Finance (102)
In Africa, most countries are betting on digital technologies to boost their socio-economic development. In that context, in its Agenda 2063, the African Union has outlined a set of key programs and initiatives to accelerate economic development on the continent.
Last Thursday, the African Union Commission (AUC) and the African Development Bank (AfDB) signed a grant agreement for the implementation of the first phase of "Upstream", a project aimed at developing the African digital market.
The US$9.73 million grant from AfDB aims to support AUC in the implementation of digital projects that are expected to develop a single continental digital market. It also aims to support the implementation of the African Continental Free Trade Area and the Digital Transformation Strategy for Africa.
"The Covid-19 pandemic underscored the importance of digital technologies and the digital economy as a whole, and in that regard, Africa should think big when it comes to digital development, digital economy, and the grand opportunities for integration and economic growth," said Albert M. Muchanga (photo, right), AUC commissioner for economic development, trade, tourism, industry, and minerals.
Upstream is designed to address gaps identified in the African digital economy during the Covid-19 pandemic. The first phase, which will run from 2023 to 2026, has three main components namely digital enablers, digital trade, and e-commerce adoption as well as supporting actions. It will help strengthen the frameworks (strategic, policy, regulatory, and conceptual) and cross-cutting dimensions (gender, climate change, and resilience) that are essential for the establishment of a single continental digital market by 2030.
Ultimately, the project will contribute to the implementation of digital enablers (universal access to broadband infrastructure, sovereign African cloud, African digital marketplace, etc.), e-business, and digital promotion programs for medium, small and micro enterprises, and start-ups. It will also help create an ecosystem facilitating digital trust, skill development, and networking with African experts.
According to Abul B. Kamara (photo, left), the AfDB's deputy director general for the East African region, the project will also create employment opportunities for millions of young Africans, which is critical to the continent's stability and prosperity. It will also ensure the digital transformation of economies and provide new opportunities to increase intra-African trade and stimulate economic growth.
Samira Njoya
Developing innovative solutions to boost the SME world is a major concern for African economies. Yet, accessing financing remains a headache for sector players.
On Tuesday, November 15, the International Finance Corporation (IFC) announced the launch of a new vehicle dedicated to supporting venture capital systems in Africa, the Middle East, Central Asia, and Pakistan. This $225 million fund will provide seed funding for startups that address development issues in areas such as climate, health, education, agriculture, e-commerce, etc. through technological innovations.
“Support for entrepreneurship and digital transformation is essential to economic growth, job creation, and resilience. It will help innovative tech companies in Africa, the Middle East, Central Asia, and Pakistan expand during a time of capital shortage and create scalable investment opportunities. We want to help develop homegrown innovative solutions that are not only relevant to emerging countries but to the rest of the world,” said Makhtar Diop, IFC's Managing Director.
The already difficult access to funding for startups in low-income countries has worsened with the global slowdown in venture capital investment, the Covid-19 pandemic, rising food and supply chain costs, rising interest rates, and currency devaluations. However, countries still have a huge potential for development. In Africa, for example, the digital economy could contribute up to $712 billion to the continent’s GDP by 2050, according to a report published on June 9 by the international network of high-impact entrepreneurs Endeavor.
The IFC sees in its new platform a way to boost nascent venture capital markets in regions that have shown early growth potential but face challenging global economic conditions. The international organization says it will make equity and quasi-equity investments in tech startups and help them grow into scalable companies capable of attracting traditional equity and debt financing. It will also use the platform to collaborate with other World Bank Group teams to build and support venture capital ecosystems through regulatory reforms, sector analysis, and other tools.
An additional $50 million will be provided by the International Development Association's Private Sector Window Blended Finance Facility, which helps reduce the risk of investments in low-income countries.
Samira Njoya
Digital tools are currently considered essential technologies for Africa's post-Covid-19 recovery and even its future growth. However, unequal access to the internet may become a challenge to countries’ efforts.
Last Thursday, the European Investment Bank (EIB) announced US$10 million in support as part of its cooperation with telecom infrastructure company the Bandwidth & Cloud Services Group (BCS Group).
