- May 15 2023
Fin South Africa partners with NHFC to disburse housing loans to South Africans
South African fintech startup Fin announced that it has signed a First Home Finance Subsidy Memorandum of Understanding with the National Housing Finance Corporation (NHFC). The MOU will see Fin become the first non-bank intermediary to facilitate the disbursement of First Home Finance Subsidies in South Africa. Through Fin Home Loans, the startup aims to give low to middle-income Fin customers access to affordable finance for building materials. Supported projects will range from new builds and renovations to kitchen fittings or extra room creation, adding a work-from-home space, solar & backup systems, and more. Speaking on the new partnership, Mark Seymour, the founder of Fin Home Loans said, “When we integrated Thuthukani into Fin earlier this year, I looked forward to scaling the business and bringing our offering to many more people. This partnership with the NHFC confirms that this was the right move and is the first of many as we strive to better serve our customers and partners.” Fin’s partner-first embedded credit strategy will enable its partners to use Fin’s tools and services to provide credit to their customers, allowing Fin to partner with corporate employers in South Africa and assist them in housing their low to middle-income employees through Fin’s payroll credit solutions. “The NHFC is happy to partner with Fin as the first non-bank intermediary to facilitate NHFC First Home Finance Subsidies linked to non-mortgage products. We are impressed with what they’ve accomplished thus far as an NHFC-approved lender, and through this partnership, we are excited to see what more they can do to help South Africans build their dream homes with the support of the First Home Finance Subsidy,” said Azola Mayekiso, CEO of the National Housing Finance Corporation. In March, Fin announced its acquisition of Thuthukani, a Pretoria-based fintech startup as part of its expansion efforts. Through the acquisition, Thuthukani’s incremental housing finance offering was renamed Fin Home Loans and integrated into Fin’s South African portfolio with a mandate to give middle to lower-income Fin customers access to affordable finance.
Read More- May 15 2023
Do South African startups exit too early? Experts have their say
Since 2015, more than one-third of acquisitions in the African tech space have involved South African companies. Does the hypothesis that some of the exit deals are premature legitimate? South Africa is and has, for a while now, been the undisputed king of mergers and acquisitions in the African tech startup ecosystem. According to Disrupt Africa’s 2022 South Africa Startup Ecosystem Report, the country’s startup ecosystem leads the way in exit mergers and acquisitions (M&As). Refinitiv Data says that in the first half of 2021 M&A deals involving tech companies increased by $160 million, an almost 2,000% increase compared to the same period in 2020. Several reasons have been attributed to South Africa’s impressive M&A dominance. These include active capital markets and banking systems, mature companies that can snatch up startups, and others. However, together with the appreciation of exit opportunities in the ecosystem, there are some concerns, albeit not that constantly had, that South African startups might be exiting too early, giving perhaps a warped picture of the country’s M&A space. TechCabal talked to some experts in the country to try to see if the hypothesis holds any weight. Why do SA startups exit? M&As are typically valuable exit avenues for all involved. Acquirees get a very nice payday for founders, employees, and investors and access to a broader pool of markets, resources, and capital. Acquirers benefit from product diversification, talent acquisition, and market expansion. According to Chris Loker, managing partner of the corporate advisory firm Moksha, the main motivators for tech startup acquisition deals are exits for international growth, procuring capital required to scale, or access to a wider client base. But these deals come particularly when the concept is proven. “Banks have even set up incubators to test new innovations, knowing that a corporate is often where innovation goes to die and their new product lead times can be many years. The travesty is that we don’t often get repeat entrepreneurs as failure is viewed with disdain or exits are rich enough – in the latter case, the trend of successful entrepreneurs becoming angel investors will hopefully grow,” Loker explained. For more established companies—and some startups too—the main reason is product diversification. Acquiring a startup that already has a product and traction makes more business sense instead of building the said product from scratch. A South African investment banker who has overseen numerous acquisitions and wishes to remain anonymous for employment reasons explained: “I’ll give an example of when many retailers were caught off guard when the [COVID-19] pandemic hit. A lot of their online stores were not well established to service their customers when the lockdown happened. This drove many of them to either evaluate whether they could develop or improve their online mediums quickly enough. The quickest route out of this predicament would be to make an acquisition, and an example is MassMart acquiring OneCart to assist them with their online service offering.” A number of acquisitions that have happened in the South African tech space do seem to be majorly driven by product diversification. Weaver Fintech acquired PayJustNow to expand into buy-now-pay-later. TymeBank acquired Retail Capital to expand into