“[After April 12], the Reserve Bank expects that all the online payment platforms will be operating smoothly for all transactions,” the bank said in a statement.

Following the introduction of the ZiG on April 5, online payment platforms in the country could not transact with the Zimbabwean dollar, the predecessor to the ZiG. This led to consumers being unable to pay for goods and services online. Banks and payment providers stated that they could not support payments because they had to recalibrate their systems to the new currency. 

Some Zimbabweans expressed concern about the lack of organisation regarding the new currency. “Bank balances have been converted to ZiG but its circulation starts on 30 April and I can’t use it for online payments, so how will I make any payments between now and April 12?” said a consumer who preferred anonymity.

Online transactions have been slow to garner widespread usage as Zimbabweans have developed a culture of cash-based transactions in more stable currencies including the South African rand, Botswana pula, and US dollar. This stems from a fear of having money kept in bank accounts abruptly converted by the government to unstable currencies, as has happened in the past.

However, a sprouting of online payment solutions over the last few years has seen adoption gradually increase in Zimbabwe. Technologies which has gained prominence include Innbucks, which allows customers to receive loose change at restaurants; Ecocash, a digital wallet; and O’Mari, a superapp which includes mobile money, insurtech, and investech products.

“Terms of the deal are not being disclosed at the moment,” Piggyvest told TechCabal in an official statement confirming the deal.

Two sources with knowledge of the matter put the investment amount at $3 million. Until this investment, Piggyvest had only disclosed $1.1 million in venture funding.

The fintech giant said it had received $5 million in venture funding since 2016, a detail that has not been previously reported. 

The recent investment by Flutterwave comes amid PiggyVest’s broader push to raise external funding, which has been in the works for more than two years, according to people familiar with the situation. Disagreement over valuation terms and the global economic downturn have affected fundraising, those people said. Flutterwave’s investment allows the payments company to have a deeper relationship with PiggyVest while the latter forges ahead with its investment round.

Flutterwave did not immediately respond to a request for comments. 

PiggyVest’s last major venture funding round was in 2018, when it raised $1.1 million from a roll call of angel investors. In 2021, Nigerian investment firm VFD Group said it had acquired a 12% stake in the company and became a major partner in the rollout of Pocket and Patronize. VFD Group’s acquisition of 12% in PiggyVest was a mix of cash investment and a merger of a competing VFD Group product, people with knowledge of the matter told TechCabal.

PiggyVest has maintained decent growth while claiming to be profitable. The holding company posted annual revenue of around $25 million in 2021, while its 2022 revenue grew slightly to roughly $27 million, said people familiar with the company’s finances. Those figures have not been previously reported. 

Founded in 2016, PiggyVest is as old as Flutterwave and was created by four co-founders as a savings platform for young Nigerians looking for a better way to stash their money and learn financial discipline. The app allows people to keep funds in their savings accounts on the app and accrue interest on their deposits. 

Customers can only access their funds four times a year or incur a fee penalty for early withdrawal. Since its creation, the platform said it has paid out over ₦1.1 trillion ($1.37 billion*) to customers by the end of 2022 through fixed withdrawal timelines. The platform disbursed ₦400 billion ($497.3 million) last year alone and claims it now has over 4.5 million registered users on its wealth management service.

However, PiggyVest’s business model has evolved over the last few years. The platform originally started out as a deposit holding service that invests consumer funds in government assets, such as bonds and treasury bills. Until the end of 2022, PiggyVest’s website claimed the company had a partnership with AIICO Capital, a licensed Nigerian fund manager, where customer deposits were “warehoused” and managed. The partnership helped PiggyVest navigate Nigeria’s regulatory environment, although it’s unclear how this partnership is structured. 

In recent years, PiggyVest has been reconstituted as a holding company called PiggyTech Global Holdings Limited, incorporated in the UK and Nigeria, according to information on the company’s website and B2B Hints, a business registration directory. 

The company operates multiple services, including PiggyVest, the wealth management app; Pocket, a consumer payments app; and Patronize, a point-of-sales product that allows retail stores to accept payments offline. Since mid-2023, PiggyVest’s website shows the holding company now has a fund manager license from the Securities and Exchange Commission (SEC) through an affiliate company, PV Capital, allowing it to manage customer assets as a fund manager.

*Exchange rate used is $1 = N804.4

The memo affects companies that own superagents, payment solution service providers (PSSPs) or switching licenses. By regulation, financial services with only these licenses cannot directly accept consumer deposits, particularly through bank transfers. According to the Central Bank of Nigeria, over 100 entities currently hold these licenses in Nigeria.

Over the last few years, some of these companies have expanded to offer more financial services directly to consumers. They avoided regulatory enforcement by securing relevant licenses such as mobile money or microfinance banking licences, which allow them to accept deposits.

