What’s the more sustainable path to Africa’s AI participation?
During the closing ceremony of the National Artificial Intelligence Strategy Workshop in April, Nigeria’s minister of technology, Bosun Tijani, announced that the project has received $3.5 million in funding from interested partners. This AI strategy project has been one of the principal agendas of the minister since his appointment in 2023. Tijani, who has been vocal about his plans to shape the direction of AI in the country, believes that AI is at the helm of the digital conversation now, and Nigeria needs to be a part of that, or risk being left behind. He’s not wrong. AI has seen robust investment across the world with AI-related startups raising about $50 billion globally in 2023 alone. Investors and tech companies are putting unprecedented amounts of money into the sector as they have recognised the huge financial returns, as well as the access and innovation that AI is unlocking. Africa alone could see its economy expand by $1.5 trillion if it can capture 10% of the growing AI investment, according to a report. Currently, Africa holds less than 1% of the AI market, and the majority of AI-related projects are surface-level, with investors being unsure if the continent has what it takes to build deeply-rooted AI solutions that can move the needle enough. According to Olu Oyinsan, managing partner of Oui Capital, Nigeria is in the stage of using AI rather than building AI startups like the rest of the world. “There are the fundamental models which are capable of taking large amounts of data, and there are AI models that include just using AI as a part of its tech stack—which is where we’re at,” he said. Oui Capital has five startups in their portfolio that deploy AI, including Duplo, Ndovu, and Maad; and Oyinsan believes that is the more sustainable model of AI introduction on the continent. What chance does Africa have in the AI race? According to Oyinsan, the jury is still out on whether or not Africa can catch up to the rest of the world on the foundational level of AI. The major reason being that the continent doesn’t seem to have the resources—like technical talent—required to build AI startups. “Because tech talent is now more borderless than it used to be, most of the brilliant AI engineers in Africa are not working for African companies,” he said. “They’re developing foundational models for companies outside Africa, which is more lucrative for them, and that is the real problem we have to tackle before we can have an actual African AI movement.” Between 2022 and 2023, African AI-focused startups in general received a total of $641 million in investments from VCs. In Asia, this figure was as high as $3 billion, with a single startup, Moonshot AI, securing $1 billion in a funding round. “I wouldn’t say that as investors, we’re looking for AI startups in Africa, but we recognize that startups that can successfully use AI into their existing stack will probably outdo their competitors,” he said. “We’re already behind on the AI arms race, but we’re not behind on the application level. Companies here can use already developed models to plug and play into a tech stack or further develop and customize it for what they need it to do.” Ayobamigbe Teriba, a partner at another VC, HoaQ, is more optimistic. He believes that beyond solutions that use AI, building successful AI startups in Africa is achievable and crucial. According to him, innovators on the continent have to find a way to build out these fundamentals that ensure representation and inclusion in the “next innovation paradigm”. “Building foundational data models in Africa using African data is extremely important,” he said. “We may lose out on major corporate development activities (acquisitions) from foreign corporations in the future if we cannot build AI products that reflect the Nigerian/African reality.” Teriba believes that heavy investment has to be made into ensuring that African companies can accomplish this, and he is optimistic that, for a country like Nigeria, this won’t take too long. “The AI groundwork, such as building Large Language Models (LLMs) is underway, catalysed—interestingly—by the public sector [ministry of communications, innovation and digital economy]. I believe that there will be increased capital flows into this vertical, taking a cue from investor enthusiasm in the public markets,” he said. In 2023, Africa’s pioneering AI startup, InstaDeep, was acquired by a German biotech company BioNTech in a deal worth $684 million. InstaDeep was one of the only AI-focused startups from the continent that scaled to a global level, and Ayo is convinced that the continent could see more of this if the initial investment is made to cultivate them. According to InstaDeep’s cofounder, Karim Beguir, one of the major reasons why they founded the startup was to show that Africa had the potential to build AI and deep tech solutions. “The large players like Open AI and Microsoft are not necessarily going to be the ones to solve the problems of Africa,” he said. One of the biggest challenges that InstaDeep has had to navigate is finding and retaining talent and while the solution for them was to offer stock options alongside mouth-watering financial benefits, this is not realistic for other AI companies on the continent amidst stiff competition from AI giants in other parts of the world. In Nairobi, the Artificial Intelligence Centre for Excellence (AICE) led by John Kamara is working to find a way around this by training AI engineers for the continent. Kevin Simmons, a venture capitalist at LoftyInc Capital, shared that more organisations and startups like AICE are building in the fundamental AI space, but aren’t visible due to the sheer time it takes for these larger models to be built and tested. “It’s too early to conclude whether or not African countries are left behind in the AI race,” he said.
