Following rising unemployment, Botswana youth are teaching English online to Asian students
As unemployment rates continue to soar, unemployed Batswana youth are turning to online English tutoring to earn a living. During the lockdowns of early 2021, *Katlego, a 24-year-old economics graduate from the University of Botswana, came across YouTube videos of influencers showing a seemingly easy way to make money from online tutoring. At first, she assumed it was just another online scam like many others which were prominent during that time. But, after the lockdowns were lifted, Katlego researched more about online tutoring, and in 2022 she decided to get into teaching English as a Second Language (ESL) herself, eventually getting her certificate in October of that year. Katlego has been teaching English online to Asian students for a year now as that is the target market of the tutoring platforms she uses. According to recent data, almost 400 million Chinese citizens are in the process of learning English, creating a huge market for online ESL tutoring services. Reasons for learning English include better career prospects in China as more Western companies move into the country as well as learning the language in order to migrate to the West. Katlego’s typical prep for a lesson includes hours of going over her lesson plans, ensuring that her laptop and headsets are working correctly, and saying a small prayer that her internet and electricity would stay on for the duration of the one-hour lesson. Should anything go wrong, she will lose the $5 she charges per lesson. According to her, she can make as much as P4,500 (~$330) a month on the job. She is one of a growing number of young Batswana who have turned to online tutoring to earn a living as the unemployment rate continues to rise in the country. “It’s a great and easy way to earn a living because all you need is an internet connection,” she tells TechCabal. “It’s better than sitting at home and waiting for a nine-to-five job, which is scarce.” Data from the World Bank shows that Botswana’s youth unemployment rate currently stands at over 44%, as of 2023. Platforms like Preply, Native Camp, TutorOcean and Cambly, among many others, allow people from countries with English as an official language to tutor students via the platforms. What makes the service attractive to young people in Botswana is the low barrier to entry, with most platforms only requiring English proficiency and an internet connection to onboard tutors. Once onboarded to the platform, tutors conduct one-hour one-on-one lessons with students for rates of between $3 and $7. A tutor’s rate is determined by their experience as well as ratings from students on the platform, and payments are done via PayPal. Sarah Moitse runs a Facebook page, “ESL Teaching with Sarah”, and it has over 1,500 followers. She tells TechCabal that the interest from young people has been astounding. Some of the services her page offers include step-by-step tutorials in setting up tutor profiles, making lesson plans and advisory on attracting students. She offers all the services for free. It’s not just unemployed youth who are trying to get into tutoring. Some are doing it as a side hustle as “most jobs here don’t pay enough”, adds Moitse. So rewarding is tutoring that some of the young people end up quitting their day jobs to tutor full-time. Twenty-year-old economics graduate *Kefilwe tells TechCabal she only started online tutoring in October 2023 and makes as much as P2,000 (~$146) a month from the seven students she has. “Only four of my students consistently attend classes so you see that there is potential to make more,” she said. “It is just about taking it seriously and being patient.” Moitse tells TechCabal that, for beginners, the going rate on most platforms is $3 per hour. As a tutor gradually gains experience and gets good ratings, they can get rates as high as $7 an hour. The number of students a tutor can have is only limited by how many they can accommodate. Challenges in online tutoring in Botswana For some tutors who spoke to TechCabal, although offering online tutoring is a straightforward exercise, there are some annoyances. One of these is racism by some of the tutored students. According to 22-year-old *Kagiso, she had a racist encounter in one of her first classes. “On the platforms, we have our cameras on and sometimes students say racist things, but you just take it on the chest and focus on your