This week in Africa: Everything you need to know - IFC invests $257.4m in Safaricom’s Ethiopia subsi...
15 min Read June 16, 2023 at 1:10 PM UTC
Welcome to our weekly recap where we share the most important news from the African Tech Ecosystem 🌍.
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IFC invests $257.4m in Safaricom’s Ethiopia subsidiary
- The International Finance Corporation is making a $257.4 million debt and equity injection in Safaricom Ethiopia to support its plan to build a communications network.
- IFC on Friday revealed that $157.4 million has been injected as an equity investment while the remaining $100 million is a loan.
- The completion of the deal comes about nine months after the World Bank arm announced plans to purchase a stake in Safaricom Ethiopia. Although the equity size IFC will be allocated for the investment is not immediately clear, it’s reportedly a minority stake.
Source: Business Daily
Ethiopia is Africa’s second most populous country, with a population of approximately 120 million. When it launched services in October 2022, Safaricom Ethiopia became the first private telecom operator in Ethiopia, one of the world’s last telecom monopoly markets. The investment and guarantees will help the company roll out and operate 4G and 5G mobile networks across the country – including in rural and urban areas. Furthermore, under a license granted in May 2023 by the Central Bank of Ethiopia, Safaricom Ethiopia also plans to launch financial services in 2023 under the brand name M-PESA.
Healthtech Dawi Clinics secures $8m for expansion in Egypt
- Dawi Clinics, the largest chain of outpatient care in Egypt, has raised $8 million in funding to support the expansion of its clinics across the country.
- The investment round was led by Al Ahly Capital Holding, the local investment arm of the National Bank of Egypt, with co-investment from the Egyptian-American Enterprise Fund, a US-backed investment fund that has previously invested in Dawi.
- Currently operating 20 branches across 10 governorates, the startup provides coordinated family care delivered by over 260 doctors specializing in various medical fields. In 2022, Dawi served more than 120,000 patients across Egypt.
Compared to the rest of the world, Africa still has a long way to go in terms of healthtech startups and healthcare provision more broadly. There are lingering issues such as the low doctor-to-population ratio yet to be addressed. But recently, especially since the disruption caused by Covid-19, a number of healthtech startups have sprung up providing innovative solutions to the problems bedeviling the continent’s healthcare system, and are increasingly getting VC backing to capture a widely underserved market.
Nigeria targets single FX rate in shift after governor’s ouster
- Nigeria’s dollar debt surged after the surprise weekend ouster of the central bank chief and as fresh comments on merging multiple exchange rates added to signs that President Bola Tinubu is resetting policies blamed for crippling Africa’s biggest economy.
- The price of the West African oil producer’s Eurobonds rose as much as 2.6 cents in the dollar before moderating slightly, with many issues reaching the highest prices since late January.
- Longer-dated maturities saw the biggest gains, with the 2051 maturity up 2.327 cents to 72.526 cents in the dollar at 0829 GMT, according to Tradeweb data.
Emefiele’s suspension had been expected after strong criticisms from Tinubu’s camp before Nigeria’s February presidential election. The country’s new President then criticized the governor’s handling of the naira and monetary policy at his inauguration two weeks ago. Folashodun Shonubi, the deputy central bank governor in charge of operations, is now acting governor. Nigeria’s financial markets were closed when Emefiele’s suspension was announced on Friday. Markets will open on Tuesday after a public holiday on Monday.
A new $54m initiative targets Zanzibar’s blue economy
- Tanzania has partnered with the African Development Bank to launch a project expected to enable Zanzibari youth to find well-paying maritime and other blue economy jobs.
- The Bank is providing grant financing of $48.65 million for the project, with the Tanzanian government contributing an additional $5.42 million.
- The project is expected to benefit about 43,000 youth and prepare over 1,500 of them to start their own enterprises while improving their livelihoods and spurring the creation of new jobs.
Ocean-based activities, including tourism, contribute more than 29% of Zanzibar’s gross domestic product and employ about 33% of its workforce. At the same time, 60% of tourism workers in the islands are foreign. Against this, the project aims to support the expansion of the State University of Zanzibar (SUZA) through the construction of a technology and business incubator, which will offer training and mentorship to young entrepreneurs, bolstering job creation in tourism, the maritime sectors, and the oil and gas industry. Approximately 400 SUZA academics and lecturers will receive new skills and training.
Logistics startup Trella raises $3.5m from Avanz Capital
- Egypt’s marketplace for trucks, Trella, has raised $3.5 million from the newly-launched private equity fund Avanz Capital, a subsidiary of Squared Capital International.
- Trella was founded in 2018 by Omar Hagrass, Ali El Atrash, Pierre Saad, and Muhammad El Garem. It connects shippers with trucks in real time, with operations in Egypt, Saudi Arabia, and Pakistan.
- Last year, Trella also secured $6 million in debt funding from ALMA Sustainable Finance (ALMA) and the US International Development Finance Corporation (DFC).
