e-Pharmacy startup MYDAWA closes its largest round yet at $20 million
MYDAWA has raised funds three times before, but the latest round marks its biggest fundraising event yet as it eyes to expand beyond East Africa. MYDAYA, an e-pharmacy platform based in Kenya and operates in the East African region, has raised $20 million in funding from Alta Semper Capital. This marks the company’s fourth fund driver after launching in 2016. MYDAWA, which offers health services through online and physical stores, has also purchased Guardian Health, a pharmacy chain that operates in Uganda. The firm has not revealed how much it paid for the acquisition, but a statement from the company says that it is part of MYDAWA’s plan to expand its turf into new markets. The new Ugandan arm has 19 new stores in Kampala and neighbouring regions. MYDAWA adds that it is actively looking for potential acquisitions, collaborations, and promising startups across Africa. It is also interested in engaging with more partners and value-add investors as it expands. In a statement by the MYDAWA, the company said, “MYDAWA is also partnering with other major health providers and businesses. Sales of its own brand products to wholesalers, clinics, pharmacies and supermarkets are growing rapidly. Sales of its services, from telehealth to fulfilment, are commencing with some of Kenya’s biggest clinic chains to expand their reach. It is partnering with insurers and others to develop and fulfil best practice chronic care as illnesses such as diabetes become an increasing issue in Africa. It provides rich data to partners.” Alta Semper’s CEO, Afsane Jetha, says, “This investment marks our entry into digital healthcare in Africa, which we see as a major growth area across Africa in the coming years. MYDAWA was the logical choice for us as their groundbreaking technology, underpinning a scalable business model along with regulatory know-how and market entry experience, mapped so well to our own strategy. The drive to increase access to good advice and safe and affordable medication is core to our overall mission of democratising access to health and wellbeing across the African continent.” Before today’s fund, MYDAWA had raised a little over $9 million in previous rounds. Its seed round occurred in March 2017, when it raised $1.5 million from Indigo Partners. Two years later, it staged a Series A round with $3 million raised from Africa HealthCare Master Fund and Indigo Partners. Then towards the end of 2021, MYDAWA raised $1.2 million from Bill & Melinda Gates Foundation. During the reveal of the fund, MYDAWA announced the appointment of Pricillah Muhiu as its business lead in Kenya. Priscillah worked at Glovo as general manager for the Kenyan market. “Under Priscilla’s leadership, there is already significant expansion of both consumer and business-to-business activities,” says MYDAWA.
Read MoreDRC-based startup Nuru has secured $40 million to build the biggest mini-grid in sub-Saharan Africa
Nuru, a solar energy startup based in the Democratic Republic of Congo, wants to provide 24-hour electricity for five million people in the country. Its Series B raise of $40 million is still a long way from the $300 million needed to achieve this goal. Nuru, an alternative energy startup in the Democratic Republic of Congo, has raised $40 million in Series B equity funding. The round was led by the International Finance Corporation (IFC), the Global Energy Alliance for People and Planet (GEAPP), the Renewable Energy Performance Platform (REPP), Proparco, E3 Capital, Voltalia, the Schmidt Family Foundation, GAIA Impact Fund, and the Joseph Family Foundation. While the IFC’s equity investment also includes financing from the Finland-IFC Blended Finance for Climate Program, the company hopes to close off an additional $28 million in project finance by the end of July. AltRaise was the exclusive financial advisor to Nuru on both the Series B transaction and accompanying project finance. The fund will be used to build three mini-grids in parts of eastern DRC—Goma, Kindu, and the largest in Bunia. With a combination of solar power and batteries, the total generation capacity will be 13.7 megawatts. Nuru, whose name means light in Swahili, has four other cities in eastern DRC already operating with its mini-grids. DRC has a population of about 100 million people, but less than 20% of the population has access to energy. Many of those who lack access to energy are in eastern DRC. The mini-grids provide an opportunity for the use of renewable energy and bypass the use of fossil fuels for power generation in the region which has little to no electrification. Nuru’s utility-scale solar mini-grids are designed to provide 24/7 reliable and renewable energy to the communities they are installed. This will help improve climate resilience and sustainable development, which the country desperately needs. Founded as Kivu Green Energy in 2015 by Jonathan Shaw, a Kenya-born American, the company built Congo’s first mini-grid in 2017. Three years later, it opened a 1.3-megawatt facility in the city of Goma, making it the largest mini-grid in sub-Saharan Africa with no connection to a national grid. “We are thrilled to partner with such a dynamic group of investors who are keen to drive our vision of expanding energy access and transforming five million lives in the DRC. Closing the Series B is a significant milestone in Nuru’s journey, but also demonstrates the viability of the metrogrid model in the distributed energy sector in Africa,” Shaw commented after the raise. “Nuru extends its heartfelt appreciation to the consortium of investors for their visionary support and unwavering commitment to Nuru’s vision. Together, we will continue to illuminate lives, drive economic growth, and empower communities across the DRC.” Earlier in March, initial investments from REPP, Proparco, and E3 Capital bridged a financing gap at Nuru to bolster their Series B equity fundraise. The three investors each committed $500,000 in a convertible note round. In 2018, Nuru raised $3.8 million in its Series A round, which was led by E3 Capital (formerly Energy Access Ventures), with EDFI ElectriFI. The investment was catalytic in building Nuru’s current operating mini-grid portfolio in the cities of Goma, Beni, Tadu, and Faradje. Bloomberg reports that a $90-million Series C round is expected to get underway later this year. This is as the company aims to raise $300 million to hit its target to serve five million people in DRC by September 24, 2024.