Nigerian fintechs such as OPay, PalmPay and PiggyVest’s Pocket App each operate with a mobile money license; while Moniepoint owns a microfinance bank, a switching and a superagent licenses, allowing it to operate a digital banking platform and a network of offline agents to provide cash-in and cash-out services across the country.

Other companies have partnered with banks to offer deposit services building on top of an open-banking architecture that has led to the rise of virtual accounts and the “pay with bank” feature for accepting consumer payments. This year, Paystack announced its partnership with Titan Trust Bank, a licensed commercial bank, to offer virtual accounts and terminals allowing merchants to accept payments with bank transfers for multi-person businesses.

Nevertheless, some companies with superagent, payment solution service providers (PSSPs) or switching licenses have styled themselves as deposit-taking institutions without an accompanying license or relevant bank partnership. The memo from NIBSS directly targets such companies, and it could lead to a purge of these services from the list of approved institutions when consumers make fund transfers.

New directives and misinformation 

The memo from NIBSS has triggered misinformation in Nigeria’s public space. One list circulating on social media caused a stir after it claimed that several approved mobile money services and payment companies would be affected by the NIBSS order.

“The recent NIBSS circular has zero impact on our services because we are not deposit-taking like a bank,” Flutterwave, a licensed payments service provider, explained in a tweet posted on Thursday.

“We wanted to reassure you that the recent NIBSS circular does not impact Paystack-Titan or any other Paystack services,” Paystack wrote on X, formerly Twitter. “We developed Paystack-Titan in partnership with Titan Trust Bank in a way that allows the service to operate compliantly, and it passed review from NIBSS,” the company added.

“Moniepoint MFB is a CBN-licensed Microfinance Bank, Moniepoint, which also holds a switching license, said. “As such, we are a deposit-taking financial institution.”

“Your funds are safe and secure,” Opay told customers on Thursday. “OPay is a Mobile Money Operator (MMO) licensed by the CBN and insured by the NDIC… the focus [of the NIBSS memo] is on Payment Service Solution Providers, Switches and Super Agents.”

Other Nigerian fintech companies, such as PalmPay and Nomba, the Y Combinator-backed startup providing financial services to small businesses, have also informed customers that the NIBSS memo has no impact on their services. PalmPay is licensed as a mobile money operator, allowing it to hold deposits. Nomba says it works with only licensed partners to facilitate consumer transactions.

The purge of unapproved deposit-taking institutions could happen over the next few days or weeks. However, it is unclear if NIBSS or the CBN will proceed with additional enforcement action.

A Kenyan court sitting in Nairobi has given Twiga Foods, Kenya’s most funded e-commerce platform, and Incentro, a Google Cloud reseller, five months to resolve their dispute over how much Twiga owes Incentro. Incentro claims Twiga owes it $450,000 in unpaid bills and a delayed bonus from Google. But Twiga claims it only owes $94,000. 

According to Incentro, Twiga fell behind on monthly payments on a three-year contract for cloud services as the e-commerce firm shifted from high growth to try to become profitable. 

After both parties missed an earlier court deadline to reconcile their invoices last week, the court will now hear the case on March 13, 2024. The $3 million contract at the heart of the dispute committed Twiga to using Google Cloud Services over three years through Incentro, a Google Cloud reseller.

In October, TechCabal reported that Incentro was demanding up to $261,878.75 from Twiga in owed bills. Incentro says its claim has now gone up to more than $450,000. The amount includes $92,000 which Incentro says it was supposed to receive from Google for additional services that are part of perks Google offers to large customers. Google did not pay this bonus because Twiga failed to sign off on the work on time. In a 158-page affidavit filed at the Milimani courts last week, Incetro alleged, among other things, that Twiga paid more than 559,000 Kenyan shillings (roughly $3,900 at the time) in value-added-tax based on unpaid invoices which totalled more than $239,000. 

But Twiga denies owing Incentro this much. The tech startup, which still uses Google (but not through Incentro), says it is in talks with Google Ireland Limited, the primary provider of Google Cloud Services. 

“There is an amount Twiga believe we owe and there is an amount Incentro believe Twiga owe,” Twiga CEO Peter Njongo told TechCabal via text. “As a sign of good faith, Twiga has paid a deposit of 50% of the amount we believe we owe.” Incentro said it did not receive the transfer but got a letter the evening before the court case saying Twiga had paid $47,000. According to Incentro, the payment notice showed the transfer was made to an NCBA account which it had closed.” Incentro claims it has not yet received the payment.