work,” she told TechCabal. Another challenge for tutors is internet access. Botswana has one of most expensive data prices on the continent, and most homes do not have broadband internet. To get through that huddle, some tutors have struck deals with internet cafés to use their computers to do work. *Maatla, a tutor who conducts his classes at an internet cafe, says the arrangement is convenient because the cafe owners understand his line of work and give him a secluded spot to work. “It’s a win-win situation because the café gets a regular customer and I get a nice work environment,” he tells TechCabal. Although he currently has only four students and does tutoring part-time, Maatla says he plans to have as many as 30 students and do it full-time as soon as he makes enough to afford internet at home. For Moitse, one of her main challenges is misinformed people who think ESL tutoring is a quick money-making scheme, thanks to ESL tutoring influencers on social media who give that impression. She adds that when they fail to make what they thought they would, some of the tutors end up giving up altogether and call the tutoring a scam. Some pages of the influencers seen by TechCabal show tutors earning as much as $4,000. “Tutoring is like any other job so you have to work hard to earn a lot of money eventually,” Moitse says. The future of online tutoring With youth unemployment not showing any sign of slowing down in Botswana, alternate ways to earn income like
Read MoreExclusive: Two crypto startups submit licence application to Nigerian SEC
One month after Nigeria’s Central Bank lifted a ban on crypto, startups are now pushing for SEC licence Two crypto startups have applied for licences from Nigeria’s Security Exchange Commission (SEC) after the central bank lifted its 2-year ban on crypto-related bank accounts, a highly-placed source at the exchange told TechCabal, signaling a push by crypto startups to take advantage of a recent u-turn by regulators. In December, the CBN lifted stringent regulations that had banned banks from transacting with crypto companies. In its place, the apex bank shared guidelines mandating banks to obtain the bank verification number (BVN) of all directors and owners of crypto businesses that use their services. The rules also say cryptocurrency companies must secure a license from the country’s capital markets regulator, the SEC. Earlier in May 2022, the SEC issued rules on offering and collecting digital assets. The SEC did not directly respond to TechCabal’s inquiries about which startups had already applied for the licences. One of the crypto companies thought to have applied is Yellow Card. “We have not made any public moves yet but it is in the process,” said one person with knowledge of the company’s business. However, Yellow Card did not immediately respond to TechCabal’s questions at the time of this report. Luno, the London-headquartered cryptocurrency exchange with operations in Nigeria, told TechCabal that it is yet to apply for the license. Last week, Yellow Card announced a partnership with American crypto exchange platform Coinbase that will allow Nigerians and people in 19 other African countries to use Coinbase’s wallet, purchase stablecoin (USDC), make remittances, save, and do everyday commerce on the platform. Quidax, another popular crypto exchange in the country, announced free bank account deposits and withdrawals to customers days after the CBN announcement. While the ban’s lifting eases business for crypto startups, experts doubt it will magically transform the market, which has found ways around the CBN ban to buy, sell, save, and trade crypto. “Nigerians are very price-sensitive. Some of the platforms sell for about 20% more than relatively risky platforms,” a web3 PR consultant who asked not to be named, told TechCabal. “Beyond the exorbitant price, these crypto startups operate with a near-saviour complex and think that it is just enough for Nigerians to have access to the blockchain. If these platforms do not significantly become easier to use, people will continue using what they have been using to transact in crypto.” Even though it came a year after the SEC published regulations to safeguard digital assets, the CBN may have removed the stigma associated with digital currencies, popularly linked to scams. A founder of a now-defunct crypto company told TechCabal, “It is probably the best thing, if not the only positive aspect, about the CBN’s guidelines.”