offering online banking services for SMEs. inq. acquired Syrex to diversify its product offering into hyper-converged cloud technology. Imperial Logistics acquired ParcelNinja to expand into e-commerce and last-mile distribution and Vodacom acquired iot.nxt to expand into Internet of Things (IoT). Market expansion and talent acquisition are two other significant reasons for acquisitions in South Africa. A market-expansion-driven acquisition example is Africa Fashion International acquiring online art marketplace Wezart with the intention of using the platform to expand its product offering globally and provide a stronger user base for artists. Talent acquisition deals are also getting more popular because as the ecosystem grows, competition for tech talent is getting tougher in the continent. For startups with capital, acquiring a smaller startup to integrate its talent often saves time and money instead of poaching it. This is known as an acqui-hire. For example, after raising an $83 million Series C round in July 2021, fintech startup Yoco acquired web3 software development agency Nona Digital in March 2022 to accelerate its roadmap by bringing a team of highly-specialised fintech product and technology professionals into the Yoco team. Are the concerns about early exits warranted? According to Keet van Zyl, co-founder and partner at venture capital firm Knife Capital, there is some legitimacy to the hypotheses. Van Zyl states that in some instances, there is a disconnection between the growth capital needed by startups and what is available, so it makes sense to sell instead of trying to embark on more fundraising. On average, according to van Zyl, South African startups exit after three to four rounds of funding. “Despite the increasing availability of deal-flow, there remains a significant follow-on financing gap for high-growth local startups with proven traction. Regarding South African entrepreneurs, we have a large mismatch between the size of the opportunities and the amount of capital required to access them. Compared to peer economies, the venture capital and growth equity investment market in SA is drastically under-serviced with available investment capital. Therefore sometimes when startups try to raise growth capital, they turn to strategic investors who seize the opportunity and make a full acquisition offer,” van Zyl tells TechCabal. However, according to van Zyl, this trend is not necessarily bad as it allows for an increased number of smaller exits – which then recycles capital into the ecosystem – instead of a long road to unicorn building and a lack of liquidity for investors. Clive Butkow, CEO of Johannesburg-based venture capital firm Kalon Ventures, shares the same sentiments with van Zyl regarding why startups exit too early. According to Butkow, if a startup is not clocking around 200% to 300% growth and an offer presents itself, it should be very well considered by the founding team and investors. “Late-stage venture capital has always been hard to come by in South Africa. For most founders, if
Read More- May 15 2023
Airtel Africa reports 5% decline in profit for Q1 2023
Despite a growth in revenue, Airtel Africa has reported a 5% drop in their profit for the first quarter of the year. Airtel’s CEO cites the challenging operating environment and worries about currency devaluation. According to a financial statement published on the Nigerian Exchange Group (NGX), Airtel Africa has reported a 5% decline in their profit for the first quarter of 2023. Airtel’s profit after tax (PAT) for the period under review dropped by 0.6% to $750m, compared to $755m during the same period in 2022. Conversely, the telco’s revenue grew by 11.5% to $5.25m in Q1 2023, compared to $4.71m in the same period in 2022. Commenting on the financial performance, Airtel Africa’s chief executive officer (CEO), Olusegun Ogunsanya, stated that the operating environment of the company has been challenging in many ways and expressed hopes of improvement over the numerous challenges. “The resilience of our underlying EBITDA margins has shown the effectiveness of our operating model, despite significant inflationary and foreign exchange pressures. Strong customer and ARPU growth over the year demonstrates that demand for our services remains very strong and gives us the confidence to continue investing to support our future growth potential,” Ogunsanya said. Ogunsanya also noted that the local currencies of its operating countries have been under pressure. He admitted that currency devaluation is beyond the telco’s control, but plans have been put in place to mitigate its impact by ensuring its revenues outpaces devaluation. Airtel Africa also revealed that its revenue growth for the quarter was impacted by clampdown on Nigerian subscribers who had not submitted their National Identification Number (NIN). The telco noted that as of March 2023, 6.4 million customers had submitted their NINs while 3.5 million customers had been fully verified and unbarred. According to the financial statement, the clampdown caused a revenue loss of $110m in the reviewed period, leading to a lag in revenue growth of almost 2.4% at Group level, and 6% in Nigeria. The telco’s financial statement also reported that its mobile services revenue grew by 16.2% across its regions. Mobile services revenue was up by 20.3% in Nigeria , in east Africa by 13.4% and in francophone Africa by 11.9%. “Mobile services revenue growth was driven by both voice and data services, voice revenue grew by 11.8% and data revenue by 23.8%. Mobile money revenue grew by 29.6%, driven by 32.6% growth in east Africa and 20.3% in francophone Africa,” the report read.
