With an impending naira devaluation, what is at stake for Nigerians?
A recent report by Absa Group Ltd. predicts a 15% devaluation of the Naira when the Tinubu-led administration assumes office. What are the implications for Nigerian citizens? In a few days, Nigeria’s president-elect, Bola Tinubu, will be sworn in. The president-elect assumes office with promises aplenty and very high expectations from Nigerians. In his 80-page campaign manifesto, amidst economic plans to address fiscal, monetary, and trade reforms, Tinubu promises to “carefully review and better optimise” the naira system. However, a recent report from Absa Group Ltd., a Johannesburg-based financial services firm, stated that following Tinubu’s inauguration, the Nigerian currency will be devalued by 15% to alleviate severe trade imbalances and dollar shortages. Investopedia defines devaluation “as the deliberate downward adjustment of the value of a country’s money relative to another currency, group of currencies, or currency standard.” In 2021, Nigeria embraced a multiple exchange rate regime by keeping a stronger pegged rate for official transactions and weaker rate for unofficial transactions. This method was employed to avoid an outright devaluation of the naira. According to the Central Bank of Nigeria (CBN), it operated a “managed float” policy at the time, which allowed it to intervene in the exchange market when necessary. However, the controlled nature of the exchange regime has now driven demand to the unofficial black market, leading to a wide discrepancy between the official and parallel markets, according to the Absa report. For context, CBN’s official exchange rate is around ₦460 per dollar, while the currency traded at around ₦752 per dollar in the black market in March. If the Absa report is to be believed, what then are the implications of a 15% currency devaluation on the ordinary Nigerian? More hardship “For the ordinary Nigerian, a devaluation by at least 15% means more inflation, which means a further increase in the cost of living and a further erosion of their respective purchasing power. Life in Nigeria will get harder. It is unfortunate, but that is the likely reality,” Basil Abia, a research consultant, told TechCabal. Inflation erodes purchasing power and plunges more people into poverty. Nigeria’s inflation rate has been hovering around the 20th percentile since the beginning of the year, rising to 22.04% in March—the third consecutive increase in 2023. Global economy and finance expert, Kalu Aja echoes Abia’s concern. “For the average Nigerian that spends the bulk of their income on food, a devaluation will see the cost of food rise simply because the means of production, PMS, and fertilizers are still imported,” he said. A double-edged sword Abia noted that the devaluation will result in increased inflation and an erosion of the Nigerian consumer’s already dwindling purchasing power. This will, in turn, affect the profitability margins of export-based micro, small and medium enterprises (MSMES) due to increased costs of imports, and increase the cost of living in the country. However, he adds that there could be some benefits from the devaluation. “If it is perceived to be temporary, it may present attractive opportunities for foreign investors to invest in our domestic financial markets. It is not certain, but it is a possibility that FPI (foreign portfolio investments) inflow to Nigeria may temporarily increase,” Abia said. Aja shares a similar view: “For citizens that spend Naira, it [devaluation] means imported inflation is more severe and reduces purchasing power. Keep in mind, devaluation is not entirely bad. It can be a strategy to reduce a budget deficit or boost export, but you can devalue your way to wealth.” For Adedeji Olowe, founder of Lendsqr, a lending SaaS fintech, the impact of the devaluation on the Nigerian economy may be minimal. “The devaluation would be on the official exchange rate which nobody has access to in the first place. Furthermore, it makes the USD that the government earns go a very long way and helps the funds that are stuck to move out [say Emirates Airlines] but with substantial losses,” Olowe said. The devaluation also indicates that the Tinubu-led administration will likely retain the existing float policy and maintain an artificial exchange rate amid Nigeria’s foreign exchange (FX) shortage. The implication, according to Abia, is that the current economic uncertainties caused by a multiplicity of FX windows will be further accentuated. “There’s also a chance that the alternative FX window might be the closest accurate valuation of the Naira, forcing an increased transactional demand by investors, importers and individuals to use the FX window for all their FX transactions and needs,” he said. Aja adds that the issue with the exchange rate is the wide arbitrage, which the devaluation will address. He told TechCabal, “the devaluation seeks to close that artificial gap and bring more certainty to economic planning. You can’t plan if you have to buy $1 at 740 or 488; devaluation closes the gap a bit, less swings, makes the exchange less volatile, and even encourages remittances.” The implications of an impending currency devaluation on Nigerians are far-reaching and multifaceted. While it is poised to address imbalances in the foreign exchange market, the darker side is the burden that falls heavily on the most vulnerable segments of society, exacerbating poverty and inequality. As the country faces economic turmoil, it is crucial for the incoming government to implement comprehensive and sustainable measures to stabilize the currency, promote economic diversification, and improve the overall well-being of Nigerians.