Read MoreSafaricom silent on details as M-PESA outage continues in Kenya
Many users have taken to social media to fault Safaricom for not alerting them of an impending M-PESA service interruption. M-PESA, the mobile money product owned by Kenya’s leading telco Safaricom, has been experiencing an outage, primarily affecting its paybill services and bank-to-M-PESA transfers. Amid frustrations from users who are voicing their concerns online, Safaricom has yet to state explicitly what is causing the disruption. The telco has only posted a brief message on its social media pages acknowledging the technical issue. “We are experiencing a recurring service intermittently affecting some paybill payments. The issue is under resolution by our technical team, we shall inform you once normal services resume,” Safaricom said on X. Customer Notice pic.twitter.com/ynAwIvx7S8 — Safaricom PLC (@SafaricomPLC) January 23, 2024 Paybill services are very popular in Kenya as they allow M-PESA users, among other mobile money service customers, to pay for goods and services or transfer money from one platform to another. Local banks have also notified their customers that they cannot transact via M-PESA channels, although some of these lenders have acknowledged that some services are back online. One bank texted customers, “We are experiencing intermittency on M-PESA services… we will advise once this is fully restored by our partners.” Poor communication from Safaricom The primary issue with these interruptions is that Safaricom does little to warn its customers of an impending outage. This has always been the norm when customers are alerted to an outage in advance. However, lately, this communication channel has deteriorated, compelling customers to demand answers from Safaricom on social media. What is becoming of @Safaricom_Care‘s MPESA nowadays? @PeterNdegwa_ seems to be very incompetent. MPESA is failing so many times these days. Currently MPESA down https://t.co/P7dtan9MwS — CPA Ng’ang’a Wa Mwangi (@Mshomolozi) January 22, 2024 A few days ago, when the same interruption occurred, it took the telco a couple of hours to inform customers what was going on with the services. Safaricom then disabled the reply option on its post on X, meaning customers could not voice their feedback. This paints a picture of a company that is not ready to engage its customers, yet most Kenyans use its products, including M-PESA. Rivals are unable to pose the needed competition Launched in 2007, M-PESA, which contributes 40% of Safaricom’s revenue, has managed to maintain its market lead for many years thanks to its early entry into the market, product innovation, and the resources of its parent company. Rivals such as Airtel Money and Telkom Kenya’s T-Kash have been struggling to gain market share and customers. In mid-2023, M-PESA led the market with a 96.5% market share, followed by Airtel Money and T-Kash at 3.4% and 0.1%, respectively. The three products serve up to 38.1 million Kenyans as of September 2023. The Central Bank of Kenya, among other government agencies, has been attempting to make other mobile money products attractive to Kenyans. Two years ago, paybill and Buy Goods services were made interoperable. However, the development has yet to pick up as locals still prefer using the more expensive M-PESA. “Pesalink needs to have an app and its own ecosystem that integrates with payment services and allows us to withdraw through local agents. Airtel needs to drop a lot of money over the next half-decade promoting Airtel Money, maybe a customer acquisition campaign,” Kiruti Itimu, an M-PESA customer suggested amidst the outage. Airtel Kenya, which rarely shares its financials publicly, has been unable to make Airtel Money an appealing proposition. Telkom Kenya, which is experiencing financial constraints of its own due to the $27 million debt it owes the American Tower Corporation (ATC), has also failed to popularise T-Kash amongst its customers. The general argument is that M-PESA is too big to beat—although this argument was debunked following a study by Analysys Mason. The last attempt to change things could happen if Airtel Money and T-Kash customers can access M-PESA agency network because out of the 338,209 registered agents, the majority of them serve M-PESA customers.
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👨🏿🚀TechCabal Daily – Zilla’s interesting pivot
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy salary week If you’re looking for something nice to spend your salary on, the $3,500 Apple Vision Pro should be off your list—and not just because it’s above your pay grade . Pre-orders for the Vision Pro are sold out. The company has sold over 200,000 of its niche MR headsets already, and some analysts predict it could sell over 500,000 pieces before the year runs out. If this teaches you anything other than how FOMO works, it should tell you that some of your friends are lying about not having any money. In today’s edition SafeBoda to return to Kenya Zilla pivots to cross-border payments Interswitch and OPay partner up Zambia moves to upgrade its towers Musk says Tesla isn’t coming to SA The World Wide Web3 Events Mobility SafeBoda to relaunch in Kenya Image Source: SafeBoda SafeBoda is coming back to Kenyan roads. Per BenjaminDada, the ride-hailing startup is set to make a return to Kenya on February 4 after a three-year hiatus. SafeBoda paused its operations in the country due to the economic impacts of the COVID-19 pandemic. Some experts also attribute SafeBoda’s exit to increasing competition from established startups like Boltboda, uberBODA and Juuboda. SafeBoda has yet to present a reason for its return, however, it’s in for some feisty challenge. The startup now has to win over its previous riders who have now joined its competitors. Before shuttering its operation in Kenya, SafeBoda reportedly had over 4,000 riders. It is unclear if SafeBoda has gotten regulatory approval to resume operations from Kenya’s transport regulator, the National Transport and Safety Authority (NTSA). Zoom out: Following its departure from Kenya in 2020, the ride-hailing startup also left Nigeria in 2022. It, however, doubled down on its Ugandan market introducing new services like electric bikes, trip insurance, and SafeCar, its car-hailing service. It remains to be seen if Safeboda has the same play in mind for its Kenyan renaissance. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Fintech Zilla’s interesting BNPL lessons Globally, buy-now-pay-later is a huge phenomenon. Klarna, one of the leading startups offering BNPL services, is valued at $6.7 billion and in 2022, the value of all items customers used Klarna to pay for was $83.7 billion. Yep, let that sink in. In Nigeria, while we’ve seen fintechs offer BNPL, we’ve not seen a lot of data that helps us understand how customers use the service. In the last three years, startups like CDCare, Carbon Zero and Zilla have been leading the charge to convince Nigerians to pay for items installmentally instead of putting down huge upfront payments. It feels like a no-brainer that people would love this service. Yet, our exclusive reporting today on Zilla, a BNPL service launched in 2021, suggests that there may be cultural problems slowing down the adoption of BNPL by customers. At least, that’s what the company thinks. And that’s why the company is pausing its BNPL offering. “One of our biggest challenges has been that a lot of people don’t understand how credit works and think it is about owing people,” one employee told TechCabal. However, some merchants who allow their customers pay with Zilla have an altogether different theory. One vendor, for instance, believes repayment periods of two to four months don’t work for a lot of customers. When people buy expensive items, they want to stretch the payment for up to a year. It may very well change the way we think about offering credit and asset financing. Go deeper. Secure payment gateway for your business Fincra payment gateway enables you to easily collect Naira payments as a business; you can collect payments in minutes through cards, bank transfers and PayAttitude. Create a free account and start collecting NGN payments with Fincra. Fintech Interswitch buddies up with OPay Nigerian fintech heavyweights Interswitch and OPay have partnered for the launch of a new payment gateway. What payment gateway? Stylised as “Interswitch Payment Gateway (IPG)”, the feature will allow OPay users to make online payments. This simplifies online payments for millions of OPay users, who were previously limited to cards, bank transfers, or QR codes. The new collaboration will allow users to make purchases online and get debited through their OPay wallets. Why does this matter? The new feature, which presents a more seamless way to make online payments, opens up an avenue for increased online purchases. Currently, over 200,000 businesses transact on the Interswitch platform daily, and a synergy withOPay’s 30 million registered users and 100,000+ merchants will boost Interswitch’s numbers. OPay’s registered users and merchants also provide additional revenue streams for Interswitch whose estimated annual revenue is about $313.6 million per year. The move also signals a potential market expansion for Interswitch, which is dominant in traditional card payment processing and merchant acquisition in Nigeria. Zoom out: This is not the first synergy between fintech giants in Africa. In 2006, Kenyan Mobile payment platform, M-Pesa paired up with Equity Bank’s extensive branch network to allow for seamless transaction of funds between users. Both players saw significant growth and solidified their dominance in the Kenyan financial landscape. Introducing Transfers to bank accounts in Ghana Paystack merchants in Ghana can now send single and bulk transfers to Ghanaian bank accounts from the Paystack Dashboard and via API. Learn more → Internet Zambia upgrades communication towers to 3G and 4G Zambia’s communication towers are receiving a 3G and 4G makeover. The Southern African country has commenced the upgrade of 87 communication towers in its northern region—Muchinga province—from 2G to 3G and 4G networks. Per Felix Mutati, minister of science and technology, internet access improved by 5% in 2022, reaching 58% by 2023. This upgrade will bring better and faster mobile internet and social media access for many residents who don’t have internet access. access.