Companies in countries where Google’s invoice billing is not available use Google Cloud through resellers in order to better control spending on cloud services instead of being billed directly. They still pay the same as if they enabled direct billing via a debit card, but also get additional services and more support. Incentro says the contract it entered into with Twiga means it has to pay Google Cloud’s Africa distributor DigiCloud the balance of the $3 million if the contract is not cancelled by Twiga and Google Cloud. 

“We are mindful that should we not hear from Google Digicloud that [sic] will have no option…but to demand full repayment of the outstanding total commit value,” part of a letter dated October 12, 2023, from Digicloud CEO Gregory MacLennan, read.

The letter which was filed as an attachment to an affidavit pointed out that Digicloud will only release Incentro from the payment obligation if Google cancels the agreement; otherwise, Digicloud would pass on any default penalties to Incentro “in order for Incentro to pass on the same quantum release (and/or associated penalties) to Twiga”. 

Recall that last week, Twiga Foods announced that it had raised “significant capital” from existing investors, including Creadev and Juven. This new capital was supposed to be used to pay 100 vendors Twiga is indebted to. Twiga has previously raised more than $150 million from 25 investors since it was founded in 2013 making it one of the most VC-backed tech companies in Kenya.

Editor’s note: A previous version of this piece had wrongly said the amount Incentro is claiming includes $209,000 in bonuses from Google. The correct amount is $92,000. This article was also updated to clarify that Incentro says it still has not received any payment despite Twiga claiming to have made payments.

The 7-year-old company is leaving Poland and the Czech Republic 3 years after taking its small business lending business to Eastern Europe. It will now focus on Lydia Collect, a loan recovery tool initially developed last year for Lydia’s in-house SME lending business but has since become a linchpin for Lydia’s new business direction. “Nigeria’s tech-savvy lending ecosystem is the ideal launchpad for our solutions, which support data-driven decision-making,” Tunde Kehinde, co-founder and CEO of Lidya, said in a press statement.

Lidya Collect was built on top of the technology that underpins Nigeria’s Global Standing Instruction (GSI), Carolina Rodriguez, Lidya’s communications lead, told TechCabal. The GSI is a last-resort system that allows connected lenders to directly debit the accounts of loan defaulters in other banks. Lidya said it worked with the Nigerian Inter-Bank Settlement System (NIBSS) to build Lidya Collect on top of the existing GSI infrastructure. 

The digital lender also announced Lidya Bridge, a credit assessment offering launched in October 2023. Bridge will analyse 300 data points from borrowers’ bank statements to make the process of assessing new loan customers smoother. Lidya will focus on selling Collect and Bridge to micro-finance institutions and other financial service providers. The company says it has already signed more than 50 lenders and microfinance banks.

The company says it has analysed more than $50 billion of credit application data from 100,000 potential customers. 32,500 of those small businesses have received $150 million since its founding in 2016.

Miishe Addy, Jetstream Africa co-founder and chief executive, simply wanted to help small exporters and importers in Ghana send cargo abroad. But after her company commenced operations in 2019, Addy and her co-founder, Solomon Torgbor, who had led a team in the customs unit of the global shipping liner, Maersk, quickly realized that growing a logistics business in Africa meant becoming the financial partner for her customers.

For Jetstream Africa, it meant supporting small businesses with a cash advance of between $17,000 to $100,000 in asset-backed loans. The credit facility helps small exporters complete orders as international demand for quality African products grows. 

When Jetstream started operations in 2019, the hypothesis was that by grouping cargo together, they could reduce the rates each cargo owner had to pay. Miishe’s team thought that doing this would make it easier for SMEs in Ghana to ship anywhere they wanted to around the world. “We were retaining customers [but] their topline wasn’t growing and ours wasn’t either,” Addy told TechCabal. Despite Jetstream’s aggregation, it was still too expensive to sell or buy goods internationally. So the company’s early assumption that simply bundling cargo into container-sized units would reduce costs and spur export growth had to be modified after months of experimentation. “What we discovered is that it doesn’t matter how much you discount freight. If customers do not have enough liquidity to buy and sell goods, the discount is irrelevant,” Addy said in a call with TechCabal.

Unlike other regions, African exporters are forced to take more risks when they sell goods to international buyers. “Folks who are producing goods on the continent probably have the worst payment terms of any trading parties in the world. If they’re selling cargo they don’t get paid until it gets to the buyer. If they’re buying cargo they have to pay a front,” Addy said. Since the cargo moves across great distances and are been imported or exported to people who do not know each other in person. Both parties need to trust that the goods are been shipped, contain what was ordered, and that the payment will arrive when due. 

African banks hesitate to offer loans to SMEs because the typical SME customer in Africa has far fewer assets than what banks are willing to accept as collateral. 