Read MoreWinter is coming: Eskom warns of more load shedding in chilly months
South Africa’s national power utility Eskom has warned that it might need to implement high stages of load shedding in order to meet surging demand during the winter months. Yesterday morning during the System and Winter Outlook briefing, Eskom cautioned that the power system is severely constrained and there is a high risk of elevated stages of load shedding in winter. Giving a performance overview, Eskom Generation group executive, Bheki Nxumalo, said that the power generating system continues to show poor performance, with frequent plant breakdowns subjecting the country to elevated stages of load shedding. These shortages will persist throughout the winter months, necessitating the continued implementation of load shedding. Nxumalo added that unavailability of the three units at Kusile Power Station and the unit at Koeberg 1 Power Station have removed 3,080MW of capacity from the grid, equivalent to three stages of load shedding. “We are striving to reduce plant breakdowns to 15,000MW or below for the winter period to keep loadshedding at lower stages. We, however, concede that this will be extremely hard given the unreliability and unpredictability of the power generating fleet and that we are already about 3,000MW worse off this winter compared to the same period last year,” said Nxumalo. According to the outlook, with breakdowns or unavailable capacity due to unplanned maintenance at 15,000MW, loadshedding might be predominantly implemented at Stage 5 for the winter period. Should breakdowns reach 16,500MW, loadshedding might be implemented at Stage 6. If unplanned outages reach an average of18,000MW, loadshedding might be required every day and might be implemented up to Stage 8. Eskom emphasised that the 18,000MW scenario that could culminate in Stage 8 is an ultimate worst case scenario. “We fully comprehend the adverse impact that rotational load shedding has on South Africa’s already fragile economy and its people. We are doing everything to mitigate the intensity of rotational load shedding including taking lessons from the rest of the world. We have seen that effective rotational load shedding during winter months requires a coordinated effort among all stakeholders within a country,” said Eskom board chairperson Makwana. Interim Group Chief Executive of Eskom, Calib Cassim, said that South Africa experienced the highest levels of load shedding as the energy availability factor (EAF) deteriorated to 56% in the past financial year, against the target of 60%. However, he also remarked that there were some encouraging developments in the efforts to deal with the electricity crisis in the country. “The establishment of the National Energy Crisis Committee (NECOM) and the development of South Africa’s Energy Action Plan, overseen by government, are some of the positive developments aimed at addressing the electricity crisis. Furthermore, the determination by the National Energy Regulator of South Africa (NERSA) of a favourable tariff increase as well as the debt relief solution by the National Treasury are critical enablers of sustainable electricity supply industry,” Cassim commented. Speaking on the possibility of a national blackout which has been touted by the media over the last few weeks, Eskom Group Executive for Transmission, Segomoco Scheppers, stated that there are a number of control measures, including load shedding, that are aimed at protecting the power system from collapsing. “Efforts are underway to return a number of units from outages to mitigate the worst case scenario of 18,000MW or above from materialising. Eskom will also keep planned maintenance at a maximum of 3,000MW during the winter period,” said Scheppers.
Read MoreIf AI is taking over, how are Africa’s edtech platforms gearing up for adoption?
As the demand for customised learning grows across Africa, Edtech startups in Africa are keen on joining the AI bandwagon. While some feel there needs to be more time for incorporating AI into learning, others think there’s no better time than now. There is a new revolution in town—Artificial Intelligence (AI)—and edtech startups in Africa are not missing out on the wave. Edtech startups in Africa are positioning themselves to leverage this transformative technology to revolutionise education and drive positive change across the continent. With the growing demand for personalised learning and remote education, these innovative companies are increasingly exploring the potential of AI to enhance their offerings. The adoption of AI in education has the potential to revolutionise the way students learn, access educational resources, and interact with educators. African edtech startups are aware of the transformative potential of AI and are getting ready to embrace this technology to take their businesses to the next level. To the CEO of AltSchool Africa, Adewale Yusuf, there has never been a better time for Africa to get involved in a cutting-edge solution. “I think that for the first time, we might have some chances to be a part of some innovative solutions. Some of these things might start from Africa and not just us participating in them,” he said on a call with TechCabal. Vahid Pourahmary, VP of Engineering at uLesson, a Nigerian edtech platform, believes that, AI is just an enabler—a means to an end in itself. “If you think about technology, technology has always been a part of education even If you go back to the time when we had an abacus to do maths,” he said. “Technology has always been in some sort or some form part of education, whether you wanted it or not. During the pandemic, whether you wanted it or not, you had to start teaching online. When the calculators were invented, whether you wanted it or not, you had to start introducing calculators in the way you are teaching. Every education organisation in the world has somehow used technology to teach,” he added. Where does Africa’s edtech ecosystem stand in this revolution? “In the edtech ecosystem, everybody is asking and answering the million-dollar question ‘How are you going to implement AI into your existing infrastructure?” says Pourahmary. He believes that the approach to answering this question is a matter of “when” rather than “how”. He states that education is at the core of uLesson. “At the core, education is our mantra, we use technology to enable that, to make it faster. AI is just one step into that process. Technology is at the core of how we deliver educational content. It might be right now with AI, we don’t know what it is going to be in a few years from now.” Pourahmary said. “We at uLesson want to make sure our learners learn, whether we do it with AI or whether we do it without it. It is just part of the technology that has always come and has been used in different ways.” Oluwabunmi Borokinni, Founder, TechChild Africa, feels AI will play a redefining role in access to education in Africa. She believes AI-powered platforms can provide distance learning opportunities for students in remote areas with limited traditional educational resources. “In Africa, we have a lot of areas where they only have access to traditional educational resources. To be able to help that, we need AI-powered platforms that can provide distance learning opportunities for them,” she said. Africa’s edtech startups remain bullish despite funding decline What pain points in Africa’s edtech is AI addressing? Pourahmary believes that it is hard to tell exactly what pain points AI will address in Africa. “Right now, people need to wait for the dust to settle for us to know what we can do with AI. I think it is hard for us to tell exactly