From zero to N15 Trillion in transactions: Hydrogen’s plans for Nigeria’s bustling payments space
Imagine Africa’s payments industry as a car. There’s the flashy exterior, but it’s the engine that makes it all work. Hydrogen, a payments company launched by Access Corporation, the holding company of one of Nigeria’s biggest banks by assets, wants to be that engine. For two-year-old Hydrogen, the focus is on building a robust infrastructure that can power payments across different channels. “Our vision is to become Africa’s most powerful payment business network. The real play for Hydrogen is the infrastructure,” Kemi Okusanya, the company’s CEO, told TechCabal. Although Hydrogen was launched in 2022, Okusanya says 2023 was the company’s “real first year.” It has launched eight products and claims to have processed 12 to 15 trillion Naira transactions across its different channels in 2023. Like most payment companies, Hydrogen earns a fee per transaction on its platforms. “A time will come when one in every three transactions happening in Africa will have something to do with Hydrogen,” she said. Hydrogen’s license allows it to operate across the entire value chain, offering services like processing, switching, and super agency. Though Hydrogen says its play is infrastructure, it competes with fintechs such as GTCO’s Squad, Flutterwave, Moniepoint, and Paystack in the payments market. Squad, for instance, crossed N200 billion in monthly transactions in January 2023. Data shows that digital payments in Nigeria have been on the rise in the last half-decade. Image Source: Stephen Agwaibor/TC Insights. Hydrogen has two arms: the merchant business and the switch and card business. On the merchant side, Hydrogen caters to small and medium enterprises (SMEs) and large corporations with tailored solutions. According to the company’s head of merchant business, Zainab Abu, these solutions include POS terminals, Instant Pay, which provides real-time transaction visibility across multiple outlets, a payment gateway that allows merchants to receive payments via their website, and a payment link. Since launching the merchant business in April 2023, Hydrogen has onboarded 11,000 active merchants across every state in Nigeria. Its transaction volume grew to billions within the first two months of operations, and in January, the merchant business processed 40% of last year’s total volumes. Abu says Hydrogen POS’s competitive advantage is that it allows other payment types beyond cards, such as bank transfers. Hydrogen will also compete offline against other fintechs that offer POS devices. Last year, Paystack launched virtual terminals, a new product that allows merchants to accept payments with bank transfers for multi-person businesses. Hydrogen acts as a third-party processor for card transactions on the card and switch business. It offers interbank transfer, bulk payments, and 3D secure, a second-level authentication for card transactions, according to Fiyinfoluwa Olorunsola, head of cards and switches at Hydrogen. Hydrogen’s card and switch business is focused on the financial sector, especially traditional banks and fintechs. “We handle the processing side of things. We process transactions for about 50% of the FUGAZ banks and top fintechs.” Yet, Okusanya admits it’s still early days. “There is so much in payments. You think you know it, but you discover a new thing.”