Trade finance—an umbrella term for the different financial arrangements that are used to source for and pay short-term trade loans—is one of the oldest banking functions. According to the World Trade Organisation, as much as 90% of global trade depends on trade financing. But in Africa, the gap between the demand for and supply of trade financing continues to widen. A 2019 estimate by the African Development Bank (AfDB) put the gap at $81.8 billion, analysts say it may have now reached $120 billion a year. A joint study released in 2022 by the WTO and the International Finance Corporation (IFC) on trade finance gaps in the four largest economies of the Economic Community of West African States (ECOWAS) — Côte d’Ivoire, Ghana, Nigeria, and Senegal — claimed that raising the share of trade supported by trade finance in the four countries to the average African level of 40% would result in an extra 8% in trade flows annually. In ten years, the gains would reach $140 billion in additional trade.

Export/import logistics runs on several parallel layers. There are the practical realities of moving a shipment from its point of origin to the port, dealing with customs rules, and warehousing. There is the vagaries of dealing with shipping lines. And the exporter needs the financial muscle to pull all of this off. Said Addy: “There is no type of supply chain that is as complex as a cross-border supply chain where those three things need to not only go well, but they have to be precisely synchronized in order for a shipment to get to B.” 

What is new about Jetstream’s model is that the company wants to bring as many layers in the export/import process as possible under one umbrella. It first started to do this in Ghana when it acquired the licence to handle customs formalities and coordinate with shipping carriers. The industry term is clearing and forwarding. Sales from clearing and forwarding is a small chunk of Jetstream’s revenue, but gross margins from the segment can be as high as 90%, Miishe confided.  For customers, taking Jetstream’s money means they do not have to wait for long to get paid, and can consequently take more orders from international customers. Due to wild fluctuations in the naira’s value relative to the dollar, Jetstream does not offer its financing product in Nigeria.

Adding credit to the core business of moving goods across borders for small businesses and a growing cohort of big enterprise customers means taking on more risk. But since the company is the freight forwarder and customs agent in both countries (it recently acquired a clearing and forwarding licence in Nigeria) it also gives Jetstream Africa the opportunity to hedge its risks. Something that standalone trade financiers and merchant banks struggle with. Whenever Miishe’s company lends (typically only up to 30% of the amount required), they also get to hold 100% of the inventory in leased warehouses in addition to full control over export documents. In the case of exports, buyers make payment to Jetstream Africa which is then disbursed to the seller less loan amount, interest, and fees.

The original goal of the business remained the same. By helping small businesses buy or sell internationally, Miishe and Torgbor hoped to build a venture-scale business. But to do that they needed to take on even more responsibilities. So Jetstream had to become both a freight forwarder and financier. In mid-2021 Jetstream announced a $1 million trade finance program after raising $3 million in seed funding. According to Techpoint, the trade finance program has since reached $9 million. Jetstream Africa which disclosed an additional $13 million pre-series A funding in January 2023 hopes to raise its first growth-stage financing in 2024.

Cet article est aussi disponible en français

First published 19 November 2023

Africa investors need to learn to make VC math work instead of debating whether the continent needs unicorns or camels. VCs who focus on the math will be fine regardless.

Within days of each other last week, Financial Times and Business Insider published interesting articles about investors who are buying up startups that were counted as dead in venture capital portfolios. Startups that fall into this category include the ones struggling to raise additional capital (and are facing certain extinction) because of too-high valuations from their last round. But the list also overwhelmingly includes companies that are simply not growing fast enough for VC tastes.

The thesis is simple. Imagine that a solid business is at risk of shutting down because it had the misfortune to fall on the wrong side of the power law—the theory that only two out of 10 investments generate most of the profits VCs make—and is running out of capital. Almost no one will want to put in capital at the elevated valuations of 2021. But what if these companies, many of which have been silently written down by their investors, have the option to continue life as slow-growing but stable companies? According to Business Insider and the FT, some investors are offering a path to this.

UK-based Resurge Growth Partners and Tikto Capital, San Francisco-based Arising Ventures and even the American private equity giant KKR are some of the firms choosing this strategy. Given the steep decline in venture capital funding made into African startups and the rise of a “VC may become PE” narrative, which I wrote about earlier this year, I want to know if this is a viable strategy for some savvy investors out there, and why not, if not.

Here’s a thought experiment. If venture capital investors (and non-investor-observers) in Africa are calling for profitability from startups (some of them barely out of their seed-stage), would it not make sense to add dividend payouts to the requests? If the desire to correct the last two years of investment excesses is turning venture capitalists in Africa into equity analysts who want dividends on cash flow, why not abandon the VC game entirely?

