This week in Africa: Lengo AI pre-seed round

South Africa’s Stitch secures $25m Series A extension

Highlights

• South African fintech Stitch—which focuses on enabling businesses to build, optimize, and scale financial products and providing API gateways to improve the conversion for online payments and optimize payment operations of its clients—has raised $25 million in an extension round of funding led by global fintech investor Ribbit Capital.
• That brings the startup’s total Series A to $46 million, having previously announced a $21 million raise in February 2022. Existing backers, including CRE Ventures, PayPal Ventures, and the Raba Partnership, participated in the round. This is Ribbit Capital’s third investment in Africa after leading Chipper Cash’s $30 million Series B and Wave’s $200 million Series A.
• The fintech has now raised $52 million in venture capital (including a $6 million seed). The company, which has over 80 employees, plans to use its Series A money to continue developing its platform, expanding its customer base, and seizing opportunities to serve new markets.

Source: TechCrunch

Our Takeaway

Across Africa, open banking has seen considerable traction in recent years with several startups enabling developers to build for the continent with ease and quickly. Commercial banks and other financial institutions also partner up with API startups to provide digital financial services. The future of financial services in the region rests on interoperability across several players and services. As the fintech startup ecosystem matures, we expect to see infrastructure-focused startups seek growth opportunities in new markets, supported by increased venture capital backing and consolidation. This is even more significant considering Africa has more than 500 million underbanked or unbanked, less than 50% of the continent’s adult population have made or received digital payments, and more than 40 million merchants do not accept digital payments.

---

Nigerian stocks close Q3 with a nearly 30% gain

Highlights

• In the third quarter of 2023, the Nigerian Stock Exchange (NGX) All-Share Index witnessed a remarkable surge, soaring by an impressive 29.52% to reach a closing value of 66,382.14 index points. This surge has propelled the market to its highest level in 15 years, igniting robust positive sentiments among investors and stakeholders alike.
• Figures from the exchange cited by Nairametrics showed that the All-Share Index, which is the broad index that measures the performance of Nigerian stocks, opened the trading quarter at 51,251.06 index points at the beginning of trading in January 2023, gaining 15.131.08 basis points or 29.52% during the three months to September 30.
• Further analysis revealed that activities on the Nigerian Exchange Limited (NGX) which opened the trading year at N27.915 trillion ($28 billion) in market capitalization at the beginning of trading, closed the quarter at N36,331 trillion, hence has earned a year-to-date gain of about N8.416 trillion.

Source: Nairametrics

Our Takeaway

The impressive rally in Nigerian equities can be attributed to several key factors that have converged to create a favorable market environment. One significant contributor is the strategic policies implemented by the newly elected administration under President Bola Tinubu. These policies have instilled confidence and optimism in the business and investment communities, driving increased participation in the stock market. Furthermore, the harmonization of various exchange rates within the country has played a pivotal role in bolstering the stock market’s performance. Collectively, these factors have created a perfect storm of optimism and confidence, resulting in the remarkable growth of the NGX All-Share Index during the third quarter of 2023. This surge underscores the potential for Nigeria’s capital market to flourish under the right conditions and policies, serving as a testament to the resilience and vitality of the nation’s economy.

---

Central Africa’s apex bank to issue digital currency

Highlights

• The Banque des États de l’Afrique Centrale (BEAC), the common central bank serving the Central Africa countries that form the Economic and Monetary Community of Central Africa (CEMAC), is moving ahead with plans to issue a central bank digital currency (CBDC) for the six-nation bloc.
• CBDCs are directly issued by central banks and made available to citizens, households and businesses, without any form of intermediary. They can be transferred or exchanged using blockchain technology, which allows for records of transactions to be stored on a network of computers. 
• BEAC’s governor, Abbas Mahamat Tolli, signed a decision in mid-September to create a working group, which will be responsible for monitoring and implementing work relating to the digital currency project. The group is supposed to work in close collaboration with the International Monetary Fund (IMF).

Source: SIKA Finance

Our Takeaway

While the hype around CBDCs may have cooled off compared to this time last year, quite a number of central banks across the world are still keen on developing state-controlled digital currencies. At least 10 countries have launched these while 87 others, representing over 90% of global GDP, are exploring a CBDC. In Africa, there is a growing allure of regulated digital currencies among central banks and a recent call for a continental cryptocurrency indicates the era of cash could be drawing to an end. More so, CBDCs represent yet another fintech innovation in Africa, a continent that leads globally when it comes to digital payments.

