This week in Africa: Everything you need to know
15 min Read April 28, 2023 at 11:58 AM UTC
Welcome to our weekly recap where we share the most important news from the African Tech Ecosystem 🌍.
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SAB Foundation launches $5m impact fund for SA SMEs
- SAB Foundation, in partnership with Lead Impact Capital and the National Treasury’s Jobs Fund, has launched an R88 million ($5 million) Financing for Impact Fund.
- The fund, underpinned by grant capital, is aimed at providing affordable financing to qualified alumni of its South African entrepreneur programs.
- On a broader scale, the Fund seeks to mitigate the financing gap that exists in South Africa, especially for small businesses, which often do not have much collateral and are perceived as high risk by the investment community.
Lack of access to working capital remains a huge problem facing the growing small and mid-sized retail sector in South Africa and the continent at large. Available data shows a $330 billion financing deficit for the small enterprises that make up 90% of businesses on the continent—and it’s a problem several startups and foreign investors are particularly keen to address as it promises attractive returns. In addition, the new fund is the latest in a long list of impact funds that have launched in Africa this year, showing its rapid growth.
d.light raises additional $1.9m from Swedfund to power Africa
- Swedfund has made an additional investment of $1.9 million in d.light, a company providing affordable off-grid solar electricity to people living without access to reliable and clean energy in Africa and India.
- The funding will be used for supporting the company’s further expansion and comes after Swedfund’s initial investment in December 2018.
- Since then, d.light has expanded from Kenya and India to new geographies such as Uganda, Tanzania, and Nigeria, and has also introduced new products and services.
Against the backdrop of a challenging macroeconomic and financial environment, high inflation disproportionately affects the most vulnerable. More Africans are lacking electricity in 2022 than in 2019 and electricity services are now unaffordable for up to 30 million people who had previously gained access to power. The lack of access to electricity is both a root cause and a consequence of poverty. With this latest investment, Swedfund asserts its continued efforts to eliminate poverty and foster economic growth in Africa and India.
StanChart launches female-focused startup incubator in Kenya
- Standard Chartered Women in Technology Incubator Kenya has launched, combining startup support with local and international experience to support female founders and help them grow their businesses.
- The program, an initiative of Standard Chartered in partnership with Strathmore University’s iBizAfrica incubator, offers immersive learning, mentorship, and building and growing startups with the support of seed capital.
- StanChart is seeking female founders with businesses that embed components of emerging technologies in building their solutions – such as artificial intelligence, the Internet of Things, big data, machine learning, robotics, blockchain, and augmented and virtual reality.
Source: Disrupt Africa
In Africa, female entrepreneurs are taking their place in the male-dominated tech world. However, gender bias still makes it harder for them to access finance and grow their businesses. Per Briter Bridges, only 3% of the total funding raised by startups in Africa since 2013 has gone to all-women co-founded teams. Efforts and initiatives like this are crucial to increasing female representation in and contribution to the startup space, which remains minute against a faster-growing percentage of ventures run by men.
Zimbabwe to introduce a $100m gold-backed digital currency
- Zimbabwe’s central bank is reportedly looking to introduce a digital currency, backed by $100 million of gold, to be used as legal tender in the country.
- The move is part of the government’s interventions to deal with its fluctuating currency and represents the first steps towards using the country’s gold reserves to peg the national currency.
- When introduced, the tokens will be exchangeable for small amounts of Zimbabwean dollars and holders are expected to be able to exchange their money for the tokens for protection against exchange rate volatility.
With cryptocurrencies like Bitcoin widely popular among Africans, central banks across the region have been working towards developing digital currencies of their own. The growing allure of such regulated digital tokens and a recent call for a continental cryptocurrency indicate the era of cash could be drawing to an end. However, there are genuine doubts about Zimbabwe’s capacity to implement its digital currency ambitions, given it’s one of the world’s poorest countries with significant infrastructure gaps (only a third of its 15 million people have access to the Internet) and an embattled economy.
Tanzania gets $153m credit injection from the IMF
- The executive board of the International Monetary Fund on Monday approved the first review of Tanzania’s three-year extended credit facility, allowing immediate disbursement of about $153 million in budgetary support, the IMF said in a statement.
- Tanzania’s economic reform program is progressing well in a challenging global economic environment, but authorities should work to boost domestic revenues while stepping up structural reforms to streamline bureaucracy and combat corruption.
- The decision brings total disbursements under the $1.04 billion loan arrangement approved for Tanzania last year to about $305 million.
Since coming into power in March 2021, President Samia Suluhu Hassan’s efforts to lessen political hostilities, improve the business climate and come up with constructive engagements with the international community have had a positive outcome on Tanzania’s economy and reputation. Last week, the East African nation saw an improvement in its credit rating, with Moody’s Investors Service giving the country a rate of B2 Positive. The UN also predicts Tanzania will be the third fastest-growing economy in Africa for this year at 5.6%, trailing Cote d’Ivoire and Rwanda.
