Last-mile delivery services increase base prices to ₦3,075 as fuel costs bite
Like most businesses affected by the recent increase in fuel prices, last-mile delivery companies in Nigeria are reevaluating their pricing. “In light of the current economic conditions, particularly the significant rise in fuel prices, we find it necessary to make an adjustment to our delivery process,” Remedial Health, a health-tech startup that supplies medications to pharmacies, wrote to its customers via Email. Four logistics companies told TechCabal they have raised delivery prices or plan to raise them. Fez Delivery, which charges ₦2,500 ($1.52) for deliveries between 0 and 5kg, will now charge ₦3,075 ($1.88) for those deliveries. The company says it will raise prices by 23%. “Our prices definitely have to change. But what we want to do is to ease our clients into that phase. So, at the moment, we are taking serious blows to keep operations running,” said Seun Alley, Fez Delivery CEO. Raising delivery prices is essential to last-mile delivery companies with thin margins. Yet, it’s not always straightforward given the price sensitivity of many customers. “Depending on the urgency required some customers don’t mind going for the least priced service when items to be sent are not needed urgently,” said Seun Omotosho, the COO of Gokada. Some customers are now relying on regular buses to get their products delivered. “I now use public transport to aid my business because DHL prices jumped from ₦12,000 to ₦14,000 for phones and for Laptops from ₦12,000 or ₦13,000 to ₦21,000,” Olawale, an online phone and gadgets vendor said. Last mile delivery companies are faced with twin but difficult tasks of adjusting prices to make up for increased running costs while retaining customers. For some of these companies, offering incentives to riders (based on numbers of orders they complete) and discounts for top customers is the solution. Others are optimistic that electric vehicles might be the silver bullet. Moonshot by TechCabal is gathering Africa’s most audacious builders and thinkers in Lagos, Nigeria. You can get tickets here.
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👨🏿🚀TechCabal Daily – Access Bank records FX gains
In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning Moonshot is giving out tickets to students at ₦5,000 only. As a student, you will get access to all Entering Tech sessions, all workshop sessions, and brand merch. Here is your chance to save a seat at Moonshot 2024. Get tickets here. Kenyan Appeal Court says Meta can be tried in Kenya Analysts expect a pause in interest rates in Nigeria Access bank records $257,000 as “unrealised” FX gains The World Wide Web3 Jobs Layoffs Meta ex-content moderators seek $1.6 million in compensation Image | Reuters On Friday, Kenya’s Court of Appeal upheld a ruling by a labour court filed in April 2023. The ruling meant Meta could face trial over the mass layoff of content moderators in the country. About 185 ex-content moderators filed a lawsuit against Sama, a third-party company hired by Meta to moderate Facebook content. These workers, who had the challenging task of filtering out hours of disturbing material from social media, sued Sama for poor working conditions and unjust layoffs. A case in 2022, filed by ex-Sama worker Daniel Motaung, sued Sama for being wrongfully dismissed for trying to form a union to lobby the company for better pay. Motaung’s case was previously dismissed for lack of jurisdiction. Meta had also argued that it was not a direct employer and couldn’t be sued in Kenya. However, the new ruling by the Court of Appeal lumps the two cases and rules that both Meta and Sama could be responsible for paying $1.6 billion in compensation to these ex-workers. Mercy Mutemi, a representative counsel for the ex-Sama workers said of the ruling, “Meta being sued in Kenya is a wake-up call for all Big Tech companies to pay attention to the human rights violations taking place along their value chains.” Read Moniepoint’s Case Study on Funding Women After losing their mother, Azeezat and her siblings struggled to keep Olaiya Foods afloat. Now, with Moniepoint, they’re transforming Nigeria’s local buka scene. Click here for a deep dive into how Moniepoint is helping her and other women entrepreneurs