Nigeria’s Fuel Crisis Hits On-demand Services Platforms Hard

By Staff Reporter  |  October 8, 2024

Nigeria’s on-demand services companies, including ride-hailing, last-mile delivery, and food delivery services, are straining under the weight of a crippling fuel price hike. The rise in fuel costs, triggered by the Nigerian National Petroleum Company’s (NNPC) decision to increase the price of Premium Motor Spirit (PMS) by 40%, has sent shockwaves across the economy.

The pump price has surged to between NGN 855.00 and NGN 897.00 per litre at NNPC stations (and well over NGN 1 K in most other outlets), significantly driving up operational costs for businesses dependent on road transport. Broadly, the retail price of petrol has surged more than five-fold in Nigeria since May 2023 when President Bola Tinubu took office and pronounced controversial reforms that have spiked energy costs in general and triggered biting hardship.

The fallout is now apparent across the economy, not least in the on-demand service industry, where maintaining competitive pricing while managing escalating fuel costs has become a delicate balancing act.

Ride-hailing Apps Struggle to Cope

Among the hardest hit are drivers for ride-hailing apps like Uber, Bolt, and InDrive, battling shrinking margins due to rising fuel costs. For many, the algorithms determining ride fares are simply no longer viable.

“It got to a stage when any ride that comes in for 1,500 naira or 2,000 naira, I don’t attend to them because I know what I go through to get fuel,” a driver told TechCabal. Drivers are increasingly opting for longer trips and requesting that customers pay more than the app-suggested fares, or face ride cancellations. One driver mentioned that customers must now pay up to NGN 5 K for trips that previously cost NGN 3 K.

While Bolt and Uber have responded with 13-15% increases in base fares, many drivers argue that these adjustments are insufficient, lamenting that the fare increment does not match the extra they now have to pay for fuel.

Despite the fare adjustments, drivers continue to ask for more, demanding that ride-hailing companies reduce their 25% commission on earnings to help mitigate their losses. The tension between drivers and platforms has led to friction, with some drivers going as far as imposing their own prices on customers, threatening to cancel trips if their demands aren’t met.

This rising cost is also impacting customer behaviour. Many are now switching to public transport or using ride-hailing services sparingly.

Food Delivery Startups Caught in a Bind

The fuel price hike has also put significant pressure on food delivery platforms such as Mano, Glovo, and Chowdeck, which are finding it difficult to maintain the affordability of delivery fees while motivating riders. Delivery companies are scrambling to devise new ways to offset the rising costs without passing the full burden onto customers.

Mano has responded by offering riders a NGN 2 K weekly bonus on top of their delivery fees and a monthly salary of NGN 4 K. To ensure sustainability, the platform is moving towards a dynamic pricing model.

Similarly, Glovo has introduced performance-based incentives, offering riders a NGN 23.4 K bonus if they complete 550 orders in two months, and NGN 39 K for completing 800 orders. Yet, despite these efforts, riders report that delivery fees have remained unchanged, leaving them dissatisfied. One rider noted that NGN 4 K used to be enough to fill their fuel tank, but now it takes NGN 6 K.

Startups like Chowdeck have been slower to respond, making only small adjustments, such as increasing long-distance delivery fees from NGN 1.5 K to NGN 1.8 K. However, riders are asking for at least NGN 2 K to keep up with rising fuel costs. Chowdeck has hesitated to implement broader changes, wary of pushing additional costs onto customers.

HeyFood, an Ibadan-based delivery startup, is exploring a more sustainable long-term solution by considering a switch to electric bikes. According to HeyFood CEO Akinropo Taiwo, riders are spending more time securing fuel in endless queues amid scarcity, which has affected their availability for deliveries. However, transitioning to electric bikes is challenging, as many riders are still paying off their petrol-powered bikes, which cost between USD 1.2 K and USD 1.7 K.

Last-Mile Delivery Faces the Toughest Dilemma

For last-mile delivery companies, raising prices has become inevitable. Fez Delivery, for instance, increased its base price for small packages from NGN 2.5 K to NGN 3.075 K, a 23% hike. CEO Seun Alley acknowledged the difficulty, saying, “Our prices definitely have to change. But what we want to do is to ease our clients into that phase. So, at the moment, we are taking serious blows to keep operations running.”

Unlike ride-hailing and food delivery services, last-mile delivery companies do not operate two-sided platforms where drivers and customers are matched. This gives them more control over their pricing but also leaves them vulnerable to losing customers in a price-sensitive market. As Seun Omotosho, COO of Gokada, observed, “Depending on the urgency required, some customers don’t mind going for the least priced service when items to be sent are not needed urgently.”

Some consumers are even switching to public transport to send goods, resorting to relying on mass transit buses for deliveries because of the rising cost of courier services. DHL, for example, increased its prices from NGN 12 K to NGN 14 K for phones, and NGN 21 K for laptops, up from NGN 13 K.

The Nigerian fuel hike is squeezing on-demand services at both ends, with startups facing the twin tasks of raising prices to cover costs while retaining customers. E-hailing apps, last-mile delivery operators, and food delivery platforms are each testing different methods, from performance-based incentives to potential shifts to electric vehicles.

Despite the creative strategies, these sectors are caught in a tough spot. If they raise prices too sharply, they risk alienating customers. If they don’t, they face severe financial strain. As Glovo riders continue to push for delivery fee increases and ride-hailing drivers demand lower commissions, the industry is in a period of high tension.

African Founders & Investors Faced With A Disconnect Thwarting Efforts

By  |  October 8, 2024

As investment opportunities in Africa’s startup landscape become increasingly competitive, the need for founders and investors to find common ground and get on the same page as they navigate shifting dynamics has become imperative. The role of investor reporting has thus come to the fore.

However, while reporting frequency has improved, many startup founders still feel that investors don’t fully understand their business or market. This disconnect creates ongoing challenges for investor confidence and highlights a gap between what founders report and what investors find valuable.