Telkom FutureMakers, Aions partner to help SA startups grow
- South African mobile operator Telkom’s Enterprise and Supplier Development program, Telkom FutureMakers, has partnered with venture builder firm, Aions Creative Technology to help local startups grow.
- This partnership comes on the back of a competitive pitching process where Aions was awarded $3.2 million in funding that will reflect Telkom FutureMakers’ commitment to growing and partnering with South African ICT SMMEs.
- Aions is currently mentoring three startups and with the Telkom funding expects to see this number grow to at least 10 in the coming 12 months.
Source: Disrupt Africa
An active early-stage support system involving accelerators, incubators, and pitch competitions helps to bridge Africa’s technology gap by providing crucial access to capital and mentorship to startups. In addition, Telkom’s backing is yet another example of corporates supporting startups and SMEs in South Africa. Across the continent, there is a growing interest among investors, including legacy organizations, in backing African startups through corporate venture capital (CVC) units.
Johannesburg is Africa’s wealthiest city with over 14,000 dollar-millionaires
- South Africa’s commercial capital, Johannesburg, remains Africa’s wealthiest city, per a study compiled by Henley & Partners and New World Wealth.
- Called the “City of Gold,” it is home to the largest number of dollar millionaires (14,600) in the continent, according to the World’s Wealthiest Cities Report 2023. Up to 30 of them are dollar centi-millionaires and two are dollar-billionaires.
- Johannesburg was founded following the discovery of gold deposits nearby in 1886 and hosts the Johannesburg Stock Exchange (JSE), Africa’s largest. In 2021, its cumulative wealth stood at $235 billion, topping Africa’s chart.
Source: QZ Africa
Per the report, Johannesburg appears to have weathered the difficult times South Africa’s economy has faced in recent times, including a persistent energy crisis and rising inflation. The “Big Five” wealth markets—South Africa, Egypt, Nigeria, Kenya, and Morocco—together account for 56% of Africa’s high net-worth individuals and more than 90% of Africa’s billionaires. Mauritius, Rwanda, and Namibia are also catching up quickly. Elsewhere across the world, New York City, Tokyo, The Bay Area, London, Singapore, Los Angeles, Hong Kong, Beijing, Shanghai, and Sidney are the top ten cities with the highest number of high net-worth individuals.
Smile ID expands footprint with the acquisition of Ghana’s Appruve
- Smile Identity, a KYC compliance and ID verification partner for many African fintech startups and businesses, has acquired Inclusive Innovations, the parent company of Appruve, a Ghanaian developer of identity verification software.
- Founded in 2017 and backed by over $30 million in venture capital, Smile combines document verification, face verification, biometrics, and data integrations into local trusted ID authorities to verify people’s identities.
- The acquisition is expected to help expand Smile Identity’s footprint across Africa and solidify its position in the identity verification and digital KYC space.
Globally, businesses lose up to $1 trillion annually to cybercrime, and in Africa, that figure stands at a whopping $4 billion. As digital services, financial and non-financial, providers penetrate the African market at large, there is a need for fintech startups and digital businesses on the continent to carry out stringent Know-Your-Customer (KYC) and verification checks on their customers. Smile Identity is one of the many platforms powering these crucial processes for other startups and large businesses.
SA rewards app Maholla raises $1.5m seed funding to scale
- South African startup Maholla, a viral consumer reward app, has concluded a $1.5 million seed funding round to help it continue to scale.
- Maholla rewards users for scanning any receipt from any store, allowing users to earn rewards irrespective of where they shop. Rewards come in the form of instant airtime, 1Vouchers, in-app games, and more.
- The company raised a $580,000 pre-seed round last July and has now brought its total funding to date to over $2 million dollars with plans to grow its users and deepen its technical capacity.
Source: Disrupt Africa
Maholla is one of an increasing number of technology startups across Africa that are reinventing the way traditional corporates in the fast-moving consumer goods sector offer discounts and rewards to end consumers. In Africa, startups that play in this space have a big market opportunity as the consumer goods sector is one of the largest and most resilient in the continent’s leading economies. There’s also a growing appetite for technology-enabled solutions among organizations and Household names such as Maggi, Milo, Fusion, and Switch Energy are among the many brands reportedly benefiting from Maholla’s dataset and targeting capabilities.
Capria reaches first close of $100m fund to back startups in Africa, others
- Capria Ventures, a leading Global South specialist firm investing in early-growth Global South startups, has announced the first close of its $100 million fund.
- The company invests in tech founders with limitless aspirations, connecting them into a uniquely-collaborative network, and activates strong relationships between hundreds of founders and leading local VC firms in the tech hubs of the Global South.
- Its new fund will focus on investing in 20-25 tech startups in the entrepreneurial hotspots of Africa, India, Southeast Asia, Latin America, and the Middle East.
Source: Disrupt Africa
With a young and dynamic population, growing economies, and a surge in innovation, Africa is set to take center stage in global entrepreneurship. Capria recognizes this and has already closed investments for its new fund in promising startups in Nigeria and Egypt, including MAX (mobility) and Paymob (fintech). Its new fund will seek founders harnessing the potential of generative AI to transform companies across multiple sectors, as well as adding a new focus on climate startups.