Read More- May 15 2023
Early days, but Safaricom’s Ethiopian venture could pay off
It has been over seven months since mobile network operator Safaricom officially launched shop in Ethiopia. There are clear signs the company has grown, having onboarded a little more than 3 million customers on its networks. Safaricom also has plans to launch mobile money services in the country, M-PESA. However, what other performance metrics has the mobile operator achieved so far? Safaricom has been interested in entering the Ethiopian market for some time, and the venture was officially announced in October 2022. The commercial launch of Safaricom Ethiopia was a major step toward expanding its market beyond Kenya, with an international consortium including Vodafone Group, Vodacom Group, Sumitomo Corporation, and British International Investment. This partnership cost $850 million. Seven months later, Safaricom has amassed millions of monthly active users with plans to expand in a market that is virgin territory due to state-owned Ethio Telecoms being the only competition. “During the year, we launched commercial operations for Safaricom Telecommunications Ethiopia Plc (STE) on October 6, 2022, post the phased city-by-city customer network pilots that commenced on August 29, 2022. We are optimistic about the transformative opportunities it presents for us. Our focus has been to accelerate the pace of the rollout, and we have now covered 22 large and medium-sized cities representing a population coverage of 22%. Plans are underway to roll out to the remaining cities, i.e., Assosa, Nekemte and Mekele,” Safaricom CEO Peter Ndegwa said in an Investor Briefing for 2022/2023 FY. Ethiopia by numbers Ethiopia is a big country with a population of around 120 million people, 78 percent of whom live in rural areas. These people are currently being served by two telcos, which is a low number considering other African nations have more than 5 carriers attending to an even smaller number of people. READ MORE: As Safaricom seeks to conquer Ethiopia, its profits are taking a hit Nonetheless, Safaricom Ethiopia continues to explore ways of levering this market. For instance, over 63 million people are over 18, while 13.5 million are between 14 and 18 years old. This is a notable market opportunity it can take advantage of, which can even be more lucrative. Kenya has 50 million people, according to the last census. With plans to launch M-PESA services in Q2, Safaricom Ethiopia is aware of the opportunity, as 35 percent of the Ethiopian population is financially included. Mobile penetration is, however, still low at 57 percent. Mobile penetration is the percentage of a population that owns or has access to a mobile device. The state has 10,000 large enterprises, as well as 240 000 SMEs. These organisations will likely tap into Safaricom Ethiopia’s products, including enterprise services such as the cloud, IoT, and more. There are plans to keep these projects rolling because the carrier has already built two data centres. The first facility cost $100 million. Telco-specific numbers According to an Investor briefing report by Safaricom that was revealed this week, Safaricom continued to fast-track its service offerings in Ethiopia. For instance, the operator has equipped over 5,000 acquisition locations with digital biometrics supported by electronic know-your-customer (e-KYC) back-office verification processes to streamline customer onboarding. The corporation boasts that the registration process takes less than 10 minutes per customer and has rolled out 4G/3G/2G sites ready for 5G. Safaricom Ethiopia has 114 exclusive branded distributor shops offering its services and serving customers in 5 different languages. It also serves 90% of customers within 2 minutes, and they have over 90% brand awareness in launched cities, with more than 30% brand consideration. Based on the population dynamics, Safaricom is also selling itself as a youthful brand with internet services. Its acquisition offer is focused on data, prepay network calling, SMS, mobile data, and home 4G Wi-Fi offerings. Airtime purchase is available through key bank digital channels, and it offers personalised offerings through its customer value management (CVM) system. The telco also offers a range of branded devices, including 2G and 4G feature phones, 4G smartphones, MiFi’s, and routers. Performance numbers According to 2022/2023 FY results, Safaricom Ethiopia has over 3 million customers. About 2.1 million use the carrier actively, with Safaricom aiming for 10 million by 2024. The customers generated KES 562.4 million (over $4 million) in revenue. 63% of the revenue was from mobile data, 24% from voice, and the rest from messaging and mobile incoming. However, the Ethiopia investment did make a dent in Safaricom Group’s overall financial performance. “Safaricom increased its Group Service Revenue by 5.2% to KES 295.7 billion while the Group net income excluding minority interest declined by 10.6% attributable to expected start-up costs and investment in rolling out operations in Ethiopia within the year,” said Safaricom (Kenya) in a statement. Nevertheless, customers reportedly use an average of 1.5GB of data and 55.4 minutes of voice. Safaricom has sold 106.9K mobile devices since launching, generating revenue from KES 676.6 million ($5 million). It has installed 1272 network sites, planning to double them by next year. M-PESA goes to Ethiopia As reported earlier, Safaricom is expanding M-PESA services to Ethiopia. It is Safaricom Kenya’s biggest earner, constituting over 39 percent of service revenue. For instance, M-PESA revenue grew 8.8% to KES 117.19 billion ($855 million), supported by 16.2% YoY growth in transactions per active user. One-month active M-PESA users jumped 5.2% to 32.11 million. The product serves consumers and businesses, with 76.4% of total registered M-PESA users active in the past month. While it was known that Ethiopian financial authorities would grant the telco the mobile money license, the development was not without hurdles because the state had initially reported it would not allow the product into the country. According to Safaricom, the licence costs $150 million. It is now prepping the technical viability of M-PESA. The service will go live before the end of June and will compete alongside Telebirr, which is offered by Ethio Telecoms. Telebirr is complemented with a super app, as does the M-PESA app. It remains to be seen how these services
Read More- May 15 2023
M-KOPA closes one of Africa’s biggest rounds at $250m with plans to go into e-mobility
M-KOPA closed a $75m drive back in February 2022. Today, the lender, which also offers other fintech-based services has supplemented its finances with a fund led by Standard Bank Group and has plans to venture into additional markets, among other new and interesting propositions. Digital financing firm M-KOPA has announced it has closed more than $250 million in debt and equity financing. The funds, according to the company, will be used to boost its fintech-based operation in new markets, particularly across Sub-Saharan Africa. M-KOPA, which closed a similar deal back in February 2022 valued at $75 million, has revealed that the round is one of the largest not just for the company, but also in the African tech sector. Standard Bank Group, M-KOPA’s strategic partner, arranged over $200m in sustainability-linked debt financing. Other lenders include IFC, Lion’s Head Global Partners, FMO, British International Investment, Mirova SunFunder, and Nithio. Sumitomo Corporation, an existing investor, contributed $36.5m in equity investment. Blue Haven Initiative, Lightrock, Broadscale Group, and Latitude also participated in the round. M-KOPA has found success in the Kenyan market following the launch of its solar-powered