👨🏿🚀TechCabal Daily – Disha takes a break
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning The pressure is getting worser for everyday Nigerian citizens. The country’s inflation rate, which hit a 28-year high at 29.90%, is making it difficult for people to afford essentials even when there’s a buy-now-pay-later option. According to BNPL startups we spoke to, it’s a double-edged sword. On one hand, these startups are getting new customers with less disposable income who now want to use BNPL, and on the other, there are now customers who can’t afford to pay off their debts. Here’s how inflation is affecting BNPL startups in Nigeria. In today’s edition Lagos to use tech to tackle kidnappers Flutterwave’s Disha takes a break Al Nasr to roll out locally-produced EV cars in Egypt How fintechs can adapt to FX reforms How many websites are hacked daily? The World Wide Web3 Opportunities Crime Lagos to use tech to track kidnappers Last month, the former Nigerian minister for comms, innovation and digital economy Isa Pantami made a statement, in a now-deleted X post, that surprised many Nigerians: that Nigerian security officials were refusing to use SIM cards to apprehend the increasing number of kidnappers. Side bar: The country, in 2019, approved $433 million to bankroll a five-year project that would provide everyone with unique 11-digit identification numbers that would be registered to every SIM card. So far, about 102.39 million NINs have been registered. While Nigeria saw a slight decline in kidnapping reports in 2023, the ex-minister’s statement still made a splash as it concerned the kidnapping of five sisters—one of whom was murdered—in the nation’s capital territory of Abuja. The news today: Now, security officials in the country’s tech capital of Lagos have announced the reactivation of tracking devices to apprehend kidnappers. The Lagos State Commissioner of Police said, on Friday, that it’s working with several other agencies to apprehend culprits in hot zones. Re-activation? Per the officials, the tech used to track SIM cards and match the national identity numbers registered to the cards has been deactivated since 2021. Per Punch, sources at the Nigerian Police Force say that the police don’t have adequate tracking devices, and sometimes have to depend on tracking systems by the domestic intelligence agency DSS which increased response time. The sources also revealed that the payment for the tracking service at the NPF was suspended at the same time. With the service now back on track in Lagos, it’s unclear if other states across the federation, especially in hotspots like Kaduna, FCT, and Niger will also get the same support. Access payments with Moniepoint You don’t have to take our word for it. Give it a shot like he did Click here to experience fast and reliable personal banking with Moniepoint. Startups Flutterwave’s Disha takes a break Flutterwave’s 2021 acquisition of Disha was a trendsetter. It was one of the very first publicly-known instances of big African startups acquiring smaller ones. In the same year it became a unicorn, the fintech swooped in to save the creative design agency with 20,000 users which, at the time, was at risk of shutting down. Now, Disha is going away again: Last week, Disha announced the product will be paused indefinitely from March 31, 2024. Its 100,000 creators have until then to migrate their content and profiles to other platforms. According to the team, the pause will help the Disha team focus on its product and provide better tools for creators. While the move seems sudden, a look at Disha’s pages across Instagram, Twitter and LinkedIn shows reduced engagement over the past two years. Disha helped creatives create one-page websites and the Flutterwave acquisition added a payment option for the platform. The platform has grown its users 5x since its acquisition, but it’s likely that this growth isn’t matching Flutterwave’s vision for the platform. Flutterwave’s CEO Olugbenga Agboola had said, at the time, that he considered Disha the creator version of Flutterwave Store which now serves over 900,000 businesses across 154 countries. Will Disha come back? Disha isn’t the first Flutterwave-owned product that has been “halted temporarily”. Early in 2022, Flutterwave paused its Barter by Flutterwave, its virtual dollar card service, due to problems its partner company, Union54, faced with chargeback fraud. While other companies who also paused their services have since revived their cards, Flutterwave is still yet to bring Barter back. Last year, Agboola gave a statement that now mirrors Disha’s: that Flutterwave is working to upgrade Barter and make it even more efficient. The company is yet to give any concrete details on the return of Barter. Secure payment gateway for your business Fincra’s payment gateway enables you to easily collect Naira payments as a business; you can collect payments in minutes through bank transfers, cards, virtual accounts and mobile money. Create a free account and start collecting NGN payments with Fincra. Mobility Al Nasr to roll out locally-produced EVs in Egypt We’ve seen a bit of fair interest in indigenous EV solutions on the continent. Just last week, Kenya-based EV company Roam announced a $24 million raise to scale its business across the country. Roam’s competitor, BasiGo, also recently expanded its operations to Rwanda where it launched electric buses for public transit. In Egypt, Al Nasr is working to do the same. Last week, the state-owned company revealed that it’s working with an undisclosed Chinese company to roll out locally-produced EVs in Egypt by 2025. In 2022, the company announced plans to set up Egypt’s first EV distributorship in partnership with the National Automotive Company (NATCO). At the time, the plan was to roll out locally produced EVs in the country by 2023, but things fell apart after Al Nasr struggled to settle on a foreign manufacturing company to handle the assembly. President of the company Khaled Shedid said on Saturday that the company had finalised deals with a Chinese manufacturer that will see five different types of EVs launch in Egypt next year. Egypt will
