and create an enabling environment for innovation. The DRC could take inspiration from these African countries, learn from their successes, and tailor its policies to the unique context of startups within its borders. Among French-speaking countries in Africa that have adopted similar legislation, the Democratic Republic of Congo, with a population of over 100 million, offers immense potential for international investors. The country boasts not only a dynamic and diversified domestic market but also creative, innovative and ambitious entrepreneurs. To compare, Tunisia has a population of 12 million, Senegal 18 million and Côte d’Ivoire 29 million. The DRC’s potential is therefore much greater for tech startups such as fintechs, and it can position itself as an essential destination for international investors, especially those from Canada, the United States, the United Kingdom, France and the Netherlands, where tech startup ecosystems are extremely dynamic. And to unlock this potential, we must first address some of the structural challenges that hinder the growth of startups in the DRC. We need to improve access to reliable internet and electricity, strengthen the country’s education system with a focus on science, technology, engineering, and math, and develop a financial system that supports venture capital and other forms of startup funding. The government plays a critical role in creating an enabling environment for startups. Clear, supportive laws and regulations can help foster innovation, while investments in infrastructure can help reduce the cost of doing business. The idea is to create an ecosystem in which entrepreneurs can thrive and be rewarded for their work. In addition, fostering partnerships between the public sector, private companies, and international organizations can support the growth of Kinshasa’s tech ecosystem in the coming years. For example, tech hubs and co-working spaces can act as springboards where ideas and talent come together, creating an environment conducive to the growth and success of startups. We also need to harness the power of the Congolese diaspora, particularly in Canada, the United States, France and Belgium. This diaspora is a huge reservoir of talent, experience and financial resources. Initiatives to connect diaspora professionals and entrepreneurs with their counterparts in the DRC could provide invaluable opportunities for mentorship, investment, and business partnerships. We must not forget how important it is to include women, people living in rural areas, and marginalised communities in our efforts to build a thriving startup and tech ecosystem. Programs that ensure access to digital skills training, startup funding, and investment guarantees for these groups can help ensure that the benefits of the digital revolution are widely shared in the country. I see a future where Congolese startups are not just players in the local market, but formidable competitors on the international stage. I see a future where the words “tech startup” evoke not only Silicon Valley, but also Kinshasa, Lubumbashi, Goma, Matadi, and Mbuji Mayi. I also see a future where Congolese startups are not just players in the local market, but formidable competitors on the international stage. I see a future where the words “tech startup” evoke not only Silicon Valley, but also Kinshasa, Lubumbashi, Goma, Matadi, and Mbuji Mayi. My vision for the DRC’s startup and tech ecosystem is ambitious but achievable. By tapping into our collective strengths, addressing our
Read MoreFraud concerns may stall contactless payments implementation by banks
New guidelines from the Central Bank of Nigeria (CBN) place the burden of fraud on banks. This may stall contactless payment implementation by banks. On June 30, 2023, the Central Bank of Nigeria (CBN) introduced new guidelines for the operations of contactless payments in the country. Per the new rules, such transactions will be limited to ₦15,000 for a single payment or ₦50,000 daily. However, Several banks who spoke to TechCabal said they are unsure of how to implement the guidelines. “Yes, we are aware of the guidelines but we are yet to get direction on the implementation process,” an Access Bank personnel told TechCabal. A Fidelity Bank source said the bank is working on an in-house implementation plan. According to the CBN guidelines, users can tap or wave their devices—including smartphones and cards—that are enabled with contactless technology to make payments without inputting a PIN to confirm the transaction. Contactless payments are powered by radio frequency identification (RFID) or near-field communication (NFC) technology which allows enabled devices to initiate and authorise payment transactions without additional confirmation from the user. But the primary problem with the use of contactless payments is the risk of fraud arising from the absence of authorization, meaning a serious cause of concern for banks and financial institutions involved. This YouTube video tells how scammers used contactless payment to steal from a Denver woman’s bank account. However, the CBN is betting that its decision to cap the transaction amount on contactless payments will