solutions for local households. At the beginning of its operations, the firm connected homes with solar systems, which included panels, batteries, LED lights, and charging stations for mobile devices. The selling point of the service was its ability to gainfully replace paraffin lamps with clean lighting and power sources for off-grid homes. All these services, which have since been improved over the years with more products such as access to TV services, are offered through M-KOPA’s pay-as-you-go model that allows users to make affordable instalments using mobile money (M-PESA). Customers can, for instance, pay as little as KES 100 (under $1) per day to keep their lights on. M-KOPA says it has sold over 3 million of these products through its sales model that has an agent network of over 10,000. This means it has sold a million more assets in more than one year. With more than $1 billion in cumulative credit provided to underbanked customers in Africa, M-KOPA has been a success story in East Africa. It expanded to Nigeria in 2021, with a more recent footprint in Ghana. According to the firm, it recorded an 85% compound annual growth rate in new customer acquisition from 2020 to 2022. Fueled by new funding M-KOPA plans to boost its smartphone financing offering, expand into additional markets, and prioritize sustainability. It is also committed to driving women’s financial inclusion and developing eco-friendly electric mobility solutions in the East Africa market. What they said Speaking on the round, Jesse Moore, M-KOPA CEO and Co-founder said, “At M-KOPA, we are working hard to create a positive environmental and social impact by systematically addressing the barriers to digital financial services. We have already unlocked $1bn in cumulative credit to over 3 million customers, and are proud of the thousands of local jobs we’ve created during tough economic times. As we continue to scale we remain committed to building a sustainable business and closing economic and digital gender gaps. We are delighted to have the support of new and existing investors who share our vision and mission.” “Supporting M-KOPA is in line with our purpose of driving sustainable growth for Africa and her people. Financial inclusion not only enables economic growth, it also accelerates it. M-KOPA has, in a short time, managed to positively impact so many lives by enabling access to power and smartphone connectivity, which are a vital part of enabling the economic empowerment of all.” added Nick Riley, Corporate Financing Solutions at Standard Bank
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- May 15 2023
Gricd raises $1.5 million, rebrands as Figorr
Gricd, a hardware startup that develops Internet of Things-powered solutions to support the last-mile delivery of perishable goods, has raised $1.5 million in seed funding as it overhauls its brand identity to Figorr. Founded in 2018, Gricd (now Figorr) had previously disclosed $512,800 in funding raised through grants, convertible notes, and angel funding. It also raised an undisclosed sum from Katapult VC. This latest round was raised by Atlantica Ventures with participation from VestedWorld, Jaza Rift Ventures, and Katapult VC. The company’s rebrand as Figorr, signals its new focus on software solutions. Oghenetega Iortim, the CEO of Figorr, told TechCabal that the rebrand represents the company’s new direction. “When I started the business, it was largely supposed to solve an agriculture problem, but now we’re doing so much beyond the agricultural space. We work with multiple sectors, including agriculture, healthcare, and logistics. We also recognize that our real superpower is data, which is why we went with Figorr (pronounced as figure).” According to Iortim, Figorr uses a hardware device, MOTE, which is “about the size of a pack of cards”, to transmit the location, humidity, and temperature of sensitive and perishable products in real-time to the cloud and customers. Customers can access this data either through a mobile app or an online dashboard. In instances where products are exposed to harsh conditions, Figorr will send an email or SMS notification immediately. During the COVID-19 vaccine rollout, Figorr’s solution helped Nigeria’s National Primary Health Care Development Agency (NPHCDA) track 40 million vaccine doses, according to Iortim. How Nigeria is using Gricd’s tech to save 4.2 million vaccines from wastage With this new funding, Figorr now plans to help its customers access insurance for their perishable products. Due to poor storage facilities and a lack of technology, Nigeria loses 50% of its food to poor storage. Across Africa, that number drops to 30%. These losses equate to total losses for the farmers and traders, which are then passed on to the end customer. According to the IMF, on average, Africans spend almost half of their income on food. “Insurance companies tend to shy away from underwriting these sorts of commodities [perishable commodities], which means that for my customers there’d be a 100% burn if they lose their goods. With our data, that’s gradually changing. We can show that a customer has done a great job in terms of the storage and transportation of certain commodities over a long period. The insurance companies are then a little bit more lenient and willing to underwrite those sorts of risks”, Iortim told TechCabal. Figorr’s MOTE “We’ve tracked over 200 million cold chain items, and the value of those items is well over $600 million. With the data that I have, if I were an insurance company, I would bet on about a third of those products. If you make 10% of that[ $20 million], it’s a lot of money to overlook, in my opinion”, he added. Figorr already works with some of the leading pharmaceutical manufacturers and food companies in Nigeria and across Africa to enable the effective transportation and storage of food and pharmaceuticals. It says it has successfully tracked more than 110 million perishable items and supported its customers to realise more than $200 million in savings. The startup makes money by charging its customers a monthly subscription fee to access data from one device. The subscription fee is charged per device per month, so if a customer has multiple devices, they pay for each one separately. The devices also do not consume more than 5MB of data per month and rely on 2G connectivity and SMS. They also use global roaming network providers, which means that they can latch on to the best available network. This is especially important for a continent with poor internet connectivity and penetration. Venture capital firms tend to shy away from hardware startups because of the long period they typically require to scale, the unpredictability of the business model, and the complicated process of sales and marketing. Iortim shared that Figorr also faced the same challenges; before this seed round, the company had raised $512,000, which mostly came from grants. Iortim told TechCabal that building a relationship with investors and the amount of data Figorr has gathered since 2017 helped overcome this hurdle. “For the investors that we currently have on board, we had to build a relationship with them and show them the numbers. Plus, we have gotten to a point where we have deployed a few thousand devices in about seven countries, so there’s a lot of value we can drive based on the data,” he said. Figorr will also use the new funding to expand to East Africa. Echoing Iortim, Aniko Szigetvari, founding partner at Atlantica Ventures, said, “Tega and the Figorr team have built a powerful suite of products and services to support the cold chain industry and ensure the quality of perishable goods and pharmaceutical products in Nigeria and across the continent. We are excited to support the growth and regional expansion of the company”.
