How fuel price surge and rising inflation have opened up the ride-hailing market for Rida and InDrive
Nigeria’s rising inflation and fuel price surge have made ride-hailing customers turn to Rida and InDrive which offer cheaper pricing and the ability to negotiate fares with drivers. This trend presents an opportunity for both platforms to snag greater market share. Since 2020, Raheem Balogun, a product manager, has used Bolt for his daily commute to work. But that changed in June when Bolt increased its base fare from ₦650 to ₦800 in response to the fuel subsidy removal. Its more expensive rival Uber adjusted its fare from ₦850 to ₦1200. Like many riders TechCabal spoke with, Raheem has now found an alternative in Rida and inDrive that allow riders to negotiate fares with drivers. “I prefer to use them [Rida and inDrive] because their fares are cheaper,” he told TechCabal. Beyond pricing, the real catch for many riders is that inDrive and Rida allow customers to negotiate fares. While Uber and Bolt give price estimates before the trip starts, InDrive and Ride allow customers to propose a price–drivers can accept those prices or make counterproposals. Both ride-hailing services also don’t have base fares. California-headquartered inDrive and Armenia-based Rida aren’t new to the Nigerian market having launched in 2019 and 2020 respectively. If they seem new, it’s because an increase in fuel prices and attendant cab fares are finally making customers prioritise pricing over brand names–a sector that was dominated by two giants is now opening up. A ride from the Lagos State University campus, Ojo to the National Stadium Complex in Surulere costs between N5,500 and N6,900, with Bolt compared to Uber’s price of N8,580. The recommended price for the same trip on inDrive was N5,000, while Rida’s was N5,400. A screenshot showing the difference in prices on the four ride-hailing platforms. While cheaper pricing and the ability to negotiate will help Rida and InDrive gain some market share, they still have bigger worries if they’re not to find themselves in the persistent driver troubles that Bolt and Uber are currently facing. Good for riders, but not drivers Ride-hailing drivers—at the direction of the Amalgamated Union of App-based Transport Workers of Nigeria (AUATWON)—are demanding a 200% increase in fares from Uber and Bolt. The Union doesn’t have InDrive and Rida in its crosshairs yet because both companies charge lower commissions. While Uber and Bolt collect a 20% commission on every ride, inDrive takes 10% excluding VAT and Rida charges no commission. But there are signs that these low commissions may not be sufficient incentives for drivers in the long term. Felix, a driver who asked to be identified only by his first name, told TechCabal that controlling costs remains a big issue. “When you consider the cost of fuel, the commission, and the payment we have to give to the car owners, you realize that the situation is a bit challenging for us,” the driver who uses both platforms said. One major trend is that drivers now register on all major ride-hailing platforms, hoping to find the most lucrative deals in their location. It’s common for drivers to use the estimated prices on Bolt and Uber to get similar deals on InDrive or Rida, banking on the lower commissions to improve their margins. Some peculiar cultural problems remain, like the perception of many customers that drivers treat them differently when they use these cheaper solutions. Susan, a frequent user of inDrive said drivers often act like “they are doing you a favour because you’re negotiating prices.” Another person said that the drivers sometimes ask for a different price other than what was agreed. These are early indications that InDrive and Rida need to strengthen their brand efforts and improve customer perception. Rida and inDrive customers have also complained about the user experience on the apps. In an email response to TechCabal, inDrive said it is working “to tackle any issues that arise, concentrating on enhancing the app’s performance and refining the user interface.” Rida recently upgraded its app, adding new features such as a navigation system and a safety button.