overcome their funding challenges. Economy Analysts expect a pause in interest rates Image Source: Imgflip To rein in inflation, the central bank’s Monetary Policy Committee has raised interest rates four times since the start of the year. The MPC raised interest rates to 26.75% in July. Inflation slowed for the second consecutive month in August with 32.2%, down from 33.4% recorded in July. The decreasing impact of the currency devaluation, the temporary removal of fuel subsidies, and a drop in food prices driven by the harvest season played a role in the inflation slowdown. Although analysts anticipate a potential pause in interest rate hikes, the central bank will likely remain cautious and assess inflationary pressures through November, considering the recent fuel price increase, before determining whether to ease or maintain its monetary tightening stance. The MPC will also make other decisions around short-term interbank interest rates. In July, it widened its asymmetric corridor, allowing commercial banks to borrow from the CBN at 31.75% (up from 27.25%) and deposit at 25.75% (up from 23.25%). Issue USD and Euro accounts with Fincra Whether you run an online marketplace, a remittance fintech, a payroll, a freelance platform or a cross-border payment app, Fincra’s multicurrency account API allows you to instantly create accounts in USD and EUR for customers without the stress of setting up a local account. Get started today. Banking Access Bank records $257,000 as “unrealised” FX gains Image Source: Access Bank Access Holding, the parent company of Nigeria’s largest bank by customer base, has posted its second-quarter financial statement. The company reported a pre-tax profit of ₦348.9 billion ($218.1 million) for the first half, driven by a surge in interest income from loans and investments. Access Bank earned about ₦646.34 billion ($404.0 million), aided by ₦412.8 billion ($258.0 million) unrealised foreign currency translation gain. The bank’s personnel expenses surged to ₦415.8 billion ($260.0 million) from ₦65.1 billion ($40.8 million). This may have been driven partly by a surge in hiring due to the Access Bank’s recent expansion. In June, Access Bank acquired ABCT Bank in Tanzania to deepen its East African presence. Access Bank’s staff headcount increased from 7,567 to 8,009. The number of high-earning employees—staff earning ₦14.9 million ($9,312) monthly and above—increased by 689 in just six months. Aside from Access Bank South Africa and Kenya, all other foreign subsidiaries reported pre-tax profits. Access Bank South Africa and Kenya posted pre-tax losses of ₦10.6 billion ($6.5 million) collectively. Hydrogen Payment Services, Access Holdings’ FinTech subsidiary, reported a pre-tax profit of ₦238 million ($148,750). Access Pension and ARM Pension, its newly acquired PFA, were both profitable, reporting revenue of ₦15.1 billion ($9.4375 million). Introducing Pay with Pocket on Paystack Checkout Paystack merchants in Nigeria can now accept payments from PocketApp’s 2 million+ customers. Learn more → CRYPTO TRACKER The World Wide Web3 Source: Coin Name Current Value Day Month Bitcoin $63,909 + 1.37% – 0.29% Ether $2,661 + 2.38% – 3.11% Sui $1.62 + 12.17% + 63.11% Solana $1487.04 – 0.99% – 4.64% * Data as of 06:10 AM WAT, September 23, 2024. Events Earnipay – Digital Marketing Specialist – Hybrid (Lagos, Nigeria) Paystack – Finance and Strategy Specialist – Lagos, Nigeria KrediBank – Head of Liability Generation – Lagos, Nigeria Mono – Technical Product Specialist – Lagos, Nigeria Cowrywise – Backend Engineer (Infrastructure, API Engineer, DevOps) – Hybrid (Lagos, Nigeria) When – Sales and Marketing Operations Specialist – EMEA, Remote Spacefinish – Associate Designer – Lagos, Nigeria LemFi – Customer Support Representative (Chinese Speaking) – Remote (Any Location) Kuda – Senior Product Designer (3+ years of experience) – Lagos, Nigeria Apex Web Network – Marketing Specialist – Hybrid (Lagos, Nigeria) Issue virtual USD cards for you and your customers Do you want to issue virtual USD cards for your customers and business expenses? Use Kora’s APIs to issue cards, customise your card program, and set your customers’ funding
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🚀Entering Tech #74: Is Uploaded Intelligence a moonshot goal?
