African Tech Weekly Recap: April 3 to April 7, 2023

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

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US VP announces over $7bn to fund climate projects in Africa

Highlights

• In response to Vice President Kamala Harris’s call for the private sector to promote and enhance climate resilience, adaptation, and mitigation across Africa, the private sector made over $7 billion in new commitments. 
• The US Government also announced new federal funding and initiatives to expand access to climate information services and enhance climate resilience and adaptation. 
• These are expected to generate significant economic benefits while addressing African nations’ pressing needs resulting from the climate crisis, including food security challenges, by helping to lift over 116 million farmers and promote climate-smart agriculture.

Source: White House

Our Takeaway

Climate change affects Africa more than other continents but at the same time, nowhere promises bigger opportunities than in Africa. The continent offers a massive investment opportunity given the need to reinvent all sectors, and we’re already seeing new value chains and business models created – from sustainable agribusiness to renewable energy, driven by a young and rapidly-growing population increasingly tackling big challenges and creating new markets. These present an ever-increasing pipeline of climate-related investment opportunities, hence the massive $7 billion commitment comes as little surprise.

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Camel Ventures launches $16m fund to back fintech in Egypt

Highlights

• Egypt-based Camel Ventures has launched a $16 million VC investment vehicle “Camel Ventures for Investment I (CVI)”.
• The new VC fund will focus on supporting Egypt’s fintech startup ecosystem, by providing them with both equity investments for early-stage startups, as well as venture debt for later-stage startups.
• CVI has already made ten investments in various sectors across Egypt, including Khazenly, Pharmacy Marts, and klickit.

Source: Wamda

Our Takeaway

In Egypt, only 33% of people have a bank account, according to the most recent World Bank data while 50% of its 100 million people actively use smartphones. Also, the North African country boasts a young and tech-savvy population with 61% below 30. Expanding access to financial services through digital channels is thus an attractive market opportunity, and startups leading such efforts stand to gain significantly from increasing amounts of venture capital available in the country, which has grown more than 10-fold since 2016 and has placed Egypt as one of Africa’s leading countries by tech venture funding.

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Troop raises $11m for South African, global expansion

Highlights

• Troop, a developer of corporate meeting technology and services secured $11 million in Series B funding to expand its presence in South Africa and globally.
• Its technology platform helps companies plan, book, expense, and manage logistics for in-person meetings, addressing the increased demand for group meetings due to the shift towards a distributed team environment.
• The company, whose customer base ranges from start-ups to well-established global enterprises, plans to double its current employee base in South Africa in 2023 and build a team of 170 people globally by 2025.

Source: Ventureburn

Our Takeaway

In Africa, startups digitizing the administrative stack for enterprise customers, such as Troop,  have a big market opportunity considering the growing appetite for enterprise software solutions among medium-to-large organizations on the continent. The Middle East and Africa’s cloud computing industry is expected to grow to $31.4 billion by 2026, from $14.2 billion in 2021, as more organizations digitize their operations. This opportunity has also pulled big operators like Microsoft, Google, Huawei, Equinix Inc, and Teraco, with huge investments being poured into data centers and cloud infrastructure on the continent. 

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DFC invests $25m in Novastar’s Africa People + Planet Fund

Highlights

• The US International Development Finance Corporation (DFC) has made an equity investment of $25 million in a new fund by Pan-African venture capital firm Novastar Ventures, to back founders building agriculture and climate solutions.
• The DFC revealed details of the transaction during its latest update detailing the transactions it had approved over the last few months.
• TechCrunch reported that the Nairobi and Lagos-based VC firm targets to raise over $200 million via the Africa People + Planet Fund, making it one of the largest funds in the region.

Source: TechCrunch

Our Takeaway

DFC’s backing will provide much-needed capital to these entrepreneurs and support their efforts to develop sustainable solutions to address the challenges faced by Africa’s agriculture sector and climate change. Additionally, it shows that international organizations recognize the potential for innovation and impact in the African continent. The Africa People + Planet Fund is Novastar’s third pool after the $108 million Africa Fund II, which saw it enter West Africa. The East Africa Fund—an $80 million fund with a $12.5 million co-investment facility—was its maiden vehicle that invested in 15 startups within the region.

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Paymenow raises $14m for its earned wage access platform

Highlights

• Paymenow, an earned wage access platform, has secured a $14 million debt facility through Rand Merchant Bank (RMB), marking the first-of-its-kind structure for the EWA market in South Africa.
• EWA is a financial wellness offering to employees that allows them to access a percentage of their accrued wages before the end of their payroll cycle, providing a way to unlock funds without the threat of costly loans and improving financial wellness.
• The agreement follows Paymenow’s reported growth in several industries; it claims to serve over 200,000 employees, with that figure projected to double in the next year.

