African Tech Weekly Recap: January 2 to January 6, 2023

Welcome to our weekly recap where we share the most important news of the African Tech Ecosystem 🌍

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Weak growth but strong markets expected in 2023

Highlights

• The global economic and investment landscape in 2022 was subject to three strong headwinds: aggressive interest rate tightening to contain inflation, China’s zero Covid-19 policy, and the invasion of Ukraine by Russia.
• Africa’s recovery from the pandemic-induced slump was abruptly interrupted last year. Economic activity bounced back in 2021, with GDP growing 4.7%, but it’s expected to slow sharply to 3.6% in 2022.
• A lot of uncertainty remains around the same headwinds that rocked the global economy this year, but there are many reasons to be positive about 2023, especially as it concerns Africa’s financial markets.

Source: Daba Outlook

Our Takeaway

The near-term outlook for the African economy is highly uncertain amid a highly-anticipated global economic recession this year, triggered by policy tightening and the erosion of real spending power. In addition to external factors, a host of countries on the continent face respective internal challenges. Regardless, Africa should avoid a major economic downturn and while growth will be subdued, we expect financial markets on the continent to build on 2022’s momentum and outperform their EM peers.

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Egypt-based Mahaseel Masr raises funding to scale

Highlights

• Egypt-based agritech Mahaseel Masr has raised funding from Emirates International Investment Company (EIIC).
• The startup, founded in 2020 by Mohamed Abdel Rahman, offers a B2B marketplace for fresh produce, connecting farmers and growers to global buyers.
• The fresh infusion of capital will be used to accelerate the deployment of its e-commerce platform, and enhance its product offering and supply chain operations.

Source: Wamda

Our Takeaway

The spate of tech innovation seen in Africa over the past few years places the continent as one of the global leaders in agritech. Between 2016 and 2019, the industry grew by 44% year-on-year, and the continent has registered the highest number of agritech services in the developing world, reaching more than 30 million smallholder farmers as of 2021. On its part, Mahaseel is catering to a growing demand for first-rate fruits and vegetables at competitive prices, drive

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Private equity funding surged in Africa last year

Highlights

• More than $7.2 billion was raised in private equity funding on the continent through the first three quarters of 2022, almost completely surpassing 2021’s numbers. 
• This is according to data from the African Private Equity and Venture Capital Association (AVCA). In the first six months of the year, the number of VC operations exploded, with a total of 338 deals against just 195 over the same period 12 months prior.
• Though 2022’s fourth quarter numbers have not yet been released, last year is likely to be one of the best in the history of African private equity.

Source: The Africa Report

Our Takeaway

Africa is a diverse investment destination with significant potential opportunities in private markets, real assets, and public markets and by the figures, investor interest skyrocketed in the former last year despite significant macroeconomic headwinds globally. Over the long term, these funds targeting investments into private African companies stand to benefit from the continent’s economic emergence, demographic changes, and the expansion of the private sector.

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Africa blockchain incubation program launches

Highlights

• The Africa blockchain incubation program, which aims to foster and support the continent’s upcoming generation of blockchain pioneers, has opened for applications.
• This four-month intensive program was created to assist participants in creating and launching blockchain projects.
• Selected participants will receive instruction, coaching, and tools to support the realization of their ideas as well as get access to a network of mentors and blockchain experts.

Source: Nairametrics

Our Takeaway

In Africa, the emerging blockchain technology is being used in many innovative ways and in essential industries from tech, agriculture, mining, and remittances to inclusion, identity, and property, to name a few. But there’s a huge gap in funding. Africa is the fastest-adopting crypto continent globally, yet it has only a 0.5% share of the total $25.2 billion global blockchain venture funding. As the continent catches up in terms of funding such technological projects, incubators can help to bridge this gap by providing crucial access to capital and mentorship to startups.

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Tunis startup Millesima Technologies secures $480,000

Highlights

• Millesima Technologies, a Tunisian startup specializing in data technology, streaming video, and video-on-demand (VOD) has announced a 1.5 million dinars ($480,000) fundraise.
• The funds, raised from BH Equity, the VC arm of BH BANK, and from a private company, will contribute to the launch of the MYVIOO platform.
• The platform will allow companies and organizations to have one or more VOD channels (videos on demand) and live streaming that is 100% customizable and private.