The investment aims to bring transformed digital connectivity to more than 2.5 million people living in remote areas of the eastern Democratic Republic of Congo through a fiber optic network built by BCS.
"The European Investment Bank is committed to accelerating digitalization across Africa and is pleased to strengthen our partnership with BCS to transform high-speed fibre optic networks in the DRC. Expansion of the fibre optic backbone will enable local communities to benefit from mobile broadband and hospitals and schools to be connected to the rest of the world,” said EIB Vice-president Thomas Östros.
According to the Global System Operators' Association (GSMA) report "The State of Mobile Internet Connectivity 2020, "DRC is one of the African countries that have the largest connectivity gap between urban and rural areas. Its demand for connectivity has grown significantly after the coronavirus pandemic, encouraging international companies to invest in the country. Liquid Technologies, Facebook, and CSquared have committed to building fiber optic networks in the country to improve access to affordable broadband internet.
The new BCS investment, supported by the EIB, will connect areas currently underserved by broadband telecommunications. The support will fund the construction of 1,200 kilometers of fiber out of the 20,000 kilometers planned by BCS in Southern, Central, and Eastern Africa over the next 3 years.
Several outcomes are expected at the end of the project. According to the EIB release, "better digitalization will unlock new opportunities for local entrepreneurs and support job creation, and direct telecom connections to 319 schools and 70 hospitals and health centers to improve education and public health."
Samira Njoya
In September 2022, in line with its ambition to conquer Africa, Cellulant signed a partnership with Orange Money, to implement card-to-wallet transfers for eight banks in Botswana.
Pan-African fintech Cellulant Corporation announced, last Tuesday, it had secured a payment systems operator license from the National Bank of Uganda, per the 2020 Act that governs the national payment system.
According to Frances Diribe, Cellulant’s Chief Risk & Compliance Officer, the license marks another evolutionary step for the company founded in 2003. "Uganda currently has over 800,000 registered businesses and a fast-growing digital youthful population. We’re on course to double down our work in offering these businesses and their clients’ dependable payment options. By streamlining the business payment process, they can concentrate on growing themselves," he said.
Mobile and digital payments are gaining momentum across Africa. In its "State of the Industry Report on Mobile Money 2022," the Global System Operators' Association (GSMA) estimates that the continent was home to more than half of the world's active mobile money accounts in 2021. It had 184 million subscribers compared to 161 million the year before. This leads to a fairly high transaction volume (36.7 billion transactions and US$701.4 billion in value), up by 39% year-on-year.
The license allows Cellulant to expand its operations locally and regionally while assuring its business partners of its compliance with local and international security regulations. By partnering with six financial institutions and over 50 merchants in Uganda, Cellulant offers mobile banking and cashiering solutions throughout the country. It claims payment collection and payouts powered to thousands of businesses in 35 African countries.
“Cellulant launched operations in Uganda in 2009 and through its single API payments gateway – Tingg – it enables global, regional and local businesses to collect payments online and offline serving its customers with locally relevant payment methods, including mobile money, cards & banks,” it indicates.
Samira Njoya
For the past 18 months, Nigerian healthcare provider Mobihealth has been working with the Bill and Melinda Gates Foundation in select states in Nigeria. The additional capital will allow the startup to expand outside Nigeria.
The U.S. Trade and Development Agency (USTDA) announced Monday, Oct. 17, a grant to Nigeria's Mobihealthcare Limited (Mobihealth) for a feasibility study to support the development of its telehealth services in Côte d'Ivoire, Ghana, Kenya, and Egypt.
According to USTDA’s director Enoh T. Ebong, the partnership aims to “transform the delivery of healthcare to underserved communities across Africa using the best technology that the U.S. industry has to offer.”
It is “gratifying to see women-led businesses such as Mobihealth leading the development of critical infrastructure on the continent,” he added.
While the amount of the grant was not disclosed, the statement said the study would include a detailed market assessment, financial analysis, and legal and regulatory review for each of the four countries. The Africa Investment Forum (AIF), an initiative by the African Development Bank, will work with USTDA to facilitate the development and financing of the Mobihealth project.