Source: Ventureburn

Our Takeaway

Earned Wage Access is a growing phenomenon in Africa, due to the increasing number of companies that offer this service as part of employee welfare packages. For startups and investors, this presents a significant opportunity. EWA is still largely an untapped market and startups that develop such platforms have the potential to scale quickly, via partnerships with large corporations and employers to offer their services. Overall, the growth of EWA in Africa offers many benefits and opportunities for startups and investors alike.

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African tech funding declined by 57% in Q1 2023

Highlights

• African tech startups raised $649 million between January and March this year, down 57.2% from $1.5 billion raised in the corresponding period in 2022, per Disrupt Africa’s funding report. 
• In total, 633 African tech startups raised over $3.3 billion in 2022, an increase of 12.2% on 564 in 2021, while the total secured funding jumped 55.1% from $2 billion.
• This year looks set to be a regressive one, however, as so far only 87 startups have secured funding, less than half the number (175) that had done so by this time last year.

Source: Disrupt Africa

Our Takeaway

While the global venture capital market took a hit last year, Africa bucked the trend as the only region which saw year-on-year growth. But it appears the global VC crunch has caught up with the continent. Despite the slowdown, however, several investors and VC firms are still actively investing in startups focused on the region and remain bullish on Africa’s potential for growth. With a population of over 1.2 billion people, a growing middle class, and a thriving tech ecosystem, Africa remains the next frontier for investment opportunities.

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Equator gets $40m fund pledge for climate startups in Africa

Highlights

• Equator, a climate tech venture capital firm focused on sub-Saharan Africa, has reached an initial close of its first fund with $40 million in commitments.
• The company backs seed and Series A startups across energy, agriculture, and mobility sectors with partners that include BII, the Global Energy Alliance for People and Planet, and the Shell Foundation.
• After getting the commitments, Equator hopes to make up to 15 investments throughout the new fund’s life cycle.

Source: TechCrunch

Our Takeaway

The benefits of increasing climate-focused funds targeting Africa are profound. Per a UN report, Africa will need between $50 and $100 billion annually by 2050 to adapt to the effects of climate change, such as droughts and floods, which can have devastating impacts on lives and economies. Supporting innovative startups and entrepreneurs who are working on climate solutions can drive technological advancements and help build resilient and sustainable communities while also leading to the creation of sustainable jobs and new industries, boosting economic growth and reducing poverty.

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SA fintech Peach Payments raises $31m Series A funding

Highlights

• South African fintech startup Peach Payments has raised a $31 million Series A funding round from Apis Partners to accelerate its growth across the continent and grow its product offering.
• Founded in 2012, Peach provides a toolkit to help businesses accept, manage and disburse payments through the web and mobile. It is the second-largest online payment gateway in South Africa with operations in Kenya and Mauritius.
• The company intends to use the investment—still subject to the approval of the Competition Commission—to accelerate its expansion across new African markets, deepen its product offering, and reinforce its core merchant value proposition.

Source: Disrupt Africa

Our Takeaway

The informal business sector in Africa offers a lot of promise for startups looking to digitize B2B payment flows. The cash-dominated space is rife with late payments and stunts the growth of commerce. In an estimated $800 billion informal trade economy comprising more than 56 million micro, small, and medium-sized businesses, most merchants operate offline. And a survey covering 3,500 companies across 6 countries found that 23% of small businesses experience delayed payments. This explains why merchant acquisition is proving to be the “new” scramble for payment services in Africa.

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MFS Africa partners Access Bank to expand remittance corridors

Highlights

• MFS Africa, the largest digital payments network in Africa, has announced a partnership with Access Bank, Nigeria’s largest bank, to expand its AccessAfrica remittance corridors. 
• The partnership will enable real-time, cost-effective cross-border payments for individuals and businesses who want to send financial support to their families abroad or facilitate trade transactions. 
• More so, AccessAfrica customers will also be able to receive payments from all over the world through MFS Africa partners.

Source: Ventureburn

Our Takeaway

For African startups, there’s a major market opportunity in the massive diaspora remittances business. Remittances accounted for nearly 4% of Nigeria’s GDP as of 2020 and Africa received $49 billion in inflows last year. Yet, sending money from places like the US and UK to the country remains invariably expensive, with fees at an average of nearly 9% (the highest rate in the world and 3x the SDG target of 3%. The cost of international remittances within Africa is even higher. Although most of the traditional players that charge high commission rates still dominate the space, fintechs are now wrestling market share with lower fees.

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Eskom to enter the VC industry via $10bn pension fund

Highlights

• South Africa’s Eskom Pension and Provident Fund plans to expand into venture capital to reduce its dependence on traditional investments, Bloomberg quoted the deputy chief investment officer of the fund as saying.
• The fund has about $10 billion worth of assets under management, with roughly two-thirds allocated to South African stocks, inflation-linked debt, property, and nominal bonds.
• For the fund, private equity and venture capital represent an area of growth that could deliver decent returns without introducing too much risk in the total portfolio.