Partner Content:
All eyes on the Africa’s Business Heroes fifth anniversary and grand finale: Why you should attend

Much of the recent stories about African startup-land have been dour, as you well know. The unfortunate result is that former growth-at-all-costs investors are now more conservative than KKR. To my mind, there are only two forks at this junction. It is either the venture capital story is not working, or the venture capital story is working just as designed and investors misread the book all along.

If the venture capital story is not working then maybe investors in Africa need to create something new. If however the philosophies that underpin venture capital are intrinsically undamaged, then we ought to look elsewhere to find the mismatch in expectations.

---

Article continues after this ad

How many startups received funding last quarter? What sector received the most funding and how many acquisitions were disclosed in the last quarter (hint not more than 7). Get the full State of Tech in Africa Report for Q3 2023 here.

Downloand now

I took the liberty of looking for the mismatch and it seems to me that (at least) part of the mismatch stems from seeing venture capital from at least three distorted perspectives.

The first is as a social and economic restructuring vehicle, where VC funds are expected to turn the economies startups are building in around. Unfortunately, while venture-funded startups can take advantage of adverse or tail economic winds, they rarely create economic breakthroughs or pitfalls by themselves. In other words, good VC-backed startups can be created in times of economic plenty or during economic adversity, but VC-backing rarely creates prosperity or adversity.

The second distorted perspective is seeing startups as a channel to build SMEs. And the third (and most egregious) perspective is treating venture capital as a means of personal enrichment without recourse to the owners of the invested capital.

As a result of the distorted perspectives around VC money and the 2021 deluge of capital, VC (globally not just in Africa) has been rightly criticised. Some of that criticism has called for the entire VC model to be reorganised (especially in Africa) to create gazelles, camels or some other NatGeo-type wild animal. For the uninitiated, “camels” are startups that supposedly prioritise survivability and profitability and are valued at less than a billion (i.e are not unicorns).

But the caveat to preaching and creating a new (and convenient model) of venture capital is that the more than $10 billion of VC money that has so far been invested into African companies (2020 to 2023) was attracted to the continent by a narrative of VC-style returns. Thus if anyone proposes something different (in the guise of advocating for more “reasonable” expectations. Then they have to justify why investors should prefer SME-style returns from backing African companies where there are VC-style returns to generate in other markets. Good luck to anyone having this conversation with LPs.

Partner Content:
Tap into the modern-nostalgia of the Tecno PhantomV flip 5G Phone

Meanwhile, the investors who still retain belief in the VC-philosophy seem to have been stunned into inaction. Or they try to role-play the hardball tactics better associated with private equity investments.

Both approaches are a mistake because they mix up consequences and results. Africa’s venture ecosystem does not necessarily need “camels”. It just needs an acknowledgment that most African companies in existence today public and private alike, are simply not billion-dollar companies. Some of the best investors have understood this and invested accordingly. Instead of obsessing over billion-dollar valuations, they obsess over making the VC math work.

When people call for venture capital in Africa to adopt an African model, it might just be an admission of a lack of the underlying principle of venture capital. Venture capital math does not work out automatically because one creates billion-dollar companies. It works because a portfolio is structured to invest in fund-returners. That is where the math starts from. So while unicorns are important, a hypothetical $10 million fund which invests $100k pre-money to acquire a 9% stake (post-investment) does not necessarily need a $1 billion exit to return its fund.

This is an oversimplified example. But the point is that the unicorn/camel/zebra/zoo argument is a distraction, maybe even a cop-out for backing SMEs. VCs that focus on the math will be fine.

Let us, however, indulge the argument because it is not altogether without merit.

---

Article continues after this ad

Every Sunday Africa’s technology industry leaders, investors, operators, and regulators turn to Next Wave for insightful commentary on where the continent’s digital economy is headed. In an era of news and noise, Next Wave is the opportunity to reach decision makers in Africa’s fast growing world of technology with your unique message.

Get in touch today

In this case, instead of swinging between venture capital and private equity when interest rates in the US permit, or creating a mocktail of both, I have another suggestion. What if the spectators (and investors) who complain about the VC-asset class (and argue over unicorns and camels) band together to create a third force with an investment mandate that strictly find and back Africa’s camels.

Like the examples in the Financial Times story I mentioned earlier, investors could specialise in backing and turning around VC-castoffs that have great camel potential. The way I see it, there are more than a few overlooked small tech ventures. And any savvy investment outfit that bites the bullet with a solid fixed turnaround team can take VC castoffs, put solid structures underneath them, and prime them for sustained SME-style growth.

There is so much value here no doubt mixed with chaff! So if you’re an investor who believes in creating camels, zebras and other realistic creatures of the NatGeo Wild variety, what’s stopping you from going after them?

---

Abraham Augustine,

Senior Reporter, TechCabal.