mitigate fraud risks. Why? It works. According to the data analytics company FICO, “data from UK Finance revealed that in 2020 there was a total of £574 million lost through card fraud. However, only £16 million of this figure represented contactless payment fraud. A MasterCard staff who declined to be named because they were not authorised to speak to the media explained that the use case for contactless payments was tied to the need to collect small payments en masse at tolls and queues quickly. Even though the central bank stipulates an upper limit of N15,000, card issuers can offer lower-limit contactless cards depending on their risk appetite. The big worry for banks is how to handle fraud The guidelines also place the burden of fraud on acquirers (the bank of the payment recipient), issuers (the bank of the customers), and merchants (the business) who offer contactless payment channels. Placing the burden of managing fraud on merchants and banks would make it difficult for banks to seek to implement the new provisions, said Adedeji Olowe, founder of Lendrsqr, a software firm that enables digital lending businesses. “Abroad, where there are consequences for bad behaviour if your card was stolen and used for contactless, the bank covers the fraud. We both know nobody dares do that in Nigeria,” he commented. While it remains to be seen how the banks will handle contactless payment implementation, they represent a new hurdle for their security architecture, especially in light of the recent reports of hacks targeted at traditional Nigerian banks and even fintechs. In 2019, Nigerian financial institutions spent a reported N200 billion on cybersecurity. Securing contactless payments is going to increase that budget. At the Digital PayExpo hosted by the Nigeria Deposit Insurance Corporation (NDIC) and the CBN in June 2023, Chinwe Uzoho, Regional Managing Director, West & Central Africa, of Network International, pointed out that it costs a lot to secure contact payment systems. “You have to choose between fraud and secure payments,” she said, In June, Globus Bank reportedly lost N1.7 billion to hackers. TechCabal also reported how Glade, a Techstars-backed fintech, suffered an internal breach that cost over $200,000. Considering that some of Nigeria’s worst cyberattacks are underreported, chances are more hacks have possibly happened in recent times without public knowledge. So one thing is clear: for these guidelines to work, banks must brace up their security architecture as cybersecurity becomes more problematic in Nigeria.
Read MoreFor francophone startups playing catch-up, imitation is the cheat code
The African francophone startup ecosystem has a lot of catching up to do when compared to English-speaking countries. Can a copycat approach help close this distance? The year is 2016, and the Nigerian fintech ecosystem is much smaller than the over 300 fintechs we have now. Few startups exist, and even fewer are prominent. But Paystack’s acceptance into Y Combinator changed everything. Pitching themselves as the “Stripe of Africa”, the startup promised that it would do what Stripe did for payments, but in Africa. While their acceptance into YC helped create validation for the ecosystem, their eventual acquisition by Stripe (for $200 million in 2020) solidified it. It is this approach that francophone startups are trying to bring to their shores by copying the business models of successful startups in English-speaking African countries. There are many opportunities for businesses to thrive in francophone African countries. For starters, the region’s currency, the CFA, is used in 14 countries and accounts for 12% of Africa’s GDP. It is also pegged to the Euro and does not fluctuate, providing the kind of FX stability that’s not available elsewhere on the continent. A corollary effect of this is that barring internal conflict, most economies are stable. Last year, Miishe Addy, the CEO of Jetstream, a Ghanaian logistics startup, told TechCabal that her startup was expanding into francophone Africa to mitigate the effects of Ghana’s turbulent inflation. The region is home to some of the fastest-growing cities and economies in Africa. According to the IMF, six out of the seven fastest-growing economies in sub-Saharan Africa are francophone countries. The stretch of West African coastline, which begins in Abidjan and runs through Lome, Accra, and Cotonou before ending in Lagos, would be home to 51 million people in a decade. By the end of the century, it would be home to 500 million people. Another opportunity that francophone startups have is that, due to their similar currencies, language, and cultures, regional expansion is an easy path. Ivorian Mstudio wants to build a strong francophone ecosystem, one venture at a time Copying is a shortcut for francophone startups The opportunity is clear, so governments, startups, and venture firms are trying to advance the ecosystem by copying what has already proven successful in the Big 4 (Nigeria, South Africa, Egypt, and Kenya). By copying what has already worked, there is an assurance that there is market validation for the product and that Africans are willing to pay. Leslie Ossete, the