As digital banking grows, Kenyan banks continue to ditch costly ATMs
Kenyan banks spend over $900 monthly to run a single ATM, and the bill grows for leading commercial banks with hundreds of ATMs spread across the country. For years, automated teller machines (ATMs) were the go-to option for customers trying to avoid long queues in the banking halls. But not anymore, thanks to the growth in digital banking options like mobile apps and agent banking. It has allowed traditional banks to reduce their investment in ATMs for the fifth consecutive year. Banks closed 77 ATMs between January and December 2023, bringing the total count to 2,282, according to data from the Central Bank of Kenya (CBK). This is the lowest number of ATMs recorded in the country in half a decade, a notable drop from the peak of 2,573 ATMs recorded in 2019. The shift is due to the growing popularity of digital banking channels. Starting with Equity Bank, Kenya’s largest bank by market capitalisation, all local banks have adopted digital channels. Digital banking has grown in Kenya between 2020 and 2024. The value of digital payments in the country rose from $2.63 billion in 2019 to $7.15 billion in 2023 and is projected to reach $8.58 billion in 2024. Digital banking could also reach a net interest income of $255 million by the end of 2024. Mobile banking was the most used channel, jumping from 52% in 2020 to nearly 68% by March 2024. Internet banking also grew, but at a slower pace, reaching around 23% in March 2024, reflecting increased internet access and device ownership. ATMs are expensive Kenyan banks incur a monthly cost of at least KES 117,000 ($906) per ATM, and lenders like Kenya Commercial Bank, which has 380 ATMs nationwide, could spend over KES 44.4 million ($344,000) on maintenance. “It is costly to run an ATM terminal, so banks tend to save this cost by closing ATMs with less activity,” a bank executive told TechCabal. “These costs are in the form of topping up ATM channels with cash daily and manning the facility. This is not the case for digital transactions.” In 2023, agency banking grew in Kenya, with 16 commercial banks and five microfinance banks (MFBs) enlisting 87,531 and 677 bank agents, respectively. More than 90% of the bank agents were working for Equity Bank (40,211), KCB (24,055), and Cooperative Bank (15,519), indicating the popularity of the service, especially in rural parts of the country. The demand for cashless transactions is also evident in mobile money, whose transactions in Kenya grew to KES 788 billion ($6.1 billion) in December 2023. With 38.7 million users, mobile money penetration hit 75%. The value of money moved through these platforms jumped from KES 7.8 trillion ($60 billion) in the year to June 2023. The COVID-19 pandemic accelerated mobile payment adoption, and many users continued using the channel after the CBK re-introduced transaction costs in early 2023.
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TASUED Post UTME 2024: All application details
The Tai Solarin University of Education (TASUED) announces the commencement of its Post UTME screening exercise for the 2024/2025 academic session. Below are the essential details and guidelines for prospective candidates. Eligibility criteria for TASUED Post UTME 2024 UTME candidates: Candidates who selected Tai Solarin University of Education as their first-choice institution. Must have scored a minimum of 140 in the 2024 UTME. Only candidates listed on the University profile on the JAMB CAPS will be considered. Direct Entry candidates: Must possess A level/OND/HND/NCE/JUPEB/IJMB qualifications. Should have chosen TASUED as their first-choice institution. Must have obtained the 2024 Direct Entry JAMB form. Admission requirements Candidates must meet specific ‘O’ level requirements for their chosen programmes. Refer to the University Degree Brochure for detailed programme requirements before completing the online application form. Registration dates The sale of the online UTME/DE form starts on Monday, 29th July 2024. The registration closes on Friday, 23rd August 2024. Important notice Providing incorrect or false information will result in disqualification. Screening exercise schedule for TASUED Post UTME 2024 Dates: The TASUED P.UTME 2024 screening exercise will be conducted from Tuesday, 27th to Friday, 29th August 2024. Location: Main Campus of Tai Solarin University of Education. Mandatory requirements: – Participation in the TASUED P.UTME 2024 screening exercise is compulsory for admission consideration. Required documents for screening Tai Solarin University of Education Post UTME Candidates must bring the following to the screening exercise: Colour print-out of the online Screening Form. Original JAMB Examination Notification of Result Slip or Direct Entry Registration Slip. Screening slip and receipt . Final information on the Tai Solarin University of Education Post UTME 2024 Candidates should regularly check the University portal for updates and further details regarding the TASUED Post UTME 2024 screening. TASUED Post UTME screening results will usually be available on the Admission portal 24 hours after the screening exercise.