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Nurturing Africa’s AI ecosystem for global impact
Image source: Telecom Review Africa Across the globe, artificial intelligence (AI) has emerged as a transformative force that extends beyond the boundaries of the tech ecosystem, attracting attention and generating buzz. In Africa, entrepreneurs, researchers, and organizations are beginning to harness the power of AI to tackle unique challenges and drive impactful change. From healthcare to agriculture, education to finance, the continent is witnessing the influence of AI across diverse sectors, fostering sustainable development and empowering communities. “AI can help people flourish, and promote social cohesion and prosperity. It can also help people to suffer and stress less,” said Favour Borokokini, PhD student at Horizon CDTat the first edition of moonshot conversations by TechCabal. However, to fully unleash the potential of AI in Africa, a comprehensive strategy is required that addresses unique challenges and ensures inclusivity at every step. A coherent long-term vision and plan for the use of the technology as well as policies that balances out the risks of these technologies is important in ensuring that these machine learning models are equitable, inclusive, and valuable. What is a starting point for building AI infrastructure for Africa? An important step towards developing an effective roadmap for AI in Africa is addressing the data problem on the continent. In an era where data fuels the advancement of artificial intelligence (AI) and machine learning (ML), Africa faces a unique challenge: the scarcity and quality of data. The continent’s diverse and dynamic contexts, coupled with limited data availability, pose obstacles to the development and deployment of AI-driven solutions tailored to Africa’s specific needs. Investing in data collection and tailoring ML algorithms to local contexts will lead to more accurate predictions, targeted interventions, and improved decision-making across sectors. As AI continues to advance, it raises important ethical questions about the use of personal data and the potential for bias in AI systems. Although we’ve seen far-reaching legislations like the AI Act by Europe and efforts of The African Union Development Agency (AUDA-NEPAD) on The African Union Artificial Intelligence Continental Strategy for Africa, It is clear that there is a growing concern for regulations on the development and use of AI to bolster the responsible development and deployment of AI in Africa. There is also a place for legislation that ensures reskilling and retraining programmes to ensure social and economic equality. New technologies always cause disruption and can cause loss of livelihood. “How do we ensure that we are reskilling people who lose their jobs?” asked Favour Borokini. Lastly, building AI awareness through education initiatives about AI’s capabilities, benefits, and limitations will foster a culture of AI literacy at the business and consumer levels. AI education and training programmes must be incorporated into school curriculums and the workforce. “A normal front desk officer should be able to understand what AI is about,” as explained by Oluwabunmi Borokinni, programmes lead at Immersive Tech Africa, said. Like Tawanda Ewing said, “AI is more of an augmentation than a replacement for jobs.” With AI, we have an opportunity to leapfrog progress and harness technology for sustainable development to shape the future of the continent. By nurturing talent, fostering collaboration, and scaling impactful initiatives, Africa is poised to be at the forefront of AI innovation, shaping a brighter future for its people and leaving an indelible mark on the global AI landscape.Moonshot by TechCabal will convene the most audacious players—founders, business leaders, startups, enterprise companies—building Africa’s dynamic tech scene to network, collaborate, share ideas/insights, and celebrate innovation on the continent. To join the waitlist, click here.
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Next Wave: How to sell the “Invest in Africa” message
Cet article est aussi disponible en français <!– In partnership with –> <!— –> First published 7 July 2023 Like everything I write on Next Wave, this is probably not a silver bullet, but it undoubtedly an approach worth thinking about. Is it too controversial to say investors should not invest in Africa because it will have a large consumer market, will be the labour capital of the world and has a few of the fastest growing economics measured by nominal GDP? If you were an investor in the mid-eighties to late nineties, why did you put your money in communist China? Because of its large consumer market? A lot of what I hear when Africans—in government and the private sector—talk about business is how they can serve local consumption. On the other hand, when the rest of the world talks about the African business opportunity, it is often as a source of primary input that will be further processed for global consumers. Except in development circles, and even there, it slips in once in a while. Along with labour force projections, migration concerns and whatnot. The energy transition agenda has intensified this primary production focus. And the continent has mostly accepted it. Africa needs thinkers and entrepreneurs on the ground who will keep local consumption in mind, but also orient towards global markets and later continental markets. Most people who read this newsletter work in or run startups or businesses that are adjacent to Africa’s technology ecosystem. So how or why is this important for you? One answer is that better technology (especially hardware) will play a huge role in orienting African consumption towards global markets, but also that pure software layers can smoothen over the rough uncompromising edges when the right policies align. For example, hardware solutions like cold-chain storage will be an indispensable part of improving agricultural production and processing while software can help manage logistics inside the continent and create leaner businesses that are more productive and efficient. Everyone knows this, so it is not a novel idea. But applying these ideas to only meet local demand is a nearsighted and artificial limit to the entrepreneurial, investment and policy reform ambition that can lead to significant overall economic improvement. Partner Message In 5 minutes, you can get your health insurance, motor insurance, and life insurance on the P2Vest app. Available on Google Play & App Store. . Get InsuranceParasol There are positive effects of focusing on local markets, but the bitter tradeoffs include deep structural market fragmentation, a.k.a. informal markets, or debilitating and inefficient monopolies. Unfortunately, we have abundant examples of both. Markets that are structurally broken, and lumbering uncompetitive monopolies and oligopolies that are self-contained in their mediocre but profitable local dominance. Every country