What happens when humans and machines merge? 21 || September || 2024 View in Browser Brought to you by Issue #74 IS UI amoonshot goal? Share this newsletter Greetings ET people This is the last edition of Entering Tech you will ever receive…on Saturday at 3PM at least. Future editions of ET will now come to your inboxes on Wednesdays at 10AM starting September 25. On to the business of the day! How many conspiracy theories about wealthy people can you think of? Aliens trying to contact Mark Zuckerberg, extraterrestrial monsters captured by the SCP, influential people plotting world domination at Bilderberg meetings, or the classic “all billionaires are shape-shifting lizard people” trying to freeze themselves for immortality. Here’s one more: Uploaded Intelligence (UI). While Hollywood often dramatises UI, shows like Amazon Prime’s Pantheon explore why uploading your brain to the cloud might make sense. A quick Google search shows that UI is still science fiction, but wasn’t artificial intelligence (AI) one a few decades ago? In this edition, we nerd about why UI makes for a good conspiracy theory about ultra-wealthy people could create new jobs in the future Emmanuel Nwosu Intelligence for intelligence In 1950, Alan Turing, a brilliant mathematician and computer scientist, woke up one day and decided he was going to create what we now know today as the “Turing Test.” Alan Turing He wanted to answer a simple question: “Can machines show human-like intelligence?” In the test, a human “judge” communicates with both a machine and a human by asking the same questions without knowing which is which. If the judge cannot distinguish between the two based on their responses, the machine is said to be “thinking” like a human. Seventy-four years later, this test remains the gold standard for evaluating AI. Here’s one fun fact: no AI model has successfully passed this test. There have been significant achievements. In 1997, for example, IBM’s Deep Blue defeated chess champion Garry Kasparov. Nineteen years later, AlphaGo defeated a European champion in the board game “Go.” AI has since become mainstream, with over 180 million ChatGPT users today, and countless businesses relying on its API to integrate AI features. However, with this increased accessibility comes a downside: fear. Many worry that AI’s rapid advancement (still in its infancy) and widespread use could lead to job loss, privacy concerns, and unpredictable consequences in decision-making. Will it really take our jobs? Will AI become sentient and take over the world someday? We’ve answered the first question in these two articles here and here. Only time—and Arnold Schwarzenegger, can answer the second one. Fundamentally, AI and UI are birds from the same branch of technology, but the difference is in who’s in control. With AI, it’s the machine making decisions, while in UI, a human mind is behind the system. Pantheon by Amazon Prime In Amazon Prime’s Pantheon, high-schooler Maddie Kim receives strange messages from her supposedly deceased dad, who has had his mind uploaded to the internet. He became an “Uploaded”—a term for those whose consciousness is in the cloud—living on as a digital self. Intelligence for intelligence, UI represents a perfect symphony between human genius and machines; while terrifying, there’s much we can achieve together. *Newsletter continues after break Get student discounts for Moonshot 2024! Are you a student looking to fulfill your dream career in tech? Moonshot is giving out tickets to students at ₦5,000 only. As a student, you will get access to all Entering Tech sessions, all workshop sessions, and brand merch. Here is your chance to save a seat at Moonshot 2024. To get tickets, click here. The five stages of tech shock Elisabeth Kübler-Ross, a Swiss-American psychiatrist, proposed that the human psychological response to grief occurs in five stages: denial, anger, bargaining, depression, and acceptance. This framework can also apply to the shock in response to terrifying technology. When AI and ChatGPT first emerged, many were in denial about the chatbot’s capabilities. Then, large language