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👨🏿🚀TechCabal Daily – Mastering MoMo
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning If you’ve read our State of Tech in Africa report, can you take two minutes to share your thoughts with us? In today’s edition Mastercard acquires minority stake in MoMo Glo settles $1.4 million bill with MTN Kenya introduces draft Bill to regulate virtual assets service providers 2G and 3G networks in South Africa get a two-year reprieve South Africa’s Competition Commission appeals case dismissal against 23 banks The World Wide Web3 Opportunities Mobile money Mastercard acquires minority stake in MoMo Mastercard, the global payment giant, is investing R3.8 billion ($200 million) in the MTN’s mobile money service. With the investment, Mastercard is acquiring a 3.8% minority stake in the telecom’s fintech arm. The move follows MTN’s recent partnership with Sweden-based telecommunications company, Ericsson to allow MTN’s Mobile Money (MoMo) service on the Ericsson wallet. MTN group had earlier announced the intention to sell a 30% stake in the fintech firm. When Mastercard makes the cash injection, MTN MoMo will be worth R99 billion ($5.2 billion). Why it matters: On the upside, the deal grants Mastercard access to MTN’s massive network across 17 African countries, expanding its reach and solidifying its digital payments dominance. Mastercard’s investment will fuel MTN Mobile Money’s growth, potentially leading to wider service offerings, and expansion into new markets. The collaboration could also birth innovative financial products, like virtual cards linked to mobile wallets, boosting online payments and international remittances. However, concerns on whether the strategic partnership truly promotes financial inclusion, or helps consolidate power within existing players and stifle competition among smaller players. Zoom out: The latest development comes as MTN is taking big bets on its mobile money platform. The telecom reported that the fintech had seen increased traction in the market, recording a 21.7% year-on-year increase in revenue. MTN attributes this growth to the expansion of its wallet, payment and e-commerce, and remittance services. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Telecom Glo settles $1.4 million interconnection fee debt The only constant in life is change, and Glo’s debt to MTN. Nigeria’s leading telecom, MTN, has agreed to accept Globacom’s ₦2 billion ($1.4 million) interest payment on its interconnect fees—an amount charged by telecom for calls terminating on their network. Glo’s original debt to MTN in 2012 was about 1.6 billion ($1.1 million) but due to Glo’s tardy repayments, the debt accumulated interest over the years. Yesterday, the telecom reached an agreement to pay the ₦2 billion ($1.4 million) accrued interest on the debts. ICYMI: The Nigerian Communication Commission (NCC), on January 8, served a disconnection notice to Glo, which permitted MTN to disconnect Glo subscribers over years of unpaid interconnect fees. However, Glo was granted a 21-day extension to reach an agreement with MTN one day before the planned disconnection. A bromance built on borrowed funds: Glo’s debts to MTN date back 15 years, with the first reports of Glo falling behind on interconnect fees emerging in 2012. In 2016, MTN reportedly threatened to disconnect Glo over the unpaid fees. In 2019, the telecom disconnected Glo from its network for five days, forcing Glo to pay around ₦2.6 billion ($1.8 million) in owed interconnect fees out of a total ₦4.4 billion it owed at the time. Airtel also threatened to disconnect Glo during the same period. Glo’s interconnect debt grew over the years because it often made smaller debt repayments when compared with the amounts it owed. However, the NCC appears to be tightening its leash on Glo and other telecom operators in the country. Per local media, the regulator is ensuring that Glo and other telecom operators comply with the market rules and pay their debts. 