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JAMB CAPS 2024 now fully activated for candidates
The Joint Admissions and Matriculation Board (JAMB) has fully activated the Central Admissions Processing System (CAPS) for 2024 candidates. This platform streamlines the admissions process, ensuring transparency and efficiency. Accessing JAMB CAPS 2024 Candidates can access JAMB CAPS 2024 through their JAMB profiles. To do so, they must: 1. Log in to the JAMB E-facility portal. 2. Navigate to the CAPS section. 3. Review their choice of institution and course. Key features of JAMB CAPS 2024 Admission status: Candidates can check their admission status. Nigerian Universities, and other academic institutions update admission offers in real-time. Acceptance or rejection: Candidates can accept or reject admission offers promptly. Failure to accept offers may result in forfeiture. Course transfer approval: Institutions may transfer candidates to different courses. Candidates must approve or decline such transfers. Steps to check admission status Visit the JAMB E-facility portal. Log in with your JAMB credentials. Select ‘Check Admission Status’. Access the CAPS page. Review your admission details. Importance of JAMB CAPS 2024 Transparency: JAMB CAPS ensures a transparent admissions process. Candidates have direct access to their admission status and decisions. Efficiency: Institutions process admissions faster and more accurately. Candidates receive prompt notifications of admission offers. Frequently Asked Questions What happens if I reject an offer? Rejected offers return to the institution for reallocation. Can I change my institution or course? JAMB CAPS allows candidates to request changes. How do I know if I’ve been offered admission? Candidates receive notifications on their CAPS profiles. Final thoughts Candidates must regularly check their profiles to stay updated. Prompt action on offers and requests is crucial. The system ensures a fair and transparent process, benefiting both institutions and candidates. For more details, visit the JAMB E-facility portal and explore the CAPS section. For additional information, contact JAMB support or visit their official website.
Read More₦519 billion H1 loss: MTN Nigeria’s bottom line takes an FX-induced battering
MTN Nigeria records massive loss after tax in H1 2024, driven by FX volatility. Accelerating inflation and currency volatility, which defied all the policies implemented in the first half of 2024, created a tough macroeconomic environment for some of Nigeria’s biggest businesses. MTN Nigeria, the country’s largest telecommunications firm and historically a guaranteed profit maker, reported a loss after tax of ₦519 billion for the first half of 2024. It’s a massive jump from the ₦85 billion it lost in H1 2023. Most of those losses are linked to the company’s USD obligations, such as leases priced in dollars and financing costs. The devaluation of the naira and currency volatility in H1 have significantly increased those costs. “Overall, these headwinds put pressure on consumers and the cost of doing business in the country,” wrote CEO Karl Toriola in the results shared on Wednesday. “This includes, for MTN Nigeria, additional forex losses, leading to pressure on our period-end negative capital position.” To mitigate these FX exposures, MTN has reduced its outstanding letters of credit in dollars to $100 million by June 2024. It is also renegotiating lease agreements with IHS towers. The telecom giant is seeking regulatory approval for tariff increases to offset some of those losses. Key takeaways MTN has 79.4 million mobile subscribers in H1 2024 Active mobile money (MoMo PSB) wallets increased by 73.9% to 5.5 million FinTech revenue grew by 11% While revenue grew to ₦1.53 trillion, cost of sale rose to ₦252 billion (33% increase) while operating expenses came in at ₦738 billion. Data revenue outpaces voice Data revenue grew to ₦727 billion, outpacing voice revenue of ₦632 billion. Mobile money wallets increased to 5.5 million from 3.1 million recorded in H1 2023. MTN also grew its customer base to 79.4 million despite barring 8.6 million subscribers in H1 2024. On Monday, the company closed its retail outlets nationwide after some of its offices were vandalised by angry customers whose SIM cards were blocked on Sunday.