what AI can do for us in education unless we start trying. It’s a little too early, I think we need to wait a bit more,” he told TechCabal. Borokinni also believes that AI will allow for accessibility on different fronts for students with disabilities. “There are a lot of AI-powered text-to-speech systems, where students who are blind can easily listen to a lecturer or to a course that is originally in text,” she said. “AI has been able to help prescribe or describe what a slow learner can do to be able to pick up in class, or the kind of activities slow learners can participate in to help in improving their learning abilities.” Yusuf believes that “real learning” will happen with the entrance of AI and also believes that AI will expose the weaknesses of learning that have been in the past. “For a very long time, learning has always been about ‘la cram, la pour’, now we are seeing first-hand that a lot of things you want to cram are going to be automated by AI. Real learning will happen with the entrance of AI,” he added. What is the role of AI in the future of edtech in Africa? According to Yusuf, Africa’s edtech ecosystem is at the precipice of AI adoption. “The future is the future, and we are living right in the middle of it and this demands that everybody wakes up to the reality of changed learning. You have to question yourself, how can we integrate some of these things into what people are learning? We live in a new world where people get to learn the concept of AI and how it will impact their world.” Borokinni believes another role AI can play in the future of edtech in Africa is language. “In Africa, we have diverse languages, so we might want to look at incorporating AI into our language learning in Africa to promote our cultural heritage. I once started a neural learning where we have an AI system that can convert English to different languages in Africa.” She also
Read MoreNexford University eyes Kenya in helping local graduates find jobs
The collaboration aims to alleviate constraints in the job market, particularly the extended average duration of five years for Kenyan graduates to find suitable employment due to a lack of relevant skills. Nexford University, a US-accredited online university, has partnered with the Federation of Kenya Employers (FKE) and Africa Digital Media Institute (ADMI) to help Kenyan graduates find jobs. The collaboration aims to address job market constraints. For instance, Kenyan graduates take an average of five years to find a job due to a lack of relevant skills. To this end, and through tailored Nexford and ADMI courses, graduates will gain the skills they need to be successful in today’s job market. Employers will also benefit from the partnership since they will be able to design programs specifically to improve employee skills and productivity. The programs will be informed by a nationwide skills survey of 270 of Kenya’s largest employers. The partnership makes sense because the local tech space has been growing over the last couple of years. Amid major layoffs in the tech market, tech skills are still in high demand, and the partnership will help Kenyan graduates to acquire the skills they need to succeed in the growing sector. Nexford University is a leading provider of skills-focused, US-accredited master’s and bachelor’s degree programs globally at a fraction of traditional costs. According to the institution, Nexford master’s degrees cost around $2800, compared to the US average of $36,000. Nexford learners in over 90 countries have since completed over 33,000 courses, and graduates have gone on to work at companies like Google, Microsoft, KPMG, and EY. Tech Cabal had a chat with Nexford University’s CEO Fadl Al Tarzi, who mentioned that the identification of specific skills will depend on the ongoing survey results. From the preliminary findings, it is evident that power skills such as critical thinking and communication skills continue to be highly prioritised. The CEO added that there is an increasing demand for data analytics skills due to the significant digital transformation efforts happening. Tech Cabal further wanted to understand how the skills survey of 270 of Kenya’s largest employers would inform the design of the courses aimed at boosting employee skills. Fadl Al Tarzi clarified that the curriculum has been developed using a backward design approach, starting with a thorough analysis of employer needs. This approach ensures that the curriculum is aligned with the desired outcomes, allowing for a clear and focused educational journey. “That end is typically what employers are looking for. So, for instance, if we identify banks are looking for people who know how to analyse credit risk – we then map that backwards to identify what skills are needed in order to know how to analyse credit risk, then we build a curriculum that delivers on that skill and measures whether learners know how to analyse credit risk,” said CEO Al Tarzi. It was also critical to understand Nexford University’s approach to integrating tech skills into the customised courses provided to Kenyan graduates, considering the increasing emphasis on technology in the country’s job market. In his response, the CEO said the focus on technology is not limited to Kenya alone but has become a global phenomenon. Digital transformation is now prioritised by employers worldwide. While significant advancements have been made in the tech startup sector and substantial investments from venture capital firms in the past decade, most businesses worldwide still have not fully embraced digitisation. He highlighted that approximately 75% of the world’s GDP comes from traditional legacy industries where the process of digitisation is only in its early stages. “So our programs weave digital transformation skills both horizontally and vertically. Learners can build specific—say software development skills—but equally when enrolled in say a finance or accounting course they will still be learning about how to use, say blockchain, in that specific functional setting,” he added. Organisations such as Microsoft, which has an ADC office in Nairobi, have been working in partnership with local universities in Kenya to assess and enhance their curricula, aligning them with the current industry requirements. Will Nexford take the same approach? – Tech Cabal asked. “Many organisations are following a similar approach, a key difference here is we’re integrating these practical skills within our degree programs – so rendering the choice between skills and credentials no longer necessary. Learners will build practical skills while enrolled in our degree programs,” clarified Al Tarzi. The institution is also engaged in discussions with several local universities to provide bootcamps to its students. These bootcamps, which are usually six-month intensive programs, focus on hands-on practical training and serve as a valuable complement to its degree programs. Nexford says millions of dollars have been invested in developing a technology-enabled platform that automates many traditionally manual administrative tasks, providing little value to learners. At the same time, the absence of physical infrastructure costs, typically associated with traditional universities, enables passing on the resulting savings directly to learners. “The impact of this specific partnership will likely be felt more across driving business performance, as when we upskill existing employees that will help drive business performance. 75% of job seekers find a company more appealing if it offers additional skills training, and companies experience 24% higher profit margins when they invest in training,” concluded Nexford CEO.