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Inflation is a two-sided coin for BNPL startups in Nigeria
Since its launch in 2020, CDCare, a Nigerian e-commerce startup, has sold more blenders than any other products. The startup, which offers Buy-Now-Pay-Later (BNPL) options, allows users to spread payments and has gained popularity in the Nigerian market, especially for young people who want to buy electronic gadgets, home appliances and furniture. CDCare is one of the major BNPL providers in Nigeria, alongside CredPal, Zilla, and Carbon Zero. They operate in a market where retail credit is in its very early stages, In 2023, only about 6-10.5% of Nigerians formally accessed a loan, with the rest having to borrow from family and friends. According to Tobi Odukoya, CDCare’s CEO and co-founder, the effects of inflation on their business have been particularly interesting. “We have seen a lot of new customers who now have to spread payment as they cannot afford one-time payment for their wants,” he shared with TechCabal. “There’s now a new set of Nigerians who now have less disposable income and can now only afford to pay in instalments what they used to be able to pay for in full. At the same time, however, the inflation has cancelled out a whole demographic of former middle-class Nigerians who now cannot afford to pay for any wants at all. This surprising trend highlights the evolving nature of lending financial products in a challenging economic climate. This is the same for CredPal, another player in the Nigerian BNPL space which launched in 2018. In a response shared with TechCabal, Fehintolu OlaOgun, CredPal’s CEO, shared that the inflation has driven growth for the company. “It has affected the purchasing power of people, but it has also been a driver for growth as people are more interested in spreading payments as opposed to paying in full,” he wrote. He however shared that the startup is incredibly critical of this high demand and has employed even more stringent measures to confirm the eligibility of customers. Prior to this, KYC requirements for CredPal were work details like office address, salary range, salary date, and other personal information. Now, users are mandated to provide functional work IDs before accessing credit. Unlike CDCare, CredPal has a strict credit limit for users and only allows them to purchase items within a stipulated amount based on their credit history or ratings. The chaotic credit market Nigeria is not the greatest market for credit and BNPLs are not the only players suffering from this, as neobanks and other lending platforms are staggering under the weight of non-performing loans. Carbon and FairMoney, both players in the Nigerian lending space have both seen their profits take a dip as a result of impaired loans. While a part of this can be attributed to the moral standing of individuals, a larger part is perhaps the economic situation in the country. Prices go up nearly every day, and for the average Nigerian, this destabilizes their finances and leaves them with even less to repay loans. *Eno, a 24-year-old graphic designer in Abuja, defaulted on the repayment for a laptop she purchased from CDCare in 2023. A six-month repayment plan turned into seven as the amount she allocated to her essentials became insufficient due to the increase in transport fares, forcing her to eat into the funds for repayment. “I’m probably banned from the app now,” she shared with a chuckle. “But I really did everything in my power to repay, including trying to borrow from lending apps and asking for a salary advance.” It took her three weeks past the due date to complete her payment, and in that period, she received a barrage of calls and messages from the platform. “I reached out to them via every single platform I could think of. WhatsApp, texts, emails, calls, etc to request for an extension but nothing worked,” she shared. CDCare lets users spread payments for as long as one year; delivering the items halfway through the payment cycle. For their vehicle instalment payments, users get up to three years to complete payments. This extended payment period is strategic according to Odukoya, who shared that the repayment rate on their platform is quite high – as high as 90%, he maintained. Last week, TechCabal reported that Zilla, another BNPL startup, pulled the plug on its BNPL offering. This came after it faced extended low patronage and complaints from buyers who favoured other platforms like CredPal and CDCare for their longer repayment periods. They allowed a maximum of four months for users to complete payment on items. Before BNPL, Odukoya affirms that they’re first an e-commerce company, and that shapes how they’ve structured their platform. Unlike players like CredPala and Zilla which provide a list of vendors in various categories on their app for users to make their pick, they (CDCare) bypass the need for merchants by dealing directly with the biggest distributors. This does two things: help them guarantee the quality of products and ensure lower prices – both of which have been instrumental in helping them