Read MoreBNPL Blues: Zilla hits pause as consumer understanding hampers growth
Zilla, the Buy-Now-Pay-Later company founded in 2019, has paused its BNPL services and is now focusing on a cross-border payment product, Zillawire, after struggling to convince customers to use the service, two people with knowledge of the matter told TechCabal. “One of our biggest challenges has been that a lot of people don’t understand how credit works and think it is about owing people,” one employee who asked not to be named told TechCabal. “Most customers would rather wait until they have the complete amount of money to pay than get one now and pay in installments,” the person added. The company confirmed the decision to pause its BNPL offering to TechCabal and said it “had a couple of things to figure out.” The company claimed that “resuming the service is in the works” without sharing any specific timelines. Zilla was launched in 2021 by Tolu Abiodun and has about 100 merchants that provide various products and services that customers can pay for in two to four installments. Despite sluggish adoption, two categories that performed fairly well were electronics and beauty products from high-end stores, as these are typically too expensive for the average consumer to pay for at once, said one person close to the business. But even these high-performing categories provided a problem: customers wanted more than the maximum four months Zilla provided to finalise payments. “The economy is tough, and people need more time,” said Joshua, who runs a gadget store registered with Zilla. “Customers who want to buy now and pay later for phones or laptops prefer to use other services like CDCare, as they give you a chance to pay for as long as a year.” Victoria, a vendor who sells wigs and other beauty products, has had about five customers use Zilla in the two years since she joined the BNPL service. Two of those five customers eventually asked Zilla for a payment extension as they found completing payments after four months challenging. Pivoting to cross-border payments? Zilla’s new product, Zillawire, processes foreign transactions with suppliers on behalf of merchants. According to information on their website, merchants are required to upload their invoices as well as the account information of the supplier for this service. On the reason for building a cross-border payment product, the employee shared that the company noticed that a lot of their merchants were having some issues with their international payments for their products and wanted to do something about that. According to her, Zillawire, which launched in August 2023, performed better than expected and so the company is focusing on that now.
Read MoreWhy Yemisi Isidi is championing mentorship for early-stage founders
Yemisi Isidi moved back to Nigeria from the UK in 2017, and after seeing how difficult it was for businesses, especially women-owned ones, to scale, she decided to do something about it. At first, she started helping small business owners utilise social media to grow their businesses until that seemed inadequate, and then she moved into providing micro-loans through a company she started, Triift Africa. After a while, even that became inadequate as she discovered that beyond finances, entrepreneurs required a lot of structure and good management to thrive, and so she decided to step up to that. Yemisi, who graduated from Aston University in Birmingham with a degree in Accounting and Business Management started to provide advisory services to business owners. In the last two years, Yemisi Isidi has been involved in the disbursement of over $10 million to early founders and business owners. She has also been invested in providing technical advisory to enterprise programs, as well as mentorship and access through various accelerators and incubation programs like the She Leads Africa program and The Future Female Business School which was set up by the UK-Nigeria Tech Hub to support young female tech founders. Some alumni of these programs include Medsaf, Shuttlers, and Auto Girl. For Centre Stage, TechCabal had a chat with Yemisi on the role of mentorships in building sustainable businesses. How would you describe yourself outside of the work that you do? Yemisi Isidi: I am a very driven and passionate person. I care deeply about seeing things grow, whether it’s a business, idea, or community and this shapes whatever it is that I do. I like to see people live better lives and a lot of times I am grateful that I get to contribute to that through my work. At an event some weeks ago, you mentioned that you didn’t agree with the narrative of female founders being over-mentored. Please can you speak about that some more? YI: The popular saying is that female startup founders are over-mentored and underfunded. I agree with the underfunded path and I’ve seen a lot more effort in that regard with programmes intentionally focused on putting money in the hands of female founders, whether startup founders or SME business owners. But