Feel free to email abraham[at]bigcabal.com, with your thoughts about this edition of NextWave. Or just click reply to share your thoughts and feedback.

---

Partner Content:
NIGCOMSAT is open for business, leverages broadband service to launch edtech solution

We’d love to hear from you

Psst! Down here!

Thanks for reading today’s Next Wave. Please share. Or subscribe if someone shared it to you here for free to get fresh perspectives on the progress of digital innovation in Africa every Sunday.

As always feel free to email a reply or response to this essay. I enjoy reading those emails a lot.

TC Daily newsletter is out daily (Mon – Fri) brief of all the technology and business stories you need to know. Get it in your inbox each weekday at 7 AM (WAT).

Follow TechCabal on Twitter, Instagram, Facebook, and LinkedIn to stay engaged in our real-time conversations on tech and innovation in Africa.

If you liked this edition of Next Wave, please share with your friends. And feel free to reply with thoughts and feedback. We welcome those.

18, Nnobi Street, Surulere, Lagos, Nigeria	View in Map

You received this email because you signed up on our website or made purchase from us.If you know longer wish to recieve these emails, please unsubscribe

]]> https://techcabal.com/2023/11/20/next-wave-the-obsession-over-unicorns-or-camels-is-weird/feed/ 0 https://techcabal.com/2023/11/18/nala-wants-to-make-rwanda-settlement-hub/ https://techcabal.com/2023/11/18/nala-wants-to-make-rwanda-settlement-hub/#respond Sat, 18 Nov 2023 14:50:27 +0000 https://techcabal.com/?p=123818 NALA Money, the Tanzanian business and consumer cross-border payments fintech backed by Bessemer Ventures and Accel, says it plans to make Rwanda a settlement hub for its East African remittance business. Making Rwanda a settlement hub means that all international money transfers that Nala processes for beneficiaries in East Africa will first terminate in Rwanda before it is settled into the accounts of beneficiaries across the region.

 In June this year, Flutterwave one of Africa’s most-valued privately held fintech, announced a similar plan after it acquired a payment service provider (PSP) licence in Rwanda.

Nala Money, which allows residents in the United Kingdom, Canada and the United States to send money to 9 African countries, recently acquired a licence from Rwanda’s apex financial regulator, the National Bank of Rwanda. The licence will allow the company to cut out middlemen and offer cheaper international money transfers, Nicolai Eddy, chief operating officer of Nala told TechCabal. “It means we can aggregate the payment channels ourselves,” Eddy said, “We want to go deeper and a PSP licence also means that we can process remittance payments for third-party providers and  integrate with local banks and telcos.” 

A PSP licence in Rwanda means NALA can offer money transfer services through established players like Western Union, potentially opening up a new distribution and customer acquisition front for the business. Previously a fintech like NALA would have to rely on payment aggregators like Cellulant, DPO Payment or Onafriq (previously MFS Africa) in order to disburse payments to its customers in Rwanda. Per the World Bank, remittances as a percentage of GDP reached 3.6% ($474 million) in 2022. Altogether, Kenya Uganda, Tanzania and Rwanda received roughly $6.36 billion in remittances last year, World Bank data shows.

Rwanda hopes to become a leading hub for financial services firms. The 2022–2027 fintech plan of Rwanda’s ICT Ministry says it hopes to build, “the narrative that Rwanda is the gateway for entering the African fintech market.” Some of the continent’s biggest fintechs already operate in the country with ChipperCash and Paystack being the most recent entrants.

]]> https://techcabal.com/2023/11/18/nala-wants-to-make-rwanda-settlement-hub/feed/ 0 https://techcabal.com/2023/11/13/norrsken-bets-on-kigali/ https://techcabal.com/2023/11/13/norrsken-bets-on-kigali/#respond Mon, 13 Nov 2023 15:29:28 +0000 https://techcabal.com/?p=123441 Sweden’s Norrsken Foundation hopes a $20 million investment in its first hub outside Stockholm will birth Rwanda’s first impact unicorn.

On Wednesday, November 8, 2023, Rwanda’s president, Paul Kagame formally opened Norrsken House Kigali. The 12,000-square-metre campus is a $20 million bet by Sweden’s Norrsken Foundation that Kigali will become a nerve centre for African technology companies.

“Rwanda is an excellent testbed and a proof-of-concept hub,” said Niklas Adalberth, the 42-year-old founder and chairman of the Norrsken Foundation in his keynote address. If the Kigali hub is successful, Norrsken will set up similar hubs in other countries. The foundation defines success as being the home for billion-dollar impact businesses and a thriving community of companies that could create profitable businesses that are a net positive for the planet.

It’s a big win for Rwanda; with a gross domestic product of around $13 billion and growing public debt, the country needs private-sector investment. “The country can be small but the value we create can be very high,” President Kagame told guests at Norrsken Africa Week.