models (LLMs) improved, with Midjourney creating fantastic images and ChatGPT’s responses getting better. Then people started bargaining. “How can I use AI to work faster?” “How can I become productive using AI?” We have an Entering Tech Edition that answers these questions here. Soon after, people feared that AI would take all the high-paying critical thinking jobs and leave them fighting for scraps. We’re now witnessing AI acceptance, where people have learned to live with it and use it effectively. What many didn’t realize is that AI has created a slew of jobs as it became mainstream—AI ethicists, data annotators, AI product managers—and made machine learning engineers more sought after. UI’s obvious perk is offering humans a messed up version of immortality, but like AI, it could create new jobs too. We learned from ChatGPT that if UI becomes mainstream, it will open up industries. One thing preventing rapid tech development is its newness; we’re still learning how to apply it. When people are uploaded to the cloud, they gain access to unlimited data and technology. There will be less room for errors to happen. In healthcare, medical research becomes faster. In finance, market predictions become a lot more accurate; just ask any Uploaded. Image source: Google For the non-Uploaded humans that live on, we could become virtual reality designers, integration specialists, UI machine learning scientists, and hardware engineers (hopefully we don’t get more data centres than humans on Earth); and if the gig pays better, you could offer your services exclusively to the Uploaded. The technology is both terrifying and exciting. However, it is expensive; the closest existing thing to UI is Elon Musk’s Neuralink—and that says a lot. *Newsletter continues after ad break Hack Growth with the Africa Startup Festival! Join the Africa Startup Festival for an exclusive Marketing & Growth Masterclass designed specifically for founders like yourself. This hands-on event will provide real-world strategies to help accelerate your company’s growth and visibility. Register here. The future of work? The World Economic Forum estimates that 25% of
Read MoreMeta’s ex-content moderators seek $1.6 billion in compensation in Kenya
Meta now faces two cases in Kenya: an ex-moderator working for Sama sued the social media giant for moderating horrific content, and 187 former Sama moderators say they were unfairly fired and are seeking compensation. Kenya’s Court of Appeal has upheld the Employment Court’s ruling allowing 187 Facebook content moderators to sue Meta, the parent company of Facebook, WhatsApp, and Instagram. The decision means Meta can be held liable for the moderators’ treatment in East Africa’s largest economy, which could pave the way for a potential settlement after negotiations stalled last October. The ex-moderators are seeking $1.6 billion in compensation. “The cases by the content moderators against Meta, Sama, and Majorel can now proceed. Facebook had argued that it was a foreign company that couldn’t be sued in Kenya,” Mercy Mutemi, an advocate representing the ex-Sama Facebook moderators, said on Friday. Judges D.K. Musinga, Asike-Makhandia, and J Mativo said that the main dispute, which cites unfair dismissal, is still pending determination. This means the case will proceed to the trial court if a settlement is not reached. “Whether or not the redundancy was lawful is a matter for determination during the hearing. We say no more,” the judges said. Sama, a global Business Process Outsourcing organisation, dismissed the moderators after they attempted to unionise, even though Sama had claimed it had no objection to its employees being represented by a union. The moderators had also argued that their work exposed them to disturbing content and that their monthly pay of approximately KES 60,000 was not commensurate with the amount of disturbing content they had to flag. Sama and Majorel have since discontinued their content moderation business for Meta with the former now focusing on artificial labeling. Majorel laid off over 200 employees after failing to secure Meta’s business in 2023.