---

Egyptian deeptech Intella closes $3.4m pre-Series A round

Highlights

• Saudi Arabia-headquartered Egyptian deeptech startup Intella has closed a $3.4 million pre-Series A funding round, led by HALA Ventures and Wa’ed Ventures, the VC arm of Aramco, with participation from Sanabil 500 and INSEAD’s alumni angel network, along with other investors.
• Founded in 2021 by Nour Altaher and Omar Mansour, Intella offers real-time, on-demand market research for its business clients across diverse sectors.
• In March 2022, Intella closed its seed round at $1 million led by Hala Ventures, with participation from Falak Startups, Beyond Capital, and others. This year, Intella relocated its HQ from Cairo to Riyadh. The new funding will fuel its expansion into the Saudi market and support the development of end-to-end AI models localized for Mena.

Source: Wamda

Our Takeaway

From healthcare and education to agriculture and transportation, AI is increasingly being adopted by African startups and businesses to improve operations, increase efficiency, and drive growth. Perhaps the most exemplary startup is InstaDeep, a Tunisia-based startup that launched in 2014 to create AI products for businesses and was acquired by Germany’s largest vaccine maker BioNTech in January for up to $680 million. InstaDeep may have grabbed all the attention this year—and rightly so given the deal is the largest of its kind (African startup acquisition) and placed Africa’s AI industry on the global map—but there are a number of many other exciting startups solving problems with AI across Africa. AI could add as much as $15.7 trillion to the global economy by 2030, per PwC estimates. Africa has real potential to become a leader on this front, helped by its large youth population, growing middle class, and increasing access to mobile and internet technologies.

---

Ghana launches $550bn energy transition and investment plan

Highlights

• Nana Akufo-Addo, President of the Republic of Ghana, launched the country’s new Energy Transition and Investment Plan during the Global Africa Business Initiative in New York.
• The plan marks Ghana’s commitment to fighting climate change and fostering economic development in tandem. It details a credible pathway for how Ghana can achieve net-zero energy-related carbon emissions by 2060 through the deployment of low-carbon solutions across key sectors of its economy, including oil and gas, industry, transport, cooking, and power.
• Ghana’s government intends to use the plan as its main tool to engage the international community and investors for support with its energy transition. All measures suggested in the plan represent a $550 billion opportunity for the international community to invest in sustainable development in Ghana. If the plan is achieved in full, would generate 400,000 net jobs within the economy.

Source: ABC

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. Without the new plan, under a business-as-usual scenario, Ghana’s emissions are expected to rise from 28 Mt CO2e in 2021 to over 140 Mt in 2050, with the bulk of emissions growth coming from transport, driven by population growth, GDP per capita growth, and vehicle ownership. But it can instead bring the energy-sector-related carbon emissions to net zero while demonstrating that action against climate change does not need to come at the expense of economic development.

---

Lengo AI raises pre-seed with participation from Daba

Highlights

• Acasia Ventures, an early-stage venture capital firm, has taken the lead in a pre-seed investment round for Dakar-based Lengo AI, an AI-driven FMCG intelligence platform. The investment round was co-led by Ventures Platform and included participation from P1 Ventures, Launch Africa, Voltron Capital, Daba, and several other venture capital firms and angel investors.
• Established in 2021, Lengo AI is a data-driven operating system for informal retail in Africa whose objective is to provide actionable insights and intelligence to FMCG (Fast-Moving Consumer Goods) brands by tapping into the vast network of corner shops that account for 90% of purchases across the continent.
• The funds from this investment will be used to expand Lengo AI’s tech and sales teams, further enhance the AI component of the product, and extend its presence into new African markets.

Source: Wamda

Our Takeaway

Africa is expected to account for up to 40% of the human population by the end of the 21st century with the FMCG market positioned to emerge as its first globally relevant industrial sector. As the demand for packaged food, beverages, personal care products, and household items surges, multinational companies are expanding their presence and local players are emerging. But they need help with infrastructure limitations and a dearth of data on consumer preferences, market trends, and supply chain dynamics. Lengo solves the latter problem by leveraging AI and is poised to capture a major market share in an industry that accounted for two-thirds of Africa’s $1.4 trillion retail spending in 2016 and is expected to grow even further—driven by rising middle-class incomes and urbanization.

---

Sub-Saharan Africa growth to slow to 2.5% this year

Highlights

• The latest Africa’s Pulse report from the World Bank says Sub-Saharan African growth is expected to face headwinds. Several factors, including rising instability, lackluster growth in some of the region’s largest economies, and increasing global economic uncertainty, are projected to contribute to a slowdown in economic expansion.
• The report forecasts that real gross domestic product (GDP) in the region will decelerate to 2.5% in 2023, down from 3.6% in 2022. South Africa, Africa’s most industrialized nation, is expected to see a modest expansion of 0.5% in 2023, hampered by energy and logistical challenges. 
• Meanwhile, Nigeria and Angola, the region’s largest oil-producing countries, are projected to grow at rates of 2.9% and 1.3%, respectively, influenced by lower international oil prices and currency pressures that impact both oil and non-oil economic activity. The consequences of this economic slowdown are particularly pronounced for the region’s most vulnerable populations, as weak growth translates into slow poverty reduction and limited job creation.