co-founder of Mstudio, an Ivorian venture studio, told me in Abdijan that her studio chose this copycat approach because it “gives us a higher chance of success”. “We look at countries that have similar markets, economies, industries, ways of doing things, and an informal market as well because that is our focus. We try to see which startups and trends do not exist in francophone Africa and can be replicated here,” she added. When asked if this copycat approach could work, Mathias Léopoldie, the co-founder of Juluya, an Ivorian fintech, told me that it is “a proven strategy because the markets are very similar in terms of demographics (low-income, young population) and economies (20-25% primary sector, 25% secondary sector, and 45%-50% tertiary sector).” However, a copycat approach does bring some problems. Jumia has always been paraded as the “Amazon of Africa”, but it has struggled to attain profitability. What works in one market might not translate into another. Anglophone countries have common law, while francophone countries have mostly civil law. Then there’s the language barrier (I could only communicate in Abidjan with the help of AI). Copying blindly will not work for francophone startups English-speaking startups that have expanded into francophone Africa have found it difficult to find success. When Wasoko raised $125 million last year, its CEO told TechCrunch that it was expanding into Senegal and Cote d’Ivoire because of their “solid year-on-year GDP growth.” The startup is now closing its offices. Sendy, a Kenyan logistics startup, has placed its Ivorian subsidiary in liquidation. But Wave, a Senegalese fintech, is currently making a killing in Cote d’Ivoire. There are “some deep cultural differences in terms of doing business,” according to Léopoldie. “Francophone Africa is not the same as Nigeria or Kenya; you’re going to have specificities; the persona might be different; they do not purchase the product in the same way, or they did not experience the problem in the same way,” Ossete added. “From my experience in mentoring, investing, and building startups in sub-Saharan Africa, it’s easier for francophone startups to expand east (to English-speaking countries) than the other way around. ” Axel Peyriere, the CEO of Auto24 and an angel investor, told TechCabal. If what works in Anglophone countries struggles to be replicated successfully by the same people that built it, how can a copycat approach work? By innovating and applying home-ground advantage to create tailor-made solutions. Some English-speaking startups have taken the route of acquisition instead of expansion. Autochek (Nigeria) and Chari (Morocco) are recent examples. Léopoldie told TechCabal that he believes a “francophonized” approach to bringing innovation from anglophone markets to francophone markets could work. “It is interesting that many anglophone late-stage startups are actually struggling to enter francophone markets,” he added. Innovation is not always about creating something new; it can also mean bringing something that did not exist before to the market. By copying what has proven successful in neighbouring countries and applying home-ground advantage, the francophone tech ecosystem has a cheat code and blueprint for success. As Ossete told me, “We do not lose a lot of time in execution because we already know at least how to structure the business model and the structure of the business itself.”
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👨🏿🚀TechCabal Daily – Kenya’s Finance Act’s final act?
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning If you’ve been missing TC Daily in your inboxes, it’s because we’re landing your Promotions or Social folders. To make sure you never miss an edition, please move us to your Primary or Main folders. In today’s edition Kenya’s Finance Act has been halted SA nabs another cybercriminal for $8000,000 fraud Emojis can be used to sign contracts Propel raises $2.7 million The World Wide Web3 Event: Angel Investor Meetup, Lagos Opportunities Legislation High Court maintains suspension of Kenya’s Finance Act 2023 Kenya’s Finance Act is acting up. Yesterday, Justice Mugure Thande, extended an earlier order halting the implementation of the country’s recently-approved Finance Act 2023. Image source: YungNolly Why was the Act suspended? Busia senator Okiya Omtatah, Eliud Matindi, Michael Otieno, and four others filed a petition challenging the constitutionality of the Finance Act 2023. They argue that the Act was passed without the concurrence of both Speakers of the National Assembly and Senate, as required by the Constitution. They also argue that the tabling of the Finance Bill was done without following due procedure. Additionally, they argue that the housing levy, which compels employers and employees to pay 1.5% each, is unconstitutional because the Constitution limits the national government’s role in housing to developing a housing policy. However, Cabinet Secretary Njuguna Ndung’u argued that the conservatory order could halt government operations by suspending budgetary steps. The ruling: Per Justice Mugure Thande, the cabinet secretary did not make a convincing case for the