Read MoreGTCO’s fintech HabariPay begins recovery of ₦1.1 billion sent to customers in error
HabariPay, the fintech subsidiary of Guaranty Trust, has begun a legal process to recover ₦1.1 billion (*$1.1 million) erroneously sent to several thousand account holders in 2023. On Wednesday, a federal high court in Lagos granted an application for over 40 financial institutions to restrict accounts that received those funds. The fintech lost the money after it mistakenly credited merchants twice. As a condition for lifting those restrictions, affected merchants will be contacted and asked to refund the extra money received. “Any other account that benefitted or received the double credit transaction” will also be compelled to refund the extra money, said court documents seen by TechCabal. The court documents did not specify how the double credits happened. One person with direct knowledge of the situation said hackers accessed the fintech’s website using a strategy called race conditioning, which allowed them to trigger simultaneous transactions. At least one person connected to GTCO claimed the incident resulted from human error. Before instituting the legal process, HabariPay had begun recovering some of the funds by directly contacting merchants to reverse some of the transactions, one person with knowledge of the situation said. It only went to court to compel merchants it could not reach independently to also reverse the transactions. Court orders are crucial for financial institutions since they cannot reverse erroneous transactions without legal authorisation. The fintech’s delay in initiating the court process underscores the slow pace of legal proceedings in Nigeria, a challenge for financial institutions that need to recover lost funds quickly. Habari Pay’s fraud incident highlights the worrying trend in Nigeria’s financial sector, where financial institutions lost $25.7 million to fraud in the second quarter of 2024—a 1,784.94% jump from the previous quarter. *The naira’s exchange rate to the dollar in September 2023 was ₦923/$1. US rate cut could revitalise foreign inflows into African startups, increase debt deals
Read MoreUS rate cut could revitalise foreign inflows into African startups, increase debt deals
Africa-focused venture capitalists expect that the US Federal Reserve’s decision to cut interest rates could improve the inflow of foreign capital on the continent. The Federal Reserve cut the key rate by 50 basis points—the first cut in four years—higher than the 25 basis points predicted by several analysts. From 2020 to 2022, a zero-interest rate policy pushed investors to seek higher returns in more asset classes and markets. “Africa is always seen as an alternative to when the market isn’t great in the US. People don’t invest in Africa because they want to invest in Africa but because it’s just a better option for them with regard to what’s available to them and their original markets,” Haile Amegashie, an Africa-focused investor, told TechCabal. As interest rates rose in 2023, investors retreated, leading to a significant drop in funding and growth-stage deals across Africa. Only four Series B rounds were completed in the first half of 2024, reflecting the sharp decline in capital flow. This year’s rate cut comes as African venture capital firms are actively raising funds and could make U.S. fund managers more open to investing in Africa once again, two investors said. “I think [the rate cut] has a long-term effect to increase the sentiment of US investors or foreign investors to look at (the) African market. But I think it would take time; maybe we will see an actual positive sign six months from now,” a partner at an African growth stage firm who asked not to be named told TechCabal. In H1 2024, African startups raised $779.7 million, the lowest amount since 2020. This funding dip has led startups to shift focus from growth at all costs to a pursuit of positive unit economics. Cost-cutting measures, including layoffs, have become more common. Lower U.S. interest rates also lead to a weaker dollar, which might bode well for African startups seeking to raise debt funding, investors shared. Debt funding was the highest source of funding for African startups in the first half of the year. “[The low rates] will also make it more feasible for African companies to borrow, again, from US lenders, which used to happen a lot, but after 2022, in my understanding, it has shrunk quite a bit because it became almost suicidal for African companies, or companies operating in weak currency economies to take any US debt because the cost to payback was just impossible,” the partner, who asked not to be named, said. African currencies must remain stable for the benefits of a weaker dollar and low interest rates to be felt. Many African currencies have recently experienced devaluation, and if this trend persists, it could diminish the positive impact of the U.S. interest rate cut on the continent. The rate cut could also boost investment in smaller, less congested markets as investors seek better returns. A broader approach to investing will spur development across the continent and benefit Africa’s tech ecosystem.