Source: ReliefWeb

Our Takeaway

Notably, more than half of the countries in the region, specifically 28 out of 48, have seen downward revisions in their 2023 growth forecasts compared to the World Bank’s April estimates. However, there is some positive news on the inflation front. The Bank anticipates that average consumer prices may decrease from 9.3% in 2022 to 7.3% in 2023. Additionally, fiscal balances are improving in African countries that are pursuing prudent and coordinated macroeconomic policies. To bolster a turnaround in the region’s growth prospects and create job opportunities for its large youth population, the report emphasizes the importance of implementing reforms that support private sector growth, investing in education, and prioritizing the inclusion of girls and women in economic activities.

---

Morocco to co-host the 2030 FIFA Men’s World Cup

Highlights

• The announcement that Morocco will share the hosting honors of the 2030 World Cup with Spain and Portugal has brought a sense of excitement and optimism to the North African country. This news comes just a month after a devastating earthquake claimed the lives of nearly 3,000 people in Morocco.
• In a surprising move, FIFA announced the joint hosting of the 2030 tournament a year earlier than originally planned. While Morocco, Portugal, and Spain were the sole bid put forward, the decision to have Uruguay, Argentina, and Paraguay each host a match to commemorate the tournament’s centenary adds an extra layer of significance.
• Observers noted that the ease of travel between Morocco and the two Iberian countries played a crucial role in the success of the bid, emphasizing the practicality and convenience of the hosting arrangement.

Source: CNBC

Our Takeaway

Hosting the World Cup could potentially provide a significant economic boost to Morocco, which was already grappling with challenges such as a severe drought and high inflation rates. The country had previously made unsuccessful attempts to host the World Cup as the sole host nation in 1994, 1998, 2006, and 2010, when South Africa became the first African country to host the tournament. By teaming up with Spain and Portugal for the 2030 bid, along with the support of Saudi Arabia, Morocco significantly improved its chances of hosting the tournament. Additionally, Morocco’s performance in the 2022 Qatar World Cup, where the men’s national team reached the semi-finals, marked a historic achievement for African soccer and likely boosted their credibility as a potential World Cup host.

---

BRVM inks major deal with Luxembourg exchange

Highlights

• West African regional stock exchange, the Bourse Régionale des Valeurs Mobilières (BRVM) has signed an agreement with the Luxembourg Stock Exchange (LuxSE) on sustainable finance, an initial step in a collaborative effort aimed at enhancing sustainable finance within the markets governed by BRVM.
• The BRVM plays a pivotal role within the West African Economic and Monetary Union (WAEMU), which aims to enhance integration among Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. BRVM is a shared exchange among these eight countries. On the other hand, the Luxembourg Stock Exchange (LuxSE) is a prominent listing venue for international debt securities and a pioneer in sustainable finance.
• Through the agreement, both exchanges will explore the establishment of a bond market dedicated to green, social, sustainability, and sustainability-linked bonds at BRVM and also assess opportunities for dual-listing sustainable securities.

Source: SIKA Finance

Our Takeaway

Sustainable finance has witnessed remarkable expansion within emerging markets in recent years. This growth has been marked by substantial advancements in ESG policies and frameworks, aimed at mobilizing capital for sustainability, as well as a surge in creative capital market products and bond issuances aligned with sustainability objectives. In Africa, the OECD estimates the sustainable financing gap until 2030 at about $1.6 trillion while the continent needs additional financing of about $194 billion annually to achieve the Sustainable Development Goals by 2030. Countries like Nigeria, Egypt, and South Africa have made significant strides in leveraging public capital markets to drive sustainable investments and BRVM’s recent deal will help ensure the francophone region is not left behind.

---

Bboxx secures $17m to drive ‘clean’ transition in Rwanda

Highlights

• Bboxx is utilizing funds from a $17 million subsidy, financed by the World Bank, to support a significant clean cooking initiative across Rwanda. Bboxx has entered into an agreement with the Development Bank of Rwanda (BRD) to access a portion of this grant.
• Under its clean cooking brand, Bboxx Cook, the company will initially deploy a portion of the subsidy to help realize its goal of providing cleaner cooking solutions to as many as 500,000 Rwandan households. Upon the successful completion of the initial phase of the project, Bboxx Cook will have the option to access additional funding to further advance its objectives. 
• This initiative is a vital component of the broader subsidy program, which aims to enhance the quality of life by reducing the percentage of households relying on firewood for cooking from 80% in 2017 to 42% by 2024, while also completely phasing out the use of charcoal in urban areas.