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Digital activism: Are online spaces becoming less safe for women?
While still facing steep patriarchal oppression, African women are using the internet to build communities, learn, and call out unjust systems. However, these efforts are met with vitriol which affects the social media experience for women. How are online spaces evolving and are they becoming more aggressive towards women? Digital technology has seen more advancement in human history than any other innovation — reaching more than half of the world’s population and revolutionising the human experience in less than two decades. One of the ways that digital technology has significantly impacted the world is in how we socialise and communicate, with a potent example being social media. Social media connects almost half of the entire global population, enabling people to make their voices heard and talk to people across the world in real-time. For women and many socially disadvantaged people, social media platforms like Twitter have provided a platform for women to share critical stories, build community, organise and mobilise for resources, and importantly, call out unjust systems. In the past decade, there has been a growing popularity and interest in feminist ideology across Africa, which is directly linked to social media. Young activists across the continent are increasingly taking advantage of digital tools to organise in search of radical change in the way that African societies are structured, as is evident in movements like #ArewaMeToo, #FreeSheena, #ShutItAllDown, and #AmINext, among others. According to notable journalist and activist, Kiki Mordi, we can’t speak about social movements in our generation without speaking of social media. “The digital space helped us to connect with one another, and it helped for scale. In the past when I attended protests, it was a lot of work getting people to be interested in the cause. Social media made us more efficient at organising as it exposed us to a lot of people and helped us build networks,” she said over a call. Emitomo Tobi Nimisire, a Sexual Reproductive Health and Rights advocate, shares that a very useful application of social media in the fight against inequality is how it provides a platform for women to get some semblance of justice. “In recent years, we’ve seen people use social media to call out their abusers. One of the reasons this happens is that we have a failing justice system, and people are left with little to no option but to leverage their online platforms to get some semblance of justice,” she shared with TechCabal. Injustice is fighting back Nimisire believes that anti-feminist movements are getting stronger than ever. “There are anti-equality movements offline and a lot of funding goes into these spaces. These movements happening offline are validating the bullies online and justifying their violence and hate towards women,” she said. She is not wrong. While the internet has connected women across the continent and given access to knowledge, support, and community, it has also exposed women to aggression and pathways for abuse. There is a growing incel movement consisting of angry and belligerent men; some as young as twelve, that is built around the hatred of women. This culture is so strong that experts fear it could provoke terrorism, with over 1,000 daily references on the internet to misogyny and degrading actions towards women. Every 29 minutes, someone on an online incel forum posts about rape. Further analysis of this movement shows that this violence towards women on the internet is currently at an all-time high, eight times higher than in 2016, which has led to a growing trend of women dropping out of social media platforms altogether. “Social media is just a replication of our immediate social space. If misogyny exists in real life, it will exist on social media. Because we are far from erasing the normalcy of misogyny in real life, it is the same thing online. There was a time I felt some semblance of hope. A time on social media when women came out to speak on topics that were considered taboo and that period brought me joy. However, the misogyny will fight back and it did. Other people hated how bold women and girls were becoming online and how we were building platforms to fight misogyny. It’s the same thing as real life. As soon as a woman speaks up, there are many people waiting to tell her to shut up,” Mordi shared over a call with TechCabal. Ann Holland, cofounder of Sistah Sistah Foundation opened her Twitter account to specifically speak about the inequalities that women faced at the hands of the patriarchy, especially in Zambia. She moved to Twitter from Facebook, where she faced a lot of bullying at the hands of misogynists, for openly being a feminist and decrying the unfair treatment of women, especially in regard to issues like sexual abuse and female genital mutilation (FGM). With over 30,000 followers on Twitter, Ann is popular for standing up for women, speaking up against inequality, and her unwavering love for Beyoncé. Holland is no stranger to digital harassment and has been bullied, sued, and even arrested for her commitment to equality. “As much as the internet is a safe space, it is also a dangerous place for women. Sometimes, all you need to do is exist as a woman for people to hate your guts on the internet. They hate you for speaking up, they hate you for changing the minds of their victims, and they hate you for creating platforms for women to feel safe and want more from society. These things get to you, regardless of how tough or strong you are,” she shared. Holland is extremely careful of what she shares about herself online, as she is scared of what people can do with that information in her real life, considering that she is the target of a lot of hate. However, according to Holland, despite the harassment and bullying, there is still a significant improvement in the way that people respond to feminist messages on social media. “In spite of how
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Gadgets sold in iStore Preowned SA
