Next Wave: Kenya has an opportunity to provide regional leadership
Cet article est aussi disponible en français <!– In partnership with –> First published 30 July 2023 How many cities on earth have natural forest reserves occupying almost a quarter of the city area and are still entirely within city bounds? Not too many. Only one city on the planet—and perhaps the universe—fits the bill. Nairobi. The vast 117km2 grassland sitting only a few miles away from Nairobi’s central business district is not only a tourist attraction, but it is also the inspiration for the popular moniker for Kenya’s technology ecosystem—Silicon Savannah. This is the second part of a series of ecosystem essays reviewing what often goes unspoken as a smorgasbord of private sector entrepreneurs, business angels and venture capitalists, and government attempt to cultivate unique identities around technology and innovation. If you missed last week’s email you can read the web version here and subscribe (if you’re not yet subscribed) so you don’t miss it. Small tip + why you should subscribe. For next week’s review, we’ll look at what makes Tunis, the capital of Tunisia unique as an ecosystem. For this week, step with me into Kenya, the poster child of African tech innovation for the last 15 years. Like last week, today’s review is structured on three pillars. Today’s review is structured on three pillars. What Nairobi’s ecosystem has going for it. What it does not have going for it that can be fixed. And suggestions for where to start. <!–Chart section 1 Naira-USD spreads have narrowed dramatically following FX policy reforms and the removal of Nigeria’s unorthodox central bank governor, Godwin Emefiele. | Chart: Ayomide Agbaje — TechCabal Insights. Chart end–> Partner Message Download the latest Smile ID State of KYC in Africa report on the most recent trends in identity verification across Africa, highlighting the power of biometric verification and document verification in combating fraud. It is a must-read for any business looking to acquire users across Africa and keep up with fraud trends. Download report here A Ngong Road story In 2012 when Kenya’s technology ecosystem began to etch itself into the global consciousness, a vibrant community of software developers, researchers and entrepreneurs had been working out of a cluster of coworking spaces on (or close to) Ngong Road, near the Kilimani neighbourhood of Nairobi. iHub, Nailab and Gearbox, and a placement campus for Andela, were all located in this part of Nairobi. Because these incubators, coworking spaces and startups were at the centre of what was seen as Kenya’s technology boom, the story of Kenya’s technology ecosystem tends to focus on them. But the Ngong road story begins in Mombasa before the internet became as common as it is today. The unofficial Ngong Road Map. Photo rights, Kwasi Gachie via Code for Africa. The country’s early technology pioneers were the entrepreneurs who fought Telkom for the right to create local internet exchange points (IXPs) to reduce the cost and latency of sending internet packets over VoIP locally. This was in the late 1990s to mid 2000s when Jambonet, Telkom Kenya’s backbone service was the only internet gateway in Kenya. The liberalisation of the internet data business plus new undersea cable landings in Mombasa, thanks to the efforts of Bitange Ndemo, then a permanent secretary at Kenya’s ministry of information and communication, helped enable early internet businesses and create the first crop of internet entrepreneurs like Ken Njoroge and Bolaji Akinboro of Cellulant. This cross-country linkage (internet–wise) between Nairobi at the centre of Kenya, and Mombasa on the coast, still drives part of Nairobi’s technology ecosystem appeal. At the very least, it’s what enables the growing data centre and internet service industry, and indirectly contributes to why multinational technology companies like Oracle, IBM, Cisco and others set up regional offices in Nairobi. A solid internet infrastructure base also means better consumer access to and use of technology. This is invaluable for consumer tech startups, digital service businesses and Kenya’s large base of freelance digital service providers. In the earlier stages, Kenya’s technology industry represented an outgrowth of the development and aid agencies concentrated in Nairobi. But it is slowly transitioning into a key player in the tech support service market globally. In addition to this, Kenya’s relatively long history of tech entrepreneurship in political and business environments that were not always friendly to upstarts. And a fairly large pool of potential customers (both business users and to a smaller extent, individual consumers), represent the key strength of Nairobi’s ecosystem. That’s interesting because the technology ecosystem in Kenya got its start on the back of technical support for development partners, aid agencies and a local growing financial services market. Many of the early entrepreneurs, whether the ones who started coworking spaces on Ngong road, Nairobi, the ones who can retell stories from the early telco and ISP wars, or the private equity funded businesspeople manning the data centre and internet service infrastructure industry owe their survival to this key market—at least in the early days. What is key to note is that this legacy industry has difused throughout the ecosystem at the enterprise level, but not enough at the early-stage startup level. Unlike say, a Nigeria where a quite a few battle-harded enterprise operators are the face of technology upstarts. This is not to say there are not cross-sector experienced operators playing significant roles in Kenya’s startup ecosystem. There are many. Just as a few of the early startuppers have crossed to enterprise companies. A good example is of course, Juliana Rotich, one of the co-founders of Ushahidi, who now leads Safaricom’s fintech division. Shaking off the M-Pesa halo “M-Pesa is part of the lure that brings the idea of Silicon Savannah to life,” Mark Kaigwa, a Partner at Affrinovator once told Tom Jackson, publisher of Disrupt Africa. That lure has grown old. The way I see it, Safaricom understands this. At least that is how I interpret the launch of a “super app” in 2021, followed by an ambitious Ethiopian entry which (according to