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👨🏿🚀TechCabal Daily – It’s raining taxes
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning What do you look out for in a good podcast? Ease of access, hot topics, or the host’s soothing voice? We’re working on a podcast and we need your input so we create something worthwhile. Please take a minute to share your podcast preferences with us here. In today’s edition Nigeria wants to waive taxes for SMEs Kenya proposes significant tax on digital marketplaces Tanzania goes after unlicensed loan apps Paga shifts gears to consumer app The World Wide Web3 Opportunities Economy Nigeria wants to waive taxes for SMEs Critics have tagged the President-Tinubu-led administration as tax masters. Since it took office, the Tinubu-led government has introduced a slew of levies, with its latest being a 0.5% cybersecurity levy for all transactions. It appears the government might be having a rethink about its tax reforms. A proposed tax waiver: In its newly proposed tax reform, businesses that earn less than ₦25 million ($17,000) a year will be exempt from paying taxes. These businesses make up the bulk of Nigeria’s informal economy, contributing 57.7% of Nigeria’s 2022 GDP. Businesses in the informal economy also contribute largely to employment across the country where unemployment rates is on a steady increase. The government claims it is lending a helping hand to these businesses to cushion the effect of inflation which stands at 33%. These businesses will be exempt from paying withholding tax, company income tax, and payroll taxes. Why it matters: Nigeria has the largest informal economy in sub-Saharan Africa. While taxes are the government’s way of making money, the informal sector, which contributes a large portion of the Nigerian economy, suffers from 33% inflation, which has made it more difficult for businesses to make a living. High inflation eats into their customers’ purchasing power, making it harder to sell products and services By exempting these struggling businesses from taxes, the government is hoping to give them some breathing room. This could allow them to stay afloat, keep people employed, and maybe even contribute more to the economy in the long run. It’s a gamble, but one that could pay off for both businesses and the country. The proposed tax reforms may not be implemented until 2026. Currently, the reforms are undergoing private-sector consultations, after which they will be submitted for review to the National Assembly. Read Moniepoint’s case study on family-owned businesses Family-owned businesses are everywhere, shaping our world in ways you might not expect. We’ve found some insights into how they work, and we’d love to share them with you. Dive in right away here. Regulation Kenya proposes a significant tax on digital marketplaces One year ago, almost exactly to this date, we wrote a TC Daily edition titled “Kenya’s content creator tax”. That edition broke down Kenya’s proposed 15% withholding tax for content creators. The Finance Act of 2023 which initially proposed the 15% withholding tax faced criticism, and the Act was amended, before being passed. The final version charges online content creators a much lower withholding tax rate of 1.5%. Now, Kenya wants that tax to extend to all online platforms created by non-residents. According to the Kenyan Wall Street, amendments have been proposed to the 2023 Act, and these amendments include new provisions that would increase taxes on online platforms and marketplaces operating in Kenya. The proposed amendments will make S.3 of Kenya’s Income Tax Act specifically list which digital marketplaces will be subject to Kenyan tax laws. Listed marketplaces include ride-hailing services, food-delivery services, rental, professional, freelance and task-based services. The proposed “Significant Economic Presence Tax” won’t just apply to established ride-hailing companies, it will also target startups whose founders aren’t Kenyan residents. This tax can be as high as 20% of their annual gross turnover. The tax is a significant—no pun intended—increase from the 1.5% digital services tax that’s presently in place for these digital platforms. Kenyans are on a rocky road: Imported cars could also see a 2.5% annual tax on their values if the amendment passes. What’s critical about the bill, though, is that it provides Kenya’s tax watchdog, the Kenya Revenue Agency (KRA) with powers to fine businesses who don’t integrate the tax monitoring system eTIMS into their services. The proposed act doubles the payable fines from the KES1 million initially announced by the KRA when eTIMS launched last year. The KRA’s insistence on eTIMS isn’t too farfetched seeing as the agency generated KES 2.166 trillion ($32.2 billion) using the service in 2023. 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. Regulation Tanzania’s apex bank goes after unlicensed loan apps 2022 was the year a few apex banks across Africa set their sights on unlicensed digital lenders. In Kenya, the Central Bank of Kenya (CBK) released new regulations that cut the number of digital lenders in the country from 480 lenders to just 51 by 2024. Nigeria’s consumer protection watchdog, around the same time, also released similar guidelines that required the country’s teeming digital lenders to be licensed or face heavy fines. So far, Nigeria has 225 fully-approved lenders, 41 with conditional approvals, and 88 more on a watchlist. Now, Tanzania is joining the fray. The East African country’s central bank is banning unlicensed digital lenders, targeting over 100 shady apps offering quick cash. Why the crackdown? These countries have concerns about predatory practices like sky-high interest rates and public shaming of borrowers who fall behind. These lenders, using the borrowers’ contact lists, typically send messages like: “This person is owing us money, and you’re one of his guarantors. Tell him to pay or else we’ll embarrass both of you”. In extreme cases, the messages are more explicit and contain the threat of
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Profitable Paga doubles down on mobile app