Adalberth was only 24 when he co-founded Klarna, the Buy-Now-Pay-Later company that is Europe’s most valuable private company. Adalberth exited the company in 2016 and founded the Norrsken Foundation to support impact businesses. Since then he has progressively sold down his stake in Klarna to less than 1%. Half of the proceeds were committed as an initial investment into the Norrsken Foundation.  Since its creation in 2016, Norrsken’s house in Stockholm has become the centre of the city’s impact entrepreneurship space in a country that is considered Europe’s impact hub. By bringing the right mix of investors, entrepreneurs, and talent, the foundation hopes to recreate the same success in Kigali.

Built on the former site of École Belge de Kigali, a Belgian school founded in 1965, the Kigali campus is the second such hub the foundation has put up since it acquired one of the grand halls of an old tram station in downtown Stockholm for its first facility. Two weeks ago, the foundation opened its third house, a 3-storey, 10,000-square-metre building in Barcelona, Spain. The Kigali campus which has been operational since January 2022 hosts roughly 1200 members, East Africa director, Pascal Murasira said at Norrsken Africa Week. The event is Norrsken’s first impact entrepreneurship and investment meeting held outside Stockholm.

Wooing capital to Kigali

Two weeks ago, Norrsken22, an independently managed African growth-stage VC announced it had raised $205 million to invest in growth-stage tech companies in Africa. Last week, Norrsken22 partners were part of fund managers at Norrsken Africa Week. An event the Norrsken Foundation said was organised to bring capital allocators and tech founders together in person. The Norrsken Foundation is a founding partner of Norrsken22.

This first Africa event was held in the Norrsken campus in Kigali on the 8th and 9th of November. More than 1,500 entrepreneurs, investors, government officials, and academia from Europe, Southeast Asia, the Middle East, and across Africa attended the 2-day networking-focused meeting. The event also brought together the different arms of the Norrsken Foundation, including Norrsken22, the $205 million Africa-focused growth stage fund, and Africa Seed Fund, an early-stage investment outfit. African startups that had been part of the Norrsken Accelerator, a global impact-focused accelerator based in Stockholm were also represented by their founders. 

Kigali’s big push for private capital

Since 2009 Rwanda has aggressively sought to position itself as a diversified investment hub in East Africa. In recent years, the focus moved to tech investments. A $30 million Rwanda Innovation Fund backed by the African Development Bank (AfDB) was launched in 2021 to invest in funds and directly back tech companies in East Africa. Per Statista, Rwandan tech startups raised only $1.9 million in 2022, a year when African startups raised the most ever. It was a decline from 2021’s $6.8 million figure. 2023 has been better. Kasha, a Rwandan startup raised $21 million in Series B funding, and Eden Care, a Rwandan insuretech became the first from the country to be accepted into YCombinator, the famed San Francisco-based accelerator program. 

Convincing investors to invest in the country remains challenging. But the country’s new financial centre wants even more. It wants investment funds to be incorporated in the country and has created a special fintech program that boasts Flutterwave, Onafriq (formerly MFS Africa), Chippercash, NALA, and recently, Paystack as members. 

Just before Norrsken Africa Week, it hosted a breakfast meeting for investors. One early-stage investor who had attended the meeting told TechCabal that her firm was still weighing their options. Another early-stage investor said her VC firm was in the process of setting up a new fund in Rwanda and scouting for office space. They favour Norrsken, which is home to at least 3 other VC firms (Katapault, Angaza Capital, and Renew Capital). Earlier this year, on the sidelines of the Inclusive Fintech Forum, the Africa Business Angels Network (ABAN) and Kigali International Financial Centre signed an MoU to pave the way for the network to set up its catalytic Africa fund in Kigali.

Entrepreneurs also suffer from indecision. One e-logistics startup founder who spoke with TechCabal was impressed with Kigali, but still weighing options. She considers a location that will facilitate access to capital without being too far from the business operations as ideal. “It’s a chicken and egg problem,” the founder conceded.

Resolving this tension between capital and founders is the thrust of the Norrsken Foundation and its ecosystem partners.

---

This article was edited to correctly state the area of Norrsken’s campus in Kigali. We incorrectly reported it as 4,400 square meters.

]]> https://techcabal.com/2023/11/13/norrsken-bets-on-kigali/feed/ 0 https://techcabal.com/2023/11/06/next-wave-founder-mental-health/ https://techcabal.com/2023/11/06/next-wave-founder-mental-health/#respond Mon, 06 Nov 2023 15:02:22 +0000 https://techcabal.com/?p=123023

Cet article est aussi disponible en français

First published 5 November 2023

“A startup is a lonely place. You are working on something that no one believes in, that you’ve been told time and time again will never work. It’s you against the world.” – Marc Randolph, co-founder, Netflix.