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TechCabal Daily – Kenya’s Finance Act is free
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Uganda has joined the big leagues. Last week, MTN launched the country’s first 5G network. For now, the service is not everywhere Ugandans go; it is only available around the Lugogo Mall in Kampala, the city’s capital, but MTN plans to roll it out to the rest of the capital city by the end of 2024. In today’s edition MTN Nigeria’s profit slumps by 29.1% in H1 Kenya’s Finance Act is free Safaricom to invest in Kenyan startups Funding African civic tech The World Wide Web3 Event: NITDA CO-Create West Africa Tech Week Opportunities Telecoms MTN Nigeria’s profits slump by 29.1% in H1 African telecoms are taking a beating, and Nigeria’s shaky forex market is all to blame. Last week, Airtel Africa reported a $151 million loss in Q1 2023, a pale comparison to the $178 million profit after tax it made during the same period in 2022. The telecom cited the currency devaluation in Nigeria as the culprit. Now, MTN Nigeria is reporting something similar. While this telecom reported ₦128 billion ($165 million) in profit for H1 2023, it is at least 29.14% shy of the ₦181 billion ($234 million) it recorded in H1 2022. What went wrong? Per MTN Nigeria’s CEO Karl Toriola, it’s all due to the policy changes Nigeria has experienced in the first half of the year. Karl Toriola, MTN Nigeria CEO Since he came into power in May 2022, President Bola Ahmed Tinubu has removed the country’s long-standing fuel subsidy and floated the naira to create a unified foreign exchange rate. Toriola notes that these actions have created “additional financial burdens” for MTN users in the short term. There’s still growth though: Despite its significant reduction in profits, the telecom still recorded growth in other areas. It reportedly gained 1.5 million new subscribers in H1, taking its total tally to over 77 million subscribers. Its services revenue grew by 21.6%, driven by voice revenue growth of 12.1% and data revenue growth of 34.9%. Active mobile money (MoMo PSB) wallets also grew by 1.1 million in H1 to 3.1 million. Zoom out: MTN is not everywhere we go out of the woods yet. The telecoms stressed that unrealised forex losses included in its net finance charges affected the telco, adding that there was no impact on EBITDA due to the quarterly nature of its tower contracts. However, it expects a full impact by the end of H2. Secure payments with Monnify Monnify has simplified how businesses accept payments to enable growth. We are trusted by Piggyvest, Buypower, Wakanow, Fairmoney, Cowrywise, and over 10,000 Nigerian businesses. Get your Monnify account today here. Legislation Kenya’s Finance Act is free But the country’s taxpayers won’t be. On Friday, the Kenyan Court of Appeal lifted an earlier court order barring the implementation of Kenya’s new Finance Act. Image source: Zikoko Memes ICYMI: In June, three senators filed a petition to a Kenyan high court, challenging the constitutionality of the Finance Act 2023. The Finance Act 2023, which is designed to generate revenue for the government, introduces several new taxes, including a 1.5% tax on content creators and a 3% tax on crypto traders. The senators argued that the Act was passed without due process and that the 1.5% housing levy which the Act mandates employers and employees to pay, is unconstitutional because the Constitution limits the national government’s role in housing to developing a housing policy. Implementation of the Act was suspended in June, and on July 10, another court extended the freeze order, barring the implementation of the Act. And now? Well, the order has been lifted and the Kenyan treasury can now enforce it. The Court of Appeal lifted the order after Treasury Cabinet Secretary Prof Njuguna Ndung’u argued that the country was losing Ksh500 million ($3.5 million) for every day the Act was not being enforced. Per the secretary, Kenya’s budget for the financial year of 2023/24—about Ksh2.9 trillion ($20.4 billion)—is heavily dependent on the taxes which the Act provides. Kenya was reportedly set to generate Ksh 211 billion ($1.4 billion) with the implementation of the Act. The judges of the appeal court therefore lifted the freeze order, in order to allow the country to move forward with its projects. The big picture: It’s not over yet though. The judges have stated that the courts may consider suspending specific provisions of the Act, as opposed to the entire Act, if the provisions had irreversible effects. For provisions without permanent effects, the courts urged members of the public to file for overpaid taxes and get refunded. Discover Trends with Smile Identity Download the Smile ID State of KYC in Africa Report on the