Finance (109)
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
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
The bureau is part of the US fintech company’s African expansion strategy. It will serve as a base for the extension of Visa Inc.’s footprint in Central Africa.
Electronic payment solutions provider Visa Inc. recently opened a bureau in the Democratic Republic of Congo (DRC), its first in Central Africa. The bureau was inaugurated during an official visit of a Visa Inc. delegation led by its CEO, Alfred Kelly.
On Wednesday, August 10, in Kinshasa, the delegation met with Congolese Prime Minister Jean-Michel Sama Lukonde to discuss digitalization projects. During the audience, Alfred Kelly explained that the DRC bureau is urgently needed because the country is one of the most dynamic in Africa. Visa is “pleased to establish a local presence (there). Our shared goal is to expand access to e-commerce and support the DRC economy by working closely with public and private partners,” he said.
Through its local bureau, Visa will partner with public and private actors and decentralize access to digital services for the population by introducing new solutions. It will also create solutions facilitating payment collection.
During one of his previous visits to the DRC, Alfred Kelly inked partnerships with the country's central bank, financial institutions, fintech companies, merchants, and mobile operators. In the coming months, Visa will issue unique identifiers for more than 150,000 M-PESA clients in the DRC. It will also assist fintech company Infoset in a project to boost financial inclusion.
The DRC bureau is the eighth inaugurated by Visa Inc. in Africa. The seven others are in South Africa, Côte d'Ivoire, Morocco, Rwanda, Kenya, and Nigeria. In 2016, when it inaugurated its bureau in Côte d'Ivoire, Visa justified it with its ambition to capitalize on the growth potential of the French-speaking African market and also get closer to its clients, who are involved in the development of digital payment solutions.
Samira Njoya
The round is announced just months after the last fundraising operation concluded by the fintech company. Its proceeds will help the company expand further and develop new products and services.
Ghanaian fintech startup Zeepay announced, Friday (August 5), the completion of a Series A round, raising US$10 million. The funds were raised from Netherlands-based Symbiotics BV (US$9 million), with participation from a Mauritius-based fund (US$1 million). They will enable the startup to expand into selected African markets and boost its offers.
In its release announcing the round, Zeepay quoted its founder and managing director Andrew Takyi-Appiah, saying that the “raise was necessary and comes at the time when we are planning to increase our annual turnover from USD 1.5 billion circa 2021 to USD 200 billion over the next 5 years.”
Zeepay was founded in 2016. It provides digital solutions to facilitate online transactions. Currently, it claims over 130,000 transactions facilitated monthly. In March 2020, it became the first Ghanaian company to receive an Electronic Money Issuer (EMI) license from the central bank BoG. The startup is already operational in 20 African countries. But, it wants to increase its continental footprint and “augment support from local African Banks the likes of Ecobank, Fidelity Bank and Absa” as its CFO Godfried Boakye puts it.
Samira Njoya
In Africa, the development of digital infrastructures is a key prerequisite for an effective digital transformation, which is accelerated since 2020. The additional financing committed by the two partners will help the continent develop the needed infrastructure.
British International Investment (BII) and FMO announced Tuesday (July 27), a joint US116 million commitment to the fourth Africa Infrastructure Fund (AIIF4). As the lead investor, BII committed US$76 million against US$40 million by the FMO.
The fund, managed by African Infrastructure Investment Managers (AIIM), seeks to raise a total of US$500 million. Part of the fund will finance digital infrastructure (including mobile telecom towers, data centers, and fiber networks) in Africa.
“For over a decade, BII has proudly been an active partner to AIIM, an institutional fund manager with long-term industry expertise and on-ground knowledge of the Africa infrastructure space. We are pleased [...] to mobilize further capital to help meet AIIF4’s target size, playing a role in meeting Africa’s infrastructure needs. AIIF4 aligns with BII’s core infrastructure strategy, and we are confident that our capital will help modernize cities and services and accelerate social and economic prosperity for people and communities across the continent,” said Ryan Wagner, BII’s Head of Infrastructure and Climate Funds.
In 2020, the coronavirus pandemic forced African countries to accelerate their digital transformation. The need for high-speed connectivity and digital services is increasing. It is therefore essential to invest in the development of internet networks as well as data storage and security infrastructures.
The digital infrastructure that AIIF4 will help develop "will support inclusive development, improve standards of living for consumers and accelerate sustainable economic growth within many countries across the continent," according to BII.
Samira Njoya
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In Africa, fintech startups are gradually gaining ground, offering exclusive services to users. Thanks to its new mobile app, Studely becomes the first startup to allow students to remotely open a bank account in Paris.
Cameroonian consulting firm Studely launched Friday (July 22), its fintech app StudelyApp in Brazzaville, Congo. The app was launched during a ceremony attended by administrative authorities, entrepreneurs and students.
According to Studely co-founder and CEO Duplex Kamgang (photo, left), the mobile app complements the visa assistance services rendered by Studely.
“StudelyApp has been developed [...] to help students remotely open a bank account in Paris. It gives them the possibility to become banked while facilitating the payment of their school and housing fees. When they enter France or Germany, they just have to purchase a Mastercard for their bank transactions,” he explains.
The innovation was praised by Congolese Minister of Digital Economy Léon Juste Ibombo, who estimated that the app would enrich the Congolese ecosystem of practical solutions addressing the challenges faced by students who travel abroad. With its new service, Studely becomes the first global startup to develop a solution for the problems faced by students when they are required to pay their school ad housing fees before landing in Europe for their studies. The app is already available for Android devices. In the coming days, it will also be available for iOS users.