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Next Wave: Why hasn’t Kenya produced a unicorn yet?
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 27 July, 2024 Why hasn’t Kenya produced a unicorn yet? If you ask any Kenyan founder, they will tell you that achieving unicorn status is equivalent to striking gold. It represents the pinnacle of success, a milestone that only seven startups in Africa have achieved. Kenya, despite being one of the four largest tech ecosystems in Africa, has no homegrown unicorns. A successful Kenyan startup could potentially expand rapidly across the East African region, significantly increasing its market size and chances of becoming a unicorn. But has this happened? What setbacks might Africa’s Silicon Savannah be facing, considering that many startups generally have unicorn ambitions? There is a general thesis that Kenyan startups are not “ambitious” enough to solve the continent’s most complex issues. The Global Startup Ecosystem Index Report declared that Kenya has not produced unicorns because its startups have yet to explore regional and international markets. StartupBlink, in a separate report, agreed: “Kenya will not be able to create a critical mass of unicorns from within its local market.” Five industry experts who spoke to me cite several reasons Kenya hasn’t had a unicorn, including the one that says the country is a small market. “A unicorn from these lands would need to be a continental or global business, solving a larger-scale problem,” one angel investor told me. The argument that Kenya’s market is too small to nurture a unicorn is debatable. For instance, in 2023, Kenya replaced Nigeria, which has produced four unicorns (Opay, Jumia, Flutterwave and Interswitch), as Africa’s top startup funding destination. In that year, Kenyan startups raised about $800 million, surpassing Nigeria, which dropped to fourth place after leading in 2021 and 2022, per The Big Deal. It is challenging to grow where M-PESA already exists A business’s profitability often depends on unit economics, not just market size. A high-margin business model can generate significant revenue even in a smaller market. A startup can become a unicorn by dominating a specific niche, regardless of overall market size. There are many examples of this globally: OpenAI popularised AI chatbots and Israel’s Wiz found a niche in cloud security. Granted, these are big companies backed by the world’s top venture capital firms, but I don’t think niche domination will happen soon in Kenya anyway. Next Wave continues after this ad. Sign up now for the Wealth Summit for free. Get inspired to reach your financial goals. Sign up here! This is because fintech startups—the only ones often projected to become unicorns—in the Kenyan market are yet to crack a new market that Safaricom’s M-PESA hasn’t already dominated. Utility payments? M-PESA has that. Global payments? M-PESA has this covered. How do you truly innovate around these products, considering M-PESA already leads the fintech space? “If you look at it, most unicorns are fintechs. But M-PESA already dominates in Kenya,” the expert told TechCabal. “So, it’s hard for a fintech to claim that unicorn status, especially now that valuations are more conservative.” The aforementioned Startup Ecosystem Index Report once projected that startups like M-KOPA, a digital credit company; and Wasoko, a B2B e-commerce platform, stood a chance of becoming unicorns. This projection was made in 2022. Since then, Wasoko has exited Zanzibar, Uganda and Zambia to “focus on the momentum we’ve built in our more mature markets”. Its valuation has also shrunk to $260 million as of December 2023, with former employees saying that its “losses were quite high”. M-KOPA raised $250 million in 2023, but it hasn’t reached that valuation yet. Its last valuation was $330 million in May 2023. Despite their potential, Kenyan startups have yet to fully overcome the complex hurdles specific to the Kenyan market, hindering their path to unicorn status. While hoping that fintech could be the unicorn pathway for Kenya’s tech ecosystem, it’s essential to consider other sectors. Kenya might have unique problems to solve in alternative areas like agriculture and healthcare. Maybe these are where the Silicon Savannah unicorns will emerge from. Kenn Abuya Senior Reporter, TechCabal. Feel free to email kenn[at]bigcabal.com, with your thoughts about this edition of NextWave. Or just click reply to share your thoughts and feedback. We’d love to hear from you Psst! Down here! Thanks for reading today’s Next Wave. Please share. Or subscribe if someone shared it to you here for free to get fresh perspectives on the progress of digital innovation in Africa every Sunday. As always feel free to email a reply or response to this essay. I enjoy reading those emails a lot. TC Daily newsletter is out daily (Mon – Fri) brief of all the technology and business stories you need to know. Get it in your inbox each weekday at 7 AM (WAT). Follow TechCabal on Twitter, Instagram, Facebook, and LinkedIn to stay engaged in our real-time conversations on tech and innovation in Africa. If you liked this edition of Next Wave, please share with your friends. And feel free to reply with thoughts and feedback. 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👨🏿🚀TechCabal Daily – A billion-dollar bailout