suspension of the order. She granted the petitioners’ request to have the case classified as a matter of significant constitutional importance and ordered that the case file be sent to Chief Justice Martha Koome for the appointment of a panel of judges to hear the case. Zoom out: The Finance Act 2023 introduces several new taxes, including a 1.5% tax on content creators and a 3% tax on crypto traders. These taxes are designed to generate revenue for the government to support its development agenda. You’ll be in good company Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Click here to open a business account today. Cybersecurity South Africa nabs another cybercriminal Every day for the thief, one day for the law. Martins Egenamba, a South African who claimed to be a technology entrepreneur, has been sentenced to a 15-year jail time for defrauding victims in the United States and South Africa of millions of dollars. Martins Egenamba How did he do it? Per MyBroadband, Egenamba’s scheme was a case of business e-mail compromise fraud. This crafty individual managed to get away with about R16 million ($851,075) by swooping in on invoices, and tweaking the bank account details to divert the money to his own pockets instead of the rightful recipients. And that’s not all! For businesses in the US, he forwarded the funds straight to his South African company’s FNB account, Barlon d’Or Group. While he may be behind bars now, investigations are still underway regarding his involvement in another R6 million ($319,153) fraud scheme. Zoom out: SouthAfrica sees a lot of cybercrimes. One popular fraud scheme is the pyramid scheme and cryptocurrency scam, Mirror Trading International (MTI). MTI stole billions of rand from South Africans and victims in other countries including America. In fact, INERPOL’s Cybercrime Assessment report lists the country as the cybercrime hub of Africa. Consumer tech Judge rules that emojis can be used to sign contracts Image source: GIPHY A picture is worth a thousand words. How much is an emoji worth? Per MyBroadband, a Canada-based court is forcing a grain buyer to honour a sales contract because he responded to a message of the contract sent to him with a thumbs-up emoji. Yes, you heard that right. How did this happen? The grain farmer, Kent Mickelborough, signed a contract to sell 87 metric tons of flax and sent it for the grain buyer Chris Atcher to sign. Atcher claims he responded with a thumbs-up emoji to acknowledge receipt of the contract. Mickelborough, however, took the emoji as confirmation that he was entering the agreement as the buyer. But is it really valid? Justice TJ Keene, the judge who presided over the case says it is. He said that the thumbs-up emoji is an “action in an electronic form” that could be acknowledged as a “non-traditional means to sign a document.” This is also deemed acceptable because the buyer used his personal phone number to send it. GrowthCon 1.0: Learn how to unlock 10X Growth Connect with growth leaders, operators, and enablers to explore proven tactics for driving sustained business growth in Africa at GrowthCon 1.0. Experience curated masterclasses, case studies, a growth hackathon and more. Get your tickets now at 15% off. Use the discount code “TIX15”! Funding Nigerian startup, Propel, raises $2.74 million in seed funding Founders of Propel: Sunkanmi Ola, Seun Owolabi, and Abel Agoi Propel, a Nigerian HR tech startup, is setting sail with a $2.74 million seed funding to help scale its community-as-a-service platform. The company was founded in 2020 with the aim of helping multinational corporations reduce the risk of hiring remote workers from emerging markets. Lead investors: Amsterdam-based No Such Ventures led the funding round, joined by APX (an accelerator by Axel Springer Digital Ventures and Porsche Digital), Golden Egg Check, and Future of Learning Fund. Propel connects talented individuals in emerging tech communities with global companies that are committed to diversity, equity, and inclusion (DEI). The company uses a “community-as-a-service” business model, which means that it provides a platform that allows companies to access vetted talent pools in emerging markets. Future plans: The company aims to broaden its community ecosystem, expand its community platform, and introduce additional client services. Moreover, it intends to leverage the funding to achieve €1 million ($1.1 million) in community-generated revenue by Q4 2024. Zoom out: Propel operates in multiple global
Read MoreNigerian stock market rally continues driven by sector-wide gains