Read More- May 15 2023
What is the next frontier in the evolution of tech media in Africa?
When TechCabal launched ten years ago, mostly covering startup activity in Yaba, Lagos, it was more of a passion blog than the pan-African publication it is today. According to Tomiwa Aladekomo, CEO of Big Cabal Media, publisher of TechCabal, not only has the publication grown in reach, but also in the maturity with regards to the content that it covers. “From Yaba, TechCabal eventually started covering Nigeria and then the rest of Africa. Additionally, the coverage started to go beyond just startups and into a broader tech picture that includes everything from the global tech industry to banks, telcos, and regulations,” said Aladekomo. As TechCabal grew, so did the African tech ecosystem, which had started to become more appealing to international venture capital firms, circa mid to late 2010s. As the capital flowed in and interest surged, the industry saw the upspring of tech media publications who saw the value of covering the African tech ecosystem. Some of these publications include Disrupt Africa (launched 2016), Techpoint (launched 2015), Weetracker (launched 2018), Ventureburn (launched 2012) and Bendada.com, launched in 2018 by Benjamin Dada. Dada, who started his dabble in journalism through blogging and freelancing with another Nigerian tech publication for the better part of two years, started Bendada.com to fill what he saw as gaps in tech coverage with incumbent publications. “After that time blogging as a freelance journalist, I figured that the only way I could control the quality, pace, and a whole bunch of things about my tech coverage was through my own publication. I started out as the sole writer and then people started reaching out to write for the platform, and because I already had some experience with running a Medium publication, I allowed it.. And that’s how Bendada.com became what it is today,” Dada tells TechCabal in an interview. In order to motivate a business case for the publication, in an ecosystem where competition was already strongly competitive, Dada had to think of an alternative model which went beyond just news publication. “When I started out on my own thing, I had to figure out how to make revenue. It was a toss up between content creation and just traditional news publication. In the end, I chose the route of content creator, which is people would pay me for the time and expertise I put into putting together a story about them or their business, because whenever I put out a story like that, it would help them acquire customers or promote their offering to the audience. We started with mostly interns and freelancers but we have since grown to have full time staff which is great progress,” added Dada. Running a digital media brand in the midst of a digital media downturn At the start of the 2010s, digital media boomed as venture capitalists started to see the value in backing publications which told the stories of technology startups and their mostly eccentric founders. However, the past few months have seen the industry, especially in the US, going through a rough patch. Layoffs and shutdowns have been the order of the day as executives try to find profitability models to sustain their businesses beyond journalism. Fortunately, Africa’s digital publications have not experienced these challenges, and there is much optimism that they won’t. “I think African digital publications are not going to fall to the same fate as the US ones because most of them were not built off of VC money. This means they are not under pressure to achieve difficult growth rates and other pressures which come with the backing of VCs,” Dada says. But even for the few venture-backed publications on the continent, he believes the peculiarity and sheer amount of opportunity that is present in tech media in Africa will allow them to weather the digital media crisis storm. Some of the tech media brands that have raised venture capital in Africa include Big Cabal Media, publisher of TechCabal, and Stears Insights. “The media brands who have raised capital obviously have deeper pockets, connections, networks, and are able to explore numerous revenue channels which helps them diversify their stream beyond just traditional media revenue baskets. I believe there are a lot of low-hanging fruits which can be reaped with the backing of VC capital. I think the only challenge now will be for maybe newer entrants into the media space, who need to figure out how to establish themselves in a competitive market,” says Dada. Newsletters, the new frontier? As the news publication space has grown to near saturation over the last few years, a new frontier in the African tech media space has opened up: newsletters. Some prominent newsletters in the industry include Communique, Notadeepdive, TechSafari and Afridigest. Newsletters have proven to be a hit with readers, with many growing their readership to significant heights. They particularly enjoy the advantage of not being shackled to a corporate setup, which has seen some tech news publications constantly accused of favouritism and bias in their reporting. When Caleb Maru, who stated that he has no journalism background, started TechSafari, he did not anticipate that it would blow up to the proportions that it has today. “The whole media thing came almost as an accident. I was just trying to understand the tech ecosystem in Africa and I wanted to force myself to learn so I figured the best way to do that was to actually just write about what I was saying and to share that publicly, and force myself to put stuff out there and hopefully get people responding and sort of crowdsourcing the learning,” Maru told TechCabal. Maru, who has lived in Australia and had his first interaction with the African tech ecosystem through his startup Entry Level, which helped people get tech jobs in Africa, adds that he has also been investing in early stage startups for the past year and a half. After writing a few stories in his newsletter, he realised the knowledge gap that existed between
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- May 15 2023
Next wave: The non–digital infrastructure Africa’s digital economy needs