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. Crypto Kenya introduces draft Bill to regulate virtual assets service providers The Blockchain Association of Kenya (BAK) has introduced its first-ever Virtual Assets Service Provider (VASP) draft Bill. The draft bill proposes a comprehensive framework encompassing licensing, consumer protection, anti-money laundering, and a regulatory sandbox. The bill’s introduction follows a series of policy-focused community engagements initiated by BAK. In June 2023, Kenya signed into law the Finance Act 2023. The Act, which had a 3% gross tax on digital assets, was actively challenged by the BAK. They submitted their concerns, petitioned the High Court, and held industry workshops. Ultimately, lawmakers recognised the need for dedicated regulations and tasked BAK with crafting a billto govern the cryptocurrency industry in Kenya. But it’s not a solo mission: Until February 7, stakeholders worldwide can review the draft and contribute their voices. This approach ensures the final Bill reflects the needs of everyone involved. After that, BAK will revise and incorporate feedback into the next iteration of the Bill and deliver it to the National Assembly’s Departmental Committee on Finance and National Planning by February 14, the same committee that tasked the association to develop the draft bill. If passed, this bill will attract international investments and talent, positioning Kenya as a leader in Africa’s crypto space. BAK also aims to attract $1 billion in Foreign Direct Investment (FDI) by 2027, supporting Kenya’s economic recovery. Zoom out: Other African countries like Nigeria are also taking steps to regulate their cryptocurrency industry. After initially banning crypto in 2021, Nigeria’s Central Bank has lifted its ban in December 2023, and now aims to regulate “virtual asset providers.” Banks can now serve crypto providers, but only those licensed by the Securities and Exchange Commission (SEC). Internet 2G and 3G networks in South Africa get a two-year reprieve South Africa has hit the breaks on its planned shutdown of 2G
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Exclusive: Ghanaian talent startup Remoteli raises £250,000 from footballer Jeremie Frimpong
Remoteli, a Ghana-based tech talent startup that connects African tech talents with remote workplace services, has raised £250,000 pre-seed funding ($314,824) to scale operations and expand across Africa. The funding round was led by Jeremie Frimpong, a Ghanaian-Dutch professional footballer who plays as a right wing-back for Bundesliga club Bayern Leverkusen. Frimpong’s investment follows a trend of football stars backing tech startups. In 2023, French football players, Aurelien Tchouameni, Jules Kounde, and Mike Maignan participated in a $3 million funding round for StarNews Mobile, an African mobile video network. Exclusive: MTN, Globacom strike deal to settle ₦2 billion interconnection fee debt Samuel Brooksworth, Remoteli’s founder, told TechCabal that he began the company after discovering the gap that existed between talented young graduates who could not find employment and decision-makers from various organisations that struggled to grow their business during the COVID-19 pandemic. “The primary goal of our partnership with Jeremie Frimpong is to propel Remoteli towards our ambitious target of facilitating employment for 1 million people by 2030,” Brooksworth told TechCabal. Part of that partnership with Frimpong involves the Pathways project that will tackle the challenge of guiding young footballers whose careers didn’t pan out. Pathways project offers new opportunities, and with Remoteli’s support in training and upskilling, these athletes can unlock potential careers off the pitch. Frimpong shares Brooksworth’s optimism and believes in adding value to more people’s lives. “I invested because I believe in what Remoteli is trying to do. I care a lot about developing people and places that don’t have a lot of opportunities because that is the background I come from. When Samuel pitched the idea to me, I bought in immediately,” the footballer told TechCabal in an interview. Remoteli’s founder, Samuel Brooksworth, and footballer, Jeremie Frimpong. Credit: Remoteli Remoteli says it has strategically focused on bootstrapping and minimal fundraising to maximize organic growth. The startup boasts of AI-powered software that matches organizations with qualified tech talent. It is also developing a suite of tools and resources designed to empower companies worldwide by connecting them with talented and ambitious African professionals. These include project management tools, seamless communication channels, time tracking, invoicing solutions, and customizable features tailored to each organisation’s needs. The startup claims to have hired over 100 individuals directly and supported over 100 dedicated clients. It recently expanded to Kigali, Rwanda, and plans to extend operations to several other African countries in 2024. Remoteli has its eyes on a Series A round later this year.