42Markets raises $10m from Convergence Partners to expand its portfolio
- Financial and capital markets-focused fintech investment group 42Markets has received $10 million in growth funding from Convergence Partners to advance the growth and development of its portfolio companies.
- The company describes itself as an incubator of specialized fintech businesses with deep expertise in financial and capital markets.
- 42Markets’s portfolio includes Mesh, a trading platform, Andile, a financial and capital markets advisory platform, as well as South African-based FX Flow which is a foreign currency risk management system that provides a real-time view of foreign currency exposure and hedges.
In recent years, Africa has witnessed significant growth in financial and capital markets-focused fintech startups leveraging mobile technology and digital platforms to provide access to investment products and services to individuals and businesses. The growth of these fintechs has been fueled by a supportive regulatory environment and increasing investor interest from firms like 42Markets. Earlier this year, the buyout firm Convergence Partners raised $296 million to buy African technology assets. The capital raise was one of the first private equity funds secured for sub-Saharan Africa this year and brought the total funds under management at Convergence to about $600 million.
Johannesburg stock exchange records second listing of the year
- The Johannesburg Stock Exchange has announced a new copper listing on the Alternative Exchange (AltX Board), Copper 360 Limited (CPR).
- Copper 360 is a copper mining company with operations based in the Northern Cape, with a focus on producing premium copper that will yield a high cash margin.
- This is the second company to list on the JSE this year, pushing up the number of listed companies on the bourse to 303 with an overall market capitalization of R22.76 trillion (around $1.2 trillion).
Copper 360 is now one of 44 companies in the basic materials sector listed on both the Main Board and AltX Board of the JSE. A listing on the JSE gives companies like that access to deep and highly liquid capital markets while providing investors exposure to Africa’s great growth potential through a trusted entry point. The AltX market focuses on good quality, small and medium-sized high-growth companies while providing smaller companies a springboard onto the JSE Main Board with a clear growth path and access to capital.
Only a quarter of sub-Saharan African countries formally regulate crypto
- A survey by KnowBe4 found that only one-quarter of countries in sub-Saharan Africa formally regulate crypto but two-thirds have implemented some restrictions, and six countries—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have banned crypto.
- Despite the hostility, 81% of respondents in Mauritius, Botswana, South Africa, and Kenya knew what cryptocurrency was, with 52% having already invested in it.
- The primary goal for their investment was long-term profit (69%), followed by quick profit (39%). More so, 18% opted for cryptocurrency because they did not want to be tied to local banks, and 16% wanted to benefit from next-generation trading and transactions.
The adoption of cryptocurrency in Africa has experienced a notable upswing in recent years, with transactions surpassing $20 billion per month in 2021. This makes it the most rapidly expanding market for cryptocurrencies, as stated by the International Monetary Fund. Nevertheless, this surge has also resulted in a rise in fraudulent activities by scammers who exploit the ecosystem’s vulnerabilities. Hence, there is a mounting necessity for increased awareness and regulation of the risks linked with cryptocurrencies.
Nigerian fintech Storspay raises $320k, gets into Techstars NYC
- Nigerian fintech startup Storspay has raised a $320,000 funding round and been selected to participate in the Techstars NYC accelerator, backed by JP Morgan Accelerator.
- Storspay has developed a decentralized retail lending infrastructure platform for the Internet, connecting retail investors seeking alternative asset investment opportunities with small businesses globally that need working capital.
- The startup has been selected to participate in the 13-week fundraising and mentorship program for startups seeking to accelerate their growth and raise their next round of funding. This forms part of the funding round, which will help scale its platform.
Source: Disrupt Africa
Storspay’s business model is one of the most innovative in a pool of startups looking to provide SME financing in Africa. Lack of access to working capital remains a huge problem facing the growing small and mid-sized retail sector in emerging and frontier markets, including Africa. Available data shows a $330 billion financing deficit for the small enterprises that make up 90% of businesses on the continent—and it’s a problem several startups and foreign investors are particularly keen to address as it promises attractive returns.
Swiss DFI commits $15m to Convergence Fund
- The Swiss Investment Fund for Emerging Markets (SIFEM), a development financial institution, has committed a $15 million investment to Convergence Partners Digital Infrastructure Fund (CPDIF).
- CPDIF invests growth capital in the digital infrastructure and digital services sectors in Sub-Saharan Africa and is the third fund managed by Convergence Partners.
- Earlier this year, the private equity firm raised $296 million to buy African technology assets. The capital raise was one of the first private equity funds secured for sub-Saharan Africa this year and brought the total funds under management at Convergence to about $600 million.
Internet broadband penetration in sub-Saharan Africa has grown exponentially over the past two decades, mainly as a result of investments in enabling infrastructure. Still, there is more work to be done to close an existing digital divide on the continent—only 28% of the sub-Saharan African population was connected to the internet as of 2020—and ensure that Africa is able to reap the benefits from the current and subsequent iteration of the technologies. Convergence aims to address this, by drawing capital to digital infrastructure and services with a vision of bridging the digital divide in Africa.
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