When Tayo Oviosu founded Paga in early 2009, he believed mobile phones could bring financial services to all Africans. It meant creating a mobile app, but it was still early days in Nigeria’s financial services industry, and KYC and identification frameworks were almost nonexistent. It forced a change of plans. Instead of an app, Paga launched PoS systems that are now extremely popular and is a prominent player in the financial services space. “At the end of March 2024, we had processed 335 million transactions since inception, worth over ₦14 trillion ($32 billion), and we did 80 percent of that in the last five years. This last quarter was our best quarter ever,” Oviosu said. “Last year, we grew gross profits north of 200% year-on-year. Our Nigerian business was profitable for the third year.” Oviosu declined to share actual profitability figures. 15 years and trillions of naira processed transactions later, Paga is refocusing on a mobile app it first launched in 2020. The Paga app, which the company says has 4.5 million users (it did not disclose the number of active users), allows users to create mobile accounts, pay bills, buy airtime, and send money. The focus on a consumer fintech app comes as digital payments is experiencing explosive growth. In 2023, an ill-considered currency redesign saw fintech startups process record volumes. While a rising tide lifts all boats, it also creates competition and everyone wants in on the fintech action. Nigeria’s biggest banks have floated standalone fintech products and well-funded startups Moniepoint and OPay have grabbed a large share of the consumer market. “This is not a winner-take-all market. There are different segments of the market that everyone is focused on.” Oviosu believes Opay is his most direct competitor, but clarifies that both companies have differing approaches to the market. “Our primary target is a slightly higher audience than Opay’s, not to say we don’t have an overlapping audience.” Beyond market segmentation, Paga’s focus is delivering a superior customer experience. “You won’t see a video saying people lost their money in Paga. If there is any issue, we’ll resolve your problems.” Diversification is important for Fintech startups Paga offers three services: agency banking; a wallet-as-a-service that allows developers to leverage the fintech’s wallet infrastructure, and the Paga mobile app. With 50,000 agents, Paga’s agent banking business is likely sizeable, but intense competition in the agency banking space and the distribution of PoS which are heavily subsidised puts pressure on operating margins. “Before businesses make enough to recover the payments on the devices, people will start dropping off. There is no loyalty there.” Oviosu believes saturation in the space will kill off margins and predicts a turn to tap-to-pay as the preferred means of payment in the future. While the jury is still out on what the future will bring, the present problem in the financial services space is the rising incidents of fraud. Between April and June 2023, Nigerian financial institutions lost ₦5.5 billion to fraudulent loan accounts, per data from a FITC report. These incidents are causing perceptible friction between traditional banks and neobanks. Fidelity Bank—which lost ₦2 billion ($2.5 million) to fraud—restricted transfers to OPay, Kuda, Moniepoint, and Palmpay in October 2023. Several financial services experts often claim the KYC processes of neobanks are lax and are easily exploited by bad actors. In December 2023, the regulator weighed in, standardising KYC processes for neobanks and requiring identification for all accounts. “We made that decision with the CBN to counter fraud. We wrote a whitepaper to the industry: the banks, and mobile money providers, which led to discussions that ultimately shaped the recently revised CBN regulation.” The discussions with regulators continue to be ongoing, with a recent directive prohibiting neobanks from onboarding new customers as authorities crack down on crypto trading. As Paga turns to the future, it plans to launch in another African country and prefers not to be drawn into conversations about an exit. When we press, Oviosu only shares that he prefers a strategic acquisition over an IPO. “I think the pressures of running a public company are such that for most people, it’s hard to do that, and still stick to the long game.” “I want to build a multibillion-dollar business that is valuable to somebody else to take and continue that vision.”
Read MoreGTCO targets $750 million capital raise on NGX and London Stock Exchange
GTCO, the holding company of Guaranty Trust, a banking subsidiary with a market capitalisation of ₦840 billion, will list additional shares on the Nigerian and London Stock Exchange as part of plans to raise $750 million. The share sale will allow the bank to meet and surpass a new working capital requirement of ₦500 billion, adjusted by the Central Bank in February 2024. “A decision has not been reached if the shares and bonds will be issued in tranches, series, or proportions, so it’s possible to see multiple issuances until the said amount is raised,” said Nelson Abudah, a research analyst at Afrinvest. Abudah also noted that GTCO’s would prefer to raise the amount on the NGX but there’s it’s doubtful the local market is robust enough for the size of capital it’s looking to raise, driving a need to look elsewhere. “It calls into question the depth and size of the NGX. On one hand, there’s the reality that the NGX can’t create enough funds for such an amount to be raised. Then again, there’s the fact that it’s not only GTCO that’s looking to tap into the Nigerian market at this point in time,” Abudah said.
Read MoreTanzania targets predatory loans: Central Bank excludes unlicensed apps
Tanzania’s Central Bank will no longer allow unlicensed digital lenders to operate in the country and has told customers to look out for valid licenses before patronising loan companies. The Bank of Tanzania’s (BoT) new restrictions are believed to be linked to questionable lending practices like debt-shaming of defaulters, and high interest rates. The directive will affect over 100 unregistered digital apps that provide instant loans to about 30% of adult mobile phone users who don’t have regular income or relationships with traditional financial institutions like banks, saccos, and cooperative societies. “In accordance with Section 16 (1) of the Act [Microfinance Act 2018], it is an offence to engage in the business of lending without a valid license. The prohibition to engage in lending business without a license includes the provision of loans through various platforms such as digital loans,” BoT said in a notice. As part of the reforms, licensed platforms will be required to issue borrowers signed loan agreements detailing the terms and conditions including total fees for the loans, interest rates, and rollover fees for late payments. Currently, the apps don’t provide detailed agreements as users get the loans with a click of a button. “The General Public is hereby reminded to review the loan agreement to be entered, including understanding and agreeing to the loan terms and conditions, and be satisfied that the lender has a valid license issued by the Bank of Tanzania,” BoT cautioned. BoT’s decision follows a similar move by neighbouring Kenya which banned over 100 unlicensed digital credit providers. It reduced the number of authorised mobile loan apps to 50.