A recent report from Wimbart, a PR agency specialising in African and emerging markets with a notable tech clientele, highlights the critical role of investor reporting. The findings reveal that effective communication between startups and investors is not just beneficial but essential for navigating the current subdued funding environment, where investments have declined.

A Shift in Reporting Demands

The report, titled “Startup Performance Reporting in Africa: Aligning Startup and Investor Expectations,” indicates that 72.2% of investors have intensified their reporting requirements over the past 18 months.

This change reflects growing concerns regarding financial stability (33.3%), transparency (25%), and the need for enhanced performance monitoring (16.7%). With nearly two-thirds (64.7%) of investors initially receiving monthly updates from portfolio companies in 2023, this figure dropped dramatically to 27.8% by 2024. Investors are now favouring quarterly reports, which have risen from 29.4% to 50%, suggesting a shift towards a more manageable reporting structure.

This new trend underscores the increasing reliance on regular reports to assess the “quality of founder,” a key determinant in follow-on funding decisions. An overwhelming 88.8% of investors agree that the quality of these reports significantly impacts their assessment of a founder’s ability to execute business objectives. One investor noted, “For performance tracking and risk assessment, looking at previous reports helps assess a founder’s track record.”

The Disconnect Between Founders and Investors

Despite the apparent need for robust reporting, a notable disconnect persists between startups and investors. 40% of startup founders feel that investors do not fully understand their business or market, which creates challenges in communication and investor confidence. This sentiment is echoed by the report’s findings that 60% of investors view the founders themselves as the biggest barrier to meaningful reporting. Common complaints include a lack of focus in reports (27.8%) and perceived inaction from founders (16.7%).

The report highlights that 70.6% of investors are primarily focusing on pre-seed and seed-stage companies. This concentration aligns with the early-stage nature of Africa’s startup ecosystem, where venture capital firms aim to support nascent businesses. However, while 93.9% of founders recognise the importance of regular updates for maintaining good relationships, only 42.4% believe that investors genuinely grasp their business intricacies. This gap emphasises the need for both parties to bridge their understanding to foster a more productive relationship.

The Importance of Quality Metrics

Founders are increasingly aware of the necessity of detailed reporting. Over 57.6% cite the effort required to produce such reports as the biggest barrier. Yet, the effort often pays off: 60.6% of founders report receiving direct intervention or support from investors as a result of their updates.

However, tensions arise over what constitutes essential reporting details. While 70% of founders utilise standardised templates, many feel that critical performance metrics—such as customer acquisition costs (CAC), customer retention rates, and lifetime value (LTV)—are frequently overlooked by investors.

The Wimbart report suggests key recommendations to enhance investor-startup relationships. Investors are urged to clearly communicate their reporting requirements and expectations, possibly providing templates to facilitate adherence. Startups should avoid vanity metrics and focus on meaningful indicators that demonstrate their understanding of the business.

In a challenging fundraising environment, Jessica Hope, Founder and CEO of Wimbart, emphasises that “in today’s tough fundraising environment, startup founders cannot afford to overlook clear and consistent reporting – it’s not just beneficial but essential.” The shift in investor priorities towards sustainability and long-term performance further emphasises the need for effective communication.

The evolving dynamics of investor reporting in Africa highlight the critical importance of clear communication in fostering robust relationships between startups and investors. As the funding landscape continues to tighten, addressing the disconnect between what founders share and what investors value will be vital for securing future investments. By embracing effective reporting practices, both parties can navigate the complexities of Africa’s startup ecosystem more successfully.

RLabs Takes Center Stage as Host of AfriLabs Annual Gathering 2024
Press Release

RLabs Takes Center Stage as Host of AfriLabs Annual Gathering 2024

By  |  October 8, 2024

The highly anticipated AfriLabs Annual Gathering 2024 will take place on November 6th and 7th in Cape Town, South Africa. This ninth iteration of the Gathering, themed “Uniting Innovation,” promises a transformative agenda with innovators and thought leaders from across Africa and beyond.

Known for its tradition of showcasing a new host country each year, the event offers a rare opportunity for local and international stakeholders to engage with the host nation’s innovation ecosystem. This year, Cape Town’s vibrant entrepreneurial scene will be in the spotlight.

The 2024 Gathering will tackle key issues such as artificial intelligence, blockchain, sustainable development, and digital inclusion. The program aims to foster collaboration, spark thought-provoking discussions, and drive impactful solutions for Africa’s growth and prosperity. Innovators from sectors like fintech, healthtech, and the green and blue economy will share insights, offering a comprehensive view of Africa’s rapidly evolving innovation landscape.

RLabs will host this year’s event at the Cape Town International Convention Centre. As a leader in South Africa’s innovation space, RLabs is the ideal host for an event that brings together ecosystem builders, investors, and partners across Africa and its diaspora.

During a recent info session, Moetaz Helmy, AfriLabs Board Chair, highlighted the Gathering’s importance: “This gathering is more than just a meeting of minds—it’s about creating a legacy of innovation across Africa. Each year, we see how bringing the event to a new country stimulates new partnerships, ideas, and opportunities.”

Who can participate?

Whether you’re a startup founder, investor, policymaker, or innovation enthusiast, the AfriLabs Annual Gathering 2024 is a unique opportunity to engage, learn, and help shape Africa’s digital future.

You can book your slot here to be part of Uniting Innovation in Africa and drive positive change across the continent.

If you’re interested in contributing or having your brand represented at the event, get in touch to explore partnership opportunities.

Africa’s Wave Of Digital Nomad Visas Spells Desire And Doubt

By  |  October 7, 2024

As remote work continues to reshape the global workforce, African nations are positioning themselves as attractive destinations for digital nomads. Kenya’s recent introduction of its Class N Digital Nomad Visa is the latest in a wave of similar initiatives across the continent, designed to draw in skilled remote workers who contribute economically without taking local jobs. Kenya’s move reflects broader trends in countries like Mauritius, Namibia, Seychelles, Cape Verde, and South Africa, all of which have launched similar programs.