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning We are in the market for a couple of new roles. First, we’ve got openings for senior business and technology analysts who will help us demystify Africa’s tech ecosystem. We are also in the market for a new Sales Manager. If you or anyone you know can open doors and close deals faster than you can read this newsletter, then apply for the role and help us grow our revenue streams. In today’s edition Ethiopia gets $3.4 billion bailout from IMF Lagos wants to raise $121 million from taxing remote workers Nigeria wants to digitise government offices with new bill The World Wide Web3 Events Economy Ethiopia gets $3.4 Billion bailout from IMF Ethiopia finally gets some respite. The country has struggled with double-digit inflation and has struggled to pay back debts worth $28.4 billion since 2021. Recently, it defaulted on the interest payment for a $1 billion Eurobond that matures later this year. But what do you do to the old and frail? You help them. And who better to help Ethiopia than the International Monetary Fund (IMF)? Ethiopia began discussing a $10.5 billion aid package with the IMF and World Bank in early July to boost its ailing economy. To attract support from the IMF, the country also devalued its currency by allowing market forces to determine its exchange rate freely. The IMF will lend the country $3.4 billion over four years, starting with a disbursement of $1 billion. The loan will allow Ethiopia some respite as the funds will stabilise the economy and support local spending. Read Moniepoint’s 2024 Informal Economy Report Did you know that only 2.8% of informal businesses are started out of passion? Click here to find out the motivation of businesses in Nigeria’s informal economy. Regulation Lagos wants to raise $121 million from taxing remote workers Nigeria’s commercial capital, Lagos, will start taxing remote workers and digital influencers as part of a plan to raise ₦5 trillion ($3.04 billion) in internally generated revenue (IGR) under the current administration—668% more than it generated in 2022. Lagos wants to tap into the growing remote work and digital economy sector to raise ₦200 billion ($121.8 million) annually in taxes—contributing about ₦600 billion ($365.3 million) to this administration’s IGR target. The big question here is how the government plans to identify taxpayers in this new bracket and implement the taxes, given there’s no centralised system. South Africa has a system that works fairly well, and remote workers must declare their income at the end of every financial year. Last year, its government started trying to cast an even wider net on remote employees by requiring employers of South Africa-based remote workers to deduct pay-as-you-earn (PAYE) tax. This could be As part of its own plans to increase IGR, Lagos will also introduce new tax structures for the property sector, informal, and circular economies. If this is successful, it could serve as a model for other Nigerian states and developing economies looking to expand their tax base. Collect payments anytime anywhere with Fincra Are you dealing with the complexities of collecting payments from your customers? Fincra’s payment gateway makes it easy to accept payments via cards, bank transfers, virtual accounts and mobile money. What’s more? You get to save money on fees when you use Fincra. Get started now. Regulations Nigeria wants to digitise government offices with new bill In 2015, we reported a critical move: Nigeria’s Corporate Affairs Commission (CAC) launched an online company registration portal. A user aptly commented, “It appears the CAC has finally joined us in the 21st century,” highlighting the long-awaited digitisation of a process already standard in other regions. The same sentiment faced the lauded Nigeria Startup Act, signed into law two years ago but yet to be fully adopted by more than half of the country’s states. Since it was passed in 2022—exactly one year after it was drafted—very few provisions of the NSA have been implemented. And now, the government is introducing yet another tech bill, to digitise public institutions across the country. The proposed National Digital Economy and E-Governance Bill, which has passed a first reading, will require all public institutions to conduct activities and functions electronically, including accepting document filings, and information processing. There are also penalties of up to ₦10 million ($6,000) for corporations who fail to comply with the frameworks of the bill. While the new bill will help increase Nigeria’s digital literacy rate by