Read MoreE-commerce platform Sky.Garden removes 1,500 vendors over counterfeiting claims
Sky.Garden, a Kenyan e-commerce platform for electronics and home products such as furniture, removed 1,500 of its 30,000 vendors in a “clean up” of counterfeit goods. The company dismissed claims that some vendors were boycotting the platform. “We have not observed any boycotts from vendors. However, we recently conducted a thorough cleanup of the marketplace. This process involved removing brokers and sellers of counterfeit or substandard goods,” Sky.Garden told TechCabal in a statement. The e-commerce platform has also removed brokers who falsely claimed to be sellers. Brokers help vendors sell their products on marketplaces, but they do not own any merchandise. Sky.Garden’s crackdown on counterfeit goods conflicts with claims by at least three vendors that they were unfairly removed from the platform. Several other vendors stopped posting their products on Sky.Garden’s e-commerce site, those people claimed. At least five customers also told TechCabal that their electronic orders from Sky.Garden were never delivered and the company promised refunds. “We were told to wait for up to 24 hours to receive a refund,” said one customer who waited three weeks for the refund. Sky.Garden said some refunds were delayed because of complications with select merchants. “However, we have since resolved these issues, and all outstanding refunds have been processed,” the company said. Sky.Garden claims it has a 75% fulfillment rate and an average commission of 8%. Fulfillment rate is the percentage of customer orders that are successfully processed and delivered on time. In 2022, Sky.Garden was acquired by buy-now-pay-later (BNPL) firm Lipa Later for KES 250 million ($1.93 million). The acquisition was a lifeline for the struggling company which announced layoffs of over 50 employees. Some of those employees were retained after the acquisition. “The transition over the past year has been a continuous learning experience, and we’re proud of the progress we’ve made. Our primary focus remains to position Sky.Garden as Kenya’s leading marketplace,” Juliet Wanjiru, Sky.Garden’s managing director told TechCabal. As sister companies, Sky Garden customers use Lipa Later’s BNPL services to spread out payments for online purchases.
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👨🏿🚀TechCabal Daily – HeyFood, Hello Vindication
In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning Today, Founder Institute is celebrating the graduation of its 10th cohort with a fireside chat themed “Scaling with Resilience.” Our folks on the inside have told us that this event will feature insights from organizational leadership experts, founders of venture-backed startups, and experienced investors. It’s also a fantastic opportunity to connect with the Founder Institute Lagos ecosystem, including FI’s network of startups, alumni, partners, investors, and mentors. RSVP here. Citidata’s big bet on edge data centres in Nigeria HeyFood, hello vindication South Africa cuts back on interest rate as inflation cools Funding Tracker The World Wide Web3 Events IoT Citidata’s big bet on edge data centres in Nigeria Image Source: Wunmi Eunice/TechCabal Nigeria’s data centre market is a study in contrasts. On one hand, the demand for data centre solutions is growing across different big data businesses, such as government entities and banks, which are required to store data locally. On the other hand, the country still only has 14 data centres compared to South Africa’s 39, the most on the continent. Generally, Africa still has much catching up to do with other continents. South Africa can count itself lucky as bigger players like Amazon Web Services are committing to developing data centres. For Nigeria, Citidata Centre is one of the companies trying to fill this demand gap. Its plan? Build six new Tier III edge data centres in Ogun State and Lagos State by 2027. The company’s flagship centre in Ogun state, which launched in July 2024 with a 30-rack capacity, is set to expand to 80 racks. Five more centres will be located across key business hubs like Ajao Estate, Surulere, Lagos Island, Lekki, and Victoria Island. Edge data centres offer a practical solution for Nigeria’s market where large-scale infrastructure is still too costly as businesses—even banks are trying to cut costs on infrastructure. By focusing on local assembly and partnerships, Citidata aims to keep costs down. As Citidata CEO Andie Moyan noted, “agility” and “cost-effectiveness” are key in this environment. When the options are cheaper and offer better incentives for big businesses to jump ships, they’ll make the switch. As Nigeria’s demand for internet connectivity and data storage grows, companies like Citidata are positioning themselves to play a role in closing the infrastructure gap. Whether this strategy can improve Nigeria’s data centre game remains to be seen, but one thing is clear: the race to meet demand