The mental health of tech founders isn’t often talked about in our ecosystem. In the early days of building, a founder is likely to be constantly travelling, bootstrapping, wearing many hats in the business, and often, neglecting themselves and forgetting to take a break. These can take a cognitive and psychological toll on them, leading to stress and anxiety, poor judgement, and a breakdown in their personal relationships.

Founders go through a lot of mental stress—imposter syndrome, doubt, and the justified need for validation from their team, investors, and customers.

Fundraising is a primary source of stress for founders | Chart by Mobolaji Adebayo, TC Insights

“I think being a founder is a lonely journey,” Dennis Mary, founder of web3 startup Yuki, told me. “Nobody seems to understand you. This includes your team and family. Being a founder can be mentally draining, especially when you face rejections from applications like Techstars, for instance. You can begin to start questioning yourself. You have to figure things out all the time. Sometimes, when there is bad news, you have to absorb it first before thinking about how to pass it on to your team.”

Partner Content:
Surviving the Nigerian market: Entrepreneurship nuggets from Chuks Aylor

Ope Onaboye, CEO of e-commerce fulfilment startup Renda, said that many founders are scared of failure but would never make that struggle public. This fear of failure is further compounded by the current drought of venture capital funding, macroeconomic shocks, and worst of all, the witnessing of the shutdown of other once-promising startups. Sometimes, having no support system to lean on by way of family, friends or spouses can be disheartening, especially when they are not in the same field as the founder and therefore cannot understand what the founders are building.

---

Article continues after this ad

The National Science Week (NSW) is a hallmark event in Uganda’s calendar, celebrated every year to honor Science, Technology, and Innovation (STI). The event will feature a dedicated Investor Summit, bringing together some of the world’s leading pan African Venture Capitalists, Investors, and Startups..

Find out how you can participate

Seventy-two percent of founders have said that launching their business had a negative impact on their health, according to information obtained from data-sharing platform, Startup Snapshot. The data which sampled over 400 early-stage startup founders across the globe reported that 81% of founders are not really open about their stressors, fears and challenges, similar to what Onaboye said. Twenty-three percent are seeing a therapist, according to the aforementioned report.

It’s important that founders guard their health jealously as they solve hard problems daily. Inadequate sleep can lead to health problems like hypertension, diabetes, obesity, depression, heart attack, and stroke. A combination of healthy food and exercise can make it easier to get the required amount of sleep required by the body to live a better quality of life. Simple exercise routines daily can give the body the much-required vitality to do its best work while avoiding terminal illness.

Founders must take breaks when they begin to experience burnouts; they must set realistic goals for their companies and not feel undue pressure to prematurely expand the business, say, regionally. Setting realistic projections to achieving success is important for tech entrepreneurs to save not just themselves but their team. A founder must not allow the business to revolve around them, their personality, or whims. The business’s operations must not cease if its founder dares to go on leave. Delegating work and getting more team members involved in the running of the business should be encouraged through open workplace communication and the documentation of progress on projects and the establishment of enduring systems for the business.

---

Article continues after this ad

Every Sunday Africa’s technology industry leaders, investors, operators, and regulators turn to Next Wave for insightful commentary on where the continent’s digital economy is headed. In an era of news and noise, Next Wave is the opportunity to reach decision makers in Africa’s fast growing world of technology with your unique message.

Get in touch today

---

Joseph Olaoluwa,

Senior Reporter, TechCabal.

Feel free to email joseph.olaoluwa[at]bigcabal.com, with your thoughts about this edition of NextWave. Or just click reply to share your thoughts and feedback.

---

We’d love to hear from you

Psst! Down here!

Thanks for reading today’s Next Wave. Please share. Or subscribe if someone shared it to you here for free to get fresh perspectives on the progress of digital innovation in Africa every Sunday.

As always feel free to email a reply or response to this essay. I enjoy reading those emails a lot.

TC Daily newsletter is out daily (Mon – Fri) brief of all the technology and business stories you need to know. Get it in your inbox each weekday at 7 AM (WAT).

Follow TechCabal on Twitter, Instagram, Facebook, and LinkedIn to stay engaged in our real-time conversations on tech and innovation in Africa.

If you liked this edition of Next Wave, please share with your friends. And feel free to reply with thoughts and feedback. We welcome those.

18, Nnobi Street, Surulere, Lagos, Nigeria	View in Map

You received this email because you signed up on our website or made purchase from us.If you know longer wish to recieve these emails, please unsubscribe

]]> https://techcabal.com/2023/11/06/next-wave-founder-mental-health/feed/ 0