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Next Wave: Japan is invested in exporting its resources to Africa
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 12 May, 2024 1993 and 2024 tell very different histories of Japan’s growing investment in Africa. After the Second World War, in which Japan was both defeated and economically devastated, the Asian country capitalised on a weakening yen to provide cheap goods for both export and consumption. In the years that followed, Japan pioneered the Tokyo International Conference on African Development (TICAD) which was first held in 1993, reviving international interest in Africa. The Japan-African relationship initially began in the 1990s as an aid relief programme. Years later, the relationship has transformed from global support to setting up private investments on the continent, as a means of offsetting increased Chinese presence on the continent, mainly through sovereign investments. A senior analyst at the Tony Blair Institute in London agrees with this: Japan “is moving away from being based on development and is increasingly driven by the private sector.” The main trigger for that shift is the ageing Japanese population, which is cash-rich and has a lot of legacy businesses in auto industries, manufacturing, biotech, amongst others. Africa has fast-growing ventures and lots of young people at its disposal to stage an expected global revolution. This podcast says that global partnerships between Africa and Japan can solidify a new growth story. Next Wave continues after this ad. Are you ready to be part of the FinTech revolution in Africa and across the globe? Join us, as we prepare for the unforgettable 3i Africa Summit that unites industry leaders, businesses, investors and innovators. Venue: Accra International Conference Center, Accra, Ghana. Date: 13th – 15th of May, 2024. Register to save your spot!! You do not want to miss out on this!! Register Here One significant contribution Japan is making to Africa can be seen in the rise of corporate VCs (CVC). CVCs are not a new phenomenon. Globally, CVC-backed funding soared to an all-time high of $73.1 billion in 2020, increasing 24% from 2019. With funding from institutional VCs drying up, the rise of Japanese CVC may drive the much-needed growth African startups need. CVCs differ from institutional VCs in the sense that they are independent arms of big corporations and are generally used to drive traditional research and development in areas where talent and resources are abundant. Beyond just funnelling money, they can share experience, customers, and even assets. For startups they choose to eventually back, exits through mergers and acquisitions are the easiest route. The value of Japan’s spending in Africa under finance and investment amounted to $726 million in 2022. Chart by Stephen Agwaibor, TC Insights Africa has large deposits of underground resources which Japan does not, such as oil, natural gas, gold, silver, copper, diamond, nickel, platinum, manganese, and rare earths—all driving forces of the continent’s economic growth. Besides, the battle for relevance regarding the geopolitical status of semiconductors is still on. Therefore, Japan could bypass unnecessary drama and collaborate with Africa to be the industry leader in high-technology progress in semiconductors, flash memory, and electric-battery innovations, for which most of the base components are harvested from Africa. Spinning off a venture backable project in this regard could boost the Asian nation’s status as both financier and manufacturer. This is most likely the reason for Japan’s mouth-watering interest in Africa. Next Wave continues after this ad. On 16 and 17 May in Kigali, for its 11th annual summit, the Africa CEO Forum will call on its community of 2,000 business leaders, CEOs, investors, heads of state and ministers to seize this critical moment to shape a new future for Africa Click here for more infomation A small pilot Japanese auto giant Toyota and musical instrument company Yamaha have made significant progress getting ahead of the market using Africa for research and development efforts, especially in the mobility sector. More specifically, electric vehicles. The trading arm of Toyota Tsusho Corp set up a venture capital unit in 2019 called Mobility 54, specifically for African markets. Mobility 54 has generally invested approximately $28 million into 14 startups in mobility startups on the continent. Next Wave ends after this ad. GITEX Africa returns a second time on May 29–31, 2024 to Marrakech, Morocco, discussing ways to accelerate the continent’s digital health revolution. GITEX is the continent’s largest all-inclusive tech event renowned for uniting the brightest minds in the technology industry Grab your tickets here One of Mobility 54’s first major investments was a $7.6 million injection into Sendy, a Kenyan logistics startup, which closed a $20 million Series B round in 2020 and has now entered into administration. Despite the failed engagement, Sendy had an R&D agreement with Toyota as the Japanese company is looking to contribute to solving challenges of the mobility industry of Africa. Sendy is not Mobility 54’s only investment; the CVC has backed Uganda-based Tugende, a startup that allows motorcycle taxi drivers own their own motorcycles in 18 months or less, instead of renting indefinitely. It has also backed startups in electric mobility and vehicle financing like Kenya-based BasiGo and South Africa-based Drive to Own. Yamaha Corporation, on its part, participated in a $7 million funding round of Nigerian motorcycle transit startup MAX.ng in 2019. Critics have highlighted that Japan’s investment strategies in Africa have yielded little benefits since the first edition of TICAD in 1993 and are wary of further Japanese investment on the continent. However, there is no indication that shows Japan is ready to back away from investing in Africa yet. There are increasingly large footprints of Japan’s desire to do business in the African tech ecosystem in places like Nigeria, Egypt and Ethiopia. Next Wave ends after this ad. Register
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👨🏿🚀TechCabal Daily – The ZiG isn’t zagging