Kenya’s Play for Global Talent

On October 1, 2024, Kenya officially amended its immigration regulations to introduce the Class N Digital Nomad Visa, offering a legal framework for remote workers to live in the country while maintaining foreign employment.

President William Ruto introduced the Visa with much fanfare at the 2024 Magical Kenya Travel Expo, highlighting Kenya’s goal to boost tourism and attract global talent. The visa enables foreign nationals working for companies outside Kenya or freelancing for international clients to reside in the country for extended periods.

To qualify for the visa, applicants must demonstrate a valid passport, proof of remote work, an assured annual income of at least USD 55 K from non-Kenyan sources, accommodation arrangements, and a clean criminal record. Notably, digital nomads are prohibited from taking local jobs, ensuring the protection of Kenya’s labour market.

While the visa supports long-term residency, it also offers a pathway to permanent residency and, eventually, citizenship. Kenya hopes this will draw more remote professionals, particularly those working in tech and innovation, to bolster the country’s growing tech ecosystem.

“By attracting skilled foreign workers, Kenya aims to boost its tourism industry, stimulate economic growth, and foster innovation,” the government noted, positioning the visa as a key part of its strategy to reinvigorate its economy post-pandemic.

The Growing Trend Across Africa

Kenya’s visa isn’t an isolated move. Several other African countries have already jumped on the digital nomad bandwagon. Mauritius introduced its Premium Travel Visa in 2020, allowing digital nomads and tourists to stay for up to 12 months, with a monthly income requirement of USD 1.5 K.

Namibia, in 2022, launched a similar visa, with a monthly income threshold of USD 2 K, aimed primarily at boosting its tourism sector. Seychelles and Cape Verde have also created digital nomad programs, each with its own set of financial and accommodation requirements. South Africa is also getting ready to roll out its version, with an annual income requirement of ZAR 1 M (~USD 53 K), making it comparable to Kenya’s income threshold.

The shared intent among these countries is clear: to invite remote workers who bring foreign income into their economies without competing with local labour. Digital nomads typically spend on housing, food, and leisure, benefiting local businesses.

These visa programs also have the added benefit of positioning the host nations as forward-thinking, modern destinations for remote workers, many of whom are highly skilled professionals in tech, design, and entrepreneurship.

Can Africa Deliver on its Promises?

While these initiatives are promising, there is scepticism about the actual implementation, particularly in Kenya. The country has a history of ambitious projects that fail to materialise. For instance, Kenya’s Startup Act was once hailed as a game-changer for its tech ecosystem but has yet to be fully realized. Similarly, the much-touted Konza Techno City, billed as East Africa’s tech hub, has faced delays and bureaucratic hurdles.

While the Class N Visa has officially been gazetted, Kenya’s track record raises concerns about how quickly it will be implemented and whether the infrastructure will follow.

Nonetheless, the appetite for innovation remains strong. Remote workers are likely to find Africa’s combination of affordable living, rich culture, and growing tech ecosystems appealing. And as Europe scales back its digital nomad incentives, African nations could capture a new wave of remote professionals seeking fresh opportunities.

The Future of Work in Africa

Africa’s digital nomad visa trend is part of a larger global shift in how and where work is conducted. As more professionals untether from traditional office environments, they seek locations that offer both professional opportunities and a high quality of life. African nations, with their varied landscapes and burgeoning tech scenes, could become major beneficiaries.

Kenya’s introduction of the Class N Visa is a sign of the times. As more countries follow suit, Africa could become a new hub for remote workers, bringing fresh talent and investment into the continent. However, the success of these programs rests on how well governments execute their plans, manage expectations, and ensure that the promised opportunities become realities.

For now, Kenya—and Africa as a whole—seems ready to embrace the future of work. Whether that future becomes a reality will depend on how well these nations balance ambition with execution.

How Fawry Made Bank In Fledgling Foray Into Tricky BNPL Scene

By  |  October 5, 2024

Egypt’s leading fintech company, Fawry, has marked a significant milestone by surpassing EGP 1 B (~USD 20 M) in total Buy Now, Pay Later (BNPL) disbursements just over a year after launching the service.

The BNPL sector, which allows consumers to spread payments over time without upfront costs, has been booming worldwide. Fawry, long established as a payments platform with services like bill payments, mobile top-ups, and e-commerce, saw an opportunity to expand into consumer finance, introducing BNPL as part of its growing portfolio in mid-2023. The quick uptake of the service points to strong demand in Egypt for flexible financial solutions, especially amid economic challenges.

CEO Eng. Ashraf Sabry emphasised the significance of this achievement, stating, “This milestone is a testament to the company’s ability to leverage its existing consumer base while introducing innovative services that cater to underserved segments of the population.” Fawry’s entry into BNPL, he noted, aligns with the company’s mission to drive financial inclusion in Egypt. By integrating BNPL into its broader suite of services, Fawry positions itself as a comprehensive financial platform.

The numbers are impressive. In just one year, Fawry’s BNPL business has generated USD 20 M in revenue. The company leveraged its digital infrastructure, particularly its myFawry app, which has over 10 million downloads, and the myFawry prepaid card, to fuel this growth. These tools allowed Fawry to seamlessly onboard customers and expand its reach, positioning itself ahead of many local competitors in the BNPL space.

However, the success comes in the context of Africa’s broader challenges in adopting BNPL services. According to Tobi Odukoya, CEO of Nigerian BNPL startup CDCare, “The high cost of credit in Africa poses a unique challenge for BNPL providers.” In Nigeria, the average interest rate is 16.5%, while retail profit margins sit between 5-10%, making it difficult for BNPL models to sustain profitability.

This reality holds for Egypt as well, where inflation and devaluation have strained consumer purchasing power. Nonetheless, Fawry has managed to navigate this tough economic landscape by focusing on essential goods and services, which are in high demand, particularly among low- and middle-income households.