stay ahead in the Nigerian BNPL superiority race. Optimism has been unable to stop the naira’s fall In January, the International Monetary Fund (IMF) predicted that the inflation rate is expected to drop to 23% this year 2024, and consequently 15.5% by 2025, due to the foreign exchange reforms introduced by the central bank. These reforms include monetary tightening which the CBN governor, Yemi Cardoso, disclosed in December 2023. In spite of this, the naira has tumbled aggressively in 2024, depreciating 31% to reach 1,400 on January 30. Zuleihat Yakwari, who runs a home appliances store in the country’s capital, shared with TechCabal that business is incredibly slow. Most of her customers now prefer to patronize declutter pages on social media where they buy used appliances from people relocating to other countries. The rest, like those who use BNPL platforms, prefer to pay in bits. Sometimes, she has to sell some of her products on declutter pages for reduced prices, because they just need to go. “People
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How to apply for SRD SASSA Grant in 2024 and get it
The South African Social Security Agency (SASSA) has continued to provide relief to those in need through the Special Relief of Distress (SRD) grant. If you find yourself in need of financial assistance, here’s a comprehensive guide on how to apply for the SRD SASSA 2024 grant. Step 1: Choose an application channel to apply for the SRD SASSA 2024 You can submit your application for the SRD SASSA 2024 grant through various channels: Apply for the SRD SASSA 2024 via WhatsApp Send a WhatsApp message to 082 046 8553 You’ll provide personal details as prompted by the chat Then you’ll receive a Reference number, an OTP number and a website link to click on Afterwards, click on the link, insert the OTP number, and click verify Then provide your surname and ID number Then confirm details as per details provided on the chat Continue to Step 2: AGREE TO TERMS Apply for the SRD SASSA 2024 via the website Open your Chrome, Safari or any other internet browser you have Got to https://srd.sassa.gov.za Enter your capture ID number and mobile then click the send SMS button You will receive a 6-digit OTPnumber Insert the OTP number and click verify pin Continue to Step 2: AGREE TO TERMS AND CONDITIONS Apply for the SRD SASSA 2024 via the SASSA Chatbot Use your Chrome or Safari Internet browser Visit www.sassa.gov.za On the website, click on the SRD R350 Grant assistance chatbox Then provide your ID and mobile number Through the chat, choose ‘I want to apply for SRD R350 grant’ The chatbot will provide a link to the SRD Website You’ll then follow the SRD Website Steps Continue to Step 2: AGREE TO TERMS AND CONDITIONS Ensure to select the channel that suits you best to apply for SRD SASSA 2024. Step 2: Agree to Terms and Conditions Read and agree to the Declaration and Consent Document. Understand the contents of the You and Your Special COVID-19 SRD Grant document. Step 3: Provide personal details Provide necessary personal information such as ID number, name, surname, address, and gender when you apply for SRD SASSA 2024. Step 4: Submit Banking Details/Choose Payment Option For banking details submission, here’s what to know about the categories outlined for the process: New Applicant with Personal Bank Account Choose Bank Name Provide Account number Provide Branch Name Provide Account Type Agree to Terms and Conditions Submit Banking Details New Applicant without Personal Bank Account Choose Payment option- Cash Send Agree to Terms and Conditions Submit Banking Details Existing Client Confirm Existing Personal Banking Details Agree to Terms and Conditions Click Submit SASSA clients with cash send option who wish to add bank details Choose Bank Name Provide Account number Provide Branch Name Provide Account Type Agree to Terms and Conditions Submit Banking Details Step 5: Receive an SMS on your mobile number After successfully updating your banking details, expect to receive an SMS confirming the activation of your SRD R350 Grant application. Step 6: SASSA verification and validation process Your provided details will undergo verification and validation processes against various databases when you apply for SRD SASSA 2024. Applications will be either approved or declined with reasons provided. Step 7: Viewing SRD SASSA application status you apply for it Check your application status through the SRD website, WhatsApp, or by contacting the toll-free call centre when you apply for SRD SASSA 2024. Step 8: Reconsideration If your application is declined, you have the right to request reconsideration within 30 days. Apply for reconsideration through the SRD website or contact the SASSA Toll-Free Call Centre for SRD SASSA 2024. Step 9: SRD grant cancellation Should you need to cancel your SRD grant application, visit the SRD website, provide the necessary details, and follow the prompts to cancel SRD SASSA 2024. Step 10: SRD grant reinstatement If you wish to reinstate a cancelled grant application, visit the SRD website, provide the required details, and agree to terms and conditions before reinstating for SRD SASSA 2024. General Information on how to apply for the SRD SASSA 2024 For any further assistance or inquiries: Contact the SASSA Toll-Free Call Centre on 0800 60 10 11. Send an email to Grantsenquiries@sassa.gov.za. Visit the SASSA website (https://www.sassa.gov.za) Applying for the SRD SASSA 2024 grant is an easy process aimed at providing much-needed support during these challenging times. Make sure to follow each step carefully to ensure a smooth application experience.