equipping Nigerian civil servants, estimated at 720,000, with digital skills, it remains an uphill climb. Presently, only a few Nigerian parastatals and agencies have a substantial online presence with functional websites and advanced digital systems. Most government agencies have basic websites with limited online services or minimal or no online presence at all. The country’s judicial system, for example, just started an e-affidavit process this month. Critics argue that the new bill might meet the same standstill as it lacks a clear implementation roadmap. Aside from its implementation plan, analysts claim that some provisions of the bill may have already been addressed by existing policies like NITDA’s Government Digital (GDS) Service Framework. While the cost plan for the bill is unknown, Nigeria, in 2022, spent ₦152 billion ($92.5 million) on digitisation projects for a few agencies. With 80% of its public institutions in tow, the budget for the implementation will cost way more. Paystack Virtual Terminal is now live in more countries Paystack Virtual Terminalhelps businesses accept secure, in-person payments with real-time WhatsApp confirmations and ZERO hardware costs. Enjoy multiple in-person payment channels, easy end-of-day reconciliation, and more. Learn more on the Paystack blog → Crypto Tracker The World Wide Web3 Source: Coin Name Current Value Day Month Bitcoin $65,984 – 1.90% + 6.83% Ether $3,277 – 2.20% – 3.98% Neiro Ethereum $0.052 + 100.86% + 100.86% Solana $179.10 – 2.31% + 23.75% * Data as of 23:20 PM WAT, July 30, 2024. Events You can still
Read MoreProlific Nigerian VC firm Ventures Platform casts a wider net across Africa
Ventures Platforms is one of Africa’s most prolific startups. In eight years, it has invested in 78 startups, scoring big wins with Piggyvest, Moniepoint, and Paystack—which Stripe acquired in October 2020 for over $200 million. After these Nigerian successes, it’s turning its attention outside Nigeria and aiming to become more pan-African. Since Kola Aina founded Ventures Platform in 2016, it has only invested in 12 non-Nigerian startups. “Even though we started from Nigeria and most of our investments are based in Nigeria, we always set out to be a pan-African investor,” said Dotun Olowoporoku, the managing partner of Ventures Platform. The firm’s $46 million fund, which was launched in 2021, typically invests $250,000 to $1 million per startup. As it deepens its roots outside Nigeria, it will only invest in “key strategic markets” with a stable political environment, homegrown technology talent, and angel investors. Its most recent investments outside Nigeria have been in the Francophone West Africa region, which satisfies these benchmarks. “Startups only breed where the ecosystem has been put together,” said Olowoporoku. In 2023, the sector-agnostic fund invested in twelve startups, making it one of the most active investors on the continent in a year when funding declined 36% year-on-year. Besides its vast portfolio, Ventures Platform made its name by being a hands-on investor for its startups. In November 2022, the firm appointed Damilola Teidi to lead a team solely focused on supporting its portfolio companies. “As a founder whose aspiration is to build a business that generates a ton of free cash flow, there is no better fund. In my lowest moment as a founder, when we went down to zero revenue, Ventures Platform was there. When I needed to recruit talent, Kola Aina had time on his calendar to speak to an engineer,” Njavwa Mutambo, the CEO of Caantin, a non-Nigerian Ventures Platform portfolio startup, told TechCabal. Ventures Platform: Lake versus Ocean Strategy VC investing is like fishing; you cast your net into a vast ocean and hope for the best. While that’s a simple analogy, VCs and fishermen head to sea every time to take their chances based on robust analysis and hope for outsized returns. For Ventures Platform, fishing either happens in lakes or oceans. The Big 4 (Nigeria, Kenya, Egypt, and South Africa) are seen as oceans where multiple “sharks” can exist in the same market and still thrive, while smaller ecosystems are seen as lakes where there is mostly only one “shark.” Francophone West Africa ties into the firm’s lake strategy, as the firm sees the region as pockets of lakes. The firm will invest in startups in the region as long as they can “dominate the market quickly,” own up to 80% of the market share, and be able to expand into neighbouring countries. “It’s easy for companies to start in Senegal, expand to Cote d’Ivoire and Cameroon, and become huge businesses without coming to Nigeria,” Olowoporoku said. However, acquiring a significant market share can be expensive and capital-intensive. In recent months, the African tech ecosystem has adopted a more conservative approach to spending after the end of the zero-interest rate policy, which reduced startup funding. But Olowoporoku told TechCabal that his firm would still back a startup in the region that is