Source: Bloomberg

Our Takeaway

That Eskom’s VC plans come around one month after Naspers shut down its Foundry—one of the most notable corporate venture capital (CVC) units in Africa with one of the biggest indigenous investment funds—reflects a growing interest among investors, even corporate organizations, in backing African startups. It also signifies a changing VC terrain, with an evident influx of corporate-facilitated funds in the space (the majority in South Africa), led by multinational giants Naspers, Standard Bank, Nedbank, and Multichoice.

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Spain to invest $2.3bn in South African energy transition

Highlights

• Spain is providing $2.3 billion to help fund South Africa’s energy transition and water needs, according to Ambassador Raimundo Robredo Rubio.
• The funding is being provided through a mixture of financial instruments, with the country’s government working with its development finance institution, Cofides, and South Africa’s Industrial Development Corp.
• This comes at a time when some of the world’s richest nations struggle to push forward on a ground-breaking climate finance initiative with the continent’s most-industrialized country.

Source: Bloomberg

Our Takeaway

Today, more than 770 million people lack energy access in the world – mostly in Africa and developing Asia – regions with populations that are also the most vulnerable to the climate crisis. Addressing this problem while not neglecting climate change requires a reallocation of capital to decarbonizing global economies, particularly a clean energy transition in emerging markets. In addition to helping South Africa move away from fossil fuels towards renewable energy and boosting access to clean water (a fundamental human right), Spain’s investment should strengthen economic ties between both countries toward a sustainable future.

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Amazon launches inaugural Africa Femintech challenge

Highlights

• Amazon Web Services (AWS) has opened applications for its inaugural Femintech Innovation Challenge, tailored specifically for women-led startups across Africa and aimed at facilitating innovation, networking, and investment opportunities.
• The challenge will showcase and celebrate the accomplishments of women-led startups, inspiring more women to enter the tech industry as founders and leaders. 
• It will also provide a platform for participating startups to pitch their ideas to a panel of judges, comprising prominent venture capitalists and industry experts.

Source: Disrupt Africa

Our Takeaway

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.

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A new $16m fund launches to support Egyptian fintech startups

Highlights

• Egypt-based Camel Ventures has launched a $16 million VC investment vehicle “Camel Ventures for Investment I (CVI)”.
• The new VC fund will focus on supporting Egypt’s fintech startup ecosystem, by providing them with both equity investments for early-stage startups, as well as venture debt for later-stage startups.
• CVI has already made ten investments in various sectors across Egypt, including Khazenly, Pharmacy Marts, and klickit.

Source: Wamda

Our Takeaway

In Egypt, only 33% of people have a bank account, according to the most recent World Bank data while 50% of its 100 million people actively use smartphones. Also, the North African country boasts a young and tech-savvy population with 61% below 30. Expanding access to financial services through digital channels is thus an attractive market opportunity, and startups leading such efforts stand to gain significantly from increasing amounts of venture capital available in the country, which has grown more than 10-fold since 2016 and has placed Egypt as one of Africa’s leading countries by tech venture funding.

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Kenya on course to launch its first SpaceX-backed satellite

Highlights

• The Kenya Space Agency (KSA) has announced that the country will launch its first operational satellite this month in a landmark achievement for the country’s space program.
• Codenamed Taifa-1, the project is scheduled to be launched on April 11, with the assistance of  Space Exploration Technologies Corporation (SpaceX), SpaceX Falcon 9 rocket.
• The satellite is expected to provide data for decision support to agriculture and food security, natural resources management, and environmental monitoring among other details.

Source: ABC

Our Takeaway

The launch of Kenya’s first operational satellite is significant for several reasons. Firstly, it marks a major milestone for the country’s space industry, demonstrating its technological capabilities and competitiveness in the region. The satellite will be used for a range of important applications, including weather forecasting, disaster management, and telecommunications, which will benefit Kenyan citizens and businesses. Finally, it highlights the growing trend of African countries investing in space technology as a means of driving economic growth and development.

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Partech Africa backs TerraPay in $100m Series B round

Highlights

• TerraPay, a global payments infrastructure company, has successfully closed its Series B equity financing round, raising in excess of $100 million in equity and debt financing. 
• The funding round was led by IFC and supported by Prime Ventures, Partech Africa, the US International Development Finance Corporation (DFC), and a consortium of other investors.
• The funding will help further TerraPay’s global expansion plans, especially across the LATAM and MENA regions, strengthen its existing pay-out network to 150 countries by 2024, and support and accelerate its growth.

Source: ABC

Our Takeaway

The cost of migrant remittances to developing markets, especially Africa, remains expensive and well above the UN SDG target of 3%. As a leading payments infrastructure company, TerraPay aims to enable the delivery of cross-border remittances and instant money transfers, securely, and at a low cost. With the new funding, the company is well-positioned to capitalize on the growing demand for remittance and payment solutions and continue its mission of making cross-border payments more accessible, secure, and affordable for all.