is only getting started. Read Frank Eleanya’s article. Read Moniepoint’s Case Study on Funding Women After losing their mother, Azeezat and her siblings struggled to keep Olaiya Foods afloat. Now, with Moniepoint, they’re transforming Nigeria’s local buka scene. Click here for a deep dive into how Moniepoint is helping her and other women entrepreneurs overcome their funding challenges. Startups HeyFood, hello vindication GIF Source: Zikoko Memes HeyFood, a food delivery startup that operates in Ibadan, Nigeria’s third largest city, says it is profitable. The Y-Combinator-backed company didn’t say by how much, probably reserving that detail for its current and potential investors it is speaking to in its ongoing fundraising to expand to other states. HeyFood’s report about being in the green is noteworthy for several reasons. Firstly, it adds to a string of pleasant vindications for the food delivery sector. In 2023, we saw deep-pocketed food delivery companies like Jumia Food, and Bolt Food throw in their towels due to the inability to keep up with the aggressive marketing. Soon after, we began seeing food delivery startups report profitability one after the other. In November 2023, YC-backed Chowdeck said it is profitable after fulfilment. Last week, YC-backed FoodCourt said it makes as much profit as a healthy restaurant—enough to sustain its operations. HeyFood, says it loses no money from its operations. We might have to check in on what is in the YC water, but until then, this poses two questions did predecessors quit the game too early after overestimating the challenges in the sectors? Or is the new player curving the ball differently? In answering positively to the first question, one may argue that leapfrogging into food delivery requires a long growth curve and the big players got jaded prematurely—right before investment into changing customer behaviours paid off. Now, tens of thousands of Nigerians make orders online monthly even with the last of their meagre pay. The average orders on HeyFood, Chowdeck and FoodCourt are ₦4,000 ($2.44) ₦7,000 ($4.27) and ₦15,000 ($9.14) respectively. The answer to the second question may show that this is less about long-suffering and more about strategising. HeyFood says that to 15x its revenue, it needs to expand to Abuja and Benin, instead of Lagos. HeyFood says that this is the strategy of Doordash, a U.S. company that grew market share by capturing suburban cities before moving into metropolitan ones. This is a more cost-efficient strategy that will allow the startup to piggyback on the popularity of local lucrative restaurants that sell food at true value, instead of restaurant chains that have trained their customers on discounts (fancifully named value-pack meals.) This is the opposite of what predecessors like Jumia did. Whatever the true answers to these questions are, only time will tell. Issue USD and Euro accounts with Fincra Whether you run an online marketplace, a remittance fintech, a payroll, a freelance platform or a cross-border payment app, Fincra’s multicurrency account API allows you to instantly create accounts in USD and EUR for customers without the stress of setting up a local account. Get started today. Economy South Africa cuts back on interest rate as inflation cools Image source: SARB After ten consecutive hikes followed by a year of keeping the rate unchanged, the South African Reserve Bank has cut interest rates by 25 basis points. On Tuesday, the bank lowered interest rates from 8.25% to 8%. For observers of Africa’s most industrialised economy, the decision was expected. Per SARB’s inflation update on Wednesday, South Africa’s inflation eased to 4.4% after
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Citidata expands Nigeria’s data centre market with six new data centres
With only 14 data centres nationwide and growing demand for storage, Citidata Centre plans to build six Tier III edge data centres in Ogun and Lagos state in the next two years. Edge data centres—small data centres close to users and their devices—have low capacity and are easy to manage. They offer affordability in a price-sensitive market. Before joining forces to establish Citidata, Petrodata Management Services and TopTech Engineering Limited managed edge data centres in Lagos and Abuja for oil and gas clients. TopTech Engineering worked with Huawei to provide final fittings for the Chinese company’s data centres. Most data centers are concentrated in Lagos, but demand for colocation or data centre services is rising as the federal government has mandated all ministries and departments to store data locally. State governments are also pushing for colocation, further driving demand. For Citidata, citing its flagship facility in Ogun state—the first Tier III data centre in that state—makes sense from a disaster recovery or business continuity perspective. A disaster could be any event that disrupts the normal operations of the data centre such as natural disasters, cyberattack, or