Transport touches on almost every sector of the African economy and is crucial to its development. Within the industry, the trucking and logistics market accounts for almost 80% of transported goods but players in this space often grapple with challenges caused by fragmentation and lack of transparency. With digitization, venture-backed startups such as Trella solve this problem while tapping into the lucrative industry. More so, Trella is one of the most funded startups in Egypt, having now received over $38 million in equity funding since its launch.
Swedish firm set to acquire Tunisia-based Expensya
- Tunisia-founded expense management software company Expensya is to be acquired by Swedish counterpart Medius for an undisclosed sum.
- Founded in 2014, Expensya offers a software (SaaS) platform that helps businesses of all sizes manage their expenses via its web, mobile, and smart payment-card solutions.
- The company raised a $20 million Series B funding round in May 2021, off the back of previous rounds, and in the past two years has reportedly more than doubled its recurring revenue and grown its headcount to more than 200 employees across Tunisia, France, and Germany.
Source: Disrupt Africa
Both companies have complementary geographic and product strengths that accelerate the ability to grow and cross-sell in the highly competitive business applications market. In Africa, startups digitizing the administrative stack for companies—from human resources to expense management—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, mainly driven by private sector funding and appetite for digital solutions.
Nigerian stocks jump to 15-year high after apex bank shakeup
- Nigeria’s stock market soared to its highest level since July 2008 on Tuesday, the first trading day in Africa’s biggest economy since the ouster of central bank governor Godwin Emefiele.
- Investors betting on a currency devaluation sent the main index of the Nigerian Exchange 4% higher on the day to a closing price of 58,164 points, contrasting with a largely flat performance for MSCI’s main emerging equity benchmark.
- The moves take Nigerian stocks’ year-to-date gains to 13.5%, more than double the return on the MSCI index.
Nigeria is resetting monetary policy after its new president sacked the central bank head last Friday with reports now suggesting the regulator is on the verge of making a decision to allow its local currency to trade more freely against the dollar. That, along with the official removal of a costly fuel subsidy two weeks ago, has sparked hope of a turnaround of Africa’s biggest economy, sending equity market indexes and dollar bond prices to levels not seen in at least a decade.
Ecobank and Dashen Bank launch remittance app for Ethiopians
- Ecobank has partnered with Dashen Bank to enable Ethiopians living in the diaspora to send money instantly to any Dashen Bank account, other local bank accounts, mobile money wallet, and cash pick-up using Ecobank’s Rapidtransfer International app (RTI).
- The cross-border remittance solution app, which is available in the rest of Ecobank’s 33 countries, enables the African diaspora residing in Europe to remit funds back to Ecobank countries in Africa.
- Users of RTI will reportedly be able to send money back home at an average fee of 1.5% of the funds being remitted.
In 2017, it was estimated that the Ethiopian Diaspora comprised a significant population of at least two million individuals, primarily residing in Europe and North America. According to Knomad, the global knowledge partnership on migration and development, remittance inflows into Ethiopia amounted to $436 million in 2021 and an estimated $327 million in 2022 – a figure that the partnership between Ecobank and Dashen Bank seeks to tap into by rolling out the Rapidtransfer International App.
Egypt’s Acasia Ventures expands into Nigeria with Lagos office
- Egypt’s Acasia Ventures, formerly Cairo Angels, has opened an office in Lagos, Nigeria, to expand the firm’s reach and scope in the country.
- Acasia Ventures has so far invested in 12 African startups, a couple of which are based in Nigeria, including Credable and Fez Logistics.
- The announcement comes a few months after Acasia Group undertook a significant step in its regional expansion by setting up an office in Dubai.
Nigeria continues to be one of the youngest populations on the continent and a leading technology hub while new leadership in the country has committed itself to the growth of business, innovation, and technology as a cornerstone of economic policy. Acasia Ventures is planning to capitalize on that appetite and also pave the way for its sister company Acasia Impact to work with corporations in Nigeria to build custom, sector-specific programs around entrepreneurship and innovation.
Nigeria abandons currency peg in major policy shit
- Nigeria’s central bank allowed the naira currency to drop as much as 36% on the official market on Wednesday, days after President Bola Tinubu suspended the central bank governor who oversaw much-criticized multiple exchange rates.
- A web of multiple exchange rates under Godwin Emefiele had led to foreign currency shortages and made it difficult for investors to take money from Africa’s biggest economy.
- The regulator had removed trading restrictions on the official market, which drove the naira to a record low of N750/$1 on the official market, down from Tuesday’s low of N477, Refinitiv Eikon data showed.
Tinubu took over a weak economy with high debt and decreasing oil production. However, he has pledged to revive the economy and requested public support for difficult choices. Foreign investors considered forex restrictions a major obstacle to investing in Nigeria, the largest oil producer in Africa. The new president’s primary goals were to unify the exchange rate and eliminate an expensive subsidy and accomplishing these tasks within the first two weeks of his presidency has pleased the markets with the stock market soaring to its highest level since July 2008 this week.