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Thanks to everyone who spoke out for Daniel Ojukwu, a Nigerian journalist who was wrongfully detained for 10 days for his investigative report involving mismanagement of funds by Nigerian officials. Daniel was released on Friday morning. Now, onto the business of the day. In today’s edition Fresh subsea cable cuts hit Africa Zimbabwe’s new currency struggles as businesses mark up ZiG purchases Solar storm dazzles social media and Starlink South Africa takes action against AI election threat The World Wide Web3 Opportunities Internet Fresh subsea cable cuts hit Africa Modern civilisation, as we know it, can grind to a halt if one of these three things happens: if World War III happens and somehow everybody dies; if the internet cables crisscrossing the earth all snap at once; and if aliens finally make contact. This writer wagers the second option might as well be in the works. How? On March 14, the world as we knew it, got a taste of its dependence on the internet. At least 8 African countries experienced internet outages due to damage to submarine fibre optic cables along the West African coastline. The outage halted trading activities on Ghana’s stock exchange, caused Nigeria’s second-largest cement maker to postpone meetings with investors, and caused panic among many other Africans who wondered why surfing the net had become a frantic exchange of text messages asking if anyone else’s internet was working. Another one: March’s outage affected the West Africa Cable System, MainOne, South Atlantic 3, and ACE sea cables. Per local media reports, there have been fresh cuts on two internet cables connecting South Africa and Kenya. While the cause of the cut is yet to be discovered, internet users across Kenya and Tanzania will be severely impacted, with major Kenyan network and internet service providers, including Safaricom and Telkom Kenya, experiencing outages. Total internet blackouts are expected in some areas. Internet users across Rwanda, Uganda, and Madagascar will also be impacted by the cuts. Per TechCentral, cable repair ships have been deployed, but no estimated time for repairs has been given. With the last subsea cable disruption, it took at least five weeks to fix two of the three cables and an additional four weeks for the final cable to be fixed. Read Moniepoint’s case study on family-owned businesses Family-owned businesses are everywhere, shaping our world in ways you might not expect. We’ve found some insights into how they work, and we’d love to share them with you. Dive in right away here. Economy Zimbabwe’s new currency struggles as businesses mark up ZiG purchases Zimbabwe is cracking down on businesses using inflated exchange rates instead of the rate stipulated by the new gold-backed currency also known as the ZIG. The news: In an attempt to stabilise the value of the ZiG, the government released a notice that it will fine businesses 200,000 ZiG ($14,815) for offering exchange rates higher than the official rate of 13.5 ZiG per $1. Additionally, businesses caught selling goods or services using an exchange rate higher than the interbank selling rate will be committing a civil offence. The ZiG isn’t zagging: Despite hoping the new currency, ZiG, would boost the economy, its value has instead dipped. Initially trading at 13.53 ZiG per $1, it fell to a record low of 13.67 ZiG just one month later. The reason for the instability of the currency: Prior to this change, stores would mark up prices by 10% for ZiG purchases. This protected businesses from losing money if the currency weakened further. However, it also made ZiG less attractive to use, fueling inflation and a black market for foreign currency. Now, with stores required to charge the official price, ZiG should become more competitive with dollars. Unlicensed currency traders also offered much more attractive rates, buying US dollars for up to 15 ZiG and selling them for around 20 ZiG. This contrasted sharply with the official rate of 13.5 ZiG per US dollar. Additionally, informal traders remained hesitant to switch to the new currency, clinging to the US dollar due to concerns about the volatility of the ZiG. Four currency changes in four years: Zimbabwe’s fight against hyperinflation has led to frequent currency changes, with four new currencies introduced since 2019. This started with replacing its old RTGS currency with the Zimbabwean dollar in 2019, introducing a new Z$100 note in 2022, and announcing a gold-backed digital currency in 2023. This year, it introduced a new gold-backed fiat currency the Zimbabwe Gold (ZiG) to replace the Zimbabwean dollar, which lost a staggering 75% of its value in 2024. The ZiG is the nation’s sixth attempt to establish a stable local currency. It is backed by the country’s gold reserves (2.5 tons) and some foreign currency holdings ($100 million) by its central bank. 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. Internet Solar storm dazzles social media and Starlink Image source: Andrew Chin/Getty Images Over the weekend, social media exploded with dazzling photos of the Northern Lights, an awe-inspiring natural phenomenon painting the sky with a rare display of vibrant colours. Christened Aurora, the sightings were a rare event that last happened in 2003. While the sighting was not visible in most parts of Africa (parts of South Africa were invited to the watch party), people across the continent joined in—virtually—with dazzling images shared on the gram. As the sighting blessed us with colourful skies and maybe a rare sighting of unicorns in the sky, Aurora also meant that satellite-based internet services like Starlink experienced glitches. How? This light sighting was the result of a geomagnetic storm, the strongest ever to hit the earth. Geomagnetic storms
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🚀Entering Tech #65: How to become a data engineer