iStore is a popular retail store that specializes in the sale of Apple products and accessories in South Africa. In addition to offering new Apple products, iStore also sells pre-owned gadgets, which are previously owned devices that have been refurbished and restored to like-new condition. These preowned gadgets offer an affordable alternative to buying brand-new devices, while still providing all the features and functions that Apple devices are known for. In this article, we’ll take a closer look at the preowned gadgets sold in iStore South Africa. iPhone gadgets in iStore Preowned One of the most popular pre-owned gadgets sold in iStore is the iPhone. iStore offers a wide range of preowned iPhone models, from the iPhone 7 to the iPhone 14. These devices have been thoroughly tested and restored to arguably new condition, and come with a one-year warranty for added peace of mind. Preowned iPhones are a great option for those who want all the features of a new iPhone, without the high price tag. iPad gadgets in iStore Preowned iStore also offers pre-owned iPads, which are great for those who want a larger screen for browsing the internet, watching videos, or playing games. Like the pre-owned iPhones, iStore’s refurbished iPads have been restored to like-new condition and come with a one-year warranty. iStore sells used iPads starting from the iPad Air 2 to the latest iPad Pro models. MacBook gadgets Another popular preowned gadget sold in iStore is the MacBook. These laptops are ideal for students or professionals who need a high-performance computer for work or school. iStore offers preowned MacBook models such as the MacBook Air, MacBook Pro, and MacBook Retina Display. These preowned MacBooks usually come with a one-year warranty, providing a cost-effective way to get a high-performance Apple computer. Apple watches In addition to the above devices, iStore also offers preowned Apple Watches. These smartwatches are great for those who want to track their fitness goals or stay connected on the go. iStore sells used Apple Watches starting from Series 1 to the latest Series 7. These preowned watches are tested and restored to almost pristine condition and come with a one-year warranty. Final thoughts on iStore Preowned gadgets iStore also offers a range of refurbished accessories such as chargers, cases, and headphones. These accessories are also restored to like-new condition and offer a cost-effective way to accessorize your preowned Apple devices. Overall, iStore South Africa’s preowned gadget selection offers a great range of options for those looking to buy refurbished Apple devices at a lower cost. Whether you’re looking for an iPhone, iPad, MacBook, or Apple Watch, iStore’s preowned selection has something to suit everyone’s needs and budget.
Read MoreVodacom, MTN to continue price hikes despite increasing revenues
Vodacom and MTN plan to continue price increases despite revenue increases. According to their latest financial results, pan-African mobile network operators Vodacom and MTN recorded service revenue increases of 17.2% and 15.6% respectively. Despite the growth in revenues, both MNOs have announced that they are planning on implementing price hikes across their various markets. Vodacom’s mobile contract customer revenue increased by 2.8% to R22.6 billion, benefitting from contract price increases of between 3% – 5% implemented in the first quarter of the financial year. Speaking at an annual results investor and analysts call this week, Vodacom Group CEO Shameel Joosub stated that the telco plans to continue with price increases, especially for post-paid customers, permanently. “The modus operandi that we’ve deployed now is to increase prices, which we think we want to make a more permanent feature of our strategy going forward, but at the same time to give more value. So, what we’re doing is we’re increasing the allocation of data that comes with it. An example would be if you have had a 6% to 7% increase, you have got between 15% to 20% increase in the bundle that we are now allocating to the customer,” said Joosub. For prepaid consumers, Vodacom stated that it will be trying to do more price optimisation instead of straight-up increases. This will be done by effectively allocating more data on the monthly packages and slightly lifting the price at the bottom to be able to do it. “We’re also putting a large focus on making sure that customers are getting the maximum out of it. Through our CVM (customer value management) platforms, if they’re properly engaged, it increases their active days. We’ve built a new measure into our AI platforms that doesn’t just look at the uplift, but also pushes more deliberate active day management to try and get more days out to the customer,” added Joosub. Unlike Vodacom whose pricing strategy seems to be underpinned by more value addition for consumers, MTN’s strategy, according to CEO Ralph Mupita, is meant to mitigate macroeconomic pressures on the business. “The postpaid price increases, effective from April 2023, should help to drive improved top-line growth in the business and mitigate inflationary impacts on the MTN SA business. This tariff increase will help to mitigate the decline in voice and improve data performance in the remainder of the year,” Mupita said. In March, MTN also announced that it was passing the costs of dealing with loadshedding to consumers, with MTN South Africa CEO Charles Molapisi stating that “if we don’t pass some of these costs [to customers] it will become difficult for the sustainability of the business.” To cushion the impact of the price increases on consumers, MTN added that it will be introducing different bundles to cater for the change in consumption. Additionally, Molapisi said that the telco “will be practical on how [it increases] prices so that [it doesn’t] squeeze the lower end of the market”. With macroeconomic pressures not showing any signs of simmering down anytime soon, it seems like the telcos will also keep passing the cost of doing business to consumers, especially the postpaid ones. “Within this environment of elevated inflation, implementing selective price increases across the portfolio remains a critical priority to ensure that operations generate sufficient cash flows to fund future capital expenditure needed for building world-class networks. We will continue to have the necessary engagements with the regulatory authorities on such needed increases,” MTN added.