has at least one example. Reorienting from a local market focus to a global value chain focus will mean replacing the crude workarounds that make up the informal sector with efficient programming of software, hardware and services. Here’s why. Partner Content: Work, create, collaborate at ThinkSpace, an optimised workspace for the modern Lagos professional Africa is lagging in global production and value-addition Figure 1 is Africa’s share of global production and value-added production from the 1990s to 2020. As the chart reveals, both production and value-added production are embarrassingly low. In my opinion, it is what you get when a significant portion of your production (in agriculture, for example) is for local processing (cassava to eba, maize to unga, etc.) and consumption, but it still fails to meet local consumption needs. Figure 2 makes the disparity between value-added African produce and what is obtainable clearer. Source Kiel Institute for the World Economy. Source Kiel Institute for the World Economy. Is the problem that there is no market for more value-added African produce? The answer is somewhere between ‘How can we know?’ and a resounding no. And this is because we have not made much of an effort, especially in today’s world where you do not even need to produce finished products to increase our participation in the global value chain. Value addition has moved beyond producing finished goods to intermediate production Writing for tralac, John Stuart, an economist and policy analyst points out that, “the bulk of global trade today (about 70%) is not even in finished products, but in intermediate products: items that are used in the further manufacture of products or the repair of existing products.” In other words, most of what is traded globally is not finished products, but components that are needed to finish a product or maintain it. Per data from the World Bank’s World Integrated Trade Solution, sub-Saharan Africa imported more than $14 billion of these intermediate products in 2020, up from just over $11 billion in 2015. The spare part trade is a big portion of the China-Africa trade as my Nigerian Igbo brothers will, no doubt, attest. All of Africa’s competitiveness is in primary production. This leaves a lot of space which informal attempts at value-addition struggle to fill partly because of a lack in standardisation. It is the reason why small-scale manufacturers in Aba, Nigeria, will slap on a “Made in Taiwan” label on electronics or a “Made in Italy” on shoes. One way to look at it is to criticise the apparent dishonest display. The other way to look at it is to see the unspoken appeal to what is considered the standard. I remember speaking to some guys in Enugu, Nigeria, whose company (funded by All-On) built quality solar inverters but their wholesale partners chose to add “Made in Taiwan” labels to the inverter packs, because customers wouldn’t consider “Made in Nigeria” good enough, even though it was better in many cases and had better and trained local support and readily available spare. Partner Content: Join Olu Akanmu, President and co-CEO OPay Nigeria, at DBN Techpreneurs Summit 2023 Made in Taiwan, Made in Japan and recently, Made in China were all considered a sign of poor quality, but now
Read MoreIsland of challenges & opportunities: Inside Madagascar’s fledgling startup ecosystem
Despite having a few startups that have managed to raise funding and expand their operations beyond the island, Madagascar still does not have what one can describe as a vibrant startup ecosystem. TechCabal spoke to some ecosystem players to understand the country’s challenges in trying to establish an ecosystem and the efforts to address them. The island nation of Madagascar is more famous for the 2005 DreamWorks Animation movie “Magadascar” and the subsequent spinoffs than for its startup ecosystem. A quick Google search of the country yields more results about the movie than any startup activity. Despite being the fourth largest island in the world with a population of over 28 million, Madagascar has not found success in getting its tech ecosystem off the ground—not for a lack of effort. Matina Razafimahefa, co-founder and CEO of SAYNA, an edtech and freelancing platform, told TechCabal that Madagascar’s tech scene has not taken off because of several reasons including a lack of access to capital. “In Madagascar, the tech businesses you find are internet cafes and IT consultancy,” he said. In April 2022, SAYNA closed a $600,000 funding round backed by Orange Ventures, Launch Africa Ventures, and MAIC Investors Club. SAYNA’s core product is a mobile video game designed to teach digital professions. It uses algorithms to automatically connect learners to IT micro-tasks requested by international companies. The startup has already trained 3,000 students, with a goal to reach 10,000 by the end of the year. “SAYNA, with its focus on soft skills training, mentorships and a peer-to-peer learning environment, stands a good chance of becoming a direct gateway to projects, experience, and income for youth across the African continent,” said Zachariah George, managing partner of Launch Africa Ventures, after the fundraising. In Q1 of 2023, venture capital tracking platform MAGNETT reported that another Malagasy startup, WeLightAfrica, which provides solar energy solutions to rural dwellers, raised $20.6 million in equity funding in January. The startup also raised $13.6 million in debt, perhaps signalling the beginning sort of renaissance of the country’s fortunes in establishing a startup ecosystem. According to Emmanuel Cotsoyannis, director general at Miarakap, an impact investment fund dedicated to backing SMEs and startups in the country, the reason it has been difficult to ignite an ecosystem in the country is that most of the economic activity is centralised in the capital Antananarivo and focuses on providing basic needs, making it difficult to identify startups that can scale. Despite the unfavourable market conditions, Miarakap has backed some startups in the country, including Supermarche.mg, a home delivery startup founded in 2018 by Manitra Andriamitondra. According to Cotsoyannis, Madagascar’s large swathe of software engineering talent, backed by proper funding and an enabling environment in terms of policy, can change the country’s fortunes in establishing a startup ecosystem. Unfortunately, those two vital factors have not been developing fast enough, which has seen the innovation gap being filled by tech conglomerates who develop their innovations in-house. Some of these include Axian Group, one of the country’s largest companies which builds fintech, e-commerce, and energy inclusion products. “We have a long-lasting tradition of software engineering in Madagascar that began in the 1980s through the policies of the then administration and has carried on since. We produce thousands of talent annually but most of them understandably choose the employment route either in government or private sector tech companies