MAY 10, 2022
7 min Read
African Tech Weekly Recap: April 11 to April 15, 2022
Welcome to our weekly recap where we share the most important news of the week in the African Tech Ecosystem 🌍
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🇪🇬 Egypt’s Pylon raises $19m seed round
- Egypt-based infrastructure management platform Pylon has raised $19 million in a Seed funding round comprising equity and debt, led by Endure Capital, Cathexis Ventures, Khawarizmi Ventures, and Loftyinc Ventures, and angel investors.
- Founded in 2017 by Ahmed Ashour and Omar Mohamed Radi, Pylon democratizes smart grid infrastructure to energy and water distribution companies in emerging markets enabling them to capture up to $400 billion of losses and uncollected revenue.
- The investment will accelerate Pylon’s growth via expansion into other emerging markets (Southeast Asia, Africa, Latin America) and advance engineering and product development.
From cloud computing to data, AI to cybersecurity, analytics to IoT, enterprise-focused tech startups are springing up across Africa. There’s also a growing appetite for enterprise tech solutions by organizations that wish to digitize their workplaces and processes, as well as take their services, infrastructure, and profits to the next level. From an estimated market size of $14.2 billion in 2021, for instance, the Middle East and Africa’s cloud computing industry is expected to grow to $31.4 billion by 2026.
🇳🇬 African digital bank Umba gets $15M for expansion
- Umba, a Nigerian digital banking platform operating in Lagos, Nigeria, has raised $15 million in Series A funding to expand financial products to underserved populations across three new markets in Africa.
- The new funding follows a $2 million seed round in 2020, bringing the total funding received to date to $17.5 million.
- Nubank and other investors like Tom Blomfield, the co-founder of Monzo, and previous backers Lachy Groom and ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital, and Streamlined Ventures participated in this round with VC firm Costanoa Ventures leading the round.
In recent years, several neobanks have launched in Africa as they look to challenge incumbents in their respective markets. These startups don’t operate a monolithic model. While a few provide banking services to individuals and businesses on a single platform, some target varying sizes of businesses, while others offer tailored services to individuals. Currently, digital banks are among the most funded players by VCs in fintech.
🇳🇬 MTN mobile money gets banking license in Nigeria
- MTN Nigeria, the Nigerian arm of Africa’s largest telecom, today received final approval from the Central Bank of Nigeria to run a payment service bank.
- With this approval, MTN Nigeria can provide virtually all the services offered by conventional commercial banks with the exception of granting credit and processing foreign exchange transactions.
- This announcement follows a previous approval in principle granted in November 2021, to Airtel Africa Plc and MTN Nigeria Communications Plc to operate a payment service bank in the country.
Source: The Paypers
Despite being home to the largest unbanked population in Africa, Nigeria lags behind its peers when it comes to mobile money adoption, compared to countries like Ghana and Kenya, where leading telcos MTN and Safaricom, respectively, have driven exponential growth in penetration over the years. MTN’s approval in Nigeria is thus expected to spur the adoption of mobile money in the country, and although it poses a significant threat to other fintech players, particularly agency banks, Nigerians stand to benefit from the proliferation of digital financial services.
🇰🇪 Kenya to double tax on Big Tech
- Kenya plans to double tax on foreign tech giants like Amazon, Netflix, Twitter, and PayPal which use the internet to market and sell products.
- The Treasury has proposed to increase digital tax service (DST) to 3% of the gross value of online transactions in the financial year starting July from the current 1.5% through the Finance Bill 2022.
- The Kenya Revenue Authority (KRA) has identified foreign firms, which derive income in Kenya through digital marketplaces as a major driver of tax receipts in a highly digitalizing global economy.
Similar to Kenya, countries in the East African region have in recent times made efforts to tax digital services revenues in a move to expand their tax bases as well as boost revenue collections, narrow fiscal deficits, and curb excessive government borrowing. While the move certainly bodes well for the government’s fiscal health, there are fears the decision could scare off investors from the budding digital services market
🇿🇦 SA-founded Luno hits new milestone with 10m customers
- Luno, the crypto company founded by two South Africans, now has 10 million customers in over 40 countries. Luno’s latest one million customers were onboarded in just six months.
- Luno allows customers to buy crypto for as little as R1 in line with its mission to put the power of crypto in everyone’s hands.
- South Africa is one of Luno’s strongest and most active markets. Customer growth in the country is almost 40% year-on-year while over 40% of the new customers added in the last six months are based in the home market.
Luno’s growth reflects the broader crypto industry’s resilience following a volatile year. According to Chainalysis, the value of Africa’s cryptocurrency market rose to $105.6 billion between July 2020 and June 2021, a 1,200% surge, despite repeated efforts by governments on the continent to stifle adoption. Considering the prevailing unfavourable macroeconomic conditions in most African countries that have so far propelled adoption by Africans still persist — including weak currencies, high unemployment rates, and low-income levels — we anticipate increased crypto uptake going forward.
🚀 Africa’s startup funding bucks global trend in Q1
- African startups had a very solid Q1 2022 in terms of VC investment, both in dollars and in deal volume, at a time when venture funding was simultaneously declining in the US, Asia and Latin America.
- According to Briter Bridges, $1.77 billion of VC funding went into African tech in Q1 2022. That’s close to the $1.8 billion estimate of Africa-focused newsletter The Big Deal.
- Regardless, the fact that it is trending in the other direction as most of the world is curious.
In what was a record year for venture funding in Africa, startups on the continent raised more than $4 billion in 2021. This year, African startups secured more than $1 billion in a record seven weeks, prompting predictions startup funding in Africa may reach $7.3 billion at the end of 2022. The continent however still accounts for a small fraction of global VC activity. According to CB Insights’ latest Venture Trends report, African startups attracted a mere 1% of all funding last quarter, with a 2% deal share, indicating more room for growth.
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