when we say female founders are over-mentored, then I don’t agree. Mentorship covers a lot of things, including operational advice. If you have an investor who gives you money, but isn’t holding you accountable and doesn’t understand your industry enough to give you professional advice or access to a valuable network, then there’s a very high chance of you failing, despite the money and this is applicable to both male and female founders. Startups that were part of local incubation or accelerator programmes are more likely to succeed, and it’s not just about money but also access to a network and accountability structure that supports their growth. We’ve seen startups that were on the brink of folding but were resuscitated by their local investors. Not just with money, but also with them being able to rally and provide management with the support that they need to pull them through the process. Underfunded and over-mentored just sounds like “Give me the money and leave me alone to do the work.” But there are bigger questions that need to be answered to build a sustainable business, questions like if they know how to do the work and if they’re always going to be motivated when doing the work. There needs to be additional support beyond funding that makes it easier for people to build profitable and sustainable businesses, and this is a gap that mentorship covers. So yes, women are underfunded, but there is still room for mentorship. What are some of the benefits of mentorship to early-stage founders that people don’t pay attention to? YI: There are so many benefits, but I will share two. First, it gives you access to a network community, which makes it easier to get external funding, especially when you’re part of a recognised mentoring programme. But most importantly, it makes it easier to bootstrap to generate internal funding. Perhaps the mistake here is when we think about funding, we’re thinking of another person who is not a customer giving you money, but there’s funding that is your business being profitable and having healthy cash flow, and I’ve seen how these mentorings and training make it possible for businesses to achieve this more quickly. Another investor spoke to us about startups not necessarily requiring a huge investment to start operations in the early days. What do you think about that? YI: Businesses do need money for operations, licences, research, etc, depending on what they’re building. Finding investors early makes it possible to focus on building the business rather than trying to look for other streams of income to sustain it, so money is essential in making growth happen faster. However, it is not always straightforward. I think that a lot of money stifles innovation and problem-solving, especially when there is no accountability. Corporate Governance is already a big issue in our ecosystem. Too much money where there is no solid foundation, assured integrity or product market fit can be a problem. Even when you have a clear path to success, we have a very unpredictable market so it’s important to think about how to build sustainably from the beginning. What are some of your most important wins in the past years? YI: Over the past two years alone, have been involved in enabling access to over $10 million in funding for early-stage startups and businesses across six African countries. I’ve also worked with about 700 entrepreneurs across Africa to build investment-ready and profitable businesses and aided them in accessing available funding opportunities. In 2017, I organised the Illorin Digital Summit which had over 1000 people in attendance from different states across the North Central and Western parts of Nigeria. That work has now evolved to become Cirkle Labs which is an
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👨🏿🚀TechCabal Daily – Angola’s apex bank escapes hack
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy salary week Our sister company, Zikoko, is hiring some content creators. So if you’re a wizard at creating vox pop content but hate being called a TikToker, here’s your chance to make magic happen. Apply here. In today’s edition Angola’s apex bank escapes hack Kenya warns Airtel and Telkom Telecom Egypt to launch 5G in three months Nigeria to hold first rate meeting in February What’s the average African startup to unicorn time? The World Wide Web3 Events Cybersecurity Angola’s central bank escapes hack GIF Source: GIPHY Last week, Angola’s apex bank revealed that it escaped an attempted hack on January 6, 2024. The news: Banco Nacional de Angola (BNA) says there’s nothing to worry about. Per its statement, the bank’s security systems caught the cyber threat quickly and prevented any major damage to its computers or data. They were able to keep their online services running safely and efficiently, although maybe a bit slower than usual. It’s more common than you think: While cyberattacks on commercial banks and fintechs raise eyebrows, silent alarms are often ringing at central banks across Africa. The governor of the