A majority of Nigeria’s stocks across all sectors have pushed the NGX to positive results last week, yet again. Experts believe the recent economic policies of President Bola Tinubu could be responsible. Driven by stocks across all sectors of the economy, Nigeria’s NGX continued its bullish run last week, delivering a strong close for the exchange. The NGX All Share index was up 3.40% at close of the week. Despite overall growth, the banking sector remained the best performer, gaining 9.82% at the close of the week. Financial markets experts told TechCabal that investors are reacting positively to some of the economic policies of the Tinubu administration. Last week, President Tinubu signed an executive order deferring the implementation of two key taxes until September 2023. The Tinubu admin also formed a committee on fiscal policy and tax reforms headed by Taiwo Oyedele, signalling the possibility of critical tax reforms. Onome Ohwovoriole, an analyst with Money Africa, told TechCabal that last week’s market rally was a case of a rising tide lifting all boats. Oise Ajayi, the head of investment research at Achoria asset management, also said, “Investors are seeing a step in the right direction and that is what they have been reacting to. Prices are rising now and they are not moving in one direction. Banking and oil gas stocks have been very strong drivers of market performance. Oil and Gas stocks have been on the rise since they took out fuel subsidy from the sector. Added with banking, they are the top two sectors.” Foreign investors remain cautiously optimistic Several analysts say that foreign investors are still on the sidelines. According to the NGX, foreign-investor participation has increased to 12% of transactions from 4% before the devaluation. While it’s an increase, many are still waiting on deeper reforms. With H1 financial results on the way, there’s a sense that the NGX’s good run will continue if companies report strong numbers. “We are not expecting any significant downturn yet. For now, the sentiment feels positive and we believe it will remain that way in the next trading sessions. Also, we are going to be seeing H1 results and the ones that will declare dividends. Investors would make decisions based on the outcome of that,” Ajayi added.
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Next Wave: Can’t leapfrog trust
Cet article est aussi disponible en français <!– In partnership with –> <!— –> First published 9 July 2023. Credere (from Proto-Indo-European – ḱreddeh- i.e to trust) is the heart of lending. In far too many African markets credere is local, very local and we can’t technology our way out of this “tribal” variety credere. The entire financial system is constructed on the premise that if you have too much money than you could spend in the short term, you would look for somewhere to stash it. And if I knew how to spend money in the short term to generate even more money, you would stash it with me. You trust me with your money and I trust that between keeping watch over it and giving it back to you, I can make enough to justify the effort by making more money from it. To quote Matt Levin.The bank is a magic trick that allows risk-averse savers to fund risky projects. Let us call this system of brokerage between risk-averse depositors and risk-loaded entrepreneurs, Trust Transactions. Another point to note about this system is that was not legislated into being. It has had centuries to develop and be finetuned. Even so, it does not work the same everywhere. For Africa in particular, alongside versions of the Trust Transactions described earlier (mostly large for cross-border trade routes), local groups developed their unique Trust Transaction systems for depositing and managing wealth. Despite this happening in populations separated by thousands of miles, the results were often similar. Whether they are called tontines, chamas, esusu or stokvels, these small group credit systems essentially functioned as deposit money banks, and insurance systems for their communities across Africa. Partner Message GrowthCon 1.0: Learn how to unlock 10X Growth Connect with growth leaders, operators, and enablers to explore proven tactics for driving sustained business growth in Africa at GrowthCon 1.0. Experience curated masterclasses, case studies, a growth hackathon and more. . Get your tickets now These communities were more social than commercial A close parallel to how these systems operated are the credit union and Main Street bank ecosystem that blossomed as frontier towns grew in young America. These small-town banks served as engines for America’s explosive growth in the 19th and 20th centuries. Whether in 20th-century America or Africa, the key to the success of these banks was that they were more social than commercial in their daily operations. They had a friendly human face whom participants knew and trusted. And trust was often the only asset entrepreneurs who borrowed from the pooled fund could boast of. As the United States grew into a modern economy, these small family-friendly banks, credit unions and the entrepreneurs they backed also blossomed alongside the. Sam Walton of Walmart fame for example built his straggling small-town business into a national chain off the back of credit from small-town banks. As business grew, several small-town banks lost their small-town background, grew and became indistinguishable from the big banks. By contrast, Africa’s credit unions—the chamas, tontines and esusu groups—remained local. Contained in small towns, neighbourhoods or villages participation was limited to only a few people at a time. By this time, the modern financial system was pretty much established. Still, even though the newly created African banks received the bulk of their deposits from