This week in Africa: Everything you need to know
15 min Read August 25, 2023 at 1:20 PM UTC
Welcome to our weekly recap where we share the most important news from the African Tech Ecosystem 🌍.
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Zanifu raises $11.2m to provide SME financing in Kenya
- Zanifu, a Kenyan fintech providing inventory financing to micro, small, and medium-sized businesses, has raised $11.2 million in hybrid (debt and equity) funding in a pre-Series A round led by Beyond Capital Ventures and Variant Investments.
- Founders Factory Africa, AAIC Investment, Google Black Founders Fund, and existing investor Launch Africa also participated in the round.
- This brings the total debt-equity funding raised by the startup to $12.7 million. The fintech provides inventory credit to retailers, and the new funding will enable it to expand the solution to distributors too.
Access to capital remains a significant barrier to the growth of many small businesses in 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. Following the new funding, Zanifu plans to scale its operations in Kenya, shelving its previous plan to expand to Ghana, and Uganda – some of the markets where small businesses also find it hard to raise capital for their operations and growth
Saudi Arabia is Egypt’s largest foreign direct investor
- Saudi Arabia topped the ten highest investing countries in Egypt during the first half of the fiscal year (FY) 2022/2023, with investments valued at $2.10 billion.
- The Kingdom was followed by the UAE with $1.50 billion, while Italy and the UK injected $1.20 billion investments in the Arab Republic, each.
- Egypt’s net foreign direct investment (FDI) reached $5.70 billion in H1-22/23, a 75.40% year-on-year growth compared to $3.30 billion, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).
Encouraged by economic reforms and streamlined business legislation and with a huge market of more than 90 million consumers — almost half aged 20 or under — investors are racing to gain lucrative footholds in all sectors in Egypt, including energy, banking and financial services. As such, Egypt’s FDI flows show no signs of slowing down anytime soon. With the streamlining of business rules and the introduction of laws that provide greater protection to investors, they are far more engaged than in previous years.
Africa’s data center market to top $5bn in investments
- Africa is being called the next frontier of the data center industry as large numbers of data centers along with large power capacities are coming up.
- The data center demand in the region is fuelled by the rise in the adoption of 5G, artificial intelligence, government incentives, and smart city initiatives. More than $5 billion are expected to be invested in the market, per available forecasts.
- The region is also witnessing cloud investments leading to data center growth and acquisitions, with South Africa being one of the major markets having attracted the likes of Google, Oracle, and AWS.
Currently, Africa has 17% of the global population but only about 2% of all colocation data centers globally. As more African households and businesses come online, the African data center market is witnessing increased demand across industries. And acquisitions & joint ventures are enabling new players—including some of the largest tech companies in the world—to enter the market, attract customers, and capture a higher market share. Oracle, Microsoft, Amazon, Equinix, and Huawei are some big names building or buying data centers across Africa.
Africa’s largest startup Flutterwave proceeds with IPO plans
- Flutterwave Inc., Africa’s largest startup valued at $3 billion, is pressing ahead with plans for an initial public offering.
- This comes after the company made headway in resolving allegations of financial impropriety in Kenya so that it can access more and bigger international partners.
- Olugbenga Agboola, CEO and co-founder of the pan-African payments company revealed that Flutterwave has won approval for the first step in securing the right to operate in Kenya, a key African market.
Flutterwave’s aspirations for an IPO have encountered hurdles, primarily due to detrimental accounts of mismanagement involving high-ranking employees. Moreover, navigating regulatory landscapes across the continent has been a challenge, exemplified by the freezing of its accounts in Kenya after facing numerous accusations of fraudulent activities within its systems. Nevertheless, a successful Flutterwave IPO on the Nasdaq in New York would significantly validate the broader African tech ecosystem, extending to founders, tech professionals, and notably, both small and large-scale investors.
Payments fintech Fawry to launch digital bank in Egypt
- Fawry, an Egypt-based e-payment solutions provider, unveiled plans to turn its e-portal, MyFawry, into a digital bank later this year.
- Back in July, the Central Bank of Egypt (CBE) issued rules for licensing, registering, controlling, and monitoring the work of digital banks.
- As per its internal records, the company’s total revenues amounted to EGP 1.4 billion over the period of January-June 2023, registering a 42.4 percent annual increase.
Digital banks—across several verticals—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 Fawry and state-owned E-Finance—especially after its success in digital payments—are thus moving to capture this opportunity with neo-banking platforms, contributing to the general booming fintech sector in Egypt.
Remittances expected to Nigeria to hit $26bn by 2025
- Remittance flow to Nigeria will rise to $26 billion by 2025 from $20.1 billion in 2021, according to estimates by Agusto & Co., a Pan-African credit rating agency.