Fawry’s foray into BNPL also signals a broader shift in the region’s fintech industry. Africa’s BNPL market is seeing increasing competition, with companies like South Africa’s PayFlex and Nigeria’s CredPal entering the fray. However, Fawry’s entrenched market position in Egypt gives it an edge. The company already processes more than 6 million transactions daily, serving over 52.5 million users each month. By embedding BNPL within its existing ecosystem, Fawry reduces the risk of customer churn and strengthens loyalty.

Fawry’s approach also taps into the cultural sensitivities around debt in Africa. In many parts of the continent, particularly in Muslim-majority regions, there is an aversion to traditional forms of credit. Islam prohibits interest-based lending, which limits the appeal of conventional credit products. Fawry’s BNPL service provides a viable alternative for these consumers, allowing them to make purchases on credit without the need for bank loans or credit cards.

Despite the promising start, the path ahead is not without challenges. BNPL companies face the risk of high default rates, and in Egypt, where financial literacy and debt management can be issues, Fawry will need to carefully manage this aspect of its business. Furthermore, as more players enter the BNPL space, maintaining its competitive edge will require continuous innovation. Fawry’s early success, however, positions it as a leader in Africa’s burgeoning BNPL market.

As Africa’s fintech sector continues to evolve, Fawry’s BNPL venture provides a glimpse of how established companies can expand into new territories while maintaining their core strengths. Whether Fawry’s success can be replicated in other African markets remains to be seen, but the company’s quick rise in Egypt’s BNPL scene sets a high bar for its competitors.

Nigerian Startups Have Fresh Tax Headaches In New Strict Regime

By  |  October 4, 2024

Nigerian startups are facing new tax regulations introduced by the Federal Government following strict changes quietly unveiled this month. The rules, which will take effect on January 1, 2025, promise to simplify tax compliance but could create fresh challenges for the country’s burgeoning tech ecosystem.

At the heart of the regulations is a requirement for businesses, including startups, to have taxes deducted at the point of payment. Entities like corporations, government agencies, and public authorities must withhold taxes before transferring payments to businesses. This method is designed to reduce tax evasion and ensure compliance but could add new layers of complexity for startups already navigating Nigeria’s tough business environment.

Startups Not Spared from the Tax Burden

The scope of the regulation, known as the “Deduction of Tax at Source (Withholding) Regulations, 2024”, extends across various types of income—capital gains, corporate income, and personal income—and applies broadly to businesses, regardless of size or sector.

Nigerian startups, which often operate on slim margins, are not exempt. However, companies with less than NGN 2 M (USD 1,197) in monthly transactions may sigh a little relief. These businesses are exempt from withholding tax deductions, but only if they can prove their Tax Identification Number (TIN) is valid.

For startups without a valid TIN, the penalty is steep: double the normal withholding tax rate. This puts even greater pressure on smaller businesses to maintain up-to-date tax records.

Remitting the deducted taxes is another significant element of the new regulations. Businesses are expected to remit these deductions to either the Federal Inland Revenue Service (FIRS) or the relevant State Internal Revenue Service. The deadlines are tight: FIRS requires remittance by the 21st of the following month, while state authorities expect remittances as early as the 10th.

Failure to remit on time carries its own set of penalties, including fines and administrative charges, which could further erode startup cash flow.

New Rules, New Headaches

Though framed as a means to streamline tax compliance, the new withholding tax regulations add an extra administrative burden on startups. Businesses are required to submit detailed returns for each deduction, including the name, address, and TIN of the payer. Receipts for deducted taxes must also be issued, and any misstep in this meticulous process could invite penalties.

These regulations arrive at a time when Nigerian startups are already navigating a complex environment. While some companies have scaled rapidly, others face a tougher road ahead contending with funding woes, layoffs, and valuation cuts.

The government has included some exemptions to soften the blow. Payments related to Real Estate Investment Trusts, securities lending, and compensation payments are all exempt from withholding taxes. Even so, the exemptions may be too narrow to provide substantial relief for many tech companies.

Startups that rely on payments from across borders will also need to consider double taxation treaties. While these treaties are meant to prevent being taxed twice on the same income, navigating them can be tricky for smaller firms with limited resources.

The upcoming tax regime follows closely on the heels of a broader trend in Africa, where governments are tightening regulations and enforcement in the tech startup space. Cryptocurrency platforms like OKX have already felt the pinch, announcing plans to exit Nigeria’s market due to “unfavourable regulatory conditions.”

For Nigerian startups, the 2024 withholding tax regulations present a new set of challenges, adding to the existing struggles of scaling in a competitive and often unpredictable market. The government’s promise of simplicity and ease may fall short for those tasked with complying with these new requirements, especially if their resources are stretched thin by the need to keep up with their tax obligations.

As the January 2025 implementation deadline looms, startups will need to quickly adapt to these new regulations, or risk facing penalties that could stifle their growth. While the intent behind the law is to foster better compliance and align with global standards, it remains to be seen whether this will truly ease the burden on Nigeria’s tech ecosystem—or create more tax headaches for its most innovative players.

Featured Image Credits: Alexander Oamen/Medium

GSMA MWC Kigali 2024
Press Release

GSMA MWC Kigali 2024 to Explore Role of Connectivity in Driving Socio-economic Growth Across Africa

By  |  October 4, 2024

GSMA MWC Kigali will return to the Kigali Convention Center from 29-31 October 2024. 

MWC Kigali, Africa’s largest and most influential connectivity event, will convene powerful innovators and political leaders from across the continent. It is geared towards driving the digital economy forward and enabling socio-economic growth. 

