This week in Africa: Everything you need to know
15 min Read May 5, 2023 at 12:39 PM UTC
Welcome to our weekly recap where we share the most important news from the African Tech Ecosystem 🌍.
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African blockchain startups raised $474m in 2022
- The growth of the African crypto market has been remarkable in spite of the ongoing crunch the industry is experiencing globally, as confirmed by a report published by blockchain-focused Crypto Valley VC and Standard Bank.
- Per the report, African blockchain startups raised $474 million in 2022 from funding, a 429% increase from the previous year’s $90 million.
- While global venture funding slowed in 2022, last year still recorded an all-time high funding flow with more deals and funds being closed for blockchain.
Source: CV VC Report
Nigeria, South Africa, and Seychelles led the continent with the number of startups funded. In terms of the amounts of funding raised, Seychelles, South Africa, Liberia, Kenya, Nigeria, Cameroon, and Ghana topped the list in that order. Startups in Seychelles raised over $200m, followed by South Africa at $176m, while Kenya and Nigeria raised $25m and $15m respectively. Cameroon and Ghana closed the list with $3m and $2m respectively. The average funding for each deal sealed in Nigeria raised about $1.25m, while total funding took up only 3.4% of the total venture funding.
Nigeria plans to allow asset-backed tokens but not crypto
- Nigeria’s Securities and Exchange Commission is processing applications for digital exchanges on a trial basis.
- The SEC is considering permitting tokenized coin offerings on licensed digital exchanges that are backed by assets including equity, debt, and property but not crypto.
- This is in a bid to widen market participation in Africa’s most populous country where the central bank restricts trading in cryptocurrencies.
Nigeria accounts for the largest volume of cryptocurrency transactions done on peer-to-peer trading platforms outside the US, according to Paxful, an exchange that folded up in April. Hence, the move may lure digitally-savvy people in a nation of more than 200 million — with 43% of the population below 14 — to local assets including equities, which have been shunned for years. Other nations are also testing similar tokens and just last week, Zimbabwe announced plans to issue a $100 million-gold-backed digital currency.
Tunisian e-commerce Drest.tn raises $336k from 216 Capital
- Drest.tn, a Tunisian startup specializing in online sales of lifestyle products, has announced a recent fundraising round with investment fund 216 Capital Ventures.
- The fundraising round, which amounted to 1.2 million dinars ($336,000), will enable Drest.tn to continue its growth and expand into the African market.
- Since the creation of its website in June 2020, Drest.tn has stood out in the Tunisian market by offering a complete range of lifestyle products, with a focus on fashion and beauty.
Compared to its North African counterparts, specifically Morocco and Egypt, Tunisia’s retail market is relatively underdeveloped. As a result, there are several promising opportunities that domestic and foreign operators can capitalize on, particularly in areas such as e-commerce. As the number of shopping centers continues to expand, the presence of online shopping in Tunisia is also growing, albeit at a slower pace than other markets in Africa. Nonetheless, the market has a predicted revenue of $522.8 million for this year and is expected to grow 14.1%, resulting in a projected value of $886.8 million by 2027.
Nigeria’s Nomba raises $30m from Base10, Shopify, and others
- Nigerian payment service provider Nomba has raised $30 million in a pre-Series B investment to support the delivery of bespoke payment solutions for African businesses.
- The round, which values the company at $150 million+ according to YCombinator data on its most valuable companies, was led by San Francisco-based Base 10 Partners.
- Partech and Khosla Ventures, existing investors from its $5 million Series A round in 2019, participated, as well as new backers, including Helios Digital Ventures and Shopify, likely its first investment on the continent.
Across Africa, merchant acquisition is proving to be the “new” scramble for digital payments and services on the continent. In an estimated $800 billion informal trade economy comprising more than 56 million MSMEs, most merchants operate offline and with hard cash, with little or no exposure to the formalized, digital economy. These account for up to 90% of businesses on the continent and today, many startups such as Moniepoint, OPay, and FairMoney provide a range of digital business and management tools for different types of businesses.
Kenyan women-only taxi service An Nisa plans Saudi expansion
- Kenyan women-only taxi service An Nisa is planning expansion to Saudi Arabia after onboarding thousands of users in its home market.
- Founded by Mehnaz Sarwar in 2018, An Nisa Taxi went app-based last year and has more than 10,000 users.
- Self-funded to date, the startup has accumulated 10,000 users. It is now looking to raise external funding, as it works on an expansion to Saudi Arabia, where many of its partners are based.
Source: Disrupt Africa
Not often does an African firm—startup specifically—expand into countries outside the continent. But for An Nisa, there’s a significant opportunity in the Saudi market for a women-only taxi service. This is due to cultural norms and legal restrictions: a women-only taxi service would provide a safe and comfortable transportation option for female passengers, addressing a major concern for many Saudi women. Moreover, with the recent changes in regulations allowing women to drive, there is an increasing demand for female taxi drivers who can cater to the needs of other women.
Global tensions put economic growth in sub-Saharan Africa at risk
- Sub-Saharan Africa could stand to lose the most if the world were split into two isolated trading blocs centered around China or the United States and the European Union.