raising money to acquire customers and can retain them. The firm recently invested in Tanel, a health insurance company, and its fourth investment in Senegal. This has not previously been reported. Ventures Platform is also looking to invest in the region, as French startups have an easier path to exit due to French companies’ interest in entering the region through acquisitions, according to Olowoporoku. “We want to go to that market and look for companies that other people might have ignored because they look at that market from a narrow point of view,” he said. Ventures Platform’s GRMTT metrics Venture capital firms often have a thesis for building their portfolios, and Ventures Platform is no different. The firm has five prerequisites for investing in a startup. The firm considers a startup’s growth rate, which must be “incredible” before it cuts a cheque. “Venture investors invest in high-growth companies,” Olowoporoku said. Ventures Platform also considers the startup’s revenue before investing, as it only invests in startups making money. The firm considers the startup’s revenue margin, which helps it determine valuation, and the diversity of the revenue source, which can help startups adapt to exchange rate volatility. “Revenue is important because it’s a reflection of whether they’re creating value and whether someone is willing to pay for that value,” Olowoporoku said. The firm also considers the current reality of the market and the potential of the market in which a startup operates before investing. “A fast-growing business in a capped market is less valuable than a slowly growing business in an uncapped market,” Olowoporoku said.
Read MoreNigeria seeks to force digital transformation with new bill
If the proposed National Digital Economy and E-Governance bill is passed into law, public institutions across Nigeria will be mandated to adopt electronic communication for official correspondence, contracts, and legal proceedings. The National Information Technology Development Agency (NITDA) will be responsible for implementing the bill when passed. Bosun Tijani, Nigeria’s Minister of Communications, Innovation, and Digital Economy, released a draft of the bill two weeks after it passed a first reading at the National Assembly. If the bill is passed, public institutions will conduct activities and functions electronically, including accepting document filings, information processing, document creation and retention, permit or license issuing, and payment processing. “The bill is change-driven. The provisions are very strong, and it’s a culture-shifting bill aimed at driving us towards digitalization,” said Oswald Osaretin Guobadia, Managing partner at DigitA. The Digital Economy and E-Governance Bill mandates electronic records and contracts within government organizations. It also stipulates a fine of not less than ₦1 million per individual and not less than ₦10 million for corporations who fail to comply with the frameworks, guidelines, and regulations under the act. “The bill is a bit overloaded and should have been divided into two separate documents—one for the Digital Economy bill and the other for the E-governance bill,” said one analyst who asked not to be named. The analyst also claimed that some parts of the bill have been covered under different aspects of Nigerian law. The bill also seeks to create a new ICT division that contravenes existing laws established by the Nigerian Communications Commission (NCC) and the National Information Technology Development Agency (NITDA) “The entire bill should have been a directive from the President to different institutions on how they can come together and achieve e-governance,” Guobadia notes. ”Ultimately, the success of this lies in the collaborative nature of the Bill development process.” When enacted, the Digital Economy Bill will bring Nigeria one step closer to e-governance. The country lags behind other African countries—Ghana, Mauritius, South Africa, and Tunisia—that have been identified with high e-government development indexes. The move will also contribute to Nigeria’s goal of increasing digital literacy rates. “The Bill has the potential to significantly improve public administration and service delivery in Nigeria,” notes Davidson Oturu, Managing partner at Nubia Capital. The bill doesn’t state clear rules and procedures for its implementation and may be difficult to implement in areas with limited technological infrastructure. “The implementation may be difficult because the regulating agency (NITDA) already has a lot on its plate and may not be able to deliver on it,” Guobadia said. While the bill will enable e-government and boost digital literacy among government workers, section 62 of the draft seeks to override the provisions of any other law in all matters relating to digital economy and e-government. This can lead to power struggles between existing government agencies who already cater to some part of what the bill covers, the analyst said.