MWC Kigali will deliver a range of keynotes and panel sessions hosted by industry thought leaders and leading enterprises, focussed around the four event themesConnected ContinentThe AI FutureFinTech, and Africa’s Digital DNA. Recently confirmed speakers include  Airtel Africa’s CEO, Sunil Taldar; Amini’s Founder & CEO, Kate Kallot;  the GSMA’s Director General, Mats Granryd; the ITU’s Secretary-General, Doreen Bogdan-Martin; Lelapa AI’s CEO and Co-founder, Pelonomi Moiloa; MTN Group’s FinTech CEO, Serigne Dioum; Republic of Rwanda’s Minister of ICT and Innovation, Hon. Paula Ingabire; Take Back the Mic’s CEO & Founder, Derrick Ashong and, Wi-Flix’s CEO, Louis Manu.

For the first time in Africa, the GSMA Ministerial Programme will be hosted at MWC Kigali, marking a new chapter in the commitment to advancing the digital agenda in Africa. The programme will convene the most influential telecommunications leaders from across Africa to discuss policy and regulatory topics key to the region.

The Mobile for Development (M4D) team will again play a central role at the event, driving innovation in digital technology to reduce global inequalities. M4D will host the ‘Mobile for Development Theatre’, a dedicated space for keynote sessions, panels, and discussions. Themes will range from AI for impact and humanitarian innovation, agriculture and climate, to digital inclusion and gender. Also returning this year is the Mobile Money Leadership Forum, which will explore key trends and innovations in mobile financial services.

The MWC Kigali keynotes will cover Africa’s most pressing digital connectivity issues. Keynote 1 will discuss how digital technologies drive socio-economic development in Africa to address the continent’s unique challenges. Keynote 2 will focus on the transformative potential of AI, including how it can drive sustainable and inclusive growth across Africa. Keynote 3 will see speakers explore the rapid evolution of Africa’s Fintech landscape and the technologies impacting investment opportunities. Keynote 4 will explore how the evolving content landscape allows African content creators to be heard and celebrated globally. 

An agenda of GSMA Summits will be hosted during the event, inviting industry leaders and policymakers to discover the issues affecting enterprises in areas from network security to diversity in tech: 

  • The Security Summit will tackle the most pressing security challenges mobile network operators face today in the rapidly evolving cyber risk landscape. 
  • The Digital Summit will explore the digital economy’s potential in Africa, exploring how digital technologies and policy reform can drive significant socio-economic growth. 
  • The AI Summit will cover both the vast potential and the associated risks of AI technologies in Africa as the technology’s prevalence grows in the global economy. 
  • The 5G Summit will address the barriers preventing the technology’s widespread adoption and ways to unlock its potential for both enterprises and consumers. 
  • The Diversity for Tech Summit will focus on the urgent need for greater disability inclusion in Africa’s tech sector, ensuring that people with disabilities can access the tools and opportunities they need to succeed. 

MWC Kigali is held alongside the Africa Health Tech Summit and FEWA (Future of Education and Work in Africa), offering an in-depth exploration of connectivity challenges and opportunities in the health and education sectors. We are proud to have the support of our stellar line-up of sponsors, exhibitors, and event partners, including Africa CDC, Africa Union, Huawei, inABLE, MTN, the Republic of Rwanda, Smart Africa, and ZTE.

Register today to attend MWC Kigali, 29-31 October 2024
For more information, follow our updates on the MWC Kigali Press Zone or visit www.mwckigali.com. Accredited media are invited to register here for a complimentary pass, which is required for access to the press centre.

As Decline Looms In SA, Push For ‘Long-Overdue’ Startup Act Intensifies

By  |  September 30, 2024

South Africa’s tech startup ecosystem, once a leader in Africa, is now facing significant challenges. Industry stakeholders are increasingly vocal about the need for a dedicated Startup Act, which they argue is long overdue and critical to reversing the country’s slow decline in venture capital funding and startup growth.

Recent data paints a bleak picture. South Africa experienced a 41% year-on-year drop in venture funding in 2022, our comprehensive database, WT Elite, shows, and it recorded another decline last year.

Once a mainstay in the top two of Africa’s prominent “Big 4” tech ecosystems, South Africa has slipped down the pecking order in the last two years in terms of funding, coming 3rd and 4th in 2023 and 2022 respectively. These days, it risks losing its position to emerging ecosystems like Ghana and Tunisia, both of which are aggressively building more startup-friendly environments.

AfricArena, a Cape Town-based accelerator, has warned that South Africa is falling behind. “South Africa is now way below Nigeria in terms of growth in startups and funds raised. Egypt is now second in total startups and funds raised, and Kenya third,” the report states. Tunisia, which passed its Startup Act in 2018, has seen venture capital inflows swell significantly.

This decline isn’t going unnoticed. In a recent engagement with Parliament, the Startup Act Movement—a coalition of South African entrepreneurs—urged lawmakers to prioritise reforms that could ease exchange controls and improve the ease of doing business. These stakeholders argue that the restrictive regulatory environment is choking innovation and deterring both local and foreign investment.

Why a Startup Act?

Countries like Tunisia, Senegal, and Nigeria have already passed Startup Acts, and the results are clear. Tunisia’s Startup Act is credited with sparking a startup ecosystem boom, attracting international investors and dramatically increasing funding for tech startups. InstaDeep, a Tunisian AI startup, raised USD 100 M in a Series B round and was acquired for USD 685 M by Germany’s BioNTech in January 2023.

The success of these countries has prompted South Africa’s Startup Act Movement to push for similar legislation. Launched in 2014 and led by SiMODiSA; an industry-led initiative supporting startups, the movement has been instrumental in identifying barriers to growth for small and medium enterprises (SMEs).

Matsi Modise, a member of the steering committee, highlighted two major hurdles for startups in South Africa: restrictive visa requirements for foreign talent and exchange controls that limit financial flexibility. “We are not making it easy for talent to come into South Africa because we don’t have a very clear, straightforward, and easy-to-follow startup visa regime,” Modise said in a conversation with techCabal.