Read MoreSafaricom is buying the M-Pesa trust company at the heart of a $2.3 billion lawsuit
M-Pesa Holding is the cash management company behind the eponymous mobile money service, so why is London-listed Vodafone, which owns 40% of Safaricom, selling it for $1? After 15 years of owning the trust company set up to manage the deposits from users of the M-Pesa mobile money service, Vodafone, the UK telecoms group wants to sell it for a symbolic $1 or 137 Kenyan shillings. As recently as two months ago, a lawsuit filed by three Kenyans listed both Mpesa Holding Company, the trust company, and Vodafone among others as defendants. Read also: Why the trusteeship at the heart of M-Pesa is under fire The 150-page lawsuit alleges that the trusteeship that formed M-Pesa Holdings violates Kenya’s law on forming trust companies. The petition argued that by offering loans through Fuliza, a digital loan product, through M-Pesa, Safaricom was engaged in banking services without a licence, since the loans were made from the deposits of other M-Pesa users. Vodafone, Safaricom, and 19 others were listed as defendants in the case. The case is still in court. It is the same trust that Vodafone disclosed it was selling to Safaricom for $1. “On 17 April 2023, the group entered into an agreement to sell M-Pesa Holding Company Limited (MPHCL) to Safaricom Plc, an associate entity of the group, for $1 (Ksh137 at current exchange rates),” reads part of the Vodafone statement. “No material gains or loss is expected to arise on disposal. Completion of this transaction is subject to various approvals which are expected to be obtained before or during July 2023,” the statement continued. Safaricom’s revenues took a third consecutive hit when the telco reported its annual numbers for 2022 driven by costs associated with its expansion into Ethiopia. And the acquisition of a $150 million licence to operate mobile money services in Ethiopia. So it makes sense to acquire a cashflow-generating asset like M-Pesa Holdings which according to statements from Vodafone held M-Pesa customer funds amounting to €1.226 billion (Ksh182.18 billion) as of 17 May 2023. Local media reports say the move will be a boon for Safaricom’s cash flows in addition to providing interest income if Safaricom invests M-Pesa user deposits in short-term securities. Investing in short-term securities is exactly what Vodafone said it did with the cash it managed in M-Pesa Holding for 15 years since M-Pesa was launched. “Balances included in the group’s consolidated financial statements for M-Pesa Holding on 31 March 2023 include short-term investments of $1.35 million and $1.33 million due to M-Pesa customers, recorded within Other investments and Other creditors, respectively,” Vodafone said. In total, M-Pesa Holding had short-term investments of €1.247 billion (Ksh185.3 billion) as of March 31, 2023. Vodafone however added that added that any profit generated by M-Pesa Holding’s investments is donated for use to public charitable purposes after it subtracted direct costs. Per the National Payment System rules which guide the operation of digital payments in Kenya, trusts can be created to manage the funds held by a payment system participant like Safaricom’s M-Pesa service (not to be confused with M-Pesa Holding, the trust company). The regulations allow the trust to invest deposits it holds, but income from such investments must be donated to charitable organisations. Or (if approved by the Central Bank of Kenya) wherever the agreements creating the trust stipulate. The wrinkle is that the national payment system Act came into law seven years after the M-Pesa service was launched. In effect, the trust forming M-Pesa Holding predates the payment provider regulations. Safaricom is a licenced payment service provider in Kenya, but the lack of a banking licence undergirding its lending operations has long been debated in public and in Kenya’s parliament. On the campaign trail last year, President Ruto promised to separate Safaricom M-Pesa so it could be better regulated. Buying M-Pesa Holding from Vodafone may be part of moves to supplement cash flow as the company takes on its Ethiopian rival. But it could also easily be a belated attempt to comply with the rules that prevent Vodafone from owning the trust managing M-Pesa deposits.