ordinary income earners, they preferred to operate models based on lending to the government or a handful of big businesses. Remember, successful banking depends on a trick. I convince you that your money is safe with me and I convince myself that someone else needs that money enough to promise to pay me for taking a risk that you would not have chosen to take. Usually, this desperate someone is a business person. From micro-finance to digital banking and lending While esusu-type groups grew with the increasing population, African banks mostly chased safe investments in government bonds. So if you had enough money, you kept some of it at the bank, but if you needed a loan or money to finance a big project you turned to your closest esusu group. Fast forward this by a few years and suddenly there are more options to pick from. High-interest loans from micro-finance banks + paperwork. And high-interest loans from a smartphone. Most people will pick the smartphone option. But there are three problems with this. The first is that the smartphone option is usually not a business loan. The second is that the lender and the borrower do not know each other. The last problem is that trust is highly localised. Once “out of bounds,” commercial trust breaks down. Partner Content: Will Africa’s B2B e-commerce industry survive another decade? The result is predictable. High default rates. Lenders try to fight with higher interest rates and naming-and-shaming schemes. Eventually, it devolves into a cat-and-mouse game between lenders and borrowers. If you were a digital lender what would you do in response? A lot of digital lending firms seem to think the answer is writing more algorithms to help them predict what a prospective borrower would do. It’s a good idea and it probably helps a lot. While I’m not a banker or an underwriting expert, I’ve given this some thought and the underlying problem with getting digital lending to work seems to be more of a social problem than a problem software can solve. To put it another way, trust relationships in many parts of Africa do not extend more than a few degrees of personal contact. We are stuck in the local esusu trust level of trusted transactions. It is a malaise that affects everyone. Banks and depositors alike. In many cases, there is good reason for that. Partner Content: Tracc Systems partners with Eonsfleet to revolutionise the supply chain and transportation management landscape in Africa The lack of and abuse of broad consequences for misusing trusted transactions encourages everyone to just stay away and stick to the devil that is known. One former neighbour started a
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How Zambia’s national debt restructuring can boost country’s tech ecosystem
Despite the much-heralded development over the last two years, Zambia’s tech ecosystem has lagged behind in attracting venture capital. With the country having reached a debt restructuring agreement with some of its major creditors, can this development benefit its ecosystem? After Zambia announced a debt restructuring deal with creditors, economists are hailing the move as a step in the right direction. Many also expect the restructuring deal to have an impact on the country’s technology ecosystem. Zambia’s tech ecosystem is fledgling and has had a tough time attracting venture capital, unlike rival continental hubs like Nigeria, Kenya, and South Africa. Many expect that the restructuring will help rally investors to the southern African nation’s ecosystem, spurring growth. In 2020, Zambia became the first African country to default on its debt payments offset. That default limited the government’s ability to invest in programs critical for economic growth. “[The restructuring] allows for increased fiscal space and increases the amount of funds available for the government to invest in priority projects and social expenditure, and other areas where there was a budgetary gap,” said Jito Kayumba, special assistant and advisor to President Hichilema on economic, investment and development affairs. Potential benefits of debt restructuring on Zambia’s economy (Image source: Linkedin/ Andrew Chibuye) Good news for Zambia’s fledgling tech ecosystem Over the last year, Zambia’s tech ecosystem has seen a significant boost as numerous pan-African companies have set up operations in the country. These include subscription video-on-demand platform Wi-flix, technology infrastructure company Liquid Intelligent Technologies, and crypto exchange, VALR. The fintech unicorn Chipper Cash also entered the Zambia market last year. The ecosystem also got a co-sign from Vitalik Buterin, founder of Ethereum, who hailed the “unique opportunities” present in the country. According to Andrew Chibuye, senior country partner of PwC in Zambia, “The restructuring should result in a more favourable investment environment that will benefit all sectors including technology. Technology is considered as key to enabling growth of the economy and so it is expected to be integral as the country goes forward.” This point is reiterated by Kayumba who also points out the importance of the country’s technology sector in also enabling the growth