Read MoreHerbert Wigwe in tech: From incubating Flutterwave to backing SystemSpecs, BVN
Since the death of Herbert Wigwe, the founding Group CEO of Access Holding Plc on 9 February 2024, several tech founders and executives have been pouring encomiums on his impact on their lives and businesses. “I called him the Oracle of Isiokpo. My oracle. Because if Warren Buffet was the Oracle of Omaha; the best investor in America, then we needed our oracle in Africa. And his name was Herbert Wigwe. I called him my blueprint because he provided a road map of hard work, discipline and hustle that I follow/understand, like the blueprint of a building,” Ola Brown, founder of HealthCap, a venture capital firm that invests in fintech and health tech companies, wrote in a riveting tribute. Herbert Wigwe was many things to many people, but for many founders and executives in Nigeria’s tech industry, he was a patron, a mentor and a sponsor. The history of companies like Flutterwave, Africa’s most valuable fintech, Unified Payments, and SystemSpecs will not be complete without his pivotal role in their growth. Taking a big chance on Flutterwave For Gbenga ‘GB’ Agboola and his co-founder Iyinoluwa Aboyeji, Wigwe was why Flutterwave, Africa’s most valuable fintech company, exists today. Aboyeji writes in a post that Wigwe took a big chance on the fintech unicorn even though he never owned a single share of the company. “He came out with us to San Francisco and pitched the biggest technology companies in the world alongside us. He was the sure reference with Silicon Valley investors and gave us business that helped us grow to become Africa’s most valuable startup,” wrote Aboyeji. Agboola, on the other hand, is an alumnus of Access Bank. He worked as head of Digital Factory and Innovation, and head of innovation & product management, digital banking at the bank from 2014 to 2018 before moving to take over the position of CEO at Flutterwave. According to sources, it was while at Access Bank the idea for Flutterwave came and took off. “My journey with Herbert began in a remarkable chapter of my life, right after my startup was acquired. I was a young engineer/entrepreneur, barely 30, stepping into a senior role at one of the largest banks in Africa, Access Bank. It was Herbert who believed in my potential to spearhead digital transformation, a task that seemed daunting but was made achievable through his guidance and faith in me,” Agboola wrote via X . Pushing Remita to mainstream Remita, the payment platform built by SystemSpecs, may not have the global reach of Flutterwave,it is however the payment solutions company most preferred by the public sector in Nigeria. It is currently used by 22 states of the federation and boasts 3.8 million users nationwide. In 2018 SystemSpecs found it difficult to get the approval of the Central Bank of Nigeria (CBN) for one of its solutions, the Remita Data Referencing Services, to support the provision of payday loans for federal government workers and millions of salary earners in the country. For approval to be granted, Remita needed the backing of a commercial bank which was not easy at the time because collaboration between fintech companies and banks was a rarity. Mujib Ishola, chief technology officer, Remita, said it was Access Bank under Wigwe’s leadership that identified an opportunity for the bank to lend to federal workers and collaborated with SystemSpecs to secure the approval of the CBN. This led to other lenders participating in the payday loan market. The Remita Data Referencing Services gave federal workers and salary earners access to loans from Access Bank and other lenders. It has also contributed significantly to the liberalisation of the retail lending space, with more than 50 licenced lenders riding on the rail. “Herbert was at the forefront of our partnership, as he was able to create a structure that facilitated the completion of the project just within a few weeks. This initiative brought comfort and assistance to many workers who needed money to do things, just at the time they needed it and were experiencing the ease of seeing this happen for the first time. It was pure leadership. The collaboration has opened a new frontier to retail loan provision and the significant expansion of economic activities at the retail level,” said Ishola. The BVN, banking agents, and eTranzact Herbert Wigwe was one of the prominent members of the Bankers Committee that pushed for the adoption of the Biometric Verification System (BVN) in Nigeria in 2014. Also, as chairman of the Bankers Committee in 2018, he championed the creation of the banking agent network in 2018. Wigwe is also known to have funded Unified Payments and eTranzact at different times. Niyi Toluwalope, CEO of eTranzact said Wigwe had a “profound impact” on the company by his display of exceptional leadership and strategic insights. “As a visionary leader, his exceptional leadership and strategic insights contributed to the growth of our organization. The various insights he shared during our engagements with him were also very valuable,” Toluwalope said. His investments in Nigerian startups are said to be worth millions of dollars. “There were numerous investments in Nigerian startups that anyone will struggle to track down following his demise. As a friend put it to me, investments worth millions of dollars were made following conversations with him alone,” noted Feyi Fawehinmi, an investment accountant and author of Formation: The Making of Nigeria from Jihad to Amalgamation. For Toluwalope, Herbert’s biggest legacy in Nigeria’s tech ecosystem is best portrayed through his visionary approach to financial technology, which contributed to the transformation of the industry.