- In this severe scenario, sub-Saharan African economies could experience a permanent decline of up to 4% of real gross domestic product after 10 years according to IMF estimates.
- Those losses are larger than what many countries experienced during the Global Financial Crisis, and to avoid them, Countries will need to build resilience to manage the inevitable shifts in trade and foreign direct investment.
Per the IMF, Africa’s economic prospects could be improved if the US and the EU ended their relationships with Russia, while sub-Saharan African nations continue to engage in free trade. This strategy, known as “strategic decoupling,” would redirect trade flows to other parts of the world, generating possibilities for new partnerships and potentially enhancing intra-regional commerce. As certain African countries derive advantages from access to new export markets and more affordable imports, the region as a whole would not suffer a decline in GDP. In fact, oil-exporting countries that supply energy to Europe may even experience a boost in their economies.
African companies stayed afloat while businesses cratered amid Covid-19
- The Financial Times, and research company, Statista have released a report on Africa’s fastest-growing companies in 2023.
- The list highlights how the top 100 African businesses from across different sectors—fintech, renewable energy, healthcare, commodities, and agriculture—kept their businesses afloat while most of the world’s businesses shut down.
- The report ranks the top 100 companies according to the highest compound annual growth (CAGR) in revenues between 2018 and 2021.
Source: Financial Times
Fintech and IT/software were highly represented in the FT list, along with a diversity of corporate sectors, with names like Nigerian-based Afex Commodities Exchange and Moniepoint and Kenya’s Wasoko making up the top three. Overall, the list reflects how the Covid-19 pandemic peak in Africa saw a surge in the adoption of digital services. With lockdowns and restrictions limiting physical interactions, many turned to digital platforms for various needs, with a notable increase in e-commerce, digital banking, and telemedicine. This trend has continued even after the crisis, as more Africans recognize the convenience and accessibility of digital solutions.
Tanzania’s NovFeed wins $1m grant from Milken Institute & Motsepe Foundation
- Tanzania biotech startup NovFeed has been announced as the first-prize winner of the “Milken-Motsepe prize in Agritech”, getting a $1 million prize for their success.
- A $300,000 award for second place was presented to Karpolax, a Uganda-based company. The startup’s nanotechnology solution that helps fruits and vegetables stay fresh longer without losing nutritional value earned it the prize.
- Meanwhile, IRRI-AfricaRice came third for its biotech innovation to help rice farmers protect their crops from flooding, winning $150,000.
Modern farming is evolving rapidly and the potential for biotechnology to transform agriculture in Africa is immense, making for a promising avenue for the continent to strengthen its agriculture sector and address the challenges of feeding a growing population. For instance, introducing genetic modifications in crops with biotech can enhance crop productivity, disease resistance, and nutrient content. The Milken-Motsepe prize in agritech is the first of a series of multiyear, multimillion-dollar innovation competitions and programs to advance technological progress toward the UN SDGs.
Opportunik launches global fund targeting retail investors in Africa, diaspora
- Opportunik, a private wealth fund giving Africans and Diasporans access to global investments, has announced the launch of its licensed fund.
- Driven by an in-house team of fund managers located across Africa (South Africa, Nigeria, Kenya, and Zambia), the fund will work alongside Mauritius-based Accuvise Administrators, which has over $216m in Assets Under Administration (AUM).
- The fund aims to offer a diverse mix of asset classes enabling investors to create wealth with minimal currency or political risk.
Henley & Partners’ Africa Wealth Report estimates that a total of $2.4 trillion total investable wealth is held on the continent, with South Africa, Egypt, Nigeria, Kenya, and Morocco accounting for more than half of Africa’s high-net-worth individuals. More so, the region’s wealth management market is estimated to grow by 60% in the next decade, driven by strong AUM growth in most major markets. This presents a good opportunity for middle-class Africans if given access to the same wealth management options made available to high-net-worth individuals.
Germany woos Africa as Europe wrestles with China for influence
- German Chancellor Olaf Scholz is heading to Kenya and Ethiopia on Thursday as part of a European effort to make inroads with countries of the so-called Global South.
- The official will also push back against the influence of authoritarian nations such as Russia and China, Bloomberg reported.
- Berlin is convinced that Europe can make a better partner with Africa than can China, and Scholz will seek to advance talks on trade and cooperation agreements with the countries during his three-day trip.
Under Chinese President Xi Jinping’s Belt and Road Initiative, China has extended about $900 billion over the past decade in infrastructure and other projects around the world, including in Africa. With poorer borrowers struggling to manage their debt loads, however, Beijing has faced criticism over its role as the world’s largest government creditor to developing nations. If anything, the “scramble” for Africa shows that the region remains a major geopolitical player with an undeniably huge economic potential that can’t be ignored by the developed world and reflect an increasing realization that it will play an important role in the global economy over the next couple of decades.
Kenya launches QR code standard to facilitate digital payments
- The Central Bank of Kenya (CBK) has launched the Kenya Quick Response Code Standard 2023, also shortened as KE-QR Code Standard 2023.