- Despite more Nigerians being discouraged by the country’s economic conditions and looking overseas for opportunities, their remittances continue to play a crucial role in sustaining the Nigerian economy.
- Unpopular policies of the Central Bank of Nigeria (CBN) have restricted remittance flow into the country but the improved economic conditions in developed nations are expected to drive overseas inflows.
The projected growth in Nigeria’s diaspora remittance figures would offer the apex bank more firepower to meet the increasing demand for FX amid the country’s ongoing forex shortage crisis. Beyond that, however, the trend gives credence to a number of remittance-focused tech startups—like NALA, Chipper Cash, Zazuu, and Sendwave looking to capture some market share from dominant traditional players that control as much as 80% of the market—and Pangea, Daba Finance, and Bantaba, which aim to address help startups source capital by connecting founders with the diaspora wealth through digital infrastructures.
Private equity AIIM invests $90m in new pan-African data center
- African Infrastructure Investment Managers (AIIM) is working with N+ONE Data Centers, an African data center owner and operator, to develop a new data center and cloud services platform with a short-term target capacity of 40 MW.
- AIIM will be contributing an initial $90 million of growth equity through its latest pan-African infrastructure fund, African Infrastructure Investment Fund 4.
- The platform will focus on the development of hyper-scale and wholesale carrier-neutral facilities to provide solutions to enterprise, government, and hyper-scale customers across the continent.
There is currently more than 300MW of installed IT load in Africa, the majority of which is in South Africa. Exponential growth in data generation and consumption in combination with an increased focus on data sovereignty will result in the onshoring of data onto the continent. With data center demand expected to grow to over 1GW by 2030, significant investment is needed to support the growth potential of the continent’s digital economy. Investors have been actively seeking to capture this opportunity—more than $5 billion is expected to be invested in African data centers by 2025.
Moniepoint nears Kenya expansion after regulatory clearance
- The competition regulator in Kenya has given Moniepoint Inc. the green light to acquire Kopo Kopo, a Kenya-based company offering payment services and credit to businesses.
- Following the approval by the Competition Authority of Kenya (CA), Moniepoint (formerly TeamApt) will expand its services to Kenya continuing its growth plans across the continent.
- Moniepoint Inc., which runs one of the largest business payments and banking platforms in Nigeria, is keen on expanding to new markets with a mature banking or payments infrastructure.
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. Most merchants operate offline in an estimated $800 billion informal trade economy comprising more than 56 million micro, small, and medium-sized businesses. 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 Africa’s “new” scramble for digital services.
South Africa inflation at two-year low signals rates respite
- South Africa’s inflation slowed to the lowest level in two years last month, beating expectations and providing room for the central bank to continue keeping interest rates on hold.
- The headline consumer-price index rose 4.7% in July from a year earlier, compared with 5.4% in June, according to data from Statistics South Africa. The median of 15 economists’ estimates in a Bloomberg survey was 4.9%.
- The SARB’s Monetary Policy Committee (MPC) has stressed that it wants to see inflation sustainably around the midpoint of its target range, around 4.5% before it contemplates rate cuts.
We’ve covered inflation movements across different African economies more frequently in the last few weeks. But what is inflation and why does it matter? Put simply, inflation is the rate at which prices for goods and services increase across an economy. The rate at which prices change can have ramifications across the economy, affecting businesses and consumers alike. For instance, when high levels of inflation occur, the value of one’s money (also known as purchasing power) erodes, as consumers are no longer able to buy as many products with the same amount of money, ultimately affecting businesses that produce and sell to them.
Endeavor Egypt’s new scale-up program to back startups
- Cairo-based enabler Endeavor Egypt has launched XceleRise, a scale-up program to aid access to capital and market expansion for all startups that promote sustainability, in partnership with GIZ Egypt.
- The 15-month program is designed to equip entrepreneurs with industry knowledge, market insights, and connections necessary to scale their operations internationally and raise capital.
- Founded in 2008, Endeavor Egypt is the local arm of the global entrepreneurship movement “Endeavor”, which aims to drive sustainable economic development by supporting local entrepreneurs.
One of the defining trends of Africa’s venture capital landscape in 2022, per a Briter Bridges report, was a notable growth in the early-stage support framework available to startups on the continent, involving angel networks, seed funds, and accelerator programs. Accelerators, incubators, and pitch competitions provide crucial access to capital and mentorship to startups, and the benefits of this in the African startup landscape—which is playing catchup to ecosystems in advanced economies—can’t be overstated, especially in times of economic uncertainty.