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Cashless ATMs: Nigeria struggles to keep up with growing demand
There are about 25 ATM terminals within Badore, Langbasa and Addo, three major roads of less than 5km located within the Ajah community in Eti Osa local government area in Lagos state, which is more ATMs than over 20 local governments in Kano state have. The three roads also account for more bank presence (nine bank branches) than the entire stretch from Abraham Adesanya, Ibeju Lekki, Lekki Free Trade Zone, to Epe, a distance covering 135.9km. Five days out of seven a week, most of the over 25 ATM locations are empty because the machines are out of service, out of network, or out of cash. It is the same experience many bank customers face with about 22,600 ATM locations, as Inlaks data show, spread across the country. Nigeria requires about 60,000 ATMs to meet up with its growing population of 216 million people and a banking population of 106 million adults, according to Tope Dare, executive director of Inlaks, the largest ATM operator in the country, which controls over 40% of the market. In 2010, Nigeria had roughly about 7,100 ATMs and the number grew to over 11,000 in 2011 because the CBN mandated the removal of the offsite deployment by banks. This meant that banks would no longer invest in ATMs outside their branches. The CBN seeded the deployment to independent ATM deployers which couldn’t run the project due to the cost. The ban was eventually lifted, allowing banks to invest more in ATMs. The number of ATMs then grew from 11,000 in 2011 to 16,000 around 2016 and 21,000 in 2019. It grew to 22,600 in 2021, where it has remained as of December 2023, an indication that investment in the market has reduced. Seventy-six per cent of the total ATMs in Nigeria are deployed by eight banks. Access Bank has over 4,000 ATMs, First Bank has about 3,300, UBA has 2,150 ATMs, Zenith has 2,100 ATMs, GTBank has 1800 ATMs, FCMB has 1,350, Polaris has 1300, and Union has 1,200. A total of 17,200 are owned by these eight banks. Consequently, there needs to be more ATMs in Nigeria to serve the needs of the banking population, and this has always been the case with Nigerian banking services. The estimated branch count of the 24 commercial banks is about 4,500, which is not enough for an estimated 106 million banking population reported by EFInA. The BVN accounts are currently at 60.1 million and active bank account holders are about 135 million. The annual growth rate of ATMs in Nigeria is about 3%-4%, but this has dropped to below %1 in the past two years, as the Inlaks data show. Nigeria’s ATM per capita (number of ATMs per 100,000 adults) has also dropped from 16.92 ATMs in 2018 to about 16.15 in 2021. The global standard should be 1,000 ATMs per 100,000 bankable adults. Hence, Nigeria should have about 60,000 ATMs when it is measured against the unique bank customers at 60.1 million. Given the 22,600 active ATMs, there is a deficit of about 37,400 ATMs. As the number of bankable adults keeps increasing and more cards are issued, it is expected that ATMs will decrease in number over time, since the banks are not deploying more ATMs. Growth factors for ATMs In the past, some of the factors that have contributed to the growth of ATM deployment in the country include banks’ profitability. When banks are profitable, they undertake branch expansion and capital expenditure. Banks also deploy more ATMs when their customer base is growing because this means that more cards will be issued, and there will be a need to provide cash and additional ATMs for the customers. Banks that undertake digitalisation initiatives often need to deploy more ATMs. Financial inclusion initiatives also impact the growth of ATMs positively. Banks will also deploy ATMs in areas with improved power generation, this is because the cost of electricity is a major burden for ATM deployment. Why investors are looking away from ATMs Dare says the ATM business in Nigeria is facing its most difficult times due to the high cost of maintenance, growing adoption of other banking channels, foreign exchange crisis, galloping inflation, insecurity, and uncertainty in the ATM policy environment, all of which are driving investors far away from the market. In 2016, the exchange rate for the dollar was ₦250. It rose to ₦325 in 2017 and stabilised between ₦330 and ₦360 by 2019. Dare says buying at a rate of ₦380 in 2020 and ₦455 before the Muhammadu Buhari administration left office, impacted the unit cost of ATMs significantly. However, it went from bad to worse when the new government under Bola Ahmed Tinubu dramatically announced the unification of the FX rate, which pushed the official rate to ₦750. The black market price for the dollar is currently above ₦1,500. “A machine that we were selling at ‘x’ million naira this time last year, by today we are selling at 3.5x today. This is affecting the hire purchasing cost due to FX. The FX is also dependent on the customs duty and the OPEX. The cost of maintaining ATMs has gone up due to inflation, the cost of transportation, and the cost of spare parts because you have to import spare parts from abroad,” Dare said. ATMs are also seeing fewer investments because most investors are paying more attention to other growing electronic channels such as PoS terminals, mobile app transfers, USSD, and other alternative channels consumers use to make payments faster and more convenient. “The rapid adoption of digital payment methods is influencing consumer behaviour, leading to a shift away from traditional ATMs in favour of more convenient digital alternatives,” said Olaoluwa Awoojodu, CEO of Electronic Settlement Limited. The non-profitability of ATMs is also a big factor for investors. The interchange fee also known as the surcharge fee, is one of the lowest in the world. Today, when a customer visits an ATM he/she is charged N35 after the third transaction.