power outage. If a cyber attack or earthquake for instance affected data centres in Lagos, a company or government entity that backed-up its information in a data centre outside Lagos, has less continuity issues. “Having a data centre in Ogun State is good business for disaster recovery for companies based in Lagos, especially government guys. They like to use different states not unlike private companies that do the same state,” one data centre expert who pleaded anonymity to speak freely, told TechCabal. Citidata Centre’s flagship data centre went live on July 15, 2024 with a 30-rack capacity, with plans to scale it to 80 racks. Five other facilities will be located at Ajao Estate, Surulere, Lagos Island, Victoria Island, and Lekki and will be going live by 2027. The company considers these areas commercial areas where reducing data transfer time is critical for businesses. Andie Moyan, CEO of CitiData Centre said each of the data centres in Lagos will also come with a capacity of below 100 racks. This is intended to keep the facilities agile and cost-effective. “The immediate need isn’t just for large-scale capacity, but for processing power that is closer to end-users,” Moyan told TechCabal. Unlike standard-sized and large-scale data centres that require megawatts of power, the Magboro facility kicked off with 100KW capacity. Over the last decade, data centre capacity has surged globally due to rising demand for internet connectivity, driven by over 5.45 billion internet users. This demand has spurred a competitive race for data storage facilities, particularly data centres. Leading the pack is the United States with 5,388 data centres and more than 1,000 MW of capacity, followed by Germany (522), the UK (517), China (449), and Canada (336). Africa lags behind with 119 data centres. The disparity between leading countries is stark: South Africa has 39 data centres, while Nigeria has only 14. South Africa also dominates in capacity, accounting for 400 MW of Africa’s total 480 MW, with Nigeria contributing just 64 MW. One of the challenges identified by the industry is the cost of constructing the facilities and how affordable they are to consumers. Edge data centres are low-hanging fruits for many operators and companies. Citidata Centre plans to build the facilities locally which will further reduce the costs and support clients seeking affordable alternatives. TopTech Engineering will be responsible for building the data centres in any chosen location, while Petrodata will manage the facilities. “We believe that fostering local assembly and partnerships is essential for building a sustainable ecosystem that can support Nigeria’s digital transformation,” the company said. Moonshot by TechCabal is gathering Africa’s most audacious builders and thinkers in Lagos, Nigeria. You can get tickets here.
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South African Reserve Bank cuts interest rate for the first time in four years
The South African Reserve Bank has cut the interest rate by 25 basis points to 8% after the country’s headline inflation fell to its lowest levels in three years. It is the first rate cut since 2020. The bank has kept the rate unchanged at 8.25% since May 2023. “This decision is consistent with projections of lower inflationary pressures in the medium term,” said Lesetja Kganyago, governor of South African Reserve Bank. South Africa’s inflation slowed to 4.4% in August, down from July’s figure of 4.6%, after a decrease in transport prices and utility rates. It is the lowest figure since April 2021. With the rate cut, the Reserve Bank looks to inject more money into Africa’s most industrialised economy and drive growth momentum which has been stoked by positive sentiments towards the country’s government of national unity (GNU) and improved electricity supply. Despite the improvement, South Africa’s economy only grew by 0.4% in H2 2024, making the case for a need to boost growth by cutting the lending rate. The rate cut has largely been predicted by most economists in anticipation of the apex bank’s announcement. Economists also expect the central bank to cut the lending rate in the next three quarters and project it to reach 7.25% by May 2025. The inflation slowdown has been cited as the motivating factor for the bank’s decision to continue cuts into the future. Inflation is expected to average 4.7% in 2024 and decline to 4.3% in 2025. In July 2024, the central bank said South Africa’s economy is about 100 basis points away from what it considers ‘neutral’ and as a result, it will reduce rates gradually instead of making large rate cuts. Some economists argue that instead of gradual rate cuts, the bank should make significant cuts in the region of 50 basis points. SARB’s MPC is expected to announce its next rate decision on 21 November 2024. African tech leaders and global players will be at Moonshot by TechCabal. You can get tickets here.
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