Read MoreHere’s why Latin American fintechs are expanding to Africa
People who buy things or services online in Africa are growing by 8.2% every year—the highest in the world, and some of the biggest Latin American fintechs are taking notice. When dLocal, a fintech from Uruguay announced its expansion to Ghana, Kenya, Cameroun and Senegal in 2020, Adebiyi Aromolaran, Head of Expansion described Africa as “a tremendous untapped e-commerce opportunity,” with “huge potential for growth with an under 40% penetration rate.” When Brazil’s EBANX announced its African entry last September, CEO and co-founder, João Del Valle pointed out that the decision was supported by the fact that “Africa’s fast-growing digital economy is only in its early days, and it’s projected to grow up and to the right for the next few decades.” Optimism for growth prospects in digital payments is not the only thing these two Latin American fintech giants share. dLocal’s plan to empower global merchants to reach billions of customers and accept payments locally sounds awfully like EBANX’s plan to “attract global enterprise businesses to sell into Africa via EBANX payment rails & leverage its large emerging markets (Latam + Asia) footprint.” The bet is that Africa, where shopping behaviour is turning digital, is an untapped market for global merchants. But why is this compelling enough to warrant the aggressive growth plan where EBANX for example, plans to add 11 African markets to its list in just two years—it is already in South Africa, Kenya and Nigeria? Opening pockets of opportunity for global merchants EBANX’s approach hinges on a promise to help the global merchants they already serve find more revenue in Africa. A Rwandan traveller in Kenya for example, cannot pay for Airbnb with MTN’s MoMo or Safaricom’s MPesa, despite these being the most popular digital payment channels. Another example. Ad revenue generated by YouTube Music’s premium offering reached $15 billion in 2019. By November last year, 80 million people subscribed to the premium YouTube service, but it is unavailable in places like Kenya, for example. It is global merchant opportunities like this that EBANX and dLocal want to conquer by offering more local payment options. If African customers have access to global products they are currently locked out of because global merchants do not accept the channels people are accustomed to paying, which translates to more revenue without the headache of setting up the infrastructure. “EBANX is unique in this way because we were able to attract merchants from a very wide range of verticals. Some of them are listed on our website and these are merchants who traditionally were not keen to explore emerging markets because of the complexity of setting up the infrastructure,” said Wiza Jalakasi, director of Africa Market Development at EBANX. According to EBANX’s global payments executive, Paula Belliza, “Africa became our new priority.” This lack of access for Africans who want to purchase services or goods from global firms is part of why the virtual or gift card business is a growing vertical. The volumes that are processed by virtual card solutions, for example, might give insight into how much demand for services or products that some global businesses are not capitalising on. But this space is already coming under pressure from economic reforms, and if dLocal and EBANX manage to take off, it may only intensify that pressure. Portable (to an extent) experience Not too long ago, the biggest digital payment markets in Africa and Latin America shared many of the same characteristics. Low digital penetration, low levels of financial services access and the undisputed leadership of cash. Latin America has had more success overall in increasing digital payments as a share of payments volume, but it is also recent enough that some of the lessons may still apply in Africa. African fintech professionals have had time to gain experience since the early 2000s when banks began to use more technology. This was further buttressed as early fintechs built out mobile wallets, supported bank ATMs and fought for mobile PoS systems to become as accepted as they are today. The attention (and funding) of the last six years supercharged the depth and the experience of fintech talent as companies grew faster and expanded across the continent. So it makes sense to exploit the combination of experience from teams that have built a global business from Latin America and the experience of local fintech talent. This potent mix is a no-brainer. Take Wiza Jalakasi for example, a Malawian software engineer-turned-business development specialist. Until recently, Wiza was Vice President of ChipperCash’s global merchant team. He has now joined EBANX and will be leading its bold 11-market growth strategy in Africa. “I felt that they had all of the different pieces of the puzzle and a very good idea of how to arrange them except for like the market-specific gaps… with my experience, I was [filling] in those markets specific caps and it was very natural,” Jalakasi explained. The other part of the portable experience driving these Africa-ward expansions is that these firms often have relationships with global merchants that they can leverage to get a foothold. Expansions in fintech are often customer-driven, Olugbenga Agoobla, CEO of Flutterwave told TechCabal recently. “If a customer is going somewhere, sometimes you have to be there,” Agboola said, explaining that his firm’s relationship with Uber was part of the decision to expand into Egypt where it now helps the San Francisco-based ride-hailing company collect digital payments. EBANX and dLocal are not the only cross-continental expansions between Latin America and Africa. Migo and Paga, both Nigerian fintechs, expanded into Brazil and Mexico respectively. “We think the lessons from Nigeria are transferable,” Tayo Oviosu, Paga CEO, said when his company announced it was going to Mexico. If Paga can go to Mexico, and Migo to Brazil why can’t EBANX or dLocal come to Nigeria? No one says it this way, but the logic—though infantile and certainly not how any reasonable business thinks—is not terribly off. Payments still has a long way to go In 2022 McKinsey predicted
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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
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