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In the sprawling wilderness, rethink the King: The leopard’s advantage in Africa’s startup jungle
This article was contributed to TechCabal by Oswald Osaretin Guobadia. The sprawling wilderness may glorify the lion’s majestic presence, but the agile leopard truly excels when it comes to thriving in the jungle’s intricate dynamics. Leopards are built for stealth and agility, with a lean and muscular build. They are excellent climbers and can navigate dense vegetation with ease. Their spotted coat provides excellent camouflage, allowing them to stalk prey effectively. In contrast, although larger and more powerful, lions are not as agile or quick and are better suited for short bursts of speed in open areas. The jungle demands nimbleness, stealth, and adaptability — qualities that resonate deeply in the fast-paced world of startups and innovation, particularly in Africa’s dynamic business landscapes. Photo by Owain McGuire on Unsplash The startup terrain: Africa’s economic outlook With a population of over 1.4 billion, Africa presents a vast potential market, yet this opportunity comes with unique challenges. Indeed, Africa is a jungle. Agility and flexibility are not just buzzwords; they are the heartbeat of successful entrepreneurship, especially in environments marked by Brittle, Anxious, Nonlinear, and Incomprehensible (BANI) dynamics. Africa’s blend of opportunities and challenges exemplifies this demanding terrain. To flourish in such an ecosystem, entrepreneurs must embody the spirit of the leopard, navigating complexities with finesse and adaptability. Understanding market dynamics is paramount. Many startups aim for a total addressable market (TAM) that appears vast but often overlooks critical nuances. Factors like mobile phone affordability, data costs, network speeds, and digital literacy significantly influence market accessibility. Conducting in-depth market research would unveil the true TAM, which may be a tiny fraction of the total population. Despite the high population, digital literacy rates in Africa hover within 10–40%, generally lower compared to other regions of the world, with subtle variations across the continent varying with the extent of investments in technology infrastructure and education initiatives, highlighting the need for targeted solutions. According to the depicted data below, Africa’s GDP is expected to grow by 3.5% in 2024, a modest uptick when considered against the backdrop of global economic slowdown, heightened monetary conditions, and substantial debt burdens. This forecasted growth, while positive, must be contextualised within the broader spectrum of African economies, where countries like Nigeria have projected growth rates of 2.5%. Such figures, albeit promising, do not uniformly indicate a swift elevation from poverty; multidimensional poverty still plagues up to 80% of populations in certain areas, directly impacting market penetration and the affordability of products and services. For startups operating within this environment, this necessitates a strategic alignment of their business offerings to meet the economic realities of their consumers. They must navigate these economic waters with agility, crafting offerings that are innovative and accessible to the populace who grapple with limited disposable income amidst their competing life priorities. This juxtaposition necessitates innovative pricing strategies that resonate with the economic realities of the target market. It calls for recalibrated business models, deep consumer insights, and value propositions that address pressing needs. Investing in local innovations and engaging in community-based problem-solving can also ensure that startups are seen as businesses and integral to the societal fabric. Collaborative policy development, effective execution, flexible regulation management, and infrastructure development beyond profit centres are imperative. A pan-African approach unlocks synergies, harmonises regulations, and expands the TAM across borders, tapping into Africa’s vast potential. Innovation can be defined as executing an idea that addresses an unarticulated problem. Within the boundaries of African innovation, it’s clear that true ingenuity lies not just in the tangibility of what is being done but also in the delivery path of how it is done and why it was done. While some solutions may echo endeavours elsewhere and not only articulated but solved, the essence of innovation in Africa