Source: Wamda

Our Takeaway

Video was estimated to account for more than 82% of all internet traffic worldwide in 2022 and Millesima is looking to tap into this booming market in the Middle East and North Africa (MENA) region. In addition, Africa is increasingly becoming an important growth area for streaming services. Digital TV Research, an analytics firm, estimates that the region’s video-on-demand subscribers will reach 15 million by 2026; that sets the tone for intense competition for viewership among streaming giants and other commercial firms. 

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African startups raised $4.85bn venture funding in 2022

Highlights

• Startups in African countries raised around $4.85 billion in 2022, per data from The Big Deal, which tracks venture funding on the continent. 
• That figure could cross the $5 billion threshold after delayed funding announcements from investors are made. More than 1,000 deals of $100,000 or more were announced in 2022, an 11% year-on-year increase from 2021.
• More so, 75% of the total fund raised were in the big four countries, Nigeria ($1.2bn), Kenya ($1.1bn), Egypt ($820m), and South Africa ($550m) while fintech startups maintained their dominance with 37% of deals in the year.

Source: The Big Deal

Our Takeaway

Generally, African startups had a strong performance in 2022; globally, the region was the only one that recorded a year-on-year increase in venture funding last year helped by a great first half of the year. But in what was a worldwide bear market, shaken by a global economic decline and rising inflation & interest rates, deal activity slowed in the second half. The continent also attracted more interest than ever before: Over 1,000 unique investors participated in at least one deal in Africa in 2022, a +15% increase compared to 2021.

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Nigerian equities kick off 2023 bullish with $416m gain

Highlights

• Tuesday’s trading activities on the floor of the Nigerian Exchange (NGX) closed with a gain of N187 billion ($416 million) in market capitalization, as bulls maintained their grip on the local bourse.
• The All Share Index (ASI) increased by 1.89% to close at 51,595.66 points.  In the same vein, market breadth closed positive as BUA Foods led 23 gainers while there were 11 losers.
• As of the close of the market on Tuesday, the stock market value stood at N28.1 trillion, from N27.915 trillion ($63 billion) as of December 30.

Source: Nairametrics

Our Takeaway

The NGX had a stellar 2022 as equities in Africa’s largest economy braved the storm of rising inflation and interest rate hikes. The bourse closed the year with a market capitalization of N27.915 trillion ($63 billion) as of December 30, from N22.296 trillion at the start of the year. During the year, it recorded several landmark listings in equity and fixed income, and remarkably, its 19.98% gain saw it ranked one of the best globally.

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Sierra Leone is first in Africa to hike interest rate this year

Highlights

• Sierra Leone’s central bank became the first in Africa and second globally after Israel to raise interest rates this year. 
• A combination of factors, ranging from higher commodity costs to uncertainty around the Covid-19 pandemic, are keeping price pressures elevated in the West African nation. 
• The Bank of Sierra Leone’s monetary policy committee hiked its key rate for a fifth straight meeting to 18.25% from 17%, bringing cumulative increases in just over a year to 425 basis points.

Source: Bloomberg

Our Takeaway
While the vast majority of countries saw a decline in interest rates over recent years, soaring inflation, the war in Ukraine, and strengthening economies spurred interest rate increases around the world in 2022. Analysts and economists can’t agree on the trajectory of rates this year but there seems to be a somewhat major consensus that there will be further monetary tightening in the first half of 2023 before we see a reversal in the other half, as the base effect triggers a reversal in inflation.

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Ethereum deal volume surpassed Bitcoin’s last year

Highlights

• The total transactions on the Ethereum network tore through that of Bitcoin by more than fourfold in 2022, data from DollarGeek has shown.
• Data from Nasdaq and Ycharts shared on Reddit on January 2, 2023, showed that there were 338% more Ether transactions in 2022 (408.5 million) than Bitcoin ones (93.1 million).
• Nonetheless, according to Google trend searches, Bitcoin retained its crown regarding online search interest. About 28.41 million people googled Bitcoin during the year.