latest trends in identity verification across Africa, highlighting the power of biometric verification and document verification in combating fraud. It is a must-read for any business looking to acquire users across Africa and keep up with fraud trends. Funding Safaricom establishes two new subsidiaries for funding From left, Chief Finance Officer, Dilip Pal, CEO, Safaricom PLC, Peter Ndegwa, Chairman, Safaricom PLC, Adil Arshed Khawaja (MBS) and Safaricom PLC, Company Secretary Kathryne Maundu during Safaricom’s AGM held at MJC. Safaricom is looking to push some of its funds into Kenya’s budding ecosystem. Last week, the telecom revealed its plans to enter into the venture capital space by setting up two new subsidiaries, plans that were subject to its shareholders’ approval. On Friday, after the company’s annual general meeting, the company confirmed that its shareholders had approved the plans. Growth and seed-stage startups get a boost: The telecom has now set up two new entities that will invest in startups: one in seed-stage startups, and another in growth-stage startups. The seed-stage subsidiary will complement Safaricom’s already existing million-dollar fund, Spark Fund, which launched in 2014 to invest in early-stage startups in Kenya. The second, the growth-stage subsidiary, will invest in well-established startups that will be key to accelerating Safaricom’s journey
Read MoreAwaiting President Tinubu’s Final Cabinet Selections: A Silver Lining Amidst Missed Opportunities
An in-depth assessment of the significance of President Asiwaju Bola Ahmed Tinubu’s pending cabinet selections in steering Nigeria out of its economic quagmire. Few political figures in Nigeria have demonstrated the same aptitude for identifying and nurturing capable technocrats as President Asiwaju Bola Ahmed Tinubu. His time as the Governor of Lagos State attests to his strategic leadership, defined by a cabinet filled with proficient technocrats that brought about transformative changes. However, in his current presidential tenure, the choices he has made for his cabinet thus far have caused considerable concern among political analysts and citizens alike. This worry is not unfounded given the severe economic downturn Nigeria is grappling with. A Critical Evaluation of the Current Cabinet Selection At a juncture when Nigeria’s economic stability hangs in the balance, the necessity for a cabinet that breeds confidence and showcases a willingness to tackle prevailing economic challenges is imperative. Regrettably, the president’s selections so far for key cabinet positions have not fulfilled these expectations. The crux of the concern rests in the perceived deficiency of the kind of innovative, seasoned, and battle-tested technocrats capable of addressing the multifaceted economic issues Nigeria is currently facing. From soaring inflation rates and high unemployment to unsettling insecurity issues, the country requires leaders who can engineer strategic policies and foster an environment conducive for economic recovery and growth. The current cabinet, as it stands, lacks the necessary depth and breadth in expertise and experience to mount a robust response to these challenges. President Tinubu’s Cabinet Appointments: An Opportunity for Course Correction Despite the disappointment stemming from the initial cabinet picks, there lies a silver lining. As President Tinubu rounds up his cabinet selection, the upcoming appointments offer a window of opportunity to amend the course. These final selections could provide a chance to introduce more competent technocrats into the cabinet and compensate for the initial misses. A buoyant and sustainable economy requires stewardship from leaders armed with proven track records in their respective fields. To steer Nigeria towards a prosperous future, technocrats with innovative ideas are needed. They can devise strategies to stimulate economic growth, foster job creation, and magnetize foreign investments – essential elements in navigating the current economic turbulence. The Way Forward: What Should We Expect? As President Tinubu gears up to announce his final cabinet picks, there is a palpable hope that he takes into account the concerns raised and the precarious economic state of the nation. The weight of these decisions is enormous, for they will determine the course Nigeria takes in the coming years. It is hoped that the President will heed the call to involve experienced technocrats who can inspire confidence, both domestically and internationally. Their innovative perspectives and knowledge could play an instrumental role in crafting strategic policies to tackle Nigeria’s economic challenges head-on. Conclusion: A Make-or-Break Moment Throughout his political journey, President Asiwaju Bola Ahmed Tinubu has shown an impressive ability to pick and empower capable technocrats. However, his recent cabinet picks have raised questions about his long-standing reputation in this regard. Now, with Nigeria’s economic future at stake and only a few cabinet slots remaining, the President faces a make-or-break moment. The anticipation is high, and the nation watches with bated breath, hoping that the forthcoming selections will rectify the earlier missteps and create a cabinet capable of guiding Nigeria towards a stable and prosperous economic future. This is not just about maintaining a legacy, but more importantly, about securing the welfare and future of millions of Nigerians.
Read MoreCellulant is betting on Nigeria’s small and mid-sized merchants. Will it pay off?