BNA José de Lima Massano, in May 2023, said that the apex bank records about 350 attempts per day. In December 2022, the South African Reserve Bank (SARB) was, ironically, alerted by the FBI to a breach it still denies to this day. Months before the SARB hack, the Bank of Zambia had fallen victim to a hacker collective called Hive which had ransom demands. That same year, the Bank of Gambia suffered two separate cyberattacks. More recently, in December 2023, the Central Bank of Lesotho suffered an attack that crashed inter-bank transactions in the country. African governments take action: In the face of rising cyber threats, 33 African nations, including heavyweights like Nigeria, South Africa, and Egypt, have taken the first step by enacting cybersecurity legislation. The bad news is that this may be one of those things where the tech is two steps ahead of the legislation. A 2018 hack on Bangladesh’s apex bank account left regulators and operators dumbfounded. The hackers made away with $81 million using SWIFT, the financial service used by over 11,000 institutions globally. Since then, no major legislation has been made to prevent another hack, but the IMF suggests that international cooperation is key to stopping these hacks. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Telecoms Kenya warns Airtel and Telkom over poor service Image source: Zikoko Memes Kenya’s phone regulator, the Communications Authority of Kenya (CA), has slapped Airtel and Telkom Kenya with warning notices and fines for failing to meet quality of service (QoS) standards. This action by the regulator indicates that customers on these networks have likely faced issues like dropped calls, slow internet speeds, and inconsistent coverage across various regions. Side bar: The CA regularly tests mobile networks against benchmarks for call success rate, internet speed, and coverage. To be considered compliant, networks must score at least 80% on these key performance indicators (KPIs). In the latest report covering June 2023, Safaricom, the market leader, exceeded expectations with 90%, but Airtel and Telkom significantly missed the mark with 79% and 65%, respectively. This reflects a broader trend of declining service quality in the Kenyan telecoms industry, with the average score dropping from 82.3% in 2022 to 72.4% in 2023. Why it matters: Poor mobile network quality directly impacts people’s lives—just consider the numerous times you’ve found yourself asking “Can you hear me?” this year. Dropped calls can disrupt business; slow internet hinders productivity and access to information; and inadequate coverage leaves people unconnected in rural areas. Are penalties working? Between 2015 and 2021, Airtel coughed up KES85.9 million ($540,000) as a bitter reminder of its QoS shortcomings. Telkom has also forked over KES59.3 million ($373,000) in penalties for its bad behaviour coverage. In fact, CA has fined Kenyan telecoms over KES500 million ($3.1 million) in the past five years for poor coverage, but the telecoms keep disappointing their 86 million mobile subscribers. This raises questions about whether the current penalty structure is strong enough to incentivise lasting change. Secure payment gateway for your business Fincra payment gateway enables you to easily collect Naira payments as a business; you can collect payments in minutes through cards, bank transfers and PayAttitude. Create a free account and start collecting NGN payments with Fincra. Telecoms Telecom Egypt to test 5G within three months Mohamed Nasr, MD and CEO of Telecoms Egypt. Source: Telecoms Egypt Talk about a quick turnaround time. Egypt’s government-owned telecom has announced that citizens can expect 5G this year. The news: Telecom Egypt (TE) has begun testing 5G services in five locations across the country, aiming for a full rollout later in 2024. This follows the company’s recent acquisition of Egypt’s first 5G licence for $150 million last Wednesday. In an interview with Asharq Business, the company said the tests will span three months, followed by a nationwide rollout. Mo’ spectrum, mo’ subscribers: 5G has the potential to be a significant revenue stream for TE, attracting new customers for its 13 million subscriber base and boosting its bottom line. TE trails behind Vodacom and Orange which have 46 million subscribers and 28 million subscribers respectively, and it thinks 5G will bring more Egyptians to its table. CEO Mohamed Nasr expects the financial impact to be evident by the end of 2024. Already the telecom saw a 48% net profit in 2023, and more subscribers means even better margins, especially with the $150 million hole in its pockets. Will it though? Out of Egypt’s 97.5 million devices, only 8%, or about 7.8 million, are 5G-enabled, as admitted by Nasr earlier this month. While Nasr expects that the numbers will increase in the coming months, it’s unlikely that
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Next Wave: Trading second-hand shares in African startups does not make money anymore. That’s good?