Read MoreExclusive: MTN, Globacom strike deal to settle ₦2 billion interconnection fee debt
MTN Nigeria and Globacom (Glo), two of Nigeria’s leading telcos, have ended a 15-year-long dispute over interconnection fees after MTN agreed to accept ₦2 billion to settle the interest payment instead of the ₦3 billion initially demanded, one person familiar with the negotiations told TechCabal. The interconnection debt on which those interests accrued was settled earlier, the same person said. The agreement follows efforts initiated by the Nigerian Communications Commission (NCC) at the behest of Glo. In January, Glo faced the threat of disconnection by MTN Nigeria and was given 21 days by the NCC to settle its debt or risk seeing its 61.5 million subscribers blocked from calling MTN lines. Exclusive: CBN targets six months for recertification of PoS terminals to fight fraud Glo’s interconnection fees debt grew over the year because it often paid substantially less than the bill it racked up. There have been multiple threats from MTN and Airtel Nigeria to disconnect Glo over the years, with MTN disconnecting Glo for five days in 2019. The recent disconnection process began in November 2022 due to an accumulated debt owed to MTN Nigeria by Glo, and MTN sought NCC’s approval for a disconnection, eventually receiving it in December 2023. A source at NCC said the new executive vice chairman plans to do things differently by ensuring all telecom operators comply with the market rules. *This is a developing story
Read MoreExclusive: CBN targets six months for recertification of PoS terminals to fight fraud
The Central Bank of Nigeria (CBN) plans to recertify all active POS terminals across the country, two sources familiar with the conversation told TechCabal. Part of that process will include an update to issuing terminal identification numbers (TID) — a unique eight-digit identifier — and collecting information such as BVN and tax identification numbers from POS agents. “This means you must request TID for each merchant with their details and wait for NIBSS to generate it before they can assign a terminal to that merchant,” one person familiar with the CBN’s plans said. Before now, mobile money operators like Opay or Palmpay typically requested TIDs in bulk to assign terminals quickly, but recertification will mean acquirers (banks and mobile money operators) have to register each TID separately. Registration requires the provision of an address, BVN or Tax Identification Number (TIN), business name, and F1 Code of the acquiring bank. The validation of a POS terminal delivered to a particular location would be handled by licenced Payment Terminal Service Providers (PTSPs) like Interswitch, ETOP, or CitiServe. “Banks will typically select and map each terminal registration with a particular PTSP that sets it up, deploys, and continues to support the merchant. PTSPs are also the bridge to terminal procurement from the OEM as banks/acquirers were not allowed to engage directly with OEM for procurement,” a product manager at a fintech startup said. While there is no timeline given by the CBN for the commencement of the recertification exercise, TechCabal learned that the Nigerian Interbank Settlement System (NIBSS) was mandated by the CBN to come up with a geofencing plan that ensures that terminals are not used outside the locations where they are registered. The terminals, once certified, can only be used in the location where it is deployed. If the POS terminal is used outside the address or location, NIBSS will disable it. While the timeline of recertification is unclear, mobile money agents will be asked to provide additional information as part of their KYC to enable them to operate Tier-3 accounts. A Tier-3 account allows transactions of up to ₦1 million, and customers can hold up to ₦1 billion in deposits. Before now, agents were allowed to operate any level of tiered accounts provided that proper KYC was done and necessary documentation was achieved. Tier-1 accounts are the most popular among agents because they require minimal documentation to open and operate. The recertification is likely to push agents towards operating more Tier-3 accounts. The plan also mandates the audit of agents and review of their processes by acquirer banks, Super Agents, and MMOs to align with the proposed recertification program and beyond. Mobile money operators who spoke to TechCabal on condition of anonymity said they are still trying to get clarification on some of the features of the certification exercise for POS terminals.
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Next Wave: The case for local car manufacturing in asset financing
Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner Join us for TechCabal Battlefield, Moonshot’s startup competition where you can showcase your startup idea to a global audience and an esteemed panel of judges and stand a chance to win up to 2.5 million naira in funding for your business! Click to register for TC Battlefield First Published 04 Febuary, 2024 Asset financing was meant to help the mobility sector progress, but it has encountered a few problems. Could local manufacturing re-balance the model? Owning a car should never have to be a luxury, especially if you hope to venture into the ride hailing business. But in Nigeria, car ownership is slowly getting out of reach. There are several factors responsible for this. Nigeria, with an estimated population of 200 million, does not produce cars. Per data from the nation’s statistics office, the country boasts over 12 million registered vehicles, of which almost 90% are imported, representing a motorisation rate of just 0.06 vehicles per person. Vehicle importation is denominated in dollars, a currency that Nigeria’s naira has weakened against in the last few months ever since President Bola Tinubu’s reforms. The naira is currently the worst performing currency in the world as it exchanges somewhere around ₦1,400–₦1,500 to the greenback. But that is not the only factor that makes owning a vehicle out of reach. Anyone hoping to import cars has to contend with cumbersome clearing processes at the ports and import duties placed on used and new vehicles. Vehicle importation may yet again suffer another hike after the Nigerian Customs Service adjusted the foreign exchange for tariffs and duties upwards by 42.5% to 1,356 per dollar, making importation another headache for prospective car owners. The direct impact of these policies are borne by ride hailing drivers who are quite unfortunate to be working in the automotive industry where a lot of their expenses— fuel and spare parts—are determined by whatever the value of the naira trades in comparison to the dollar. These drivers seem to be losing a battle even before they begin to put their cars on the road. Prior to now, drivers naturally opted for the hire purchase option which allows them to make a downpayment, and then, at their own pace, settle overtime. Most of these hire purchase moves occur in Nigeria amongst friends and family. For drivers unable to make any significant downpayment due to the fact that they have no capital, the asset financing model came in as a quick fix. Vehicle-financing firms like Moove and LagRide, the Lagos state ride hailing platform, set up a rent to own model to help drivers. The value of imported vehicles into Nigeria. Chart by Mobolaji Adebayo, TC Insights Moove partnered with ride hailing startups like Uber to offer Suzuki Alto or S-Presso to drivers. Although the Suzuki vehicles used in the Uber Go category typically sell for $13,500 (₦12.1 million) in Ghana and are sold for $21,500 (₦19.2 million) in Nigeria by Suzuki, Moove rents them out to the drivers for $25,450 (₦22.8 million). At a daily remittance rate of ₦9,400 ($10.43), it would take a driver 41 months (three years and five months) to complete their payments. LagRide offers a similar model which allows drivers to make a downpayment of ₦700,000 ($776.49) for brand-new GAC vehicles (SUV and Sedan options). Drivers spread the rest of the payments across four years by making daily payments of ₦8,900 ($9.87). However, the asset financing scheme hasn’t had a smooth run. Asides from safety reasons where the Suzuki S-Presso model reportedly fared poorly in at least one crash safety test, drivers have also claimed the offered cars were overpriced and came with a difficult payment structure. In 2023, some of the complaints were reported in local media, and some of them are referenced here and here. To be clear, the asset financing model is not an exceptionally flawed model. People take car loans or loans to fund some purchases like phones, mortgages or vehicles in other parts of the world. Besides, the asset financing model is offering new car models instead of second-hand cars that local hire purchase models usually parade. Drivers disagree with this model, as they worry that the car’s value (albeit newly purchased) may depreciate at the end of a long repayment period which is usually 3–4 years on average. Nigerians are not really used to buying things on credit; they’d rather save to own. This author argues that Nigeria runs a largely cash-driven system where people are expected to have cash for every transaction as credit is unavailable. A source at M-Kopa told me Kenyans are different, as they tend to favour installmental payments more. This article here lends credence to that fact. 2023 was a watershed year for African technology startups. It was the year Instadeep got acquired by BioNTech for $682 million in Africa’s largest-ever acquisition deal. It was the year tech startups in Africa shed more than 1,500 jobs in industry-wide layoffs as 15 startups which raised $214 million in funding shut down. It was the year African startups raised $2.748 billion across 500 deals. And more! It will be remembered as the year that reset the trajectory (hopefully) for the better. Download the full report from our research team at TC Insights to learn more. Can local car manufacturing companies help? Can local manufacturing sort the asset financing problem? My colleague Abraham Augustine states that building the case for local manufacturing is not easy. To be fair, cars are only assembled in Nigeria by some local players like Innoson and Ford. However there are few newly assembled Nigerian car brands that could lower the long repayment plan offered by vehicle financing firms. An Innoson sedan car known as Innoson Carris is quite affordable, between ₦4.5 million to 6 million, lower in price than Suzuki and GAC alternatives. Three years ago, Innoson offered its IVM Caris, IVM Smart, IVM Kenga, and IVM Connect at a starting