The introduction of a dedicated South African Startup Act could streamline visa processes, open up more funding opportunities, and create a clearer legal framework to protect intellectual property. Such reforms, stakeholders argue, would help reinvigorate the country’s tech sector and attract much-needed capital and talent.

Slow Government Response

Despite clear signs of stagnation, South Africa’s government has been slow to act. As AfricArena noted, the country has shown the slowest progress in drafting and implementing a Startup Act compared to its peers in the “Big 4.” This lack of urgency has allowed countries like Ghana to close the gap. Ghana, currently finalising its own Startup Bill, is increasingly seen as an attractive destination for venture capital due to its political stability and liberal business environment.

South African stakeholders have been engaging with the government for several years, with some positive developments. In October 2021, the Startup Act Movement met with the President, receiving what committee member Modise called a “positive response.” Since then, discussions have been ongoing with the Deputy Minister of Finance and the Minister of Science and Technology. However, no legislation has been finalised.

The lack of a dedicated framework is contributing to South Africa’s declining global competitiveness, observers believe, with the country now ranked 84th out of 190 economies in the World Bank’s Ease of Doing Business report, a drop from 82nd in 2018. Entrepreneurs say this is further evidence that the country needs swift and decisive regulatory reforms.

A Boost from International Partners

Despite the slow pace of governmental action, the Startup Act Movement has received international support. The UK-SA Tech Hub, a British High Commission initiative, recently provided a third round of undisclosed funding to help drive local policy reform. So far, the Tech Hub has invested ~USD 116 M into South Africa’s tech ecosystem, with a focus on enabling high-growth startups.

Milisa Mabinza, director of the UK-SA Tech Hub, believes that provincial governments could play a critical role in implementing reforms faster. “We believe the Government of National Unity can effect policy changes more efficiently at the provincial level,” Mabinza said.

The call for a Startup Act in South Africa is becoming increasingly urgent as the country faces the possibility of being overshadowed by more agile competitors. Without bold reforms, South Africa risks losing its position in Africa’s Big 4, and with it, much of the venture capital and talent that has historically fueled its tech sector.

As Mzwandile Masina, chairperson of the Portfolio Committee on Trade, Industry, and Competition, noted during recent parliamentary discussions: “In South Africa, obtaining loans for consumption is far easier than securing financing for productive ventures.” The Startup Act Movement hopes to change that by advocating for a legislative framework that can provide the support and clarity startups need to thrive.

While progress has been slow, the combination of mounting pressure from the Startup Act Movement, international support, and growing competition from other African countries may finally push the South African government to act. Whether it’s too late to reverse the decline remains to be seen, but for now, stakeholders are holding out hope for much-needed reform.

Debit Cards, Once A No-Brainer For Africa’s Hottest Fintechs, Turn Nightmare

By  |  September 27, 2024

For the past few years, Africa’s most promising fintech startups jumped headfirst into the world of debit cards. It seemed like a no-brainer. Partner with global payment giants like Visa and Mastercard, issue virtual and physical cards, and empower a new wave of African consumers to transact seamlessly online.

But things have taken a sharp turn lately. One after another, these fintechs are rethinking or outright quitting the very card services once heralded as a plus to their business models.

The latest fintech to make this strategic shift is Rise, a Nigerian investment startup notably in the news of late for completing a couple of acquisitions. However, Rise announced it would discontinue its virtual card services by September 30, 2024.

The reasons? The same challenges plaguing other fintechs: fluctuating exchange rates, unreliable card providers, and the rising costs of maintaining these services. In a message to its users, Rise highlighted that the pressures of exchange rate volatility and delays in issue resolution made it hard to continue offering the service.

This isn’t the first time a Nigerian fintech has stepped back from debit cards. Earlier this year, Carbon, one of the country’s leading neobanks, pulled the plug on its debit card operations, raising eyebrows across the ecosystem.

Addressing the nixing of the card product in a witty Substack post, co-founder Ngozi Dozie explained the move as part of a strategic reflection, hinting that the high operational costs, largely denominated in US dollars, were unsustainable. “With the benefit of hindsight,” Dozie mused, “I question why practically all neobanks are pushing cards or even getting into it.”

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For many of these fintechs, debit cards initially seemed like a logical extension of their mission to broaden financial access and strengthen appeal. Carbon, for example, launched its debit card service in June 2021 through a five-year partnership with Visa, aiming to provide customers with virtual and physical cards for seamless transactions across Africa.

The initiative was well-received, but the reality of running card services soon clashed with financial sustainability. In his commentary, Dozie questioned whether issuing debit cards was the right strategy for fintechs like Carbon. “If I had done the analysis… I don’t think I would have been that gung-ho about pushing a strategy to provide consumers with their fifth debit card,” he reflected, alluding to a lack of real differentiation in an oversupplied environment.

The economics of running card services in Africa are increasingly being scrutinised. Tunde Adewole, co-founder of Y Combinator-backed Bridgecard, told TechPoint last year that chargeback rates—where users dispute transactions—are a significant challenge.

Mastercard and Visa impose a 1% chargeback rate, but many African fintechs experience higher rates, resulting in extra costs. Adewole noted that these schemes also charge fees for declined transactions, which can range from USD 20 to USD 100. When coupled with the challenges of currency volatility and the heavy reliance on foreign exchange, the economics start to look less appealing.

On his part, Dozie reflected on the unsustainability of Carbon’s card business, citing the high fixed costs of card operations, which were exacerbated by dollar-denominated expenses. He also speculated that low disposable income and infrequent card use compared to Western markets may have made the economics less favourable. The fintech exec suggested that if one were to calculate the unit economics of running card services and compare fintechs like Carbon to traditional banks, the income potential for fintechs would likely fall short, raising questions about the long-term viability of offering cards.

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Some fintechs, like Payday, have responded to these challenges by tweaking how they offer card services. In 2023, Payday, which Bitmama later acquired, warned users that their cards would be terminated if transactions were declined due to insufficient funds. Similarly, Chipper Cash announced that it would begin charging a NGN 500 non-refundable fee for transactions declined due to insufficient funds—a clear indicator that fintechs are shifting from a “growth-at-all-costs” mindset to one focused on sustainability.