Read MoreInvestors bet big on Africa’s logistics potential
This article was contributed to TechCabal by Bonface Orucho, via bird story agency. Africa’s logistics sector is growing into a lucrative market and strategic hub within the global logistics network, as investors’ confidence in the sector increases. A new report by logistics company Agility confirms the global logistics industry is considering expansion plans or first-time investments in the continent’s logistics sector. According to Agility Vice Chairman Tarek Sultan, “This is the most optimism we’ve seen about Africa in the 15 years of the Index.” Notably, 47.4% of respondents are planning additional investments in Africa, while 14.2% of the logistics executives from different companies are planning first-time investments on the continent. Only 6.6% of the executives are planning to exit or scale back from certain African markets. This report coincides with increased investment in Africa’s logistics sector, with railroads and ports undergoing renovations and tech-driven solutions targeting emerging opportunities like intra-African trade. A major upgrade to the Lobito Corridor, a close to 100-year-old rail network linking the mineral-rich Democratic Republic of Congo (DRC), Angola, and Zambia) to the Atlantic Ocean, received a major boost recently at the Mining Indaba in Cape Town. The US and EU-backed corridor operators signed a deal with its first customers, who committed to using the railroad to transport minerals upon its launch in 2025. Trafigura, a Singapore-based multinational commodity trader, along with the Kamoa-Kakula copper mine (a mine in the DRC jointly owned by Ivanhoe Mines and China’s Zijin Mining Group) will export up to 450,000 and 240,000 metric tons of copper, respectively, via the railroad. According to Jeremy Weir, Executive Chairman and CEO of Trafigura, these commitments will grow to make the corridor one of the leading rail transport links in sub-Saharan Africa. Revitalisation of the TAZARA railway, another logistics route connecting mineral-rich Zambia with the Indian Ocean via Tanzania, is on the negotiation table, with China proposing to inject $1 billion in its rehabilitation, according to the International Railway Journal. Elsewhere, the port of Maputo in Mozambique is the latest of many African ports to attract deep-pocketed global investors keen to invest and expand their operational capacity and general efficiency. According to a 2024 Bloomberg report, DP World, working with Grindrod Ltd., will pump $2 billion toward port expansion after winning a 25-year concession extension deal that will end in 2058. As international investors increasingly eye investments in the continent’s logistics sector, homegrown companies from established operators like Grindrod to startups are scaling operations and leveraging technology to build logistics services across Africa. Many of these companies are responding to the recently signed African Continental Free Trade Area (AfCTFA) agreement, which will see the elimination of tariffs between member states. Moroccan logistics tech startup Logidoo announced in mid-February it had raised funding to expand an end-to-end logistics offering to 5 new African markets. The startup already has active operations in 8 African countries. There has been a steady rise in the number of similar tech-led logistics startups in Africa. Tracxn.com, a startup tracking platform, shows that there are an estimated 1,218 logistics tech startups operating in Africa today. According to Africa: The Big Deal, startups in the logistics and transport sectors were among the top three most-funded sectors last year, raising some $210 million. According to the UN Economic Commission for Africa, AfCFTA will boost intra-African trade by around 40%. The UN body called on African governments to “implement the Inter-Governmental Agreement on the Trans-African Highways; finance Road Safety; sign the Solemn Commitment to the Single African Air Transport Market (SAATM); fully implement the Yamoussoukro Decision on the liberalization of air transport; sign and ratify the Luxembourg Rail Protocol to attract private sector investment in rolling stock; support the civil aviation industry” to fully benefit from AfCTFA.
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Investors react positively after Jumia’s Q4 results
The stock market reacted positively after Jumia shared its financial results for the fourth quarter of 2023, with shares of the Africa-focused e-commerce company closing at $4.56 on Thursday, a 41.18% jump. Jumia cut its operating loss in Q4 2023 to $4.5 million after several significant strategic changes, but profitability remains elusive. Metrics like Gross Merchandise Value (GMV), active customers and revenue declined compared to Q4 2022 figures, but shareholders are reacting positively to the fact that despite Jumia cutting its spend on advertising and promotions, revenue was up in constant currency terms. One big positive in Jumia’s report is the reduction of its losses to the lowest in four years. The company has also had to make difficult business decisions in the last two years. It shuttered its food delivery business in December 2023. On Thursday, TechCabal exclusively reported that the company laid off employees in January 2024. Exclusive: Jumia slashes staff after exiting food delivery business CEO Francis Dufay talked about building a “leaner, more agile and more focused company.” Macroeconomic conditions across many of its African markets has made business difficult withnflation and currency devaluation in some of its major markets like Nigeria and Egypt contributing to the reduction in the company’s GMV. One thing is clear: Jumia is keen on being profitable in 2024. “We are seeing signs of stability and growth in other markets,” Dufay said on the earnings call.