because chances of building a successful startup are unfortunately not that very inspiring,” Cotsoyannis told TechCabal. How to accelerate the growth of the ecosystem According to Harinjaka Ratozamanana, former CEO of one of the country’s foremost innovation hubs, as well as former general director at the ministry of industry, catalysing the tech startup ecosystem in Madagascar would have to first start with the government creating an enabling environment for the success of startups through the requisite policies. “At the government level, we don’t have policies that foster and promote innovation and entrepreneurship like how some countries like Rwanda do. This dampens the motivation for young people to pursue the path of tech entrepreneurship because why gamble your livelihood by going the risky entrepreneurship when so many odds are stacked against you and you cannot rely on the government to support your path,” Ratozamanana told TechCabal. In the private sector, Ratozamanana believes that making early-stage capital available to aspiring tech entrepreneurs through venture capital funds is key to driving the country into an epoch of innovation. “There is a significant number of young people who have ideas that can address some of the country’s most pressing social-economic issues including poverty and unemployment but they do not have the capital to even start. Traditional financing mediums like banks are obviously not an option so we need more venture capitalists to make bets on these young people,” he added. Cotsoyannis, however, believes that the key to unlocking Madagascar’s tech startup ecosystem is through making dedicated efforts to address issues like a highly concentrated demographic and the lack of a formalised economy which comprises mostly of informal trading, agriculture, industry, and traditional services. Addressing these bottlenecks, according to him, with support from development finance institutions, will be key to creating an enabling environment which would allow the country’s startup ecosystem to take off. In May, the World Bank, with contribution from the Agence Française de Développement (AFD), approved a $227 million loan package to the country. However, the core focus of the funding will be to support the increase in productivity and strengthening the resilience of rural livelihoods, not fostering innovation. “Madagascar is one of the least advanced economies in the world with a GDP of less than $12 billion concentrated in a handful of industries. This situation makes it hard for VCs to identify startups that can make very significant returns on investments. Putting funds from the likes of the World Bank and the French Development Agency into addressing these will be key because, after that, the fact that we have large amounts of technical talent can help accelerate the rate
Read MoreZuvy raises $4.5 million to scale invoice financing in Nigeria
Zuvy, a Nigeria-based invoice financing company, is changing the vendor-buyer relationship by offering cash upfront to vendors to meet their business needs and invoice management software for buyers to eliminate inefficiencies tied to traditional pen-and-paper. Small businesses, particularly in the FMCGs who service large business chains are often strewn with a lack of capital to service their contract agreement as their capital is often tied up in receivables which are often paid back in a 30–60-day window. These small businesses often have to find an alternative to getting capital to service their agreement which can be an arduous task. However, Zuvy, a Nigeria-based invoice financing company, is changing that by giving cash upfront to retailers to meet their business needs. “Millions of small businesses on the African continent are hindered by their capital being tied up in receivables. Our primary goal is to empower these businesses with the liquidity that they get what they need when they need it. This flexibility ensures that these SMEs can better manage cash flow, expand their customer base, and take on new contracts,” Angel Onuoha, Zuvy’s CEO and co-founder, told TechCabal on a call. The invoicing company has raised $4.5 million in funding—a mix of $4 million in debt funding and $500,000 in equity funding—from TLG Capital and a host of other investors, including Dunbar Capital; David Mussafer, chairman of Advent International; Next Chymia Consulting HK; Khalil Osman from Vicus Ventures; and several others. Zuvy’s CEO has stated that the funds secured are to be used to expand Zuvy’s reach and meet up with the growing demand from Nigerian vendors. Founded in 2021 by Harvard College alumnus Angel Onuoha and Ahmad Shehu, who is CTO and a former senior engineer at Mono, Zuvy, in addition to financing, offers free invoice and purchase order management software that enables large businesses to streamline their procurement processes. Zuvy financing is different from the bank’s For a small business in Nigeria, getting a loan from the bank is like picking a needle from a haystack. While there are over 41.5 million SMEs in the country—95% of these do not have access to formal financing—less than 1% of the total banking credit is given to small businesses. Furthermore, Nigeria’s interest rate sits at 18.5%—which is too high for a vendor. Nigerian banks offer loans to small businesses after conducting their due diligence, which might take several days and is often riddled with collateral requirements, minimum operating balances and burdensome paperwork—a luxury which a vendor is not granted, given that they have to service their agreements with their clients in a shorter period of time. While these constraints might prevent vendors from obtaining loans from banks to cover their business needs, Zuvy offers more convenient access to funds by giving advance payments to vendors in a 24-48 hrs time frame with a 4% “transaction fee”—interest rate. “In Nigeria, small businesses receive only 0.3% of total commercial banking credit. This transmission failure is a key part of Africa’s $300 billion SME financing gap. Factoring invoices represents a massive opportunity to bring capital to these small businesses, but only if you can build the tech stack to make it scalable,” said Isaac Marshall, an investment professional at TLG Capital. Ease of access for loans For vendors who are typically slow to adopt new software, Zuvy’s user-friendly platform helps vendors and their buyers to formulate, administer, and settle their outstanding invoices. Through an integration with WhatsApp, vendors can generate and dispatch invoices directly to their buyers without the need to interface with any online application. For the buyers, this software eliminates the inefficiencies and expensive errors tied to traditional pen-and-paper invoice management, creating significant operational benefits. While Zuvy joins a growing queue of digital lenders across Africa, the startup’s CEO says they are working on expanding their reach in Nigeria first and will expand into other African countries in the near future.