Union54, a Zambian fintech, also ended its virtual card services in 2022, citing chargeback fraud as a major factor. The startup found itself facing unsustainable losses due to fraudulent chargebacks, forcing it to halt operations and plot another path with its new product ChitChat. In a recent interview, Union54 CEO Perseus Mlambo told WT that ChitChat eschews the pitfalls that plagued the previous card business.

For fintechs still offering cards, such as Kuda, Moniepoint, and others, they’ve had to strike a balance between cost management and customer satisfaction. Some have opted for local alternatives like Verve, which helps sidestep the dollar-denominated costs of global card schemes like Visa and Mastercard.

While the discontinuation of card services has prompted speculation about these companies scaling down, fintech founders like Dozie argue that such moves should be viewed through a different lens. “The paucity of failure stories is actually a sign of a lack of experimentation,” Dozie remarked, urging observers to resist framing every service shutdown as a sign of distress. Instead, he suggested, this shift reflects a broader strategic realignment as fintechs reassess which products offer the most sustainable value in a challenging economic environment.

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The operational costs tied to debit cards—particularly those denominated in foreign currencies—have made fintechs rethink their priorities. The Nigerian naira’s depreciation has only exacerbated the issue, making it increasingly expensive to maintain services tied to the US dollar. In his post, Dozie revealed that Carbon’s card operation bill was denominated in USD, a major factor behind the decision to exit.

In the face of these challenges, some fintechs are pivoting. While cards may have initially helped attract users, they’re now seen as costly and inefficient for businesses with smaller margins or a more localised user base. For fintechs like Carbon, the decision to halt cards is part of a broader move to focus on products that align with long-term sustainability. Rise, too, is likely to focus on its core investment products as it navigates the shifting terrain.

The honeymoon period for African fintechs offering debit cards seems to be over. The strategy that once appeared obvious now seems fraught with challenges, from high operational costs to chargeback fraud and currency volatility. As these startups reassess their approach, it appears they are pivoting away from costly services in favour of more viable long-term offerings.

Africa’s Top Telcos Scramble To Cover Their Flanks As Starlink Encroaches

By  |  September 26, 2024

Africa’s telecommunications giants are gearing up for an unprecedented challenge as Starlink, the satellite internet upstart owned by famous tech billionaire Elon Musk, continues its aggressive expansion across the continent. Starlink’s promise of fast, reliable internet access, especially in remote areas, has sparked both excitement and concern, leaving traditional telcos scrambling to safeguard their turf.

Safaricom, Kenya’s largest mobile operator, is one of the most vocal players, recently stepping up its game in response to Starlink’s entry. In July 2023, Starlink began offering internet services in Kenya, rapidly signing up over 4,000 customers within a year.

To counter this, Safaricom has doubled the speeds of its fibre internet packages, with offerings such as 15 Mbps for KES 3 K (USD 23.00), up from 10 Mbps, and a massive increase of its 100 Mbps package to 500 Mbps, priced at KES 12.5 K (USD 97.00). Furthermore, Safaricom became the first ISP in Kenya to offer gigabit speeds, at KES 20 K (USD 155.00).

“We have enhanced our Home Internet speeds to meet the increasing demand and usage, providing reliable connectivity and enhanced value for our customers,” Safaricom CEO Peter Ndegwa noted in a statement. The move is being perceived as a response to Starlink’s market disruption, with its affordable and faster satellite services posing a significant threat to traditional ISPs and telcos.

Starlink offers speeds up to 200 Mbps in Kenya for KES 6.5 K (USD 50.00), a rate that undercuts many local providers. Additionally, its 50 GB package at KES 1.3 K (USD 10.00) and hardware rental option for those who cannot afford to purchase the KES 45 K equipment outright has further boosted its appeal. These offerings have made Starlink particularly attractive to underserved rural areas, where existing infrastructure is limited or non-existent.

Most recently, Starlink introduced a cheaper kit and a USD 30.87 monthly residential plan in Kenya, just days after Safaricom upped its speeds, taking the battle with the telecom heavyweight even further.

However, Safaricom’s response to Starlink is not limited to upgrading internet speeds. The company has petitioned Kenya’s Communications Authority to introduce stricter regulations for satellite providers like Starlink. Safaricom has argued that satellite operators should be required to partner with local mobile network operators instead of operating independently.

The telco, which has invested heavily in local infrastructure, raised concerns about the accountability and compliance of satellite services that lack a physical presence in the country. “We believe the regulator should ensure a level playing field,” a Safaricom spokesperson implied in its communication to the government.

These sentiments are echoed beyond Kenya. Telecom companies in Zimbabwe, Nigeria, and Cameroon have expressed similar frustrations over Starlink’s free rein, accusing it of unfair competition.

Starlink’s ability to enter markets without building out the expensive physical infrastructure required for traditional networks has stirred unrest among operators who have invested millions of dollars in laying cables and building mobile towers. In Zimbabwe, Starlink’s arrival led ISPs like Liquid Home, the largest fixed ISP, to slash prices, while state-owned TelOne partnered with Eutelsat’s OneWeb to offer satellite internet in a bid to fend off competition.

The broader African market is seeing a similar shake-up. In Nigeria, within two years of launching, Starlink became the country’s third-largest dedicated internet provider. It has built new ground stations across three Nigerian states and partnered with Africa Mobile Networks to provide satellite backhaul to over 100 rural base stations. Meanwhile, Starlink’s monthly pricing and flexible hardware rental options continue to attract customers from both rural and urban regions.

Yet, telcos are not backing down without a fight. In Zimbabwe, TelOne and other providers are racing to deploy competing satellite internet services, while in Kenya, Safaricom is offering new bundled family plans, combining mobile data, SMS, voice, and home internet at a discount. These packages, which can be shared among five family members, are aimed at adding value in ways that Starlink’s satellite-only service cannot replicate.