Want to be the brains behind the next ChatGPT? 11 || May || 2024 View in Browser In partnership with #Issue 65 How to become a data engineer Share this newsletter Hello ET people Welcome to the third and last edition of our series on entering tech as a data professional. In the past two editions, data professionals shared how newbies can become data analysts and data scientists. Today, we will be treating the least popular of the trio, data engineering. Like back-end developers, data engineers don’t often enjoy the spotlight, even though they do very important work that makes it possible for generative AI like ChatGPT to exist today. So next time you see a data engineer, don’t be scared, just give them a polite nod and maybe offer a fist bump. They’re not used to attention. Let’s dig in. by Faith Omoniyi & Timi Odueso How data engineering works Businesses need large amounts of data to make informed decisions. This data is often available only in raw formats and is hard to make sense of. Data engineers collect this unprocessed data and turn it into actionable and usable information for data scientists, data analysts, and business analysts, who use it to make business decisions. Data engineers are the unsung heroes, as they make it easier for data scientists and analysts to earn a living. Data engineers wear many hats! They source datasets relevant to business goals, develop algorithms to transform raw data into insights, design and maintain data pipelines, collaborate with management to understand needs, create new data validation methods and analysis tools, and ensure everything complies with data governance and security policies. Too many tasks, you might say; remember, they are heroes, right? Before we go further, let’s tell the story of Adeolu Adegboye, who leveraged his data science background to transition into data engineering. Adeolu started learning data science when he thought the world was ending during the COVID-19 lockdown. In 2021, he got an internship as a data scientist and then transitioned to data engineering in 2022 because engineering had always winked at him. Adeolu Adegboye Who is a data engineer: Coursera defines data engineering as the practice of designing and building systems for collecting, storing, and analysing data at scale. *Newsletter continues after this ad. Get more from your salary with Eazipay ‘ Join 150,000+ SMEs and employees to get up to 100% extra salaries and more this Workers’ Day! Visit www.myeazipay.com or download the Eazipay Business app to sign up to begin. Contact cx@myeazipay.com or 07000332947 for more info. What you need to become a data engineer? Here’s what the typical career path of a data engineer looks like: Data Engineer Mid-Level Data Engineer Senior Data Engineer Data Architect/Lead Data Engineer/Data Engineering Manager. Data engineering is a purely technical field that requires programming knowledge of Python and SQL, along with skills in data modelling, ETL, data management, and data architecture. Adeolu strongly recommends that prospective engineers be versed in the different cloud computing platforms—Amazon Web Services (AWS), Microsoft Azure, and the Google Cloud Platform (GCP). According to him, data engineering is a holistic skill that requires learning a bit about everything, from database handling to analytical reasoning, machine learning, data security, data storage, and so on. On the soft skill rung of the ladder, problem-solving, communications and stakeholder management are the most important skills. Data engineers are required to ensure the end user/client understands the full context of what the data provided can do for them. Meme Source: Zikoko Memes If you’re wondering where you ca learn data engineering, Adeolu recommends that you follow the 100-day plan for newbies in data engineering by The Seattle Data Guy. He teaches a range of topics and provides a spreadsheet that houses over 50 courses, challenges, and materials. Adeolu claims that if followed religiously, the 100-day plan could potentially land you an internship or even a full time role if you’re a badass. Data professionals I have spoken with for this series say Data Camp is a safe haven, if not heaven, for data professionals. Courses on the platform are made by data professionals and cater to different phases of your learning journey. While courses on DataCamp are priced, Adeolu recommends free alternatives on Codecademy and Coursera. Below are some of his recommendations. *Newsletter continues after this ad. The 3i Africa Summit!!! Are you ready to be part of the FinTech revolution in Africa and across the globe? Join us, as we prepare for the unforgettable 3i Africa Summit that unites industry leaders, businesses, investors and innovators. Venue: Accra International Conference Center, Accra, Ghana. Date: 13th – 15th of May, 2024. Register here to save your spot!! You do not want to miss out on this!! You can learn data engineering too IBM Introduction to Data Engineering Learn the basic skills required for an entry-level data engineering role. Price: Free Duration: 1 – 4 weeks Tools Needed: Laptop + internet access Level: Beginner Get course IBM Data Engineering Foundations Specialization Learn the Working knowledge of Data Engineering Ecosystem and Lifecycle. Viewpoints and tips from Data professionals on starting a career in this domain. Price: Free Duration: 2 months (at 10 hours a week) Tools Needed: Laptop + internet access Level: Beginner Get Course Introduction to Relational Databases (RDBMS) Learn how to describe data, databases, relational databases, and cloud databases as well as information, data models, relational databases, and relational model concepts (including schemas and tables). Price: Free Duration: Flexible schedule (15 hours approximately) Tools Needed: Laptop+ internet access Level: Beginner Get Course Data Engineering on Google Cloud This programme provides the skills you need to advance your career and provides training to support your preparation for the industry-recognized Google Cloud Professional Data Engineer. Price: Free Duration: 1 month (at 10 hours a week) Tools Needed: Laptop+ internet access Level: Beginner Get Course How to land your first role However, if you are looking to take a stab at it right away, Adeolu claims that following the
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How South Africa’s ecosystem has stayed resilient during the funding downturn.