TikTok to open Kenya office in bid to moderate content
- TikTok agreed to moderate content on the popular social-media platform in Kenya, the East African nation’s president said after meeting CEO Shou Zi Chew.
- The news follows last week’s move by the country’s parliament to investigate the use of TikTok after receiving a petition demanding it be banned for promoting “violence, explicit sexual content, hate speech, vulgar language and offensive behavior.”
- State House officials also said that TikTok would open a regional office in Nairobi and hire more Kenyans to work for the platform.
Kenya is one of the most active countries on TikTok. Per the Reuters Institute Digital News Report 2023, Kenya has the highest TikTok usage rate worldwide, with 54% of users in the country using the app for general purposes and 29% for news. The Chinese-owned social network reaches 44% of 18–24s across markets and 20% for news and is growing fastest in parts of Asia-Pacific, Africa, and Latin America. This shows how rapidly smartphone and internet penetration is growing in Africa, driving the uptick in social media and digital services adoption.
Google launches accelerator program for African AI startups
- Google has launched a new accelerator program to support Artificial Intelligence (AI) startups in Africa.
- The “Google for Startups Accelerator: AI First”, initiative seeks to recognize startups keen on delving into AI’s possibilities across the continent while highlighting their significant contributions in addressing some of the region’s most pressing challenges through the use of AI.
- The program is open to startups currently up to the Series A stage based in Africa or building Africa-centric solutions with AI and machine learning.
The new 10-week equity-free accelerator program draws learnings from past initiatives such as the Google for Startups Accelerator: Africa, The Google for Startups Black Founders Fund, and The Google for Startups Accelerator: Women Founders, the primary aspiration remains consistent: to support and highlight African-driven solutions. Since its inception in 2018, the Google for Startups Accelerator: Africa program has supported 106 startups from 17 African countries. Collectively, these startups have raised over $263 million in funding and created over 2,800 direct job opportunities in the region.
Remittance fintech startup LemFi raises $33m
- A fintech startup looking to transform financial services for immigrants, LemFi, has raised a $33 million Series A round led by Left Lane Capital.
- The startup offers international transfers at relatively inexpensive exchange rates with zero fees on transfers or account maintenance.
- With the conclusion of its latest investment round, the company said it would seek to expand its product offering to the United States, Europe, the Middle East, and Asia, as well as innovate new product offerings according to the needs of its users.
Regardless of the country they come from, immigrants face several common problems such as adapting to the banking systems of their new homes and also sending money back home. In 2022, migrant remittances reached $626 billion globally. For many African countries, these remittances are an important source of foreign exchange. Some countries even encourage their citizens to find work overseas so they can send money back home. But this several hundred billion dollar migrant remittance market is a broken sphere that startups like LemFi are looking to address.
New BRICS bank raises $79m to fund projects in SA
- New Development Bank (NDB), a multilateral development bank established by Brazil, Russia, India, China, and South Africa (BRICS), has raised $78.82 million via its debut “ZAR bond issuance”.
- The NDB’s two bonds, a 1 billion rand ($52.3 million) five-year note, and a 500 million rand three-year note attracted 2.67 billion rand of bids in total.
- Proceeds will be used to fund infrastructure and sustainable development projects in South Africa.
Source: Sunday Mail
The South African bond market has struggled in recent years to attract new issuers to match the growing demand from domestic investors looking for quality credit assets. The successful outcome of the issuance not only sets the benchmark for future issuances by NDB but is also relevant in addressing infrastructure gaps in the country. Africa presents a massive infrastructure investment opportunity with a current investment gap of over $150 billion per year. Only 60% of its population has access to basic electricity, among other infrastructure challenges. With funds like the NDB bond, the continent’s infrastructure market is poised for substantial growth in the coming years.
Fla6labs supports Egypt’s nascent construction tech space
- Makers, the construction technology (contech) accelerator launched by Flat6Labs in partnership with SIAC and Dar Al-Handasah (Shair and Partners), has announced that it will award the selected startups up to $100,000 each.
- The program will also grant access to pilot projects, industry experts, mentorship, business training, one-on-one consultations, coaching sessions, networking opportunities, and essential resources to cultivate and scale their businesses.
- The program will initially focus on Egyptian entrepreneurs, before expanding to Saudi Arabia and subsequently to the wider Mena region.
Source: Disrupt Africa
Compared to other sectors like financial services or e-commerce, Africa’s construction industry has typically moved at a slower pace when it comes to embracing innovation or digitalization. But that’s not for the lack of exciting startups in the space working to tap opportunities in an industry expected to continue to grow sustained by mega infrastructure projects and efforts to address Egypt’s housing deficit. Due to its low popularity, players in this space struggle to secure early-stage funding and support, highlighting the importance of the Makers program.
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