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👨🏿🚀TechCabal Daily – US kicks off TikTok ban in Montana
Lire en français Read this email in French. 19 MAY, 2023 IN PARTNERSHIP WITH TGIF In Nigeria, MTN has begun implementing the uniform USSD codes effected by the country’s telecoms bulldog last month. Now, instead of dialling *556# for airtime balance or *131# for data, MTN users can now dial *310# and *312# respectively. It’s expected that other telecoms in the country will implement the same USSD code in coming weeks. In today’s edition Montana bans TikTok SA warns citizens against Milo Designs ADC launches new Ghana centre Funding Tracker The World Wide Web3 Event: The Lagos Startup Expo Job openings MONTANA BANS TIKTOK Montana has become the first US state to ban TikTok. Yesterday, Governor Greg Gianforte signed a bill banning the social media platform in the state. The bill will become effective by January 2023. The bill referred to as SB 419, restricts TikTok from operating within Montana’s jurisdiction and requires mobile app stores to make the app unavailable to residents of the state. Governor Gianforte also shared screenshots of the directive he issued to Montana’s Chief Information Officer, instructing the ban of the platform. According to the law, users of TikTok will not face penalties. However, app store operators and TikTok itself may be subject to fines of $10,000 per violation per day. A new precedent: The passage of this controversial law represents the strongest effort by a state government to restrict TikTok based on security concerns. While there is no established legal precedent for a ban like this targeting TikTok, it is highly likely that the ban will face immediate legal challenges. ICYMI: Earlier this year TikTok CEO Shou Chew appeared before US Congress to defend his social media platform against allegations that it has deep ties to the Chinese government, as well as spying on US citizens and harvesting their data for potentially nefarious ends. Although TikTok hasn’t said it will sue, it calls the rule an “egregious government overreach” and said that it would fight it. < MONIEPOINT RANKED 2ND FASTEST-GROWING AFRICAN COMPANY Moniepoint is Africa’s second-fastest growing company, as shown in FTs latest report. We also processed 1 billion transactions worth $43 billion in Q1 alone. Read all about it here. This is partner content. SA WARNS CITIZENS AGAINST MILO DESIGNS Another day, another online scam in southern Africa. After receiving numerous complaints from customers, SA’s National Consumer Commission (NCC) is warning South Africans to not make use of Milo Designs when purchasing furniture online. This comes after Botswana victims also lost millions of pulas through a supposed “investment” scheme into a company called Ecoplexus. The modus operandi Milo Designs claims to sell furniture via its social media channels, but following several complaints from customers, an investigation from the NCC asserts that the company is in fact operating as a scam. “Upon investigating their conduct, the Commission’s preliminary assessment indicates that the operators of this scam, LM Kotze and MC Wood, are not cooperating with the Commission [and] both LM Kotze and MC Wood have no intention of delivering the goods or refunding the consumers,” the NCC’s Thezi Mabuza. Zoom out: According to Interpol’s Online Scams report, Africa loses over $500 million of its GDP per annum to online scams such as email scams, romance fraud, social media scams, malware attacks, and so on. AFRICA DATA CENTRES EXPANDS TO GHANA Africa Data Centres has revealed its plans to commence construction on recently acquired land in Accra, Ghana’s central business district. Designed with an initial capacity of 10 MW, expandable up to 30 MW based on demand, the upcoming facility will be the largest in West Africa, excluding Nigeria, to date. The company aims to complete the first phase of construction within a 12-month timeframe. Africa Data Centres‘ continental expansion strategy encompasses 10 of Africa’s key economic hubs, including South Africa, Zambia, Kenya, Rwanda, Egypt, Morocco, Senegal, Ivory Coast, Angola, and now, Accra in Ghana. The newly announced facility in Accra is a part of this expansive plan. This unrivalled expansion, partly funded by the United States government’s US International Development Finance Corporation (DFC), is a significant initiative to accelerate private sector-led digital infrastructure and services in Africa. ICYMI: In January this year, Africa Data Centres also broke ground on an additional data centre facility in Nairobi. The new build will see the existing facility on the adjacent piece of land expanded up to an extra 15MW of IT load. ATTEND FINTECH WEEK LONDON Fintech Week London 2023 is a five-day event that runs from June 19 to June 23, 2023, with a two-day flagship conference on June 19 and 20. Tickets are now on sale and you can get 15% off when you register your spot here with the code: TechCabal2315. This is partner content. TC INSIGHTS: FUNDING TRACKER This week, Kenya-based fintech company M-KOPA raised $250 million in debt and equity funding. The round was led by the Japanese-based trading house Sumitomo Corporation. Other participating investors include Standard Bank, International Finance Corporation (IFC), FMO, BII, Lion’s Head Global Partners, Mirova SunFunder (fund management), and Nithio. Here are the other deals this week: Jia, a Kenyan fintech startup, received $4.3 million in seed funding. The round was led by TCG Crypto. Other participating investors include BlockTower, Hashed Emergent, Saison Capital, Global Coin Research, Packy McCormick, Anand Iye, Jared Hecht, and Rory Eakin. Figorr Nigerian cold chain technology company raised $1.5 million in seed funding. The round was led by Atlantica Ventures. Other participating investors include Vested World, Jaza Rift, and Katapult. Egypt’s auto-tech company Helpoo raised an undisclosed amount in funding from Saudi firm Morni. Chari, a Moroccan B2B e-commerce company, raised undisclosed follow-on funding from Plug and Play. South-African cybersecurity company Port443 raised an undisclosed amount in funding from Iziko2.0, a technology investment firm, and RMB Ventures. That’s it for this week! Follow us on Twitter, Instagram, and LinkedIn for more funding announcements. You can also visit DealFlow, our real-time funding tracker. THE WORLD WIDE WEB3 Bitcoin $26,856 – 1.68% Ether $1,803 – 1.13% BNB $309 – 1.15% Cardano $0.37 –