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👨🏿🚀TechCabal Daily – MultiChoice floats above the Canal
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Our State of Tech in Africa report has been out for a couple of weeks now. In it, we dive deep into trends that defined Africa’s tech ecosystem in 2023. From a steady M&A incline, to a decline in VC funding, the SOTIA report will give you actionable insights into the business and human impact of African tech. If you’ve read the report, can you let us know if we deliver on this promise? Please take two minutes to fill out our survey here. In today’s edition MultiChoice rejects $2.5 billion acquisition offer Senegal shuts down its internet again Tingo parts way with 40 contractors KoBold strikes copper in Zambia M-Pesa gives unregistered users new deadline The World Wide Web3 Opportunities Streaming Multichoice rejects Canal+ $2.5 billion acquisition offer Last week, Canal+, a French broadcasting company set its sight on acquiring all outstanding shares in the pan-African broadcaster, MultiChoice, for R105 ($5.65) per share—an increase from the broadcaster’s current share price of R79 ($4.25). In a statement to the Johannesburg Stock Exchange, MultiChoice rejected the offer stating that Canal+’s offer “undervalues the Group and its future prospects”. What’s the deal with Canal+? Canal+, owned by media conglomerate Vivendi, began acquiring MultiChoice shares in 2020, continually increasing its stake in the South African company, and has offered to buy Multichoice for $2.5 billion hinting at its global expansion ambitions. The recent offer aimed to capitalise on MultiChoice’s struggling share price, which has dipped nearly 50% in the past six months. Currently, Canal+ owns 32.6% of MultiChoice’s shares, and South African law dictates that a shareholder exceeding a 35% stake in a company triggers a mandatory offer requirement. However, Canal+ might only be able to hold a maximum of 20% of voting rights, as the law also limits the foreign ownership of South African broadcasters to 20%. A potential takeover battle? In October 2015, Vivendi, Canal+ parent company acquired minority stakes in gaming firms Gameloft (6.2%) and Ubisoft (6.6%), eventually increasing ownership to 10% in both. Vivendi executed a hostile takeover of Gameloft, obtaining over 30% before persuading other shareholders to sell. By June 2016, Gameloft had become a Vivendi subsidiary. Vivendi might attempt the same play with MultiChoice. In response to Canal+’s accumulating stake, MultiChoice has also sought regulatory intervention, requesting a ruling on whether a mandatory offer must be extended to all ordinary shareholders. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Internet Senegal shuts down internet after delayed presidential election Senegal’s internet shut down for the third time in nine months has left citizens feeling more disconnected than ever. The latest shutdown follows President Macky Sall’s decision to postpone the presidential elections slated for February 25. The government has cited “hateful messages” on social media as the reason for the shutdown, following the same approach as the earlier shutdowns. ICYMI: This isn’t Senegal’s first rodeo with internet blackouts. In June 2023, Senegal shut down its internet after an opposition leader, Ousmane Sonko, was sentenced to two years in prison after a prolonged legal dispute since 2021, in a high-profile moral corruption case. In July 2023, the internet was shut down again to “prevent disturbances” after Ousmane Sonko was arrested for inciting rebellion against the government. While residents attempt to circumvent the restrictions through WiFi, the economic impact of the shutdown is significant. Reports suggest Senegal lost $300,000 per hour during the previous internet disruption in June, and Sub-Saharan African countries incurred $1.74 billion in losses due to such shutdowns in 2023. A concerning trend: Internet shutdowns have become a prevalent tool for African governments seeking to control information flow. In the past two years, governments in the Republic of the Congo, Niger, Uganda, and Zambia have cut off internet access during election periods. Official narratives often justify shutdowns as measures to curb violence, maintain public order, or prevent the spread of misinformation. However, the shutdowns may be used to silence opposing voices, restrict freedom of expression and hinder transparency. 