A year ago, USTDA signed a memorandum of understanding with AIF to support high-quality infrastructure solutions for sub-Saharan Africa. The MoU defined cooperation areas in vital sectors such as clean energy, transportation, information and communication technology, health infrastructure, and agribusiness.
According to the USTDA release, the “project also advances the U.S. government’s Prosper Africa initiative to substantially increase two-way trade and investment between the United States and Africa.” It will help expand access to health care for 100,000 people per year in Africa.
For Mobihealth CEO, Funmi Adewara, “the USTDA grant comes at an opportune time and will enable us to expand the scope of our integrated telehealth, electronic medical records, and digitalization services to several other African markets over the next few years.”
Samira Njoya
The news comes a month after the startup was selected to participate in the Google for Startups Black Founders Fund 2022.
Pan-African data intelligence company Stears announced Tuesday (October 11), the raise of US$3.3 million in its seed funding round. The round was led by MaC Venture Capital with participation from Serena Ventures, Serena Williams' investment company, and other investors.
“We know global professionals need our data and insight because banks, research firms, development organizations, and investors are already using our early products. Our customers tell us we are building a ‘systemically important’ company to address Africa’s data problem,” explains Stears’ CEO, Preston Ideh.
Stears was launched, in 2017, by three students who realized, by experience, that data and information about Nigeria, their country and Africa’s largest economy, were hard to come by. Combining their skills, they set up Stears to address this lack of information.
According to the CEO, the Stears website is the African version of Bloomberg and Thomson Reuters, two of the world's most trusted information providers. Stears identifies, combines, and markets the often missing, outdated, or poorly digitized data needed by traders, financial professionals, politicians, researchers, and even regulators.
In 2019, the team created Nigeria's first real-time election database, which was used by more than two million Nigerians to monitor the general election. After that experience, they raised US$650,000 in pre-seed funding.
With the resources raised during the seed round, Stears plans to collect data, perform in-depth analysis, and offer the analysis to their commercial customers in several ways beyond simply reported news. The company also plans to hire data scientists and analysts as well as industry analysts and expand in East and Southern Africa.
Samira Njoya
The new funding secured six months after the agritech startup's last financing round brings the total funds it raised to US$14.4 million, including US$6.5 million in debt financing.
Ghanaian agritech startup Farmerline announced, Tuesday (September 27), the second close of its Pre-Series A investment raise. During that round, it raised US$1.5 million from social impact investor Oikocredit.
According to Farmerline co-founder and CEO, Alloysius Attah, the round will help support farmers and agribusinesses across Africa in a context marked by the war in Ukraine. “With the support of Oikocredit alongside our first-round funders, our distribution, logistics, and financing services will continue not only in Ghana but also in Côte d’Ivoire where we’ve recently begun the process of expanding our team,” he said.
West Africa was recovering from the coronavirus pandemic when the Ukraine war began. Record inflationary pressures ensued, sending the cost of living flying in most African countries. According to Issoufou Baoua, an expert food security analyst with the Inter-State Committee for Drought Control in the Sahel (CILSS), the number of people threatened by food insecurity in the Sahel and West Africa is rising. “We have gone from 10.7 million people threatened by food insecurity in 2019 to 40.7 million in 2022,” he says.
By expanding its African footprint, Farmerline will strengthen its agribusiness supply chain, cut costs for farmers and boost yield with the deployment of AI solutions and local infrastructure.
The startup, founded in 2013, currently claims about US$18 million worth of inputs and crops financed so far by franchising with agribusinesses and input resellers. The startup now aims to reach 300,000 farmers by 2022, a nearly 400% growth from last year, when it doubled its direct reach to 79,000 farmers (from 36,000 in 2020 and 8,000 in 2019).
Samira Njoya
With the emergence of digital technologies in Africa, governments are increasingly realizing the importance of the creative economy, which can generate more business opportunities, have a positive impact on livelihoods, and boost the overall economy.
The African Development Bank (AfDB), the Islamic Development Bank (IsDB), and the French Development Agency (AFD) have invested US$618 million in Nigeria's Investment in the Digital and Creative Enterprises (i-DICE) program.