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The leading African tech moves from June 2023
1. Funding: West Africa retakes lead in June 2023 In June 2023, African tech startups raised $126.2 million from 25 fully disclosed* raises. The numbers show a 70% decrease compared to June 2023 where African startups raised $426.2 million. It’s also a 79% decrease from May 2023 when the total amount raised was $621.8 million. Per region, West African tech startups took the lead by a mile, accounting for 72%—$89.9 million—of the total disclosed funding. Year on year, raises by West African startups have increased by 13%. Image source: Timi Odueso/TechCabal Per sector, cleantech startups took the lead for the first time with 41% of the total amount raised—$52.3 million. Healthtech, logistics and fintech follow with $34.3 million, $11.5 million, and $10.6 million, respectively, in raises. Image source: Timi Odueso/TechCabal The top 5 disclosed deals of the month are: Senegalese cleantech Africa REN’s $35 million syndicated debt raise. Nigerian fintech Helium Health’s $30 million Series B raise. South African cleantech Yellow Africa’s $14 million Series B raise. Nigerian fintech Fairmoney’s $5.4 million raise. Kenyan logistics startup Peach Cars $5 million seed raise. *Note: This data is inclusive only of funding deals announced in June 2023. Raises are often announced later than when the deals are actually made. This data also excludes estimated grants from accelerators. This means that it also excludes a combined $4.3 million in grants received by 43 African startups: the 25 African startups who received the Google Black Founders Fund, the 12 edtech startups from the CcHub-Mastercard Edtech Fellowship, and the 6 African startups from Norrsken Accelerator Batch 2023. 2. Telecoms: Safaricom receives $257 million In big telecoms moves, the International Finance Corporation (IFC) announced in June that it would invest Ksh21.8 billion ($156.9 million) in Safaricom, in exchange for 7.25% of the company’s equity. IFC will also loan Safaricom a further Ksh13.9 billion ($100 million). In Ethiopia, where Safaricom has generated over $4 million since its October 2022 launch, CEO Anwar Soussa will be stepping down in July. He will be replaced by Wim Vanhelleputte who has served as CEO of MTN Uganda and MTN Côte d’Ivoire. 3. Fintech: Palmpay crosses 25 million users In June, superapp Palmpay reached its 25 million users milestone in Nigeria. The company announced the milestone at the end of the month, noting that it has an extensive network of 500,000 mobile money agents and 300,000 merchants in its payments ecosystem. 4. Legislation: Kenya passes Finance Bill Kenya’s Finance Bill is now law. June ended with President William Ruto signing in the new law which started taking effect from July 1. The bill has intense ramifications for Kenya’s tech ecosystem via taxation. Content creators, for example, will not have to pay a 1.5% tax for any form of payment they receive—including sponsorship, or earnings. There’s also a 3% tax on the transfer of any digital assets—crypto. Finally, digital lenders will remit a 20% excise duty on each loan interest that they charge. 5. Layoffs: Mara, Chipper Cash, Smile Identity, Eyowo and Twiga prune their staff It’s been a full year of layoffs in the African tech ecosystem. What started off with layoffs at Swvl in May 2022 has continued to sweep across the continent. In June, five African startups revealed that they had laid off over 238 employees. Twiga, a Kenyan agritech, laid off 211 employees—including its entire sales team—in a “cost-cutting” move in 2022. Fintech Eyowo, which announced a pivot to a D2C model, also laid off 13 employees, while Smile Identity, a KYC startup that raised $20 million in February 2023, laid off 8 employees for similar reasons: macroeconomic conditions. Fintech Chipper Cash executed its third round of layoffs, an undisclosed number which saw the exit of global chief operating officer Alicia Levine and Kenyan country director Leon Kiptum. Finally, sources at Web3 startup Mara, which raised $23 million in 2022, revealed that the startup laid off six people in May. 6. Big Deals: Flutterwave signs five-year deal with Microsoft Meanwhile, fintech unicorn Flutterwave experienced a month of ups and downs. On a good note, the fintech signed a five-year deal with Microsoft, which will see the company build a new generation of payment services on Microsoft Azure, powering payments infrastructure across the African continent. The company also confirmed, in June, that it’s looking to deepen its presence on the continent as it moves towards an IPO. On the downside, the fintech’s problems in Kenya resurfaced as a Kenyan court froze 45 of its bank accounts and 10 mobile money wallets. The freeze came after 2,468 Nigerians sued Flutterwave for allegedly being the medium through which they were defrauded of Ksh1.6 billion ($12.04 million). 