Afridigest Week in Review: Agent-driven acquisitions

+Multi-trance Series A +Physical ubiquity +Crypto & blockchain use cases +Frontier giants +Future of money +Shadow economy +Africa EdTech 50 +Podcats, Videos, & more

Emeka Ajene

Oct 25, 2021

The Afridigest Week in Review is a must-read weekly recap for Africa-focused founders, executives, and investors, as well as interested observers.

Welcome back, friends! Since last week’s Monday digest, I published a Thought Circle piece on crypto & blockchain in Africa. Let me know what you think 🙏

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Week 42 2021

📰 Deal of the Week

AGENT NETWORKS AS A VECTOR FOR VALUE CREATION

Capricorn Digital, parent company of Baxi, a Nigerian SME-focused payments provider operating a nationwide agent network with a presence in all 36 Nigerian states, is being acquired by Pan-African payments company MFS Africa (subject to approval from the Central Bank of Nigeria).

Baxi provides a wide range of last-mile services including cash-in/cash-out, money transfer, account opening, and bill payment through a network of 90,000+ agents; it processed over $1 billion worth of transactions through the first nine months of 2021.

Deal consideration is 100% cash and while the deal size wasn’t disclosed, it’s said to be the second-largest acquisition in Nigeria’s fintech space, behind Stripe’s ~$200M purchase of Paystack last year.

💡 Why it’s the deal of the week: Agent networks are a key interface to reach the continent’s underserved population — not only for digital financial services players, but for a large variety of digital innovators; the deal provides further confirmation of agent networks as a vector for value creation across the continent.

⛏️ Go deeper:

Nigeria expansion: MFS Africa has a footprint of 320M mobile wallets across more than 35 African countries, and with the deal, MFS expands its network into Nigeria. With Baxi as a key node in its network, MFS customers can make regional & global payments to & from Nigeria.
History & Vision:
- MFS Africa acquired Beyonic just over a year ago (see Week 27 2020’s Digest)
- The MFS vision is to be present in all 54 African countries & to provide “the foremost, currency-agnostic, real-time hub for payments on the continent, … enabl[ing] people to transfer money the way they can call each other”
Read about the deal from MFS Africa’s Founder & CEO: “It took a village to make this bold move. And bold it is. It is also the right one. It is what is needed to build a digital payment infrastructure that will cover the entire continent and last 100 years. It is what is needed to solidly anchor that infrastructure in the fabric of the largest economy on the continent.” — Dare Okoudjou

🔦 Other deals

KENYA + NIGERIA + EGYPT + SOUTH AFRICA

Asante Financial Services Group, a Kenyan AI-powered credit & digital financial services provider to MSMEs, raised $7.5M of a multi-tranche Series A led by Goodwell Investments with participation from Sorenson Impact Foundation, Forsage Holdings, & others — Asante is looking to raise a second tranche of funding under the same round in early 2022; the company has sustained an average ‘all-in default rate’ of 2.5% and has grown its lending activities over  650%  since Q1 2021
Sendbox, a Nigerian tech-enabled fulfillment platform for e-commerce and social commerce, raised an $1.8M seed round from 4DX Ventures, Enza Capital, FJLabs, Golden Palm Investments, Flexport and Y Combinator — The three year old company has reached over 10,000 merchants & has made more than 200,000 deliveries (of which 35%-40% are international) since launch
ILLA, an Egyptian tech-enabled logistics platform, raised a $2M seed round co-led by Watheeq Financial Services and Golden Palm Investments, with participation from LoftyInc Capital Management, Kepple Africa Fund, Cubit Ventures, Flat6Labs Cairo, AUC Angels, and Oqal Angel Network — Since its 2019 launch, ILLA has completed over 250,000 transactions/deliveries from over 65 clients spanning a distance of over 5,000,000 km
Brass, a Nigerian provider of B2B banking solutions for SMEs, raised a $1.7M seed round from Ventures Platform, Hustle Fund, Acuity Ventures, Uncovered Fund, and others — Brass has 5,000+ B2B clients for its complete banking solution and has disbursed over $2M in six months to two dozen customers in its Brass Capital private beta program
The Africa Blockchain Center, a Kenyan organization building blockchain capacity and solutions, raised a ‘seven-figure’ amount from Next Chymia Consulting HK Limited — The ABC will use the funds to set up operational structures in Kenya, Tanzania, Zambia, Nigeria, Uganda and South Africa
Elmawkaa, an Egyptian construction technology startup, raised a six-figure seed round led by Flat6