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. Layoffs Tingo parts ways with 40 contractors About nine months ago, Tingo made headlines after a US-based research team called the company “an exceptionally obvious scam.” Since then, the company has made media rounds a couple of times and it’s all for the wrong reasons. Despite Hindenburg’s allegations that the company’s fintech, agritech and telecoms businesses were failing, the company declared sales of $977 million for H1 2023. Three months later, the US Securities and Exchange Commission (SEC) halted sales of its stocks to protect investors. More recently, in December, its founder, Dozy Mmuobuosi was charged with securities fraud by the same agency. Now, it appears the company’s duplicity is also extending to its workers. Last week, the fintech laid off 40 contractors who helped onboard new users and resolved issues on TingoPay, its digital payments app. According to the affected staff, Tingo denied December and January salary payments. A fair fall? Tingo did not provide any reasons for the terminations, directing affected employees to its HR outsourcing firm, HR Indexx for clarification. The outsourcing HR Indexx disabled comments on their WhatsApp group, leaving employees without further explanation. So far, neither Tingo nor HR Indexx have responded to requests for comments. Big Tech KoBold strikes copper gold in Zambia KoBold, a California-based mining company backed by heavyweights like Bill Gates and Jeff Bezos, has discovered a massive copper deposit in Mingomba, Zambia. KoBold uses artificial intelligence to identify critical mineral deposits crucial for battery metal production, including copper, lithium, nickel, and cobalt. The mining company invested $150 million
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“An exit is an exit”: Three things we learned from the State of Tech in Africa report launch
On Friday, January 26, TechCabal Insights released its much anticipated State of Tech in Africa Report for Q4, 2023. The report shed light on the realities of funding in 2023 with insights on how investors and players in the tech ecosystem can navigate through the funding winter and come out thriving. To launch the report, TechCabal Insights had its first TC Live event of the year hosted by Timi Odueso, TechCabal’s Senior Editor, Newsletters, and featuring Mobolaji Adebayo, analyst at TechCabal Insights; Moses Kemibaro, a digital media strategist; Nadayar Enegesi, co-founder and CEO of Eden Life, and Ory Okolloh, partner at Verod-Kepple Africa Ventures. The event was packed with highlights and action points that serve as an invaluable resource for participants. Here are three that stood out for us:2023 was a reality check—leave your entitlement at the doorFor Nadayar, the silver lining behind the 2023 investment cloud was that it served as a reality check for investors. While acknowledging that most information is private and within companies, he noted the challenges startups face, including regulatory threats, macroeconomic headwinds, and funding cuts. He commended the resilience of African founders despite limited global funding. As challenging as things were, he insisted that “it could have been a bigger bloodbath.” Nadiyar advised on the need for companies to reinvent themselves, a sentiment that Moses shared when he noted that companies are pivoting, with a stronger emphasis on more B2B and less B2C models. “We should be thinking of how to prioritise profitability and sustainability and move away from an entitlement mentality towards funding.” Debt funding is great for African tech—but it should be localised Last year, there were 45 recorded debt deals in Africa, and for Ory, it’s a good thing noting, “While debt funding is sector agnostic, I think it’s a great development. However, there are challenges in how it’s currently structured.” Ory believes there’s a mismatch of instruments since much of the equity funding could be structured as debt instead, particularly working capital and assets, because it otherwise creates a premature dilution for founders who have no skin left in the game by the time they get to Series A or B. Another challenge she notes is that the debt coming in is in US dollars, which is tough in light of multiple devaluations affecting local currencies. She maintained that rethinking around exploring local currency debt will help grow startups while protecting them. An exit is an exit—take whatever wins you canAs much as it’s great to hear news about emerging tech unicorns, current realities require a different focus. Investors consider mergers and acquisitions a lifeline, with exits becoming rarer. This point was expanded on by Ory, who said, “It doesn’t matter how big an exit is, an exit is an exit. It might not be the 10x you hoped for, and it could even be a down round, which constitutes a challenge. But you must remember that this is a tough environment. So, if this merger and acquisition option gives a founder time to breathe, go for it.” She added that for earlier investors, this option creates liquidity. “In a few years, people will say VC doesn’t work in Africa because we have not had enough liquidity. Remember, these are people who are putting in money expecting a return. Maybe what will change is that the return expectations shift, but we don’t want to be in a place where you put your money in and get nothing out.” Ory also tasked us with building transparency and what she calls an “M&A muscle” to make it more viable. She suggested that TC Insights build an index of M&As and secondary markets that could be a helpful resource for investors. Other interesting subjects were discussed around expansion strategies, data protection, artificial intelligence, regulation and compliance, consumer behaviour, and switching costs. You can catch up on the full event by clicking this link.