7. Load-shedding: South African companies blame Eskom for profit drop As load-shedding in South Africa worsens, South African companies are blaming their profit declines on the electricity shortage. Earlier in June, streaming company MultiChoice recorded a 200% profit decline, going from a R2.8 billion ($150 million) profit in the last financial year to a R2.9 billion($155 million) loss. At the same time, telecom Telkom’s annual results showed a 76.6% profit loss which the company claims were due to load-shedding. Finally, retail giant Mr Price reportedly lost R1 billion ($54 million) in revenue which the company says is an indirect impact of load-shedding. These companies follow MTN and Vodacom, telecoms which earlier this year blamed their profit declines on South Africa’s electricity crisis. 8. Crime: Tingo Group accused of fraud June kicked off with a report from US-based investment research firm Hindenburg Research which accused Tingo Group, a Nigerian company, and its founder Dozy Mmuobuosi of fraud and misrepresentation. Per the report, Tingo’s claim that its telecoms arm generated $128 million in revenue in Q1 2023 is false. Hindenburg also debunked Tingo’s claim that its agricultural export business, Tingo DMCC, was on track to deliver over $1.34 billion in 9 months. The report also showed that photos of Tingo’s airline business, Tingo Airlines, were photoshopped. Days later, Tingo denied all accusations and announced that it
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Mobile data is literally money in Kenya
Lire en français Read this email in French. Editor’s Note Week 26, 2023 Read time: 5 minutes Hello Buckle up and dive into interesting African tech news, with a focus on the happenings in the vibrant East African country of Kenya. Plus, we need your genius insights to sprinkle some extra pizzazz on this newsletter, so please take our survey and help us unleash the full force of awesomeness upon you! Pamela Tetteh Editor, TechCabal. Editor’s Picks Kenyans can now pay with data Kenya’s biggest telecoms operator, Safaricom, has launched a new service that will allow customers to pay for products and services using their internet data balance. Read more CBN draws a line While Kenya pushes the boundaries with payments technology, the central bank of Nigeria (CBN) has imposed restrictions on the maximum transaction amounts permitted for residents using contactless payment technology. What are the limits? What’s the deal with South Africa’s new identification bill? South Africa’s identification bill has people losing sleep about the privacy risks of consolidating all citizens’ ID information into a single system. Learn more. Nigerian banks to do social media checks In more news about controversial rules, a wave of raised eyebrows swept across Nigeria when the CBN made it mandatory for banks to request customers’ social media IDs as part of the Know Your Customer (KYC) process. Is this a big deal? Kenya’s digital sex offenders registry Kenya has launched the first digital sex offenders registry in Africa. Now with a few simple clicks, you can find out if someone is a registered sex offender in Kenya. Learn more. Entering Tech Interested in getting tech career resources and insights?. Then sign up for Entering Tech to get started! Ethiopia’s Safaricom gets a new CEO Wim Vanhelleputte from MTN Group will assume the position of CEO at Safaricom Ethiopia, succeeding Anwar Soussa in the role. Learn more. Kenya to tax influencers and crypto bros Kenya’s Finance Bill 2023 mandates digital content creators, crypto traders, and digital lenders to pay taxes. How much? inDrive is licensed in Kenya inDrive, a ride-hailing platform, has obtained the necessary licences to operate within Kenya. Unlike Uber and Bolt, it allows customers and drivers to bargain the cost of trips. Learn more. Flutterwave enters 5-year deal with Microsoft Flutterwave has entered into a five-year technological agreement with technology giant, Microsoft. Now, the fintech company build a new generation of payment services on Microsoft Azure. Find out. Free data for Ugandan refugees The Ugandan government has partnered with the World Bank to provide Internet access to 1.5 million refugees living in Uganda’s refugee communities. Learn more. Who brought the money this week? Kenyan fashion e-commerce company, ShopZetu, raised $1 million in pre-seed funding. Chui Ventures led the round. Tappi, a Kenyan e-commerce company, secured a $180,000 grant from Orbit Startups. Ghana-based web3 startup, Mazzuma, raised an undisclosed amount of venture funding from Adaverse. Zoie, a South African-based health-tech company, also closed an undisclosed amount in funding from 4DX Ventures and E Squared Investments. What else to read this weekend? Nigeria’s Central Bank issues new rules for contactless payments Nigeria’s proposed electricity tariff hike means a fresh headache for small businesses Smile Identity lays off eight employees as it increases its ‘focus on profitability’ Following chargeback fraud fiasco, Union54 is back with a superapp Written by: Ngozi Chukwu & Hannatu Asheolge Edited by: Pamela Tetteh 18, Nnobi Street, Surulere, Lagos, Nigeria Unsubscribe from TC Weekender