Read MoreScaling with success: Wasoko’s rise in Africa’s B2B E-commerce
Daniel Yu spoke to TechCabal about Wasoko’s latest expansion to Zambia and pivot to a hub and spoke logistics model. The founder also shared his thoughts on Africa’s B2B e-commerce sector, which has been characterised in recent times by layoffs, operations cutbacks, and shutdowns. Wasoko remains the most funded B2B e-commerce startup in Africa. The company has operated for about seven years and expanded into seven countries across East Africa, francophone Africa, and most recently, Southern Africa. The e-commerce startup shares investors with Africa’s fintech unicorn, Flutterwave, and according to its founder, Daniel Yu, Wasoko is poised to be “a foundational company for the African tech ecosystem.” The move to Zambia Last week, TechCabal reported on Wasoko’s expansion to Zambia, a destination the startup had since considered in its expansion pipeline. In 2022, across the media rounds that followed Wasoko’s announcement of a $125 million Series B round, Yu shared that an expansion to Southern Africa was imminent. While some industry watchers expected the startup to set up shop in South Africa, where the retail market grew by 30% last year, Wasoko will be rooting its operations in Zambia’s capital city, Lusaka. According to Yu, the decision to move to Zambia was hinged on the growing economic projections of the Southern African country. He maintained that the government’s pro-business position and strengthened currency show a drastic move from a failing economy seeking IMF bailouts to a fairly stable one that supports businesses. For context, the Zambian Kwacha was the world’s best performer against the dollar for much of 2022. “A big tailwind that’s driving the Zambian economy is the huge growth in green technology globally This has driven a huge demand, especially for copper, which is one of Zambia’s main exports as one of the world’s largest producers. That kind of positioning within the global green economy in addition to this new administration has really cleaned things up and made the country a great investment destination,” Yu told TechCabal. “Beyond that, Zambia has several large cities that can serve Wasoko. Lusaka, the country’s capital is the largest city in Southern Africa, outside of South Africa. And it’s got a very fast-growing population that is currently underserved by e-commerce and technology. There are also several other cities that inhabit about half a million people in the Copperbelt region of the country. This all adds together to why we think Zambia is one of the highest growth prospects for Wasoko,” he added. Additionally, Zambia shares a border with Tanzania, Wasoko’s second-largest market. With the Zambian expansion, the startup hopes to build cross-border linkages between its core East African markets and Southern Africa. Finding operational efficiency Wasoko operates an asset-heavy model in most of its markets. This usually involves setting up multiple warehousing and logistics operations to serve its customers. However, in Zambia, the startup will be adopting a hub and spoke model which will significantly reduce the need to set up multiple warehouses in the region. The hub and spoke model is a centralised warehousing and shipment system where distribution centres or warehouses are established at a spot in a city from where shipments can be delivered to multiple locations. For Wasoko, adopting this model will involve using large trucks to move goods from a central warehouse to distances of about 50km (another logistics point), where the goods will be offloaded to smaller vehicles that will complete the last mile fulfilment. Yu described this pivot as an “evolution towards more advanced logistics capabilities,” maintaining that it would enable a deeper coverage of the market. Yu believes that achieving operational efficiency is a major determining factor for the success or failure of B2B e-commerce startups. “We spend quality time assessing our operations and finetuning them. That’s how we manage to stay profitable on a per-order basis,” he shared. In a recent article, Rest of World argued that B2B e-commerce startups are scaling back operations and laying off employees as they cope with a drawback in investors’ appetite. This is evidenced by the shutdown of Zumi, layoffs by Marketforce, and the scaleback of Wabi and Alerzo, amongst others. A central argument therein was that asset-heavy B2B e-commerce startups are prone to suffer because the cost of maintaining these assets will always eat into margins. “It’s simply too cash-heavy to scale with such models, given the type of funding African startups receive,” Stephen Deng, general partner at investment firm DFS Lab, told Rest of World. Yu does not believe this argument. The Wasoko CEO maintains that infrastructure is critical to running a successful B2B startup in Africa. “As a software-only B2B e-commerce company, your margins depend on slices from the suppliers and retailers—both of which already have slim margins. Winning in the market and effectively solving the problem of getting goods to local communities would mean that you have to actually do the operations yourself.” “And maybe there’s the question of whether these operations are sustainable. For that, I would point you to the hundreds, if not thousands, of traditional asset-heavy distributors, who are already operating in Africa and have been profitable for decades. They just haven’t been doing it with technology so that has limited their scale, but they’ve definitely been profitable. Additionally, controlling the chain makes us cumulatively bigger than any single wholesaler, giving us the advantage of higher buying power which enables us to negotiate for better margins at global markets,” Yu countered. The future of B2B e-commerce in AfricaPlayers in Africa’s B2B e-commerce market have continued to increase as they lobby for market share in a market estimated to be worth between $600 billion and $1 trillion. Within the past three years, entrants like Sabi, Alerzo, and Omnibiz have grown from scratch to raise tens of millions of dollars to scale their solutions across several countries. While Daniel Yu agrees that the market has become more competitive, he believes that some newer players are jumping in with copycat business models in order to tap into a perceived “funding spree” in the space.
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