Source: Nairametrics

Our Takeaway

Last year, the Ethereum blockchain averaged a daily transaction count of around 1.1 million for ETH, while that of Bitcoin’s network stood at 255,000 for BTC. Although the Ethereum network led the charge, it experienced much more volatility while transaction volumes on the Bitcoin network were steadier and more periodic. This was due to spikes in demand at certain times such as NFT launches and other gas fee-intensive events such as XEN minting.

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Telecom service provider Iristel expands into Kenya

Highlights

• Iristel, a telecommunications service provider, has announced its expansion into Kenya providing the company with a presence in Africa, as it looks to expand to new emerging markets.
• Iristel’s voice service offers an expansive, facilities-based local telephone number coverage and inbound voice origination service that enables over-the-top (OTT) and voice service providers to offer voice and messaging (SMS) services to their business or consumer end users.
• For this initial rollout of its global expansion, the company plans to provide the capability to purchase session initiation protocol (SIP) trunks, which can be aggregated with its onnet footprint and DIDs.

Source: ABC

Our Takeaway

Africa’s telecommunications industry, one of the largest sectors in the region, has witnessed rapid growth over the past two decades while playing a key role in shaping the continent’s economy as we know it today. Much of this growth is driven by some deregulation of the sector across the continent, massive investments in network infrastructure by operators, and a large young population increasingly adopting mobile voice and data services. The huge, yet-to-be-realized potential in the market keeps attracting interest from foreign investors and players.

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Okra Solar gets $4.5m debt for solar networks in Nigeria

Highlights

• Okra Solar has secured a $4.5 million revolving working capital facility from EDFI ElectriFI, to help the company penetrate the Nigerian market further and eventually speed up sustainable electrification.
• Launched in 2016, Okra Solar develops mesh-grid technology, composed of their proprietary Okra Pod and sold together with PV panels, batteries, and inverters to electrify underserved or unserved communities.
• The company is now focusing on expanding in Nigeria and plans to deploy multiple pilot projects and energize more than 30 000+ households in the next two to three years.

Source: Leadership

Our Takeaway

Even with off-grid solutions like mesh grids being 10 times cheaper than grid extension for hard-to-reach communities, 80 million people live off-grid in Nigeria. This highlights the importance of Okra’s raise and work, providing financial tools that enable local developers to deploy grids at scale and bring power to thousands of communities. The ElectriFI Country Window for Nigeria is developed in partnership with EU Delegations and host governments.

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Plesion Capital backs Uganda’s Xeno in $2m round

Highlights

• Social impact VC firm Plesion Capital has announced its inaugural investment of $500,000 in Uganda-based Xeno Corporation’s $2 million seed round, which was led by Beyond Capital Ventures.
• Led by founder and CEO Aéko Ongodia, Xeno is a fintech platform that helps Africans to plan, save and invest for their financial goals with or without internet access, and is already pre-installed on 14 million phones in Uganda.
• Plesion Capital is currently focused on African-based investment opportunities that have the potential to address major societal challenges across the continent.

Source: ABC

Our Takeaway

In Africa, most of the 428 million people working do not save or do not have their savings invested. For those who do, their savings consistently lose value to inflation and other charges. This demonstrates the size of the market opportunity and the potential for Xeno; its model and tech are aimed at addressing these challenges. With a growing customer base and a reported 97% retention rate, XENO plans to enter key markets such as Kenya and Nigeria.

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Stocks short sellers netted $300 billion in 2022

Highlights

• Traders who shorted stocks won big in 2022, according to S3 Partners, with shorted stocks recording a return of 30.8% last year.
• That means short sellers outperformed the broader market, which suffered its biggest losses since 2008. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite lost 8.8%, 19.4%, and 33.1%, respectively, last year.
• US short sellers particularly tallied $300 billion in mark-to-market profits on the average short interest of $973 billion.

Source: Yahoo Finance

Our Takeaway

When an investor sells a stock “short” they borrow shares from a broker and sell them in hopes of buying the stock back later at a lower price. This works best when the broader market is hurting. When the market gained value in 2019 through 2021, short seller returns came in below the major indexes but beat the averages when they ended the year down in 2018. More so, the total amount shorted last year was below 2021 when the $1 trillion threshold was broken, but higher than in 2018 through 2020.