<!– In partnership with –> Cet article est aussi disponible en français Roads, power, rail and agriculture input do not sound like components of digital innovation, but as I have sought to establish previously on Next Wave, a digital economy is unreservedly physical. This is the last essay in my four-part review series based on selected episodes from Season 1 of the Next Wave show. This week, I am listening to episode 8, a conversation between Tomiwa Aladekomo, Big Cabal Media’s chief executive, Andrew Mori, CEO of Deimos, a software company, and Clément Martineau, co-founder and operations director at IXAfrica Data Centre. The topic is centred around digital infrastructure (watch here). But for this essay, we’ll look away from digital infrastructure for a bit. All digital processes seek to produce a physical change in how people live by influencing inanimate objects and human behaviour. So, until a piece of technology produces an effect on something material (other than the atoms that make up technology itself) the chain is incomplete. Right? As a journalist covering the business of technology in Africa, I hear about (and use) digital innovation a lot, perhaps too much. Even though I understand the appeal and potential of digital technologies, I cannot help feeling occasionally like it is a copout for our failures at getting the basics of a modern economy right. It is not rocket that the non-digital aspects of living and working in Africa are more important than we often give them credit for. At one level, especially for those of us for whom Africa has been home since we were born, it’s easy to not even see these non–digital spaces (or the effect of the lack thereof). So we attempt to replace these gaps with street smarts (which are important, don’t get me wrong). But there is only so much street smart that can get your fresh fish through markets, or your beautiful software into corporate systems. Very quickly we find that innovation, even the digital version, needs feet to stand on. To get over the artificial limits imposed by having no feet, or two left feet (having too much of one good thing), we will need… Roads, power, rail and agriculture input Roads (especially), power, and things like fertiliser subsidies have been held over the heads of the voting populations of Africa by politicians. All three have also received huge financing commitments and fat allocations from government revenue, development partners, and other lenders. Despite this, the African Development Bank suggests that the continent’s infrastructure needs amount to $130–170 billion a year, with a financing gap in the range $68–$108 billion. Knowing African governments, I believe it is safe to say that these figures could have been several times lesser, but that in fact, they may end up several times more expensive than estimated. A long way to go to meet adequate infrastructure needs. | Chart by: Tomisin Bamidele – TechCabal Insights. There’s really nothing more to add to the well-established conversation that we cannot “startup” or digitise our way out of the rut other than to say that there is an unyielding limit beyond which the infrastructure needs of the continent cannot be leapfrogged. Take the growth of African cities as one example. Lagos, Africa’s most populated city, consistently ranks in the low rungs of liveability indexes. In 2021, it was ranked last infrastructure-wise in a list produced by The Economist’s intelligence unit (EIU). But the city won’t stop growing in population. By 2035, the UN projects it will be home to close to 25 million people—the largest population centre in an emerging megapolis that could house as many as 51 million people on the West African coast. How will Lagos keep up? How will any other city in Africa (the continent may double its population by mid-century) keep up? Only a little over 70 years ago, Africa accounted for only 10% of the global population, now the continent is hurtling towards 25% (mid-century) or as much as 40% (by the 2100s) of people on earth. Smart cities built around technology alone are an inadequate solution for managing this growth. Partner Message Join hundreds of African tech entrepreneurs, investors, media and ecosystem stakeholders at Africa’s biggest tech gathering in Morocco! Register now There’s no order to this list (road, power, rail and agricultural input). And the list is frankly not exhaustive. But, as a general guide, it provides a sufficient overview of the very material aspects of our lives that need to be transformed in an equally material way if our digital economy experiment will not falter and return to stagnation. But the seemingly apparent failure of investment in infrastructure translating into economic development has led experts like David Ndii, chairman of Kenya’s presidential economic advisory council and founder of Kenya’s first economic think-tank, the Institute of Economic Affairs, to call for the model to be revisited in favour of an agriculture-led model. “African policymakers should embrace a more pragmatic economic agenda that recognises and capitalises on Africa’s comparative edge: a greater abundance of land rather than low-cost labour,” the professor argued. But Ndii’s argument would carry better weight if we could demonstrate that agricultural efficiency only ended at improved productivity and better yields. Improved productivity for smallholder farmers may not be economically sound if they can only sell locally because they are limited in market access. Similarly agricultural improvements at a national level will be limited in impact if excess yield has little to no access to markets because roads are poor and seaports are inefficient. There are no easy answers. In my book, agricultural input includes offtake capacity, quality management, logistics, processing and retail value. All of this requires different forms of infrastructure to be efficient and cost-effective. Sponsored: Meet Billpoint, the revolutionary bill payment solution In short, agricultural input is, in fact, infrastructure itself. Meeting the infrastructure needs of Africa is not a contest between investing in agriculture versus roads or ports. And a digital economy will be a severely