Between Q1 2023 and Q1 2024, at least five South Africa startups managed to raise follow-on funding rounds. In a funding downturn, raising one round is already tough enough, let alone two within a year, making this feat by startups like Planet42 and Carry1st all the more impressive. Over the last two years of the VC downturn, the South African ecosystem has shown more tenacity than its peers across the continent. According to ecosystem stakeholders, this results from a combination of factors including business culture, macroeconomic conditions and fundraising environment. Apart from startups in the country being able to raise follow-on funding, South Africa was the only ecosystem in sub-Saharan Africa to see an increase in average valuations in 2023, according to data by MAGNiTT. The country also held its ground in terms of attracting venture capital in terms of deal value and volume. Here is why SA startups saw an uptick in average valuations in 2023 “Despite a -34% YoY decline in total equity funding in 2023, South Africa has been the most resilient ecosystem in the top 4, emerging as the new leader of the African tech funding landscape,” Partech shared in its annual report. So what has enabled South Africa to take the VC downturn punches relatively well? Some investors state that at the peak of VC inflow into Africa, South Africa was mostly left behind by countries like Nigeria, Egypt and Kenya. Development Finance Institutions (DFIs), major contributors to VC funds on the continent, believed that the country was “too developed” to pour funds into. Local institutional investors also did not back the VC asset class due to perceived risk. Keet van Zyl, managing partner at VC firm Knife Capital, says the historical scarcity of capital positively affected the tenacity of South African startups who now prioritise keeping cash-flown burn rates at sustainable levels. “ SA startups may not be paper unicorns, but they are generally robust, sustainable and capital efficient,” van Zyl told TechCabal. He added that South African startups also have a good balance of sensible valuations based on real unit economics, which makes them investible in a macroeconomic slump. Will Green, co-founder of business development firm Co.Lab, concurred that because of how risk-averse the South African VC market has been in the past, startups have had to build solid businesses to even get a sniff at VC cheques. “When the market reset as it did, those principles of good unit economics and fundamentals have proven to be the saving grace for the SA ecosystem,” Green told TechCabal. Macroeconomic resilience is a factor Despite facing high unemployment levels, load shedding and a declining currency, South Africa’s macroeconomic fundamentals have held up compared to most of the continent. According to Clive Butkow, managing partner at Conducive Capital, the resilience has trickled down to the country’s startup ecosystem. “SA’s currency, inflation and other macroeconomic factors have held up better than peers,” Butkow told TechCabal. However, Butkow admits that being able to raise capital internally enabled the South African ecosystem to weather the great American VC flight. Over the last year and a half, South Africa has seen a rise in capital from banks, pension funds and family offices being funnelled into VC funds. According to data from the Southern Africa Venture Capital Association (SAVCA), 11% of South Africa’s private equity (PE) firms investments went to technology companies. This represents the highest investment of any sector by the country’s PE firms. SA tech sees boost in investment from private equity firms What is interesting about the companies that private equity investors are backing is that most of them recorded a “rapid growth in revenues”, according to the report by the SAVCA, perhaps showing investors’s principles for companies with solid unit economics. Additionally, the startups that raised follow-on capital, Carry1st and Planet42, are rapidly growing, having collectively raised hundreds of millions of dollars in venture and debt funding. Carry1st is a mobile game publisher while Planet42 is a rent-to-buy car subscription service. Carry1st’s latest round was $27 million while Planer42’s has raised $150 million. More data from the African Private Capital Association (AVCA) shows that the southern Africa region attracted the highest volume (26%) and value of deals ($2.6 billion) with South Africa in front amidst growth in sectors like IT, software, logistics, and transportation. In showing faith in South Africa’s tech startup ecosystem, investors have also reaped rewards, perhaps motivating them to further invest either directly in startups or VC funds. In 2023, exits in the South African ecosystem returned investors R318 million (~$17 million), representing a 3.8x return multiple on the R83 million (~$4.4 million) invested in such deals. SA startups returned $17 million in exit returns to investors in 2022 How long can South Africa’s resilience last, though? The funding winter is not showing any signs of abating. Every quarter, data reports from publications such as TC Insights paint a gloomy picture, with deal volumes and values declining. Even in South Africa, despite its tenacity, startups such as WhereIsMyTransport have had to shut down due to funding challenges. With some startups having raised bridge rounds, a longer funding winter is likely to affect dilution and cap tables, leading to a further cashflow crunch. So in light of the uncertainty of the funding environment for the foreseeable future, how long can the South African ecosystem keep holding out? According to van Zyl, this will vary from company to company. Still, overall, he expects the majority of startups which have learnt from the ecosystem’s values to hold out for as long as possible. “The great startups will remain tenacious.” Butkow also expects South Africa’s relatively stable macroeconomic fundamentals to sail startups through the stormy funding weather. Additionally, he also expects the country’s low-risk profile to help attract foreign capital into local VC funds and startups. “For investors, risk equals uncertainty and when you have limited capital, you want as little relative uncertainty as possible and SA offers that.”
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👨🏿🚀TechCabal Daily – Is Amazon prime for competition in South Africa?