Read MoreDespite pushback from Bolt and Uber, Nigeria’s ride-hailing union unites against unfavourable working terms
Ride-hailing giants Uber and Bolt are fighting their unionised drivers over how the latter have chosen to christen their union. In January, ride-hailing drivers applied to Nigeria’s Ministry of Labour to register the Amalgamated Union of App-Based Transport Workers Of Nigeria (AUATWON) as the official drivers union. Under existing rules, a trade union can only get its certificate of registration if there is no objection to its creation from any third party, within 90 days. But within weeks of AUATWON’s application, ride-hailing companies Bolt and Uber reportedly objected to the registration of the union. One of the grounds for their objection was the union’s name and how it designates the drivers as “workers” for the ride-hailing platforms. For years, ride-hailing companies have continued to insist that the drivers on their platforms are not their workers but independent contractors. A driver close to the situation told TechCabal, “The ride-hailing companies said they don’t want ‘workers’ in our name; they want ‘drivers’.” The distinction is important because if the drivers are acknowledged as workers, the ride-hailing companies could have obligations to them, such as providing health insurance, leave allowance, stipulation for time off, etc. In December 2018, some drivers filed a suit asking the industrial court to rule on the question of whether they are workers or independent contractors. A case at the appeal court is yet to be determined. Registrar of Trade Unions, Falonipe Amos, summoned the drivers to a closed-door meeting in Abuja on June 26, to resolve these objections, in a bid to move their application forward. A source told TechCabal that the drivers disagreed with the objections raised by Bolt and Uber in the closed-door meeting, stating that their names have been strategically picked to form a body fronting their interests. “The union has invested so much into building the name as a brand and we cannot, at this time, adopt any other after waiting for over seven years before this approval,” the source stated. Long ride to freedom The journey to recognition for AUATWON has been long and marked with pushback. In April, TechCabal reported that the union threatened a protest in response to Bolt and Uber’s move to revoke the licences of the drivers. In May, Technext reported that AUATWON had accused Bolt and Uber of trying to “sponsor division within the union”. Some sources close to the union claimed this pushback derailed their goals to effectively register the union. The union’s general secretary, Ibrahim Ayoade, told TechCabal that the companies have to accept the union as permanent. “Our certificate (of registration) will come out soon and there is nothing they can do. They are afraid of the union. That is why they are taking those actions they took,” he said on a phone call. A source privy to the union’s discussions with the Ministry of Labour early this week said the recognition of the union will allow them cater to challenges peculiar to their industry. The feeling within the union is that ride-hailing companies have long scuttled their attempts at collective bargaining and are displeased with the decision of the drivers to unionise. The recognition of the union is important because, for years, the drivers have asked for a seat at the table during decision-making. There are several outstanding issues the drivers want a say on, like the commission the companies charge and clearer terms before drivers are kicked off platforms. In a statement, the country manager for Uber in Nigeria, Tope Akinwumi, told TechCabal that drivers are at the heart of everything they do, hence the increase of fares on June 3 and 9 on the app to reflect existing economic conditions. “We support the freedom of drivers in Nigeria and the rest of the world to organise, including by forming and joining unions and associations. As one of the largest sources of platform work in the world, Uber is committed to working with policymakers, social representatives and the industry to improve the quality of platform work. Uber remains ready and willing to engage with drivers towards improving the quality of independent work,” the statement read in part. A spokesperson for Bolt hasn’t responded to inquiries at the time of filing this report. Another source said that if their successful meeting at the labour ministry on June 26 doesn’t resolve the problem, then the court of law will decide for everyone in the sector. “We are still on top of the matter, and we are still looking at it. It could result in a court action,” the source said. Ayoade stated that more negotiations will follow after the Muslim festivities, which ended on Thursday.