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- May 15 2023
TechCabal Daily – Nigerian telecoms may pause USSD
Lire en français Read this email in French. 15 MAY, 2023 IN PARTNERSHIP WITH Good morning Twitter has a new CEO. Over the weekend, ex-Chief Twit, Elon Musk, announced Linda Yaccarino, former chairman of advertising at NBC Media, as the new CEO of the platform. Yaccarino’s profile, however, says she’s been CEO since March 2023. Starboy Musk will now take on the chief technology officer (CTO) position at Twitter where he will lead the ruination growth of Twitter’s features and product offerings. In today’s edition Nigerian telecoms may disconnect USSD SA to pay citizens for saving electricity Wasoko expands to Zambia TC Insights: Mitigating Africa’s cyber risks The World Wide Web3 Report: The State of Tech in Africa Job openings NIGERIAN TELECOMS TO DISCONNECT USSD OVER $260 MILLION DEBT Nigerians may find some of their banks’ USSD services unavailable in the near future. Last week, Nigerian telecoms announced that they had received the approval of the Nigerian Communications Commission (NCC) to disconnect several Deposit Money Banks (DMBs). Per the telecoms, the disconnection order comes due to the banks’ failure to pay over ₦120 billion ($260 million) in USSD debts. Side bar: Every time you perform a USSD transaction on your mobile phone, telecoms charge a ₦6.9 fee to your bank. The money is removed from your account at the end of the month, and banks then remit that money to telecoms. Or at least they should. Per the Association of Licensed Telecommunications Operators of Nigeria (ALTON), banks have failed to remit payments for USSD transactions for an undisclosed period. History repeats itself: This is the third time in five years that telecoms are threatening to shut down USSD services for the same reasons. In 2019, ALTON, for the first time, threatened to shut down the service over a disagreement on who should bear the cost of the transaction fees—customers, banks or telecoms. Again, in June 2021, two months after the Central Bank of Nigeria (CBN) approved that users would bear the costs for USSD transactions, ALTON threatened to shut down the service after banks failed to remit ₦47 billion ($102 million) for the USSD service. Zoom out: For past occurrences, resolutions were passed before disconnections happened, but that might not apply to this situation. At this stage, telecoms have stated that they have received no cooperation from banks to resolve the issue. 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 TO PAY CITIZENS FOR SAVING ELECTRICITY South Africa’s load shedding is reaching dire levels with experts claiming the country experienced level 8 load shedding—over 12 hours of blackouts per day—last week. Eskom, South Africa’s power generating company, has also proposed plans for up to level 16 load shedding, which could mean up to 23 hours of blackouts. There’s hope and reward: In a media briefing on Friday, however, electricity minister Kgosientsho Ramokgopa announced that Eskom would be implementing an incentive programme—the Distribution Demand Management Programme—that will reward South Africans who reduce their power consumption. Per the minister, for every megawatt an individual or business saves—through reduced demand—they will get R3 million ($154,000). Side bar: A megawatt-hour of power could power two refrigerators non-stop for a year, toast 89,000 slices of bread or drive an electric vehicle for 3,600 miles—the distance from Cape Town, South Africa to Cairo, Egypt. Per the minister, the incentive programme will help the country re-distribute excess power during peak demand periods. The reward isn’t automatic, though. Eskom will independently verify and measure all applications to prevent abuse of the programme. Big picture: This is the second electricity-related programme that’s set to reward South Africans. In January, the National Energy Regulator of South Africa (NERSA) approved a new scheme that allows residents of Cape Town to feed excess electrical power from their own generators into their power system, in exchange for cash. WASOKO EXPANDS TO ZAMBIA Wasoko, a pan-African B2B e-commerce company with a presence in East and West Africa, has expanded to Zambia. The company will launch its operations in Lusaka, the capital of Zambia, and says it will invest $1 million in its first year to “support local Zambian businesses and communities to get more essential goods for less through the power of e-commerce”. Wasoko, formerly Sokowatch, uses its platform to allow informal retailers to order products via SMS or its mobile app for free, same-day delivery, to their stores. The platform also provides retailers with credit offerings by leveraging purchasing history. A new model: Wasoko will also pivot to a hub and spoke logistics network (a model that uses a large distribution centre to dispense inventory to multiple fulfilment centres) and will use Lusaka as the central hub for Zambia. The company says it is pivoting to this model to drive stronger operational efficiency and significantly boost its capacity for faster regional expansions. In addition to its latest expansion, Wasoko will double its service radius across all of its existing locations in Kenya, Tanzania, Rwanda, and Uganda, where it says it has amassed a network of over 200,000 informal retailers and delivered more than 5 million orders to date. JOIN UNICAF’S CYBERSECURITY TRAINING Experience the best in cybersecurity learning at our virtual event. Register here and get a scholarship of up to 75% to pursue an internationally recognised Bachelor’s, Master’s or Doctoral degree from one of Unicaf’s UK partner universities. This is partner content. TC INSIGHTS: MITIGATING AFRICA’S CYBER RISKS Africa’s growing digital economy is dependent on digital tools like bank apps, e-commerce apps, and streaming platforms. However, this shift from physical to virtual comes with major risks, including a rise in cybercrime. In 2022, internet users in Africa grew by 8.4%, reaching 570 million, yet cyber attacks have also increased. According to the African Union, cybercrime has been on the rise in Africa, particularly in financial fraud and identity theft.