Source: ABC

Our Takeaway

Traditional fuels like wood and charcoal not only pose environmental challenges but also significantly contribute to carbon emissions and deforestation. Comparatively, charcoal and wood have a carbon footprint that is 50% and 74% larger than that of LPG (liquefied petroleum gas), respectively. Additionally, as much as 30% of global deforestation is driven by charcoal production. Adopting clean cooking solutions helps mitigate these issues, addressing some of the most significant sources of emissions, pollution, and deforestation in the developing world. Transitioning to clean cooking solutions could have a profound impact on the well-being of households and society. Clean cooking solutions, such as LPG, not only reduce health risks but also free up valuable time each week.

---

Lengo makes first cohort of Google’s AI accelerator

Highlights

• Senegal-based artificial intelligence (AI) startup Lengo, a Daba portfolio company, has been selected as part of the first cohort of the ‘Google for Startups Accelerator: AI First’ program. Founded in 2021, Lengo is an AI platform offering an extensive database and insights on consumer goods for companies in Africa’s Fast Moving Consumer Goods (FMCG) sector. 
• The Google AI program is a 10-week equity-free accelerator for Seed to Series A startups based in Africa or building Africa-centered solutions with technology, designed specifically for startups leveraging AI and Machine Learning from any vertical. 
• Through its novel unified investment platform, Daba Finance, a startup that enables investing in Africa’s best private and public companies seamlessly, facilitated institutional and retail investment in Lengo’s recently closed pre-seed round announced this week. 

Source: Google

Our Takeaway

AI has the potential to be transformative in Africa and could add as much as $1.3 trillion to the continent’s gross domestic product by 2030, according to McKinsey. That underscores the importance of initiatives like Google in supporting the startups working to ensure Africa does not miss out on the gains of AI. A total of 11 startups across Africa were selected from a vast pool of innovative talent, using cutting-edge AI to address Africa’s challenges and broader global issues. Selected startups in the first cohort will benefit from Google’s AI expertise and a $350,000 allocation in Google Cloud Credits and also undergo mentorship sessions, technical guidance, and networking opportunities to enhance their reach and impact. 

---

WATT gets $13m to expand renewable energy in Nigeria

Highlights

• WATT Renewable Corporation, an independently owned provider of hybrid solar solutions, has secured $13 million in funding from Empower New Energy to catalyze its efforts in advancing renewable energy solutions in Nigeria.
• The company specializes in hybrid solar energy solutions and is dedicated to reducing carbon footprint through innovative technologies. Empower New Energy works closely with project development partners and has built a strong pipeline of energy projects across 12 countries in Africa.
• The funding, which marks the largest investment to date for Empower New Energy, will enable WATT to enhance its renewable energy portfolio, adding an impressive 8MW of installed generating capacity and 14.3MWh of storage capacity through end-to-end services and operation of towers.

Source: Nairametrics

Our Takeaway

Today, the world’s largest unelectrified population lives in Nigeria. Of the country’s 200+ million people, more than 90 million still lack any access to electricity. Low per capita electricity consumption (13% of the modern energy minimum threshold), dependence on mostly subsistence agriculture (70% of the population), high unemployment (35%), and underemployment (22%), all combine to create substantial development challenges. Expanding access to clean and reliable energy is among the most powerful available levers to quickly change the economic prospects of all Nigerians and investments in expanding off-grid energy solutions like WATT are crucial to achieving this.

---

Tourism, remittances bolster Africa’s best-performing currency

Highlights

• The Gambian dalasi remains the strongest currency in Africa this year, appreciating by 0.9% against the U.S. dollar, outperforming 23 other African currencies tracked by Bloomberg. 
• The country’s central bank attributes this strength to increased inflows from remittances, tourism, external budget funding, and IMF program disbursements. The governor anticipates further growth in the dalasi’s value, primarily against the U.S. dollar, driven by expected increases in remittances. 
• In the first two months of this year, Gambia received $129.7 million from its diaspora, a significant rise from $507 million in 2022. Tourist numbers also rebounded, reaching 174,490 in 2022 from 102,460 the previous year, following a pandemic-induced decline to 89,232 in 2020.

Source: Bloomberg

Our Takeaway

The Gambian dalasi is poised for continued strength, as the upcoming tourism season, running from October to December, is expected to boost foreign exchange inflows. This, along with the forthcoming peanut harvest season, is set to further support the dalasi’s robust performance. However, Gambia is currently grappling with surging inflation rates, with consumer price inflation at 18.4% in July for the second consecutive month. The central bank governor anticipates that inflation will peak in December before gradually falling below 10% by mid-next year. On another economic front, Gambia recently concluded a $94-million extended credit facility with the IMF spanning 39 months, while negotiations for a new program with the IMF are currently underway.