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👨🏿🚀TechCabal Daily – Uganda’s national IDs get eye scan feature
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية TGIF It’s the season of love and tech boys and girls are not left out. Our sister publication, Zikoko, has just dropped a Valentine Special where three couples—one with kids, one now married and the last, still best friends—reveal how well they know and love each other, and how their relationships have evolved. This is your sign to Enter Love today. In today’s edition Jumia lays off staff again Gokada’s lean path to progress Nigeria’s inflation soars Uganda adds iris biometrics to national IDs Funding tracker The World Wide Web3 Job Openings E-commerce Jumia trims losses to $4.5 million and lays off employees in Kenya Jumia, a leading e-commerce player in Africa, has shown signs of progress in its fight against red ink. In Q3 of 2023, it lost 800,000 active customers but saw a $19 million reduction in operational losses. Now, its Q4 2023 financial report boasts a significant reduction in operational losses to $4.5 million, due to a strategic decision to shut down Jumia Food, reduce its workforce and focus on higher-value goods. Following these strides, transactions on JumiaPay, its payment service, grew 41% year-over-year. Jumia CEO, Francis Dufay also claims the company finished 2023 with a significant reduction in losses before tax, down to $98.6 million from $206.2 million in 2022. Jumia also slashed its marketing budget. Their total sales and advertising spend for Q4 2023 was $6.2 million, a 62.8% decrease from Q3 2022. Cost-cutting wins, but at what cost? Sadly, the progress comes with a painful impact of laying off an undisclosed number of employees 8’ January 2024, in Kenya and other markets to create leaner, agile teams. This comes one year after the e-commerce company laid off 900 employees in an effort to cut costs. Zoom out: Despite the progress, Jumia remains unprofitable. Economic headwinds like inflation and currency devaluation resulted in a 22% drop in orders and a decline in Jumia’s user base to 2.3 million active users, losing 500,000 active customers in Q4 compared to the same period in 2022. Its revenue also took a hit. It dipped 8.3% in 2023, falling from $203.3 million in 2022 to $186.6 million. Access payments with Moniepoint You don’t have to take our word for it. Give it a shot like he did Click here to experience fast and reliable personal banking with Moniepoint. Startups Gokada pivots to an asset-light model Nigeria’s last-mile delivery market is projected to reach a staggering $58.6 billion by 2029, fueled by an e-commerce surge which was reportedly expected to reach $9.2 billion by the end of 2023. This promise is marred by Nigeria’s terrible roads—the worst in Africa—traffic congestion in major cities like Lagos, and even some government policies like the recent fuel subsidy removal which has quadrupled fuel prices This is the harsh reality of startups like Gokada, forced to adapt and fight for survival in the delivery space. The Nigerian last-mile delivery company has pivoted to an asset-light model to stay afloat and find new funding. Why pivot? Founded in 2017, Gokada bought bikes for their drivers under a hire-purchase plan. Drivers had a repayment plan spread for up to three years, eventually becoming owners. This meant Gokada shouldered maintenance costs, which ballooned to tens of thousands of dollars a month in late 2021 and early 2022. And according to the COO Oluwaseun Omotosho, continuing on this path meant the business would have shut down. Now, with the company going asset-light, Gokada owns only 10% of the 5,000 bikes on its platform, and drivers become partners and handle their bike maintenance. Gokada just connects them with financing companies, oversees payment collection and takes a commission. However, the shift isn’t just about saving cash. Gokada is also looking for new investors after a tough past three years. What happened? In 2020, a motorcycle ban in Lagos forced Gokada to ditch ride-hailing and switch to deliveries. They laid off 80% of their staff. Their then-CEO, Fahim Saleh, was also tragically murdered that same year. In 2022, the delivery company considered selling the business to a competitor, Kwik Logistics, but the deal did not go through. 2023 also brought another blow as 54 employees were laid off in February due to harsh macroeconomic conditions and had to run a leaner operation, closing one office and renegotiating terms with vendors. More logistic startups shutdown: The harsh reality hasn’t spared other logistics startups like Hytch and GoMyWay, who have all shut down in 2023 and 2018 respsectively, due to a lack of funding. Secure payment gateway for your business Fincra’s payment gateway enables you to easily collect Naira payments as a business; you can collect payments in minutes through bank transfers, cards, virtual accounts and mobile money. Create a free account and start collecting NGN payments with Fincra. Economy Nigeria’s soaring Inflation nears 30% mark Nigeria’s January 2024 inflation figure of 29.90% marks a grim milestone – the highest since 1996, a period etched in memory for its crushing poverty and economic instability under the Abacha regime. While the country has avoided repeating such historical lows, the current situation raises serious concerns. Domestic issues like insecurity in agricultural regions and currency depreciation are among several factors driving Nigeria’s inflationary surge. Food inflation currently reads 35.5% , while the CBN has an unmet backlog of FX demand estimated at $2.2 billion. Despite implementing monetary tightening measures like raised interest rates and cash reserve requirements, the Central Bank of Nigeria (CBN) has struggled to effectively curb inflation. Critics argue that the CBN has ignored its inflation target of 6-9% set in 2014 and argue that the current measures primarily impact businesses and individuals seeking loans, further hindering economic growth. A way out? Despite repeated promises to address inflation, Nigeria’s Central Bank Governor, Olayemi Cardoso, has offered limited specifics on his plans. At the recent Nigerian Economic Summit Group (NESG) meeting, Cardoso predicted inflation would fall to 21.4%, but details remain