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 21 January, 2024 Secondary selling—also known as secondhand trading—exists everywhere. The markets of Lagos, Kinshasa and De Villiers Street in Johannesburg are full of traders and buyers haggling over bales of “pre-loved” clothing. A significant number of iPhones and laptops sold in Africa are “London-used”. Even luxury brands are not spared: Richemont, LVMH and Rolex all walk the fine line between maintaining demand via waitlisting and pushing desperate luxury shoppers to the grey secondary markets for pre-owned watches and other luxury items. Secondaries happen everywhere. One can argue that this secondary market is the real market. Trading shares of publicly listed companies on a stock exchange, for example, is simply a series of parallel secondary transactions at scale. When people talk about the financial market, this is the market they are usually referring to. It is the same for the parts of the bond market, commodities, and (maybe) even the market for financial derivatives built on top of secondary trades. TechCabal’s Muktar Oladunmade and I have written about how secondary transactions in Africa’s technology space made founders, startup employees and early-stage investors rich. We also pointed out that the heyday of secondary transactions seems over as people struggle to shed shares in private venture-backed technology startups in Africa. Sure founding teams and angel investors may have abused secondary transactions by selling dressed-up burnt potatoes to newer investors and cashing out. But unless almost every primary investment made in the four years between 2018 and 2022 is a smouldering wreckage about to explode in flames, the secondary market in Africa shouldn’t be frozen. It also should not be about making easy wealth à la 2021 and 2022. Instead, it should be playing a role in creating a market-clearing (for want of a better word) valuation for African startups now that the peculiarities of the market are better known. We’ve spoken about local tech IPOs, but it will remain a pipe dream if the private market for secondary transactions continues to jealously guard valuations that are improbable. In the world of venture capital, secondary market transactions happen because investors are desperate to buy stakes in “hot” companies, or want to consolidate their gains in what they feel is a portfolio winner. Or maybe they just want to keep founders and key employees happy by allowing them to taste some of the paper wealth they’ve accumulated. It’s a much different world today. There are fewer “hot” startups to chase after, regardless of how much marketing and PR arsenal is deployed. Valuations are too steep for anyone remotely interested, and layoffs are all too common. The State of Tech in Africa Q3 2023 By the end of the 3rd quarter of 2023: Two African countries gave crypto a greenlight. 738 tech workers were laid off in Africa. 7 acquisitions were reported. And energy/climate tech related companies took the spotlight. Plus a lot more! Download the full report to revisit one of last year’s most notable quarters Get it in your inbox But in many ways, a tighter secondary market is a beast of its own making. Like any market, selling “second-hand” shares in a company will be difficult if there are no buyers or sellers, or when buyers and sellers cannot agree on a price. Since venture funding is at a 3-year low in Africa, I suspect it’s a mixture of no or few buyers, creating a wide gap between the price buyers offer and what sellers want. This standoff is unnecessary because it is prolonging a much-needed rebalancing in the world of African venture. And it is disreputable to pretend as if this rebalancing is not already happening. While it is undoubtedly deserved in most cases, it is not a stretch to think that some good companies will be destroyed in this unforgiving market correction. A lot of that value destruction will happen because existing investors are too timid or blinded by fear to stand by their convictions. But some of it will happen because VCs are already writing down the value of companies in their portfolio to zero mentally. Writing down a company to zero mentally means the investor lacks the mental or operational bandwidth (not necessarily funds) to support a portfolio company. When an investor mentally writes down huge swathes of their portfolio, the investor (and the investee) automatically become deadweight to each other. It is either the investor made colossal mistakes with the ventures they backed. Or they are making one with that unconscious decision to give up on the hidden gems within the company. An active secondary market was the exciting place where riches were to be made. Now it will have to be the painful and useful place where portfolios are rebalanced and expectations are reset. Tweeting and WhatsApping about it will not change anything. Now that the quick flip method of going to the secondary market to extract high prices for poor investee companies is not working, startup investors (who still have cash to deploy) may fare better if they approach the deadlocked secondary market as an opportunity to scour the market and rethink what they are best placed to support and what exits in that sector should mean. Do you have a message for Africa’s tech leaders, policymakers or the leading workers building the continent’s startups? Talk to us to find out how we can help share your message on this newsletter. Email bizdev@bigcabal.com to start. Send an email. Instead of hoping for secondary transactions that will “reward” early investors and founding teams. Investors may find that is better to take advantage of current deep discounts to rebalance portfolios that were damaged by
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