Speaking at the Nigeria International Economic Partnership Forum in New York on Thursday, September 22, AfDB President Akinwumi Adesina (photo) said the funding will support the creation of 225 creative start-ups and 451 small and medium enterprises (SMEs) in the technology sector.
“The future is not just digital, the future will be driven by digital revolution. Today, Nigeria has five of the seven unicorns in Africa and raised almost $1.4 billion of the total of $4 billion raised by fintech companies across Africa in 2021,” Akinwumi Adesina said.
The program's funding is aimed at offsetting the economic downturn caused by the Covid-19 pandemic by expanding the financial and technology sectors in Nigeria. According to the AfDB, in the fourth quarter of 2020, ICT contributed 15.06% of gross domestic product (GDP), compared to 13% during the same period a year earlier. Similarly, the vibrant creative industries generated US$14.4 million in revenue between 2015 and 2018.
Despite such performance, several systemic issues including lack of funding, insufficient infrastructure, skills gap, and limited access to the internet hinder the development of the concerned sectors. The i-DICE launched by the Federal Government of Nigeria, last January, aims to tackle those systemic issues. It targets more than 68 million Nigerians aged 15-35 who are recognized as leaders of innovative, early-stage technology start-ups, as well as leaders of micro, small and medium-sized enterprises in the creative sector. For AfDB president Akiwumi, these businesses could create 6.1 million jobs and contribute US$6.4 billion to the Nigerian economy by 2027.
According to Premium Times Nigeria, the AfDB financing “will help the Government initiative further consolidate Nigeria’s position as Africa’s leading start-up investment destination and as a youth entrepreneurship hub.”
Samira Njoya
Mergers and acquisitions reached a record high in Africa in 2021. The performance nevertheless hides weaknesses, including low investment in small businesses.
Egypt-based fintech investment banking marketplace Exits.me announced, Tuesday (September 20), it raised US$1 million in a pre-seed round. The funds were raised from a “UK-Based Exits.me, a group of notable Egyptian angel investors, Baseeta Investments Holding & Mawelni Holding for Financial Investments, and the founders.”
For Omar Wagdy, one of the angel investors, this round is a much-needed one and aims to bring investment opportunities to all classes of businesses in the MENA region. "We want startups & SMEs who are off the radar of conventional investment banks to have a user-friendly and automated means of engaging in M&A and investment opportunities," he said.
Exits.me was founded in 2022. It facilitates merger acquisitions and investment in companies by offering a seamless, fully integrated online platform and a full-fledged financial advisory service. To date, the fintech has completed more than 25 transactions on its platform, with another 30 ongoings, totaling US$150-200 million.
According to a recent report by financial audit and advisory firm E&Y, the MENA region has recorded 359 merger-acquisition deals worth US$42.6 billion in the first half of 2022. This represents a 12% year-on-year increase. The United Arab Emirates, Egypt, Saudi Arabia, Morocco, and Oman are driving those deals.
Thanks to the funds raised, it intends to facilitate even more deals. It indicates that it “is also in the current procurement of its crowdfunding license from the Financial Regulatory Authority to manage and arrange crowdfunding campaigns; which will open the door to a new investment product for the MENA market, allowing anyone in any capacity to invest.”
Samira Njoya
The deal comes a few months after HotelOnline closed its Series A round. The round was backed by Yanolja, a South Korean travel tech, which was then making its first commitment in Africa.
Kenyan travel tech company HotelOnline announced, Tuesday (September 12), the acquisition of hospitality software company HotelPlus.
Although the terms of the acquisition were not disclosed, Eric Muliro, the founder of HotelPlus said he is receiving a US$1.9 million payment in HotelOnline stock, which was valued at US$24 million prior to the deal. At the same time, he has been named HotelOnline's chief technology officer.
The deal will allow HotelOnline to significantly increase its customer base while "capitalizing on the combined strengths of both companies, creating a force to reckon with in East Africa’s hospitality industry[...] Because the HotelPlus client-base currently uses on-premise software, this creates a unique integration opportunity with our cloud solutions," said HotelOnline co-founder Havar Bauck.
