MAY 16, 2022

9 min Read

African Tech Weekly Recap: May 02 to May 6th, 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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🇪🇬 SWVL acquires UK’s Zeelo for $100m

Image from Wamda

Highlights

  • Egypt-founded mobility startup SWVL has acquired UK-based B2B smart buses operator startup Zeelo, in a deal valued at $100 million.
  • Zeelo offers an asset-light SaaS platform to help large enterprises and other institutions to modernize their daily transport systems. Its solution is used by corporates, staffing agencies, independent schools, and universities across the UK, South Africa, and the US.
  • This news, one of the largest acquisition deals involving an African startup, comes a few days after SWVL acquired Turkish corporate-mobility startup Volt Lines.

Source: Wamda

Our Takeaway

SWVL is one of Africa’s fastest-growing startups. Since its founding, it has rapidly expanded its geographical footprint by acquiring smaller players with Zeelo being its fifth acquisition deal to date. Last month, SWVL announced the acquisition of Germany-based “mobility as a service” MaaS software platform door2door. That was on the back of a couple of global startups acquired, Viapool and Shot, in the previous year. The startup also joined the public markets through a special purpose acquisition merger about a month ago.

💰 Rali_Cap launches $30m fund for emerging markets

Image from TechCrunch

Highlights

  • Rali_cap, an early-stage venture capital firm focused on emerging markets fintech, has launched a $30 million fund. Last month, the firm, formerly known as Rally Cap Ventures, reached its first close of $20 million (its initial target) before increasing the fund size,
  • The two-year-old VC fund invests in B2B and API-first fintechs across Africa, Latin America, and South Asia at pre-seed and seed stages. It expects to achieve a second close by the end of June.
  • For this new fund, though open for exceptions, Rali_cap targets startups in large markets such as Africa — Nigeria, Egypt, and South Africa; Latin America — Brazil and Mexico; and South Asia — Pakistan and Bangladesh.

Source: TechCrunch

Our Takeaway

Startups in Africa raised more than $4 billion in 2021, a record year. This year, they’ve secured more than $2 billion so far. 2022 is set to be another record year, going by the rate of activity in Africa’s venture funding space. Rali_Cap’s latest fund only further signals a strong investor appetite for opportunities in emerging markets. So far, the VC firm has backed 12 African startups, 13 Latin American startups, and 7 Asian startups, from across the banking-as-a-service and card issuance, open finance sectors, and SME digitization platforms.

🇿🇦SA VC firm HAVAÍC completes final close of $20m fund

Image from Disrupt Africa

Highlights

  • South Africa-based VC HAVAÍC has announced the third and final close of the HAVAÍC Universum Core African Fund, a $20 million fund targeting technology companies in South, East, and West Africa.
  • The Cape Town-headquartered firm invests in and supports early-stage, high-growth tech businesses with proven concepts and global prospects.
  • The Fund is its second pan-African investment fund, and its third and final close comes in partnership with investment management firm Universum Wealth, and institutional investors from South Africa and the United States, including Fireball Capital.

Source: Disrupt Africa

Our Takeaway

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 have secured more than $2 billion in four months, prompting predictions startup funding in Africa may reach $7-$8 billion at the end of 2022. For HAVAÍC, it sees an opportunity in the fact that despite this growth, African startups still only draw 1% of funding from mostly foreign venture backers, indicating room for further growth and local participation.

🚀 Africa’s top insurer partners with Allianz on a $2.1bn deal

Image from Bloomberg.com

Highlights

  • South Africa’s Sanlam Ltd. has agreed to form a joint venture with Germany’s Allianz SE that will combine their assets in Africa, valued at $2.1 billion.
  • Sanlam and Allianz will fold their respective African operations, excluding those operating in South Africa, into a new unit majority controlled by the Cape Town-based group.
  • The combined operations will create a premier pan-African non-banking financial services entity, operating in 29 countries across the continent. Both parties also agreed to remain invested for at least 10 years.

Source: Bloomberg

Our Takeaway

The Sanlam-Allianz partnership aims to increase life and general insurance penetration, accelerate product innovation and drive financial inclusion in high-growth African markets. Africa has an ever-growing need for innovative insurance solutions to address the significant lack of coverage on the continent. As of 2018, the insurance penetration rate in Africa stood at a meager 1.12% or 3% with South Africa. Beyond that, however, the deal clearly shows an increasing global investor appetite for untapped markets (insurance, in this case) in Africa.