thrives in the unique approaches taken to tackle pressing challenges. It’s about the resourcefulness, adaptability, and resilience woven into the execution of ideas that differentiate African innovation, which is why the stealth and agility of the Leopard is king in Africa’s innovation space. Digital platforms must also become more prevalent and user-friendly, ensuring that technology becomes a bridge rather than a barrier to inclusion. Digital literacy and inclusion play pivotal roles in sustainable development. Policies promoting education access, incentivising digital upskilling, and fostering entrepreneurial environments are essential growth drivers. In a continent with a growing youth population, bridging the digital divide is crucial for unlocking Africa’s full potential. In bridging societal gaps, continuous support and training for founders are non-negotiable. Many aspiring entrepreneurs lack prior experience and need mentorship to navigate challenges effectively. Support systems like incubators and accelerators are crucial, offering practical advice on business development and scaling. Additionally, access to funding through measures such as microfinancing and venture capital tailored for African markets can catalyse the growth of startups. What follows should be a strong support network that improves startup success rates and stimulates economic growth. Through these resources, founders can learn from experienced mentors, connect with important networks, and adapt their products to meet market needs, turning potential into tangible success. The high hurdle of BANI dynamics However, Africa’s entrepreneurial journey is not without its hurdles. The continent’s business environment is often characterised by BANI dynamics — Brittle, Anxious, Nonlinear, and Incomprehensible. This volatility creates a complex and unpredictable landscape contributing to Africa’s high startup failure rate. A more granular look at different countries within the continent reveals a varied landscape of startup success and challenges. According to a study by Statista, the average survival rate of startups in Africa was 75% after one year, 46% after three years, and 25% after five years in 2020. These numbers are slightly lower than the global average of 78%, 50%, and 33% respectively. The study also found that the startup failure rate varied across different African countries. Ethiopia and Rwanda had the highest failure rate of 75%, followed by Ghana with 71%, and Uganda with 70%. On the other hand, Kenya had the lowest failure rate of 24%, followed by South Africa
Read MoreEthiopia secures $3.4 billion IMF loan after floating currency
Ethiopia has secured a $3.4 billion loan from the IMF after floating its currency as part of the reforms to ease the country’s foreign currency shortages and attract foreign investments. “The four-year financing package will support the authorities’ Homegrown Economic Reform (HGER) Agenda to address macroeconomic imbalances, restore external debt sustainability, and lay the foundations for higher, inclusive, and private sector-led growth,” IMF said in a statement. The National Bank of Ethiopia has maintained a managed FX rate system, causing chronic dollar shortages that have affected importers and foreign investors repatriating profits. On Monday, the birr slumped 30% to 74.73 per dollar after the central bank removed restrictions on the FX market and committed that the regulator would only make “limited interventions.” Conditions attached to the IMF financing include adopting an interest-based monetary policy to maintain low inflation and fiscal reforms in government to boost revenue collections. IMF’s approval follows months of negotiations with Prime Minister Abiy Ahmed’s administration which wants to borrow more than $10 billion from the IMF and World Bank to help the country manage its growing debt. The East African nation defaulted on a $33 million international bond payment in December 2023. The Ethiopian economy has been under pressure from double-digit inflation and growing debt repayments. It had over $28 billion in external debt as of December 2023. The new lending programme, proposed in 2019, has suffered several delays due to armed conflicts in the country’s Tigray region and Ahmed’s slow pace of economic reforms. The US, IMF and the World Bank withdrew their support during the war, battering an economy that was already reeling from the impact of the COVID-19 pandemic.
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