Cellulant’s new Nigeria country manager has one job, to grow Cellulant’s share of Nigeria’s large payments market with a combination of mobile and card payments. In a market where mobile PoS devices rule, the Kenyan company is hoping to turn a crack in the wall into a den it can dominate. In February this year, Ibrahim Aminu was appointed Cellulant’s new general manager for Nigeria. The former general manager for VigiPay, a Venture Garden Group company, boasts experience that includes time at a pharmaceutical company, an oil and gas firm, two Nigerian banks and one of Nigeria’s oldest fintechs, Interswitch. When he joined Cellulant, one of Kenya’s oldest payments firms to lead its Nigerian business, the company announcement described his role as providing “leadership as Cellulant expands coverage for Tingg, Cellulant’s Digital Payments platform, across Nigeria.” Cellulant has always served big merchants. Airlines, banks and other fintechs as an aggregator. But Tingg, originally Mula, was the company’s foray into directly offering consumers a way to pay merchants from a single app. The offerings were typical. Airtime top-up, utility token purchases and satellite TV subscriptions. Launched in 2017—the same period when the agent network business was near its crest—Cellulant also began to roll out an agent network to support Mula’s smartphone app experience. Mula quickly became synonymous with bill payments. Two years later, in 2019, Cellulant rebranded the service to Tingg. While Cellulant focused on its traditional business of collecting payments for big merchants like airlines, Tingg was to become a payments super app uniting bill payments, remittances, lending, group investments, and food and gas orders in one app across (then) eight markets in Africa. These days, Tingg is none of these things. It suspended its agency banking business. And in 2022, Cellulant’s CEO, Akshay Grover told TechCabal that his company wanted to enable smaller merchants to collect digital payments. The new goal was to add 50,000 small merchants in a year. And Tingg was the arrowhead. With a streamlined focus on enabling digital payments for smaller merchants, Tingg grew quickly. Between September 2022 and February 2023, InStore, a product that allowed small merchants to accept payments from multiple channels grew by 200% in Nigeria alone Growing this segment is a key focus of Aminu, the new country manager in Nigeria. Already Instore is used by several mid-sized businesses including quick-service restaurant chains. At last count, Tingg was being used in 400 stores in Nigeria. “The SMBs (small and medium businesses) still handle a lot of cash today as it is and there is a big opportunity [there] as we see it,” Aminu told TechCabal earlier in June. Nigeria’s infamous cash ban policy was a boon, Aminu admitted. “There is now an urgency for businesses to start accepting payments digitally,” he added. But the same policy wave that lifted Cellulant, did the same for the competition. In particular, Opay, Moniepoint and Palmpay. All three offer point-of-sale devices for card payments as well as bank transfers. In addition, all three also have strong agent banking networks that run mostly Cash-In-Cash-Out operations. Tingg’s edge lies in its razor focus on targeting small merchants that are big enough to be worth the hassle. The core of its offering is a promise to deliver smoother offline acquiring without the hardware where possible. As a result, it does not have to deal with the hassle of managing a CICO-oriented agent banking network. Nigeria’s agent banking operators have said they will increase the charges they collect from customers seeking to make deposits or withdrawals. This could drive customers away from CICO agent networks to more bank transfers and mobile phone-based payments. For now, this is only conjecture. Consumer habits die hard and Nigerians love withdrawing cash on demand. “Yes, competition would exist but we pride ourselves on the service we are able to offer our customers and our ability to deepen that relationship,” Aminu concedes.
Read MoreMTN Nigeria’s profit slumps by 29.14% in H1 2023 over inflation, forex concerns
Like its telco counterpart, Airtel Africa, MTN Nigeria’s books have taken a beating in its profits for the half year ended June 30, 2023. MTN’s CEO cites the challenging environment, inflation and naira devaluation as the reason for a slump in its results. According to a financial statement published on the Nigerian Exchange Group (NGX), MTN Nigeria has reported a drop in its H1 result in 2023— January 1 to June 30, 2023. MTN reported a 29.14% decline in its profit for the period under review of ₦128 billion, compared to ₦181 billion during the same period in 2022. Conversely, the telco’s revenue grew by 21.96% to ₦1.15 trillion in H1 2023, compared to ₦950 billion in the same period in 2022. Commenting on the financial performance, MTN Nigeria’s CEO, Karl Toriola, stated that operating conditions in the first half of 2023 remained challenging with energy, food, and general inflation at elevated levels. This was due to the ongoing adverse global macroeconomic and geopolitical environment, the cash shortages experienced in Q1, forex volatility and supply chain uncertainties witnessed during the period. “Following the inauguration of President Bola Ahmed Tinubu in May 2023, swift reforms were implemented to remove the fuel subsidy and liberalise foreign exchange management, to bolster investor confidence and drive growth and investment in Nigeria. These policy reforms are expected to be positive for the economy in the medium to long term. However, in the short term, they have created additional financial burdens on consumers and businesses, and these will be fully reflected in the pressures on our margins in H2,” Toriola said. Toriola explained that MTN had robust commercial and financial performances in H1 and would continue to invest in the business to further improve the quality of their delivery. The MTN boss said H1 helped the telco gain 1.5 million new subscribers, taking its total tally to over 77 million subscribers. Already the firm prioritised enhancing the capacity and coverage of its 4G and 5G networks. According to its CEO, 4G traffic constituted 82.5% of its total data traffic while 5G constituted 21% on all 5G-colocated clusters. In all of the wins, higher energy prices and rising costs impacted growth. “Our margins were impacted by higher energy prices and rising costs, but the impact was moderated by provisions in our tower contracts and the timing of the forex harmonisation. Notwithstanding, we will continue to execute our commercial strategy with a focus on unlocking efficiencies and driving operating leverage to support growth in earnings, cash flow, and returns over the medium term,” the report read. It stressed that unrealised forex losses included in its net finance charges affected the telco, adding that there was no impact on EBITDA due to the quarterly nature of its tower contracts. However, it expects full impact by the end of H2. Mobile services The telco’s financial statement also reported that its services revenue grew by 21.6%, driven by voice revenue growth of 12.1% and data revenue growth of 34.9%. Active mobile money (MoMo PSB) wallets grew by 1.1 million in H1 to 3.1 million. Currently, its total number of registered MoMo PSB wallets is now over 22 million, powered by 227,000 MoMo agents, and 38,000 merchants in its ecosystem. TechCabal had recently reported that the MoMo service still requires more adoption. Nonetheless, its data customers saw a 11.5% increase to 41 million and a 52.2% increase in Ayoba subscribers to 7.2 million. Outlook The group looks to prioritise three things: its network, MoMo PSB, and the acceleration of 4G, 5G and rural coverage to expand their network base. It stressed that the outlook for the full year 2023 will depend on the impacts of the levels of the exchange rate and the new VAT on tower leases effective September 2023. “The extent of these factors remains the key nearer-term risk to our medium-term guidance,” the report read.