Studely was founded in 2015 to assist students in the visa application process for their studies in Europe, France, and Germany notably. Its assists in the obtention of proof of financial support, accommodation research, travel or home insurance, and bank account opening. The fintech is already present in fifteen countries and claims over 10,000 students assisted.
Before launching the StudelyApp in Congo, it had already launched the solution in Gabon and the Democratic Republic of Congo.
Samira Njoya
In Africa, mobile money has become the most popular alternative to bank accounts. In that promising ecosystem, the competition is ever high, supported by development partners willing to boost financial inclusion.
The International Finance Corporation (IFC) announced, Wednesday (July 13), a partnership agreement with Orange Bank Africa (OBA) to support digital finance services. Notably, the agreement will improve access to finance for agents and merchants operating in the West African mobile money ecosystem.
"Through the partnership with IFC, our bank aims to strengthen its collaboration with the thousands of agents and merchants, in particular in rural areas, who play a key role in the mobile money ecosystem. More generally, this project is in line with our mission to improve access to financial services in the region by leveraging transformations in the digital sector,” said Jean-Louis Menann-Kouamé, CEO of Orange Bank Africa.
The two partners will carry out a pilot phase in Côte d’Ivoire by providing liquidity to Orange Money agents to help them meet their clients’ needs. Indeed, agents, who are mostly underbanked, usually face liquidity constraints and are sometimes forced to reject transactions. As a result, they hinder both their growth and financial inclusion.
In addition to providing access to financing for Orange Money agents, “IFC will provide advisory services to Orange Bank Africa to help the mobile bank develop and test innovative and scalable digital lending products that meet the specific needs of mobile money agents as well as merchants accepting this type of payment.”
The partnership signed by the IFC and Orange comes a few days after Wave, one of Orange's competitors, secured a €90 million financing package arranged by the IFC. At the time, the IFC explained that the financial support “will help establish a mobile money environment where customers can transact more often thanks to a simple fee structure and lower transaction costs.”
Samira Njoya
The number of mobile financial service subscribers rose significantly in Africa over the past ten years. According to the GSM Association, it is estimated at some 200 million subscribers currently. With the arrival of new ambitious actors, the high fees, which used to hinder mobile financial services adoption, are dropping.
Wave Mobile Money S.A. (Senegal) and Wave Côte d'Ivoire S.A. recently secured a €90 million financing package arranged by the International Financial Corporation ( IFC). The package includes a €25 million loan from the IFC, and a combined €41 million B loan - Ed.note: Repayable over 5 to 8 years with the possibility to pay a large portion of the loan in the last amortization year- from Symbiotics, Blue Orchard, responsAbility and Lendable. The remaining €24 million is a parallel loan -not exposed to currency fluctuation risks- from Finnfund and Norfund.
The funds secured will serve for the development of Wave’s activities in Senegal and Côte d’Ivoire. According to an IFC release dated July 6, “in addition to helping to finance the companies' operations, IFC's support will help establish a mobile money environment where customers can transact more often thanks to a simple fee structure and lower transaction costs.”
“This will foster higher frequency of transactions, new payment methods, and growing overall value of payments processed by the users, particularly among lower-income customers,” the release adds.
“Wave's vision of making Africa the first cashless continent, by building affordable and user-centric solutions, matches IFC's ambitions of universal financial inclusion. [...] This investment by IFC and other lenders helps us offer a diversity of financial products, encouraging users to stay within the formal financial sector, deepening financial inclusion in the region,” indicated Coura Sene, Wave’s Mobile Money Regional Director for the West African Economic and Monetary Union (WAEMU).
For Aliou Maïga, IFC's Regional Director for West and Central Africa, the loans “will not only promote inclusive finance, but it will also significantly contribute to further advancing digital economy solutions in West Africa.”
Let’s note that in September 2021, Wave Mobile Money Holdings Inc. (parent company of Wave Mobile Money S.A. (Senegal) and Wave Côte d'Ivoire S.A.) raised US$200 million during a Series A round, becoming a unicorn company (valued at over US$1 billion).
Muriel Edjo
In 2021, Africa officially became a common market with numerous trade facilitation mechanisms. However, non-tariff barriers still pose challenges during financial transactions notably, therefore threatening the business inclusion sought after.
The African Continental Free Trade Area (AfCFTA) recently presented a project for the development of an e-payment platform dedicated to African SMEs. The project was presented by Wamkele Mene (photo, left), AfCFTA secretary general, during a meeting with Cameroonian Minister of Trade Luc Magloire Mbarga Atangana (photo, right) in Yaounde, last Monday (June 27).
According to Wamkele Mene, the end goal of the project is to create a digital marketplace to facilitate trade. For that purpose, the AfCFTA is negotiating with banks to secure guarantees because SMEs are usually confronted with credit access challenges. With those bank guarantees, SMEs can transact through the e-payment platform while banks cover the risks. Four sectors are targeted for the first phase of the project. They are notably agriculture, textile, transportation, and the pharmaceutical industry.
The AfCFTA is a key initiative in the African Union’s development blueprint Agenda 2063. It aims to accelerate intra-African trades and consolidate the continent’s commercial position in the global market. Currently, the area includes 44 member countries, including Cameroon.
S.A.