Read MoreOutsourced and owed: 40 Tingo Mobile contractors laid off despite unpaid salaries
Forty contractors who worked for Tingo Mobile, a fintech startup facing fraud charges in the US, have been laid off despite not being paid their salaries in December and January, three of the affected employees told TechCabal. The affected contractors, who supported new users with onboarding and resolved issues on TingoPay, a digital payments app, were laid off on a call with Tingo Mobile and HR Indexx (HRI) in the first week of February 2024. HR Indexx blamed the non-payment of salaries (N100,000 net monthly) on Tingo, according to messages seen by TechCabal. “Given the substantial amount involved, totaling in millions, HRI currently does not have the funds readily available to cover the salaries while awaiting payment from Tingo Mobile,” a message from HR Indexx read. HR Indexx did not immediately respond to TechCabal’s request for comments. When the contractors turned to Tingo Mobile for an explanation, they were redirected to the outsourcing company. “HR Indexx has disabled comments in the WhatsApp group where we coordinate our activities so that we will no longer complain about the money,” an employee said. Senegal shuts down mobile internet two days after postponing Presidential elections Tingo Mobile did not immediately respond to an email from TechCabal requesting comments. “On the layoff call, [HRI] said we should go and learn other skills and start applying for other jobs,” said another affected employee. In December, the US Securities and Exchange Commission alleged that Tingo Group fabricated its financial statements and misled investors. Tingo Mobile is one of the subsidiaries of Tingo Group, the company and was the subject of an explosive report published by Hindenburg Group, the famous American short seller. The SEC formally launched an investigation into Tingo Group and suspended trading in the shares of the second subsidiary, Tingo Foods PLC.
Read MoreSenegal shuts down mobile internet two days after postponing Presidential elections
Senegal temporarily suspended mobile internet on Monday morning, upping the tension in a country often described as one of the continent’s most stable democracies. Monday’s internet suspension, days after President Macky Sall postponed Presidential elections slated for February 25, is the third internet suspension in Senegal in the last nine months. The government blamed ‘’the dissemination of several hateful and subversive messages relayed on social networks shutdown’’ for the shutdown following the same approach as the earlier shutdowns. Protests erupted on Sunday after President Macky Sall announced on Saturday that Presidential elections would be postponed for six months. ‘’Senegal’s government has again taken the abusive decision to shut down mobile Internet across the country. The implications are wide-ranging. People underestimate how many things in our daily lives are dependent on mobile internet,’’ Tidjane Deme, general partner at Partech, shared on X. Political uncertainty in Senegal has worsened since June 2023 when Ousmane Sonko, a popular opposition leader, was arrested. Since his arrest, at least two prominent opposition candidates have been arrested, while others have been attacked by the police. Residents in Dakar have taken to social media to share that they have had to use WiFi to access the internet. The Senegalese government arrested five people for selling Starlink terminals without the required licence or authorisation in August. According to some estimates, Senegal lost $300,000 per hour due to the June shutdown. Sub-Saharan African countries lost $1.74 billion to government-induced shutdowns in 2023, according to a report by Top1vpn. Since the 2011 Arab Spring, internet shutdowns have become a frequent way African governments have sought to establish control. At least ten countries had internet shutdowns in Africa last year.
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