Investors update: Only a quarter of sub-Saharan African countries formally regulate crypto

Only a quarter of sub-Saharan African countries formally regulate crypto

Highlights

• A survey by KnowBe4 found that only one-quarter of countries in sub-Saharan Africa formally regulate crypto but two-thirds have implemented some restrictions, and six countries—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have banned crypto.
• Despite the hostility, 81% of respondents in Mauritius, Botswana, South Africa, and Kenya knew what cryptocurrency was, with 52% having already invested in it. 
• The primary goal for their investment was long-term profit (69%), followed by quick profit (39%). More so, 18% opted for cryptocurrency because they did not want to be tied to local banks, and 16% wanted to benefit from next-generation trading and transactions.

Source: KnowBe4

Our Takeaway

The adoption of cryptocurrency in Africa has experienced a notable upswing in recent years, with transactions surpassing $20 billion per month in 2021. This makes it the most rapidly expanding market for cryptocurrencies, as stated by the International Monetary Fund. Nevertheless, this surge has also resulted in a rise in fraudulent activities by scammers who exploit the ecosystem’s vulnerabilities. Hence, there is a mounting necessity for increased awareness and regulation of the risks linked with cryptocurrencies.

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Nigerian fintech Storspay raises $320k, gets into Techstars NYC

Highlights

• Nigerian fintech startup Storspay has raised a $320,000 funding round and been selected to participate in the Techstars NYC accelerator, backed by JP Morgan Accelerator.
• Storspay has developed a decentralized retail lending infrastructure platform for the Internet, connecting retail investors seeking alternative asset investment opportunities with small businesses globally that need working capital.
• The startup has been selected to participate in the 13-week fundraising and mentorship program for startups seeking to accelerate their growth and raise their next round of funding. This forms part of the funding round, which will help scale its platform.

Source: Disrupt Africa

Our Takeaway

Storspay’s business model is one of the most innovative in a pool of startups looking to provide SME financing in Africa. Lack of access to working capital remains a huge problem facing the growing small and mid-sized retail sector in emerging and frontier markets, including 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. 

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Swiss DFI commits $15m to Convergence Fund

Highlights

• The Swiss Investment Fund for Emerging Markets (SIFEM), a development financial institution, has committed a $15 million investment to Convergence Partners Digital Infrastructure Fund (CPDIF).
• CPDIF invests growth capital in the digital infrastructure and digital services sectors in Sub-Saharan Africa and is the third fund managed by Convergence Partners.
• Earlier this year, the private equity firm raised $296 million to buy African technology assets. The capital raise was one of the first private equity funds secured for sub-Saharan Africa this year and brought the total funds under management at Convergence to about $600 million. 

Source: ABC

Our Takeaway

Internet broadband penetration in sub-Saharan Africa has grown exponentially over the past two decades, mainly as a result of investments in enabling infrastructure. Still, there is more work to be done to close an existing digital divide on the continent—only 28% of the sub-Saharan African population was connected to the internet as of 2020—and ensure that Africa is able to reap the benefits from the current and subsequent iteration of the technologies. Convergence aims to address this, by drawing capital to digital infrastructure and services with a vision of bridging the digital divide in Africa.