Read More- May 13 2023
Nigeria’s new blockchain policy leaves crypto in the cold
With its latest national blockchain policy, Nigeria seems to be going big on blockchain technology. But the West African nation does not seem to be welcoming crypto anytime soon—blockchain policy or not. On May 3rd, the Federal Ministry of Communications and Digital Economy (FMCDE) announced the approval of a national blockchain policy. Essentially, this means that the government is throwing its weight behind an emerging technology which it hopes can “facilitate the development of the Nigerian digital economy and enable citizens to have more confidence in digital platforms.” The move was lauded as game-changing and reflective of the government’s pro-technology position. However, several industry watchers are raising questions concerning implementation and asking a critical question: why is crypto still banned by a pro-blockchain government? Blockchain is an advanced technology that uses database mechanisms to record transactions in a decentralised public ledger. Advocates of blockchain describe it as a next-generation technology that can be applied to optimise every facet of human life, ranging from financial services and healthcare to supply chain and identity management. According to research firm Gartner, the business value added by blockchain will increase to over $3 trillion by 2030—a pie the Nigerian government is now hoping to plug the economy into. Crypto is still not welcome For the Nigerian government, approving a national blockchain policy does not amount to accepting cryptocurrency (which remains the most prominent use case of the blockchain). In July 2021, the CBN banned banks from facilitating crypto transactions and asked that banks “close accounts of persons or entities involved in cryptocurrency transactions.” The bank cited terrorism financing and money laundering as its key reasons for the action, maintaining that it was protecting Nigerians from the risks of crypto adoption. Meanwhile, the national blockchain policy draft reveals that the Nigerian government is still crypto-averse as it seeks to develop a regulatory framework for other use cases of the blockchain. “Blockchain technology undoubtedly holds great potential for the development of Nigeria’s digital economy. A lot of the focus has been on cryptocurrencies, especially bitcoin. However there is a lot more that blockchain can do for the economy and this strategy document aims to redirect the focus to other areas,” the draft reads in part. Christian Duffus, founder and CEO of blockchain startup Fonbnk, explained to TechCabal that the blockchain policy may be a reactionary measure by the government to send out a clear signal that it is not broadly against blockchain technologies, especially after the publicity of its ban on crypto. “The blockchain policy is an important move by the government to accommodate blockchain innovation in the country. After the ban on crypto, they can’t afford to be seen as a government that associates illegality with blockchain operators. Interestingly, this policy also provides a framework for eNaira, the blockchain-powered digital currency released by the CBN,” he said. Oluwatobiloba Ajayi, blockchain expert and founder of B2B crypto startup Ivory Pay, remains unruffled by the exclusion of crypto from the national blockchain policy. “Crypto significantly takes control and oversight of finances off the government’s watch. And they don’t want that, so I’m not sure this policy will help crypto,” he said on a call with TechCabal. How does the blockchain policy help? According to the FMCDE, the overarching goal of the policy is to create a blockchain-powered economy that supports secure transactions, data sharing, and value exchange between people, businesses, and government. The policy practically serves as a government-led approach to the adoption of blockchain technology in Nigeria. While the next steps in the implementation process remain unclear, the fact remains that through this policy, the Nigerian government is announcing itself as a collaborator for blockchain-related innovation in the country. Nnamdi Uba, the CEO of HouseAfrica, a startup that leverages blockchain to solve land title ownership in Africa, spoke to TechCabal effusively about the national blockchain policy. “I am one of the people that have been working on that policy project for the past three years,” he revealed. “We want to unlock the power of blockchain in our national economy through a government-led approach. The goal is to entrench the use of blockchain in government processes, then roll it out to the masses.” “However, we must realise that blockchain does not start and end with crypto. My real estate company, for example, is blockchain-powered, yet we don’t use crypto. Blockchain can help in many ways, including the tokenisation of properties, supply chain tracking, and authentication of documents. We will also see more interesting use cases come up in the future. As you know, the incoming administration has also promised to focus on blockchain technology,” he shared. Some initiatives outlined in the policy’s strategy framework include the promotion of blockchain business incentives programmes and the establishment of a national blockchain sandbox for proof of concepts and pilot implementation. These ambitions by the government convey a friendly regulatory framework for blockchain startups in the country. “Historically, we have seen government policies work against tech startups—as the case was in Lagos’ ban on ride-hailing. This is one time we are seeing the government roll out a policy that incentivises builders and investors in this niche, It’s a big deal, but for it to work, the government must be at the forefront. They must drive its implementation and integrate the technology into their own systems,” Ajayi said.
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