In its May 2022 report, consulting firm W Hospitality Group indicates that 14,538 hotel rooms were created in East Africa in 2021. The number was up by five percent from 13,837 in 2020, placing the region in the second position in sub-Saharan Africa behind West Africa.
HotelOnline wants to leverage this acquisition to become a strong African travel-tech player with a local and continental footprint in a continent where it already has over 6,000 customers across 27 countries. Its immediate plan is to conquer East Africa first, then Nigeria and Senegal. To fulfill that plan, it can rely on the expertise of its new chief technology officer, Eric Muliro, who founded HotelPlus in Kenya 13 years ago.
HotelOnline was launched in 2014. It helps hotels establish and increase their online visibility, deploy booking engines and gain exposure on distribution channels such as Booking.com. The deal with HotelPlus increases its client base by more than 2,200 and opens doors to additional customers, and unique offerings such as payment solutions, AI-driven pricing, and revenue management.
Samira Njoya
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In Africa, access to financial support is often challenging for women entrepreneurs. The situation limits the positive impact they can have on continental growth.
On Monday, September 12, Janngo Capital, an Abidjan-based private equity firm, announced the first close of its fund Janngo Capital Startup Fund (JCSF) at €34 million. The fund is backed by global financial institutions as well as leading private companies.
Its investment strategy will include backing startups that enable Africans to improve their access to essential goods and services and small and medium-sized enterprises on the continent. It will particularly focus on women and the youth.
“We are proud to lead Africa's largest gender-equal tech VC fund and see major global investors rally around our vision to back entrepreneurs building digital champions across Africa," says Fatoumata Bâ (photo), founder and executive chair of Janngo Capital.
According to Janngo's release, “ women in Africa are the most entrepreneurial in the entire world with a total entrepreneurship activity rate of 26%. Yet, they face a $42 billion funding gap and have very limited access to growth capital.”
By dedicating half of the proceeds of JCSF to women-led businesses, Janngo aims to work towards improving equitable access to seed capital for technology entrepreneurs in Africa. The funding to be allocated will range "from EUR 50 000 to EUR 5 million", explains Fatoumata Bâ.
The four-year-old venture capital firm has a particular interest in innovation in French- and English-speaking Africa, in sectors such as health, logistics, financial services, retail, food, agriculture, and mobility.
Janngo Capital claims to have funded 11 startups in Africa, including Sabi, a growing B2B e-commerce platform with a female CEO, and Jexport, an Ivorian online freight marketplace led by a woman, while other startups, such as the fintech Expensya, have male founders.
Samira Njoya
Remittances are economic lifelines for African households that receive them. However, the cost of those financial flows sometimes becomes a hindrance for recipients in rural areas.
For the first time, the United Nations' International Fund for Agricultural Development (IFAD) will fund a digital payment company. The lucky beneficiary is Pan-African fintech MFS Africa, which will receive a €1.2 million grant funded by the European Union under the PRIME program managed by the IFAD.
In a statement released on Monday, September 12, the fund indicates that the funding aims to promote the use of mobile money in the marginalized rural areas of five African countries namely Ghana, Kenya, Senegal, Gambia, and Uganda. MFS Africa and its partners are co-financing the grant with €0.64 million.
According to Jyotsna Puri, IFAD's Associate Vice President for Strategy and Knowledge, "this grant is an investment to develop a model linking mobile remittances and financial inclusion that can be scaled up across Africa, and benefit not only remittance families but also their communities.”
According to IFAD's latest estimates, mobile remittances represent only 3% (€15.7 billion) of the total remittances sent by migrants to their families. The average cost of remittances to low and middle-income countries is 6%. However, in African countries, that cost is 7.8%, far from the Sustainable Development Goals' target 10.C, which aims to reduce it to less than 3% by 2030.
With this 2-year IFAD grant, MFS Africa will enable its partners (remittance operators in European and African countries) to send money directly to mobile wallets in selected African countries with a focus on beneficiaries in rural areas.
“MFS Africa will also test and scale micro-insurance products linked with remittances and distributed through selected partners.” The grant will benefit individuals as well as businesses in the remittance industry. It will also improve transparency and encourage competition, particularly in segments often overlooked by traditional remittance operators due to low transaction volumes.