Kenya’s Peach Cars raises $5M in seed investment
- Kenyan automotive marketplace Peach Cars has closed a $5 million seed round led by Japan-based The University of Tokyo Edge Capital Partners (UTEC).
- Other angel investors, including Shintaro Yamada (founder and CEO of Mercari), Peter Kenevan (VP, Head of Japan at PayPal), and Hiroaki Ohta (general partner at Japan’s Waseda University Ventures) participated in the round.
- The startup, founded in 2020 to democratize car ownership in sub-Saharan Africa, starting with Kenya, will use the money to grow the business, hire more talent and double down on R&D as it expands its tech solutions.
With about 50 million cars on African roads, the continent accounts for just 1% of global vehicle fleets. More so, the majority of vehicles are passenger cars and second-hand, that is, not brand new. Like every populous developing region, the large market for used cars, which is dominated by unorganized dealers and classifieds, has attracted players looking to digitize sourcing and distribution. Peach Cars is similar to Autochek and Moove but they differ in that the latter two are more on the asset financing and management side with B2C or B2B2C models, while Peach is a pure C2C marketplace like Jiji.
Pezesha partners Kyosk to provide inventory credit to merchants
- Kenyan fintech startup Pezesha has partnered with the retail distribution platform Kyosk App to enable Kyosk merchants in Kenya – and soon in Uganda – to access affordable inventory credit.
- Founded in 2017 by Hilda Moraa, Pezesha offers a B2B digital lending infrastructure focused on providing affordable working capital to financially excluded SMEs in Sub-Saharan Africa.
- Through the partnership, Kyosk merchants will enjoy the convenience of placing inventory orders on the Kyosk app and leveraging stock financing to pay on credit enabled by Pezesha.
Source: Disrupt Africa
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. Pezesha claims to have extended loans to over 100,000 businesses; its partnership with Kyosk should ensure a steady cash flow for the merchants, allow for increased supplies, and enable them to meet the high demand for goods from their customers.
Goodwell Investments reaches first close of $154m uMunthu II fund
- Goodwell Investments and Alitheia Capital have received $62 million in commitments to the uMunthu II fund, which aims to finance small business growth in Africa.
- The funding comes from a collection of family offices, private investors, and institutional investors, creating significant momentum for the fund, which is expected to reach its final close within two years—with a minimum target of $154 million.
- In addition to uMunthu II, Goodwell aims to welcome new family offices and institutional investors to its network who are looking for growth opportunities that match their impact and financial objectives.
Despite growth opportunities, African entrepreneurs need more funding to reach their potential. Venture capitalists injected a record USD 6.5 billion into the 54 African countries in 2022. Yet that pales in comparison to the USD 200 billion raised in the United States alone that same year. uMunthu II is specifically investing in early and growth-stage SMEs, and actively seeking out women-led businesses because currently, only 15% of venture capital funding is going to companies founded and or led by women.
YC-backed Eze secures $3.7m for its secondhand electronics marketplace
- Eze, a B2B marketplace that connects global electronic wholesalers allowing them to trade devices in large quantities with real-time market data, has raised $3.7 million in an oversubscribed seed round.
- Founded in 2020, Eze directly connects distributors and retail stores of used smartphones, mostly iPhones, and other electronics, including laptops and tablets, with electronics suppliers, providing access to an extensive inventory from over a hundred wholesalers and manufacturers.
- The aim is to formalize trade in areas such as Lagos’ Computer Village, Nigeria’s busiest electronics market, by connecting retail stores and distributors to telecom companies and wholesalers of electronics in the U.S.
Africa might be one of the fastest-growing mobile phone markets in the world but affordability remains a key barrier to smartphone penetration, which is key to powering Africa’s digital economy. Feature phones dominate the continent, although smartphone penetration is deepening. With most consumers turning to second-hand devices, Eze is tapping the growing refurbished and used mobile phones market, which is expected to hit $146 billion by 2030, growing at a CAGR of 11%.
Egypt’s Stllr partners Payoneer to enable SMEs transact globally
- Egypt’s Stllr, a regional network of independent creators and boutique agencies, has partnered with Payoneer, a financial technology company helping small and medium-sized businesses to transact globally.
- Launched in December 2021, Stllr reduces wasted costs in marketing departments and miscommunication with external vendors, offering companies a plug-and-play marketing model by experimenting with different campaigns like SEO, media buying, social media, and more.
- The partnership with Payoneer will enable Stllr to make real-time settlements available to their independents utilizing Payoneer’s payment platform.
Source: Disrupt Africa
In Africa, startups like ArabyAds and Stllr have emerged offering platform-based solutions that help African businesses optimize marketing tasks across online and offline platforms. And as the e-commerce industry, particularly in the Middle East and North Africa (MENA) region grows, the market opportunity is substantial. In 2017, the market was worth $8.4 billion, with an annual growth of 25% since 2014, and is predicted to reach $28.5 billion by the end of this year.
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