Analysts predict that the competitive pressure from Starlink and other Low Earth Orbit (LEO) satellite providers like OneWeb and Telesat will only grow. Starlink’s appeal lies not only in its speed but also in its ability to offer services to areas where traditional networks have struggled. However, while Starlink’s model of bypassing the need for physical offices and large-scale infrastructure may seem ideal, it does present a challenge for governments, particularly regarding tax revenues and regulatory oversight.

In spite of that, with interest in Starlink’s potential to bridge the digital divide, it appears that its footprint in Africa will only grow. South Africa, for instance, is in talks with Musk to introduce Starlink after holding out initially, with Communications Minister Solly Malatsi stating, “They can fill in the gap that the mobile network operators are unable to currently fill through the limitations of their broadband infrastructure.”

Starlink’s future success on the continent will depend on how effectively it can scale and maintain affordable pricing in remote areas while navigating regulatory challenges from local authorities keen on protecting their domestic telecom providers.

For Africa’s major telcos, the arrival of Starlink and similar LEO providers marks a new era of competition that requires innovation and adaptability. Whether through boosting fibre speeds, offering bundled services, or lobbying for stricter regulations, Africa’s telcos are gearing up to cover their flanks as Starlink muscles in.

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Safaricom Responds to Mounting Pressure from Starlink with Internet Speed Upgrades

By  |  September 25, 2024

Safaricom, Kenya’s leading mobile operator, has introduced a significant upgrade in its internet speeds for home and business customers in a move to stay ahead of intensifying competition.

With an eye on the evolving competition of the market, this marks the second time the telecommunications giant has enhanced its data speeds in less than 2 months, a strategy likely driven by the rising competition from international players such as Starlink.

Since its launch in June 2023, Starlink’s satellite technology has introduced a fresh dynamic to Kenya’s internet market. As a global satellite provider, Starlink has offered a new and highly competitive option for internet users, pushing Safaricom to up its game.

In response to this new competition, Safaricom has upgraded its internet packages significantly, an effort aimed at staying ahead in the market.

One of Safaricom’s most recent moves is the introduction of a new ultra-fast 1000Mbps (Gigabit per second) Platinum plan, priced at KSH 20 K (USD 155) per month. This ultra-fast plan is designed for heavy users such as gamers, content creators, and virtual reality enthusiasts, offering a compelling alternative to Starlink’s offerings. For instance, while Starlink provides speeds of up to 200Mbps, Safaricom’s new Platinum plan sets a higher bar, making it the first local provider to deliver gigabit speeds for home use.

To further solidify its position, Safaricom has made across-the-board upgrades to its existing plans. Customers who previously subscribed to a 10Mbps connection can now enjoy speeds of 15Mbps for the same price of KSH 3000 (USD 23). Similarly, the 40Mbps package has been doubled to 80Mbps at KSH 6300 (USD 49), and the premium 100Mbps package has been increased fivefold to 500Mbps at KSH 12.5 K (USD 97) per month. These enhancements are part of Safaricom’s broader strategy to offer more value without increasing the cost, ensuring its customers can perform demanding online activities such as high-definition streaming, gaming, and large data transfers with ease.

Complementing these changes is the introduction of the Family Share plan, an integrated solution that combines mobile voice, data, SMS, and home internet into one package. This plan, which can be shared among up to five family members, promises to offer convenience and cost savings, particularly through a 20% discount on the Bronze plan compared to purchasing the services separately.

Peter Ndegwa, Safaricom’s CEO, emphasized that these changes are part of the company’s efforts to deliver both a superior experience and enhanced value to its customers. “We have enhanced our home internet speeds to cater to increased demand and usage, ensuring reliable connectivity for our users,” Ndegwa stated. He highlighted that the company’s new offerings were designed to handle even the most demanding internet activities, including cloud computing and virtual reality, further cementing Safaricom’s commitment to its customer base.

The company’s focus extends beyond residential clients. Safaricom has also revamped its Business Fibre plans, offering new speeds of up to 1Gbps for medium and large enterprises, ensuring that businesses enjoy the flexibility and reliability they need. For instance, the 15Mbps shared option, tailored for micro-businesses, comes with 5GB of mobile backup data, while larger enterprises can take advantage of backup options over fibre, 5G, or wireless connectivity. The introduction of features like 24/7 proactive monitoring and 99.99% uptime makes these plans even more attractive to enterprise customers looking for a seamless experience.

Safaricom noted that it continues to expand its fibre network, adding over 3,000 kilometres in the last financial year, and bringing its total coverage to over 17,000 kilometres. The telco also claims it has its network extension has seen an influx of new customers, with over 370,000 homes and 32,000 businesses now connected to Safaricom’s fast and reliable internet services.

However, despite these improvements, Starlink continues to present a formidable challenge. Priced at KSH 6,500 (USD 50) per month with the option of a 50GB package for KES 1,300 (USD 11), and offering flexible rental options for its equipment, Starlink’s satellite service is especially appealing in remote areas where fibre expansion remains costly or impractical. Starlink’s rapid growth in the country, with over 4,000 customers by mid-2024, is a clear indicator of the competition ahead.

Recognizing the growing threat posed by Starlink, Safaricom’s response to this challenge has not only been technological but also regulatory. In July 2023, the company successfully lobbied the Communications Authority of Kenya to regulate satellite internet providers, arguing for a level playing field to protect local operators. The regulator backed Safaricom, highlighting the need to safeguard local operators and ensure a balanced playing field.

As this battle between terrestrial and satellite internet services intensifies, the ultimate beneficiaries are likely to be Kenyan consumers. With Safaricom and Starlink pushing each other to offer faster speeds, more reliable connections, and competitive pricing, the landscape for internet access in Kenya is set for a transformative shift, bringing better service to homes and businesses across the country.