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Copia lays off staff for the third time
Lire en français Read this email in French. Editor’s Note Week 31, 2023 Read time: 5 minutes Hello This week, we bring you updates from Kenya, Nigeria, and Senegal. By the way, have you had a chance to complete our quick 3-minute survey yet? If not, we’d really appreciate it if you could spare a few moments to do so. Pamela Tetteh Editor, TechCabal. Editor’s Picks Copia lays off staff for the third time Copia, a Kenyan e-commerce platform, has laid off 25%—350 members of its workforce. This is the third time this year that Copia has trimmed its headcount. Learn more. CBN retraces its steps Nigeria’s central bank unfroze 440 bank accounts of some companies that it previously accused of “illegally trading” in foreign exchange. This includes tech startups like BetNaija, RiseVest, Bamboo, Chaka, and Yellow Card. Learn more. Flutterwave accounts remain frozen in Kenya This week, Judge Nixon Sifuna of the Kenyan High Court refused a request from Kenya’s Asset Recovery Agency (ARA) to drop their case against Flutterwave. Learn more. Hackers unveil themselves A pro-Russian hacktivist group called Anonymous Sudan claimed responsibility for a series of Distributed Denial-of-Service (DDoS) attacks on websites of Kenyan media, hospitals, universities, and businesses, including Safaricom. Learn more. Entering Tech Interested in getting tech career resources and insights?. Then sign up for Entering Tech to get started! Starlink launches in Kenya Namibia has given its official seal of approval to crypto exchanges by introducing the groundbreaking Namibia Virtual Assets Act 2023. Learn more. Freelancers to pay taxes in Kenya The Kenyan government now mandates that Upwork collect and remit Value-Added Tax (VAT) on goods and services, including freelancer services. Learn more. Sonatel acquires 5G licence Telecomms company Sonatel—Orange Senegal—has acquired 5G licence in Senegal. Learn more. Airtel Africa loses $151 million Airtel Africa has reported a loss after tax in its Q1—April 1 to June 30, 2023 results. Read more. Who brought the money this week? Kenyan agritech company Farm Works raised $4.1 million in pre-series A funding. The round was led by Acumen Resilient Agriculture Fund, other participating investors included Livelihood Impact Fund, Vested World, a number of family offices, and angel investors. Clafiya, a Nigerian health-tech company, secured $610,000 in pre-seed funding from Norrsken Accelerator, Acquired Wisdom Fund (AWF), Hustle Fund, Voltron Capital, Microtraction, Ajim Capital, and other investors. Kenyan health-tech company, Zuri Health, raised an undisclosed funding round from Five35 Ventures. What else to read this weekend? Eden Life is experimenting with affordable fast-food delivery Inside Kasha’s mission to revolutionise healthcare in Africa How to fix the Nigerian economy according to the World Bank M-PESA is launching in Ethiopia, but will it stand a chance against Telebirr? Written by: Ngozi Chukwu Edited by: Pamela Tetteh 18, Nnobi Street, Surulere, Lagos, Nigeria Unsubscribe from TC Weekender
Read MoreSafaricom shareholders approve two startup investment subsidiaries
Safaricom has established two new subsidiaries to invest in tech startups in Kenya. The subsidiaries will focus on seed-stage and growth-stage startups – and they have not replaced Spark Fund, launched eight years ago. Safaricom disclosed a plan to enter the venture capital space a few days ago. The Kenyan telco hinted at establishing two new subsidiaries to identify and invest in tech startups in Kenya. It revealed plans to inject capital into startups as a significant part of its next growth frontier. These subsidiaries have officially been created following a consensus at Safaricom’s 15th shareholders’ annual general meeting held today. In a statement, Safaricom CEO Peter Ndegwa said, “We are committed to empowering the tech ecosystem in Kenya and beyond, and this strategic move will enable us to broaden our investments, embracing both seed-stage and growth-stage start-ups. Incorporating these subsidiaries is pivotal to realising Safaricom’s purpose to become a purpose-led technology company.” Seed-stage investment subsidiary Safaricom has set up a company limited by guarantee to invest in seed-stage startups. This complements the existing Spark Fund, an investment entity governed by a board of trustees, which empowers and nurtures start-ups in Kenya. The new entity is expected to streamline administrative processes and enhance governance, further supporting young entrepreneurs. At first, Safaricom didn’t mention what would happen to Spark Fund. Launched in 2014, the fund has backed numerous startups, such as Sendy, iProcure, Eneza Education, and Ajua, while receiving applications from over 200 other startups. Spark Fund fosters the successful development and expansion of promising mobile tech startups in Kenya and offers investment, business development support, and technical assistance to local and up-and-coming startups. With the launch of the new subsidiary, it is clear that it will work hand in hand with Spark Fund to identify and finance promising seed-stage startups. “We will be looking to invest in and support early-stage companies, especially in emerging technologies such as analytics, Machine Learning, Artificial Intelligence, and the Internet of Things. We will be launching the call for applications in the coming weeks,” said Ndegwa. Growth-stage investment subsidiary This new subsidiary will have a clear mandate: to invest in well-established startups that will be key to accelerating Safaricom’s journey toward becoming a ‘purpose-led tech company by 2025,’ as per the telco’s CEO. Not only that, but this entity will also serve as the primary investment platform for all strategic investments carried out by Safaricom. Adil Khawaja, Chairman of the Board, said, “We thank our shareholders for their unwavering support in establishing the new subsidiaries. By investing in tech entrepreneurs and initiatives aligning with our strategic mission, we aim to continue transforming lives by connecting people, opportunities, and information while driving innovation, creating value, and leaving a lasting impact on society.” Dividend payout Finally, Safaricom shareholders have approved a final dividend of KES 0.62 per ordinary share, bringing the total dividend for the year to KES 1.20 per share. The interim dividend of KES 0.58 per share, approved in February 2023, amounted to KES 23.24 billion ($163.4 million). The final dividend of KES 0.62 per share will amount to KES 24.84 billion ($174.6 million), bringing the total dividend payout for the year to KES 48.08 billion ($338 million).
Read MoreBasiGo joins a growing electric motoring space in Kigali
In partnership with AC Mobility, BasiGo aims to launch electric buses in Kigali by October 2023. Operators will not be required to pay full price for the buses. Electric bus company BasiGo has expanded its services to Rwanda, making the country its second base after operating in Kenya for about two years. The startup’s goal in Rwanda remains the same—revolutionising public transport systems by introducing electric vehicles. BasiGo plans to launch in partnership with AC Mobility, which provides automated fare-collection systems for public transport. The plan is to introduce electric buses in Kigali by October 2023, in collaboration with three bus operators: Kigali Bus Service, Royal Express, and Volcano Express. BasiGo employed a similar approach in Kenya, where it partnered with Matatu companies like Super Metro, resulting in 19 electric buses currently operating in Nairobi, with over 100 others reserved for the future. Speaking on the coming launch, Jones Kizihira, CEO of AC Mobility Rwanda, said, “We are excited to partner with BasiGo to drive Rwanda’s public bus electrification. The country has recorded rapid transformation, creating a need for a more robust and cost-effective public transport system. The electric buses will help ease the cost burden of public bus transporters and advance Rwanda’s transition to clean mobility.” Why Rwanda? According to Jit Bhattachary, BasiGo’s CEO, the startup chose to expand to Rwanda because the country “has led the way in creating an enabling environment for e-mobility.” He told TechCabal, “The country has indicated strong interest in transitioning their public transport fleet to electric. Also, 58% of Rwanda’s electricity comes from renewables. There is greater near-term impact on climate emissions from electrifying public transport in markets like Kenya and Rwanda where the buses are recharged primarily from renewable energy.” Read more: Roam Motors, BasiGo have a long way edge out diesel buses in Nairobi The role of AC Mobility in the expansion According to BasiGo’s CEO, AC Mobility is a technology player for Rwandan public transport operators. Its fare collection systems are widely used on city buses in Kigali. Through the partnership with BasiGo, bus operators will benefit from a seamless experience covering fare collection and e-Bus operations. “AC Mobility’s fare collection systems are present on the vast majority of city buses operating in Kigali,” Jit Bhattachary explained to TechCabal. The pay-as-you-drive model reduces upfront costs As in Kenya, the previously mentioned bus operators collaborating with BasiGo will purchase e-buses from the firm using the pay-as-you-drive model. While a fully decked-out BasiGo electric bus can be costly, customers have the option to purchase one without a battery at a reduced price. The pay-as-you-drive subscription covers the battery lease and includes benefits such as complimentary charging at BasiGo’s charging stations and free service and maintenance. In Kenya, the K6 electric bus is available at an upfront cost of $35,600, with a pay-as-you-drive subscription of $0.14 per kilometre. “Our mission is to create the future of clean, electric public transport across Africa. We see a great opportunity in Rwanda for our business model to unlock the potential of e-buses in Rwanda and help the country accelerate their transition to sustainable and inclusive public transport,” added Bhattachary. No expansion plans beyond Kenya and Rwanda – for now BasiGo has no plans to expand beyond these two markets for now. It plans to deliver 100 additional buses in Kenya and others in its new market. “Our focus right now is on scaling the best possible e-bus solution for our clients in Kenya and Rwanda, from passengers who board our buses to the operators who rely on them every day to run their business. What you should expect is more buses to hit the road in both markets,” said the CEO. BasiGo raised almost $11 million in 2022. Three months after launching operations in Kenya, it secured $4.3 million in seed funding. Novastar Ventures took the lead in that funding round and was joined by a mix of investors from Silicon Valley, both existing and new. Some notable participants included Moxxie Ventures, Nimble Partners, Spring Ventures, Climate Capital, and Third Derivative. The $4.3 million funding included $930,000 raised during the pre-seed round in late 2021. In November 2022, BasiGo secured $6.6 million in equity funding. This funding round was jointly led by Novastar, a prominent Africa-focused VC firm, alongside Mobility54, the corporate venture capital arm of Toyota Tsusho, and Trucks.vc, a Silicon Valley-based VC firm focused on supporting startups in the transport sector. The e-mobility landscape in Rwanda Rwanda is one of the African countries that has initiated incentives to encourage the adoption of electric vehicles. Fiscal measures include capping electricity tariffs for charging stations at the industrial rate, making charging more affordable. EVs, spare parts, batteries, and charging station equipment are exempt from import and excise duties, receive zero-rated VAT treatment, and are exempt from withholding tax, further supporting the transition towards sustainable transportation.BasiGo now joins KABISA, a Rwandwese startup that aims to tackle existing barriers in the auto sector with a comprehensive electric vehicle ecosystem. Its mission is to enhance accessibility to environmentally friendly transportation. KABISA sells and leases electric vehicles and is establishing a public charging network. It plans to launch an electric vehicle maintenance garage in Kigali.
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Everyone can afford it: Inside Eden Life’s fast-food delivery experiment
Eden Life, the home service platform that provides laundry, cleaning, and meal-delivery services for Nigeria’s working class, is testing a push into the larger retail market. Since its launch in 2019, Eden Life has used a subscription model with prices ranging from N23,000 ($63.6) to N76,000 ($210). Because of the need to pay upfront for its services, Eden Life gained a perception as a service for the upper middle class. Since 2019, its subscription prices have risen sharply—to about ₦150,000 for two meals daily—in response to Nigeria’s food inflation. The startup justifies its pricing by pointing out that it serves high-quality meals made by chefs. For home cleaning, it argues that its vetted and trained cleaning staff called “gardeners,” are conscientious, professional, and consistent, more than you could say for many hired helps. But subscription pricing remained a significant barrier to entry for many customers. Eden Life tried to solve that problem by unbundling its services; its more affordable cleaning and laundry services became standalone. But the company was always up against the realities of an economy that has suffered a recession twice in the last seven years. With inflation at a 17-year-high of 22.79%, one of the company’s key customer segments, young and upwardly mobile workers, began to leave the country in droves in a ‘japa wave.’ With purchasing power dwindling, Eden Life, like every business in the Nigerian economy, has been forced to restrategize to keep revenues up. Eden Life’s Quick service delivery experiment This week, Eden Life began promoting “Homemade by Eden,” a quick service restaurant (QSR). Eden’s Homemade offers a plate of special fried rice with grilled peppered beef for N3,340, similar to middle/mass market offerings like Chicken Republic or Sweet Sensation. One theory with Eden Life’s push into QSR is that it is a way for the company to acquire new users and build trust. If people buy food from Eden every other day and come to trust them, it may become easier to sell subscriptions. Nadayar Enegesi, the Co-founder and CEO of Eden Life, told TechCabal that the company’s recent experiment is about access. “In Nigeria, food is an essential commodity. It’s about how we can take this essential commodity and level it up. We’ve shown that we have figured out quality, so the priority is to ensure this is as accessible to everyone as possible.” For an hour this Friday, Eden Life is offering customers the opportunity to buy any meal from its QSR for N1,000, a push to get into the faces of more people and drum up the needed publicity for its experiment. It’s an experiment worth pursuing when you consider that the organised fast-food industry in Nigeria is valued at $602 million with an estimated annual growth rate of 10%. With over 300 stores, Food Concepts (the brand behind Chicken Republic) is the biggest QSR brand in Nigeria. Despite its dominance, Chicken Republic leans on companies like Glovo and Jumia for food delivery. The online food delivery market is also huge and is valued at $834 million in 2022. Food delivery’s competitive landscape Eden Life’s existing logistics backbone means it will compete against QSR brands like Chicken Republic and food delivery services like Jumia Food, Glovo and Chowdeck. While Jumia Food is the market leader in the food delivery space, newcomers like Chowdeck are giving the company a run for their money. Chowdeck is rolling out grocery delivery. Chowdeck, for instance, has begun doubling down on its push into grocery delivery, offering free delivery to its customers till the end of July. While it only recently started pushing the offering, people close to the situation say it began onboarding grocery stores in February. It’s a nod to how businesses within the food and QSR space are constantly innovating to increase revenues. Eden Life hopes that its QSR experiment brings more customers into the door and changes the perception that it is an ‘expensive’ service. It will also be looking to cross-sell and show them the value of being long-term customers. The final stage will then show customers that subscription pricing is not always a trap.