Read MoreNigeria’s Central Bank issues new rules for contactless payments
Contactless transactions will be capped at N15,000 per transaction, with a daily maximum of N50,000. Nigeria’s financial regulator on Tuesday announced new guidelines for digital payment providers who offer contactless payment solutions. Contactless payments broadly refer to transactions where users pay by simply tapping or waving their payment devices at point-of-sale terminals. It is also called proximity payments. Under the new rules, users can tap or wave their devices (including smartphones and cards) that are enabled with contactless technology to make payments without needing to input a PIN to confirm the transaction. But such transactions will be limited to ₦15,000 ($19.65) for a single payment or ₦50,000 ($65.5) daily. Contactless payments are powered by radio frequency identification (RFID) or near-field communication (NFC) technology both of which allow enabled devices to initiate and authorise payment transactions without additional authorisation confirmation from the user. EMVCo—named for the organizations (Europay, Mastercard and Visa) that established it— works with payment industry stakeholders globally to set technical standards for smart payment cards and the POS readers that accept them. The COVID-19 pandemic is credited for accelerating the use of contactless payments. In 2020, the WHO urged a switch to contactless as part of measures to help slow the spread of COVID-19. In response 30 European countries raised their limits on contactless payments in the same year. In 2021 the UK contactless payment limits again to £100 in October 2021, making UK consumers among the world’s biggest spenders without having to confirm their identity. Three-quarters of all Mastercard transactions in Europe are contactless. In the UK, Visa says the figure is as high as 80% of in-person payments. Nigeria’s contactless payments rules place the burden of fraud with acquirers (i.e. the bank of the payment recipient), issuers (i.e. the bank of the customers) and merchants (the business) who offer contactless payment channels. Per the guidelines, they will be liable for fraudulent transactions “arising from their negligence and/connivance.” In addition, the guideline specifies that contactless payment be only enabled for users who have Bank Verification Numbers (BVNs). Contactless transactions that are higher than the limit will require additional authorisation in the form of a PIN, mobile code or biometric identification. Regulators in the US and Ecuador do not place any limits on single contactless transactions. To combat fraud Nigerian fintechs have moved to include ID verification as part of the onboarding process instead of simply placing limits on transactions. Paga, founded in 2009 recently announced that it would require all customers to pass additional ID verification regardless of their KYC level. Nigeria’s central bank said it considered the risks associated with contactless payments before limiting how much users can make with contactless payment methods. Limiting transaction amounts on contactless payments is a standard fraud mitigation risk. There is evidence that 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. Of this, only £16 million represented contactless payment fraud. Against a total of £9.46 billion worth of contactless transactions, that equates to 1.8p worth of fraud in every £100 spent using contactless technology.” South Africa leads the way in contactless payments in Africa. In January Tech Central reported that more than half the customers of First National Bank (FNB) use contactless payments. “Consumers have shown a strong preference for contactless payments using their contactless-enabled cards or smart devices,” said Ashley Saffy, head of business development at FNB South Africa.
Read MoreFollowing chargeback fraud fiasco, Union54 is back with a superapp
Union54, the Zambian fintech startup whose operations got halted as a result of a chargeback fraud debacle last year, is launching a superapp in partnership with Mastercard. Following the $1.2 billion chargeback fraud fiasco which saw the startup halting operations for eleven months, Zambian fintech Union54 is back with another product: a superapp called ChitChat. ChitChat is a collaborative effort between Union54 and global payments technology company Mastercard and will enable users across Africa to send messages over an encrypted platform. ChitChat will also double as a social commerce platform, enabling users to send each other money, access a USD debit card, and purchase from digital storefronts within the app. ChitChat’s card and payments features, supported by Mastercard integration, will roll out in a beta for Angola, Tanzania, and Ghana with more markets to be added this year. “We are excited to announce our ChitChat product and at the same time, announce our expanded partnership with Mastercard,” said Perseus Mlambo, CEO of Union54. “We believe that mobile payments and chat platforms can be a powerful force for increasing trade across Africa, and we are committed to building a platform that accelerates this. We’ve built payments into a chat platform, giving everyone a USD card on demand – on our terms.” Union54 and Mastercard claim to have issued over 2 million cards to Africans through their partnership. “We are delighted to deepen our partnership with Union54 as we work towards creating a world beyond cash. Our collaboration will not only enable us to expand our reach into new markets, but it will also provide consumers with a secure and convenient way to access financial services,” said Gabriel Swanepoel, country manager at Mastercard, southern Africa. In July 2022, Union54 halted its services following an attempted $1.2 billion chargeback fraud which saw many African startups that previously used its card-issuing services rush to find alternatives. In an interview with TechCrunch in March this year, Mlambo stated that Union54 intended to use lessons from the event and their subsequent hiatus to re-enter the African fintech market, a promise which has culminated in the launch of ChiChat.
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