- The service seeks to boost digital payments, which are offered by multiple financial institutions in the country that usually have in-house payment solutions, meaning customers can only use a channel that has been implemented by a vendor.
- To this end, the CBK wants to eliminate that friction through this latest collaboration so merchants no longer need to install multiple pay bills or till number systems for their businesses.
QR Codes are machine-readable codes consisting of an array of black and white squares containing information that provide an alternative option for initiating and accepting digital payments. The implementation of standardized QR Code-enabled payments should bring practical benefits to businesses and customers. And Kenya, arguably Africa’s most digitized financial market, now joins other emerging markets that have implemented the standardized approach to issuing QR codes for facilitating payments: including the Philippines, Jordan, South Africa, Singapore, Bahrain, Saudi Arabia, India, and China. Broadly, the future of financial services in Africa rests on interoperability across several players and services.
Flow Global raises funding to provide float to mobile money merchants
- Flow Global, a Fintech company that provides capital solutions to merchants offering mobile money and agency banking services in Uganda and Rwanda, has raised bridge funding of an undisclosed amount.
- The startup provides merchants with customized digital loans with a reported 69% of those seeing an improvement in their revenue within the first month and growing by 40% over 6 months on average.
- The investment, from a DFI and a commercial Impact investment firm, sets Flow Global on a path to reach global profitability by mid-2023 as it continues to expand and scale rapidly within and across markets.
Agency banking has grown by leaps and bounds in Africa, driven by a mix of fintech players and commercial banks. But for merchants to operate profitably, constant access to working capital is needed but most agents lack such and end up accruing 20–30% in expenses to rebalance and manage liquidity. Startups like Moni Africa (in Nigeria) and Flow aims to solve this through short-cycle working capital solutions: Flow’s current established markets (Uganda and Rwanda) are home to approximately 403,000 mobile money merchants servicing over 50 million users and the latter figure balloons to over 605 million in sub-Saharan Africa.
Mezzanine provider Vantage Capital invests $33m in Morocco’s Promamec
- Vantage Capital, one of Africa’s largest mezzanine fund managers, has made a $33 million equity investment in Promamec, which will facilitate the exit of the private equity fund AfricInvest and fund growth capex.
- Promamec is a pioneer in the local production of medical consumables and has grown into one of Morocco’s leading medical consumables and equipment distributors.
- This investment will enable the company to finance its development plan which involves increasing production capacities, broadening product offerings, and strengthening its positioning in sub-Saharan Africa.
This transaction represents Vantage Capital’s 34th investment across four different funds with its portfolio of investments spread across 11 African countries. Promamec also marks Vantage Capital’s third investment in Morocco, thus reinforcing its presence in one of its key target markets. Along with venture capital, private equity investments have grown significantly in Africa over the past decade. Per AVCA, $7.6 billion in private investments (both VC and PE) was poured into Africa last year across 626 deals, a remarkable 46% year-over-year increase in deal volume, impressive figures considering 2022 presented numerous challenges for private capital fund managers globally.
Kenya’s Fingo unveils neobank in partnership with Ecobank
- Fingo, a YC-backed Kenyan fintech, launched its digital bank, developed in collaboration with Pan-African financial institution Ecobank Kenya.
- The startup aims to provide financial services that appeal to a fast-growing African youthful population that happens to be the youngest globally but the most financially marginalized.
- The Ecobank subsidiary unveiled the neobank, said to be the first of its kind in the East African country, in an event with the country’s president, William Ruto, in attendance.
Neobanks, also known as digital-only banks, have gained popularity in Africa in recent years. They offer a range of banking services through a mobile app or website, without the need for physical branches and notable names include Kuda, Carbon, and Fairmoney in Nigeria, as well as TymeBank and Discovery in South Africa. These banks have attracted a significant number of customers, especially among the younger generation, due to their ease of use, lower fees, and innovative features such as savings goals and budget tracking. With the increasing adoption of smartphones and mobile technology in Africa, neobanks are well-positioned for growth and have the potential to reach previously underserved populations.
Access Bank gets the green light to acquire Finibanco Angola
- Nigeria-based Access Bank has received regulatory approval from the Central Bank of Angola to proceed with the purchase of a majority stake in Finibanco Angola.
- The lender had already received approval from the Central Bank of Nigeria to move ahead with the acquisition and will now wait for greenlight on the transaction from Angolan authorities, which it expects to get in the “coming days.”
- Additionally, Access also signed agreements with minority shareholders in Finibanco Angola to buy their stake after which the bank intends to hold an 80% stake in the business.
Nigeria’s largest bank by customer base, Access Bank has expanded its pan-African footprint significantly in the last few years through acquisitions. In 2021, it acquired a majority stake in BancABC of Botswana, offsetting the most active day in the history of the country’s bourse, the Botswana Stock Exchange. Per Tracxn, the bank has made 8 acquisitions, spending more than $285 million on those deals. Access Bank’s entry into Angola could be well timed as net profits of the country’s banking sector increased by 295% in 2021 to 592.402 billion kwanzas (€1.3 billion) and are fast growing.
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