🇪🇬 Egypt’s Khazna gets approval from Central Bank to launch its cards

Image from Disrupt Africa

Highlights

  • Khazna has obtained final approval from the Central Bank of Egypt (CBE) to roll out its Khazna Card in partnership with ADIB Egypt.
  • Launched in 2020, Khazna offers a multi-product that caters to the 50% of Egyptians who are active smartphone users yet lack access to formal financial services. It currently offers general-purpose credit, buy now pay later (BNPL), and bill payment.
  • The company last month closed a $38 million Series A round for its efforts to replace informal cash-driven alternatives across Egypt.

Source: Disrupt Africa

Our Takeaway

Digital banks have enormous potential in Egypt, a country where 2 of every 3 individuals are partly or totally excluded from formal financial services but 50% of its 100 million people actively use smartphones. In addition to high mobile and internet penetration, the North African country boasts a young and tech-savvy population with 61% below 30. Startups like Khazna have thus moved to capture this opportunity with neo banking platforms, contributing to the general booming fintech sector in Egypt.

🇳🇬Nigeria’s largest telcos get mobile money banking licenses

Image from Ripples Nigeria

Highlights

  • Airtel Africa Plc and MTN Nigeria Communications Plc have in the past month received respective final approvals from the Central Bank of Nigeria to run payment service banks (PSBs).
  • With the approval, both telecom operators — which have extensive experience operating mobile money across Africa — can provide virtually all the services offered by conventional commercial banks with the exception of granting credit and processing foreign exchange transactions.
  • The final licenses follow previous approvals in principle granted in November 2021, to both Airtel Africa and MTN Nigeria, to operate PSBs in the country.

Source: TechCabal

Our Takeaway

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 and Airtel’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.

🇿🇲 Draper Startup House launches in Zambia

Image from Disrupt Africa

Highlights

  • Draper Startup House (DSH) has established its first location in Southern Africa in Lusaka, Zambia through a partnership with BongoHive, a technology and innovation hub.
  • Founded in Singapore in 2018 by Vikram Bharati as Tribe Theory, a hostel concept for digital nomads, Draper Startup House (DSH) has grown into a global network of spaces connected to services, education, and investment.
  • With over 35,000 community members in 60 countries who tap into its education, technology services, investment, and community resources, DSH is a unit of the Draper Venture Network founded by Timothy Cook Draper, a US venture capital investor.

Source: Disrupt Africa

Our Takeaway

South Africa has been pretty much the only country known for tech innovation and startup activity within its subregion. However, over the past year, other nations like Namibia and Zambia have been in the venture spotlight. Last August, Zambian fintech, Union54, emerged as the country’s first to be selected for the Y Combinator accelerator and followed that up with a $15 million seed round led by Tiger Global last month. The launch of DSH in the country is a further sign that tech stakeholders are paying attention to Zambia, and it could be southern Africa’s next big ecosystem.

🇳🇬 Nigeria’s Hello Tractor raises $1m from Heifer International

Image from Disrupt Africa

Highlights

  • Nigerian tractor-booking platform Hello Tractor has raised $1 million from Heifer International to provide loans for tractor purchases which can be repaid from revenues earned by leasing them to local farmers.
  • Hello Tractor has a tracking device and software that allows farmers and tractor owners to book connected tractors from their phones. Farmers get a service formerly unavailable to them, and owners see a fleet optimization opportunity that also minimizes fuel theft and fraud.
  • The startup currently serves over 500,000 small farmers across Africa with over 3,000 tractors and combine owners, and plans to scale with the new funding.

Source: Disrupt Africa

Our Takeaway

Hello Tractor is one of many new agritech startups that have sprung up across Africa, and are finding business opportunities in addressing the lack of agro infrastructure and other farming challenges. However, while African tech startups attracted more than $5 billion from local and foreign venture backers in 2021, only a fraction of that financing went to agritech ventures, highlighting a gap in funding available to the sector.

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See you next week 👋

African Tech Weekly Recap
Airtel Africa
Allianz
daba
dabafinance
Draper Startup House
Egypt
Havaic
Heifer International
Hello Tractor
invest in africa
Khazna
MTN Nigeria
Rali Cap
Sanlam Ltd
South Africa
SWVL
VC Fund
Zambia
Zeelo

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients. Daba is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.

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