Read MoreExclusive: Jumia slashes staff after exiting food delivery business
Jumia, one of Africa’s most prominent e-commerce platforms, laid off employees in Kenya and other African markets in January 2024, one month after it exited Jumia Food, its food delivery business. The number of employees affected by the layoffs was not disclosed. “News about layoffs was shared last week but no communication was made about who was affected and you’re still expected to work,” one Jumia employee wrote on Glassdoor on February 5, 2024. This year’s layoffs come one year after Jumia fired 900 staff as part of attempts to cut costs and guide the company toward profitability. Some other employees were moved to different roles within the company, the company told TechCabal. “As we continue to review our investment and innovation in our operations, we are refocusing teams and resources on activities and projects to support our path to profitability,” the e-commerce giant told TechCabal in an email on Thursday. “Based on this, we are making some adjustments to our organisational setup in several countries including Kenya to better optimise our capital and continue to seek cost efficiencies, just like any other company. We remain confident about the future of e-commerce in Kenya and Africa and will continue to offer our services to consumers and vendors through Jumia.” Jumia eased into the discontinuation of its food delivery business by ceasing operations in Ghana, Senegal, and Egypt in early 2023. By the end of 2023, it had fully exited the business and removed the Jumia Food app from app stores. The company said food delivery was not sustainable, as it was forced to compete with more aggressive players. Jumia slashes operational losses in Q4, but profitability remains out of reach Under the leadership of Francis Dufay, Jumia has emphasised cost discipline and cutting operational costs. Its Q4 2023 report, released today, showed that the company is making progress, with operational losses down to $4.5 million for the quarter and cuts in its advertising expense. Inflation and currency devaluation in some of its key markets continue to pose a challenge as revenue and gross merchandise value, a metric that represents the value of all goods sold on the platform, reduced. Nevertheless, the company insists that cost discipline and some positive signs in other markets will be crucial in reaching profitability.
Read MoreJumia slashes operational losses in Q4, but profitability remains out of reach
Jumia, one of Africa’s most prominent e-commerce businesses, cut its operating losses in Q4 2023 to $4.5 million after several important strategic changes, but there are still questions about profitability. One difficult decision it made in Q4 was shutting down Jumia Food, given the tough macroeconomics of the food delivery business. It also reduced its workforce and moved away from a focus on low-ticket items. Nevertheless, profitability has remained elusive in a Q4 where the company lost 500,000 active customers compared to the same period last quarter. Key takeaways: Jumia’s reported revenue of $59.4 million for the quarter It cut its operational losses to $4.5 million Quarterly active users declined to 2.3 million Under Francis Dufay, who was hired as CEO in February 2023, the firm continues to demonstrate impressive cost discipline and improve cash utilisation. “We believe that Jumia is now a much leaner, more agile and more focused company. We have reevaluated our portfolio and made tough decisions regarding business activities that did not bring the right value,” the company said in its statement. The company reduced its sales and advertising spend to $6.2 million, reducing advertising on consumer incentives like vouchers and free shipping. The drop in advertising spending is 62.8% compared to Q3 2022. Its general and administrative spending was also down to $12.3 million. Its Gross Merchandise Value, a measure of the value of all goods bought on its platform, declined to $233.3 million. The company blamed the reduction on currency devaluation across markets. “Eight out of ten local currencies in our countries of operation depreciated against the US Dollar in 2023, compared to 2022,” Jumia said in its financial report. High inflation rates and currency depreciation impacted the purchasing power of customers. However, the firm experienced growth in commissions driven by corporate sales to local and regional retailers and distributors in some countries it operates in. “We are seeing signs of stability and growth in other markets,” Dufay said in the earnings call that was held today after the results were released. In terms of runway, Jumia has a cash balance of $35.5 million and a liquidity position of $120.6 million. A bright spot in its report is the growth in JumiaPay transactions which reached $3 million in the fourth quarter of 2023, up 41% year-over-year. Dufay said the company was exploring plans to roll Jumia Pay delivery in Nigeria as he estimates that 50% of transactions could be cashless by 2024 ending.
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