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning This morning, the team at TechCabal would like to ask you to take a few seconds out of your day to speak out for press freedom. One of our colleagues, Daniel Ojukwu who works for the Foundation for Investigative Journalism (FIJ) has been wrongfully detained by the Nigerian Police Force for nine days. Daniel’s detainment is due to his investigative report involving mismanagement of funds by Nigerian officials. Daniel is yet to be charged to court as required by Nigerian law, and has been transferred to the Federal Capital Territory without due process. Please lend your voice to #FreeDanielOjukwu across social media, and help us ensure that all journalists can uncover the truth and hold leaders accountable. In today’s edition NIBSS in ₦1.4 billion lawsuit Takealot beats Amazon to a prime offer ASafaricom is East Africa’s most profitable company Elon Musk’s Neuralink malfunctions in test patient Funding tracker The World Wide Web3 Opportunities Economy NIBSS in ₦1.4 billion lawsuit What do you call an unexpected event? A black swan. The biggest black swan in Nigeria’s waters right now might be the fraud and financial impropriety allegations against the country’s financial infrastructure backbone, the Nigeria Interbank Settlement System (NIBSS). How? Last year, Temidayo Adekanye, a former chief risk officer of NIBSS, flagged fraudulent activity across different arms of the company, including AfriGo, a domestic card scheme launched in 2023, and NQR, a platform for QR-code payments. He also raised similar concerns about a cloud migration project, according to court filings. Adekanye then requested details of the company’s financial records and third-party contracts but was denied access. Shortly after, Adekanye was asked to resign and was offered ₦160 million ($112,700) in severance or risk immediate termination of his employment in a meeting with the company’s Head HR, HOD Legal/Company Secretary, Executive Director, Business Development, and CFO. His request to review the offer was refused, and eventually, he was fired. What’s next? The former NIBSS executive has sued, and is now asking the National Industrial Court to award damages of ₦1.4 billion ($986 million) for wrongful termination and breach of contract. Dig deeper. Read Moniepoint’s case study on family-owned businesses Family-owned businesses are everywhere, shaping our world in ways you might not expect. We’ve found some insights into how they work, and we’d love to share them with you. Dive in right away here. E-commerce Takealot and Amazon in early competition Days after the launch of Amazon in South Africa, the e-commerce company is being welcomed with stiff competition. What’s happening? Naspers-owned Takealot, South Africa’s top online retailer, is offering South Africans a subscription service similar to Amazon Prime. You see, Amazon Prime is a paid subscription service offered by Amazon that provides a variety of benefits to its members including free and faster shipping, streaming services and exclusive discounts. This feature, however, isn’t yet available to South Africans. Yesterday, Takealot announced a similar feature called “TakealotMore” which is scheduled for a May 13 launch. This feature offers free deliveries for subscribers which matches one of the major selling points of Amazon Prime. It will be offering the new subscription with a tiered approach to cater to different budgets. This means there will be two plans to choose from, the TakealotMore Standard plan costs R39 ($2.11) per month, while the Premium plan is priced at R99 ($5.36) per month. Competition is the fuel that ignites innovation: It’s taken over a decade–operating in South Africa since 2011—and the threat of a multinational behemoth for Takealot to offer its prime service. The company, however, has had years to observe customer preferences and develop its own offering. Presently, Takealot looks like it’s staying ahead in South Africa by offering high-quality products at friendly prices. Amazon is touting the same root, focusing on matching those same good prices for local customers. It’s still the early days but only time will which platform will be primed for the market leader status. 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. Companies Safaricom becomes East Africa’s most profitable company Kenya’s Safaricom is winning big with M-Pesa but it’s taking a hit on profits due to its Ethiopian expansion. A financial rollercoaster: On one hand, Safaricom’s net profits grew by a small 1.2% from $474 million in its 2022 financial year to $480 million for its 2023 financial year. On the other hand, a different metric—its operating profits—shows a 20% jump to $1 billion, which makes Safaricom East Africa’s first billion-dollar profit boss. M-Pesa magic: The push behind Safaricom’s growth is M-Pesa, Safaricom’s mobile money platform. It grew revenue by 20% (thanks to a surge in both business and personal payments). Data usage is also booming, with revenue up by 18%; this alone brought in about $1.4 billion. What this means is that Safaricom’s core business of providing mobile phone services and M-Pesa transactions is highly profitable. Even though the company’s overall net income was impacted by the Ethiopian expansion, Safaricom’s day-to-day operations in Kenya are generating significant earnings. Its Ethiopian expansion is a hungry venture: Safaricom’s big move into Ethiopia is exciting for the future, but it’s hurting profits now due to startup costs. The company spent about $700 million over the course of two years as it expanded into another East African country. Currently, it’s facing an uphill battle against the state-owned Ethio Telecom, which boasts 72 million mobile subscribers compared to Safaricom’s 9 million. Similarly, Safaricom’s M-Pesa service—with 3.1 million users in February 2024—needs significant growth to catch up to Ethio Telecom’s dominant mobile money platform with 41 million users. The good news? Kenyan unit profits are still up 13.7%. The bottom line: Safaricom’s core business in Kenya
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