Read MoreData centre infrastructure: An exclusive interview with Raxio Group’s Bhavik Pattni and Yannick Sukakumu
Yannick Sukakumu and Bhavik Pattni are players in the data centre industry in Africa. In this exclusive interview for TechCabal, they discuss with Noel K. Tshiani, founder of Congo Business Network. Sukakumu, who holds the role of country manager in Kinshasa, and Pattni, performing duties as the head of corporate and business development for the Raxio Group in Dubai, share their valuable insights and extensive experiences navigating the dynamic data centre business in the Democratic Republic of Congo and across the African continent. As the head of corporate and business development at Raxio Group, can you share with me the company’s overall vision and mission to drive Africa’s digital economy through carrier-neutral colocation data centres? Bhavik Pattni: We have a bold mission to lead digital transformation in our markets by sustainably providing world-class infrastructure that enables organisations to grow and reach their full potential. We do this by building and operating state-of-the-art data centres in key metro areas across the continent. These data centres are often the first of their kind in these countries and house mission-critical digital infrastructure for local public and private sector organisations and global enterprises. We help these organisations expand into new markets, reduce their total cost of ownership, and ultimately provide better service to their customers. Raxio Group has expanded its operations to several countries in Africa, including Uganda, Ethiopia, the Democratic Republic of Congo, and Mozambique. Can you tell our readers about your company’s impact and achievements in these regions, particularly in terms of empowering local businesses and driving digital transformation? BP: Yes, we are now present in seven markets across the continent: Uganda, Ethiopia, the Democratic Republic of Congo, Mozambique, Côte d’Ivoire, Angola, and Tanzania. We are proud to play the role of first mover in these markets by providing much needed Tier III certified data centres. The impact of our work is being felt today, but will be felt for years to come as these markets continue to develop. In most cases, the latter is difficult to quantify. We work with local companies from the earliest stages of development. From site acquisition to construction, we rely on highly skilled local companies to help us build our facilities on time and to specification. There is a great deal of knowledge transfer in this process that will benefit employees of these companies and their future work. This development process has also had a positive impact on job creation. In each market, we estimate that we will create hundreds of jobs, particularly during the construction phase, and potentially thousands as new businesses are created as a result of our data centre. All our facilities are managed by a fully local team of highly proficient information technology professionals, whom we equip with industry-standard training, thereby equating their expertise with their counterparts in more developed markets. Further, in Uganda, where we have been operating for two years, we have been able to observe our impact on digital transformation. For the first time, local businesses have a secure, highly reliable data centre facility in the country. For banks, this means they can meet compliance regulations set by the central bank, they can reduce their costs by co-locating with us, and most importantly, they can better serve their customers by focusing on their core business. Local and regional cloud service providers are able to expand their service offerings and provide higher service level agreements to their customers. International content delivery networks are able to bring their services closer to the consumer, thereby reducing the cost of that content. These are just a few of the observations we have made since we began operations. Sustainability is a key focus for Raxio Group, with an emphasis on greenfield investments and sustainable infrastructure. How does the company integrate environmental considerations into its data centre projects and contribute to energy transition initiatives in Africa? BP: Sustainability is at the core of our values, as it should be for any data centre operator. Data centres’ main cost is energy, so it is important that they deliver their services in the most sustainable way. We carefully consider the location of our facilities. All our facilities are strategically situated in areas that benefit from abundant, backup power supplies. Most of the power generated in our markets is already renewable, so our goal is to maximise grid uptime by selecting sites with more than one power source. In some of our markets, we will use solar power to supplement grid power, further increasing our reliance on renewable energy. From a design perspective, our data centres are built to be highly efficient. Through a carefully considered equipment selection process, we have achieved a power usage effectiveness of 1.3, setting a new benchmark for the continent. During operations, we use advanced tools to monitor several key indicators so that we can quickly identify efficiency losses or potential risks. Financing has been a key factor in our growth, and we are grateful to our shareholders, Roha and Meridiam, for supporting us from an early stage. More recently, Proparco and the Emerging Africa Infrastructure Fund have provided Raxio with a $170 million sustainability linked debt facility to ensure that we meet certain sustainability targets. In your role, you are responsible for corporate and business development at Raxio Group. Could you share some insights into the company’s strategies for forging partnerships, engaging with stakeholders, and driving growth in the African market? The data centre industry is also growing rapidly in Africa, but it is still in its infancy. What are some of the challenges Raxio is facing as it expands its operations in Africa? BP: When we think about infrastructure as a pillar of growth, there is a real need to be fully aligned with all of our stakeholders, from customers to government to investors to peers. We are very fortunate to be part of a thriving ecosystem of companies that are all growing and rely on the growth of their peers to continue to grow. All of the businesses in
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