For MFS Executive Director Nika Naghavi, the funding will help enhance the “financial resilience of the African diaspora and their families back home by unlocking the challenges in the remittance value chain, covering both the sending and receiving sides.”
Samira Njoya
E-commerce has been booming in Africa over the past few years. To support commercial enterprises in their digital transformation, El-dokan provides them with highly flexible and customizable technological infrastructures.
Egyptian enterprise software solution provider El-dokan announced, Monday (September 5), the close of a US$550,000 pre-seed round to establish its international presence. The round was led by a cluster of local and regional investors including EFG EV and Flat6Labs, 500 Global, and Hala Ventures.
Apart from helping establish its international presence, the funds will also help El-Dokan upgrade its technology. "We already succeeded in establishing a legal entity in Saudi Arabia to expand our sales and marketing activities across the GCC [ed. note: the Cooperation Council for the Arab States of the Gulf]. This expansion should be followed by the South African market, after building a strong footprint in the Mena region," an El-Dokan representative told Middle Eastern media The National.
According to the International Trade Centre's (ITC) recent report on African ecommerce potential, Egypt is among the ten countries that account for 94% of online activities in Africa. During the coronavirus pandemic, the number grew significantly and ecommerce has become an essential component of the country’s business strategy. For data platform ecommerceDB, an estimated US$5.2 billion in ecommerce revenues were generated in Egypt.
El-Dokan is already a leader in the MENA region. But, it wants to capitalize on the growing adoption of ecommerce to reinforce its position on the African continent. Since 2014, the company has been providing application programming interfaces (APIs) to large and medium-sized retailers, as well as startups, enabling them to build highly customized and tailored e-commerce stores. The company also helps them "drive sales growth while simultaneously bringing down maintenance costs [and helps achieve] the highest levels of operational efficiency," says Mohamed Yousry, CTO and co-founder of El-dokan.
To date, the company estimates that its customers have grossed US$45 million. El-dokan also claims collaboration with several international clients such as Procter & Gamble (P&G), Misr Pharmacies, Mobily, Zahran stores, and Apple Premium Switch Plus seller, as well as food delivery app Appetito.
Samira Njoya
This is the second funding round completed by Duplo less than 12 months after the launch of its operations.
B2B payment startup Duplo recently completed a US$4.3 million funding round. In a press release received by We Are Tech on Wednesday, August 31, the company says the additional funds will be used to launch new products and expand into new business sectors in Nigeria.
According to Yele Oyekola, CEO and co-founder of Duplo, “there has been a lot of innovation in consumer payments in Africa in recent years, "but business-to-business payments have remained largely unchanged.”
“We strongly believe that there is a great opportunity to catalyze growth and maximize business opportunities across the continent by removing the bottlenecks that hinder the seamless flow of money between businesses and we are excited to have raised funding from this exciting group of investors to deliver this much-needed transformation,” he said.
This is the second round completed by the fintech, which was founded in September 2021. In February 2022, it secured pre-seed funding from accelerator Y Combinator and pan-African venture capital firm Oui Capital. The funds were secured to upgrade its tech and improve its product.
With this second investment, Duplo will expand its business and now work with financial teams of medium-sized companies and above. "When we think of payments in the continent or even Nigeria, for example, there’s a lot of focus on merchants collecting payments from the customers. And from the B2B angle, what startups help them with, is just collection and payout. Still, there’s a massive value in assisting them in tracking and reconciling payments in real-time, which is where we play a significant role,” Duplo says.
According to the World Bank, in Sub-Saharan Africa, B2B payments represent a US$1.5 trillion market. But the process of issuing and receiving payments remains largely manual, making it costly and highly inefficient for businesses.
The platform aims to address this situation. Since launching its operations, it has helped companies reduce time spent on administrative tasks such as account reconciliation by up to 50% and payment-related costs by up to 85%. Duplo claims to have increased the number of businesses on its platform by 1,000% in the last three months. Payment volume has also increased by 4,200% in the last 5 months.
Samira Njoya