of other important sectors of the country’s economy like mining and agriculture. “The beauty of technology is that it can help create efficiencies in the supply chain and the value chain of most of our other core sectors. Growth in agriculture, mining, and energy can be accelerated by the smart integration of technology, leading to new jobs created, new homes being built, and new infrastructure across the board,” he said. For startups, who have thus far struggled with attracting venture capital funding, the restructuring is a welcome development that could boost their ability to raise capital from investors, both local and international. Since 2015, 23 startups have raised more than $75m in disclosed funding, according to Biter Bridges, far behind ecosystems like Nigeria, Kenya, and South Africa. Snapshot of the state of venture capital funding in Zambia. (Image source: Briter Bridges) Ahmad Hamwi is the founder of Ignitos Space, a spacetech startup providing farmers with farming insights. According to him, the restructuring is the biggest opportunity to take the Zambian startup ecosystem to the next level in terms of providing liquidity for funding. “I believe that we will see a lot of shifts in the ecosystem which will lead to more investor attention. Zambia has over the last two or so years shown that it can become a very lucrative place to invest in and this debt restructuring will further prove the viability of the economy for investing which I believe will boost investments in our startups,” Hamwi told TechCabal on a call. Beyond investment into startups, Hamwi believes that subsequent digitalisation initiatives will move Zambia deeper into the digital transformation journey, boosting the scale-up of local startups, and making them attractive to investors. “The restructuring will allow a lot of projects to boom, including digitalisation ones, which would help a lot with bringing a lot of people into the digital economy. Also, an increase in trade resulting from the process could go a long way in boosting the growth of e-commerce and fintech solution providers in the country,” he added. Creating an enabling environment for ecosystem success Mwiya Musokotwane is the CEO of Zambia-based investment firm Thebe Investment Management. Together with Perseus Mlambo, CEO of Union54, they are the founding members of the Zambia Technology Sector Working Group, whose main mandate is to work with partners, including forty local and international companies, to develop business-friendly legislation to support African tech companies looking to incorporate or operate from the country. Speaking to TechCabal, he stated that the restructuring process, among other upsides, presents an opportunity to use technology to accelerate economic growth and job creation in Zambia. “From a technology perspective, I think the opportunity that exists is that technology investment benefits are felt from day one. For example, if a tech startup domiciles itself in Zambia because the government has created an incentive package, that means jobs are immediately brought to Zambia because that founder will probably come and live here. A significant part of the startups team will probably come and live here and by coming here, they boost adjacent economy sectors,” he said. “If just 6,000 software developers moved to Zambia, its GDP would grow by 1%. That is not immaterial. That is a material contribution to GDP growth rate because software developers have a higher earning potential so they’re bringing their salaries which they will spend on other sectors of the economy. If we look at the number of people who work in the technology sector across Africa, it’s well above 700,000 individuals and if you become the best place for these people to live and work, you can certainly do a significant much in growing the economy.” For Lulumbi Njeleka, principal partner at Monter Capital, a Lusaka-based investment firm, the restructuring has the ability to create an enabling environment for alternative investors, including
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👨🏿🚀TechCabal Daily – SA lawyers use ChatGPT…and fail
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Threads has now reached 90 million users within five days of launch. Elon Musk isn’t having it though. The billionaire is threatening to sue Mark Zuckerberg and Meta for hiring Twitter employees—some of whom he fired without due process or severance, and mocked. According to Musk, the ex-Twitter engineers built Threads, but Zuckerberg has responded that no ex-Twitter employee was involved in building the new social media platform. In today’s edition South African lawyers use ChatGPT for case and fail Medsaf lays off full-time staff Airtel launches 5G in Kenya TC Insights: Unionising Africa’s digital labour The World Wide Web3 Event: The Moonshot Conference Opportunities AI SA lawyers uses ChatGPT for case, and fail History is repeating itself, and within a month too! South African lawyers arguing a case at the regional court in Johannesburg were called out for using fake precedents generated by ChatGPT. To sue or not to sue: According to Sunday Times, the unnamed lawyers were representing a woman who was suing the trustees of a company for defamation. While the company’s lawyers argued that trustees could not be sued for defamation, the plaintiff’s lawyers argued that South African courts had—in previous cases—judged that trustees could in fact be sued. The judge then postponed the hearing for two months to allow the lawyers time to find the precedents they needed to prove their case. Unfortunately, the lawyers could not track down the case manually and instead asked ChatGPT for citations. While the citations were for real cases, they had nothing to do with defamation. Image source: YungNolly Careless not misleading: In the judgement against the plaintiff, Judge Chaitram called out the lawyers stating that they were, “simultaneously simply overzealous and careless.” “The embarrassment associated with this incident is probably sufficient punishment for the plaintiff’s attorneys,” said Chaitram. Big picture: This is the second case where lawyers have used ChatGPT to source for cases, and failed. In May this year, a US law firm was fined $5,000 after one of its lawyers used ChatGPT to cite bogus cases. It’s also one of the many cases where ChatGPT and similar services have provided false information to users. You’ll be in good company Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Click here to open a business account today. Layoffs Medsaf lays off all full-time staff In layoff news, Nigerian healthtech Medsaf has laid off all its full-time employees, about 30 employees. Last week, sources confirmed to TechCabal that the startup, in March, made the layoff announcement via its chief operating officer Rotimi Lawal. Lawal informed staff that the company was experiencing funding gaps and other dismal payment issues in the operation of its business. The company—which has raised $3.6 million total since its founding in 2017—has reportedly been facing financial difficulties since mid-2022, and this led to delays in staff and vendor payments. Unpaid salaries and benefits: Several laid-off employees also confirmed that they hadn’t been paid salaries since December 2022, despite promises from the company that salaries arrears would be paid by April 2023. In response, Medsaf’s CEO, Vivian Nwakah, blamed the situation on investors reneging on funding commitments. Nwakah also noted that staff had been asked “not to come to work in January…So many of the employees that you are speaking with hardly worked in January and are requesting salaries that are owed to them when they were not actively working for the company,” she said. Vivian Nwakah, CEO of Medsaf. Image source: Seedstars Sources also allege financial misappropriation by the company’s management citing a $100,000 project fee that never made it into the company‘s accounts. Medsaf denies the story: A day after the report, CEO Nwakah took to LinkedIn to tag the report as “full of lies, misinformation and slander”. In the post, Nwakah shares a cease and desist letter to TechCabal where Medsaf—through its lawyers—demanded a retraction of the story, and an apology. TechCabal, however, stands by its story. We have found no instances of material errors, misrepresentations, falsehoods, or malice in our article. Telecoms Airtel launches 5G in Kenya Image source: Airtel More Kenyans are getting 5G! Last week, Airtel became the second telecom to launch 5G in the East African country, following Safaricom’s October 2022 launch. Where is it launching? We don’t know yet, Airtel hasn’t specified. The telecom only mentioned that it has 370 5G sites spread across 16 counties. However, the service is expected to focus on customers in major areas and cities such as Nairobi, Nakuru, Mombasa, and Kisumu. Ashish Malhotra, the managing director of Airtel Kenya, said, “Airtel 5G will revolutionise various sectors, such as smart cities, education, healthcare, agritech, transport systems, entertainment, and more, shaping the future of Kenya.” Can anyone use it? Only if your device is 5G-capable. Airtel argues that customers will be moving in and out of 5G areas and will be well-served by 4G bundles, which can access 5G without issues. The telecom also announced 5G Wi-Fi routers and plans which it is offering to businesses and residential areas. Find the pricing here. Zoom out: More telecoms are shooting to launch 5G in the country including the state-run telecom Telkom. The telecom, however, has been facing financial difficulties, leading to the telco’s failure to pay the American Tower Corporation (ATC) Ksh200 million for tower leasing. GrowthCon 1.0: Learn how to unlock 10X Growth Connect with growth leaders, operators, and enablers to explore proven tactics for driving sustained business growth in Africa at GrowthCon 1.0. Experience curated masterclasses, case studies, a growth hackathon and more. Get your tickets now at 15% off. Use the discount code “TIX15”! TC Insights Unionising Africa’s digital labour According to the International Labour Organization, there are almost 800 digital labour platforms across the world as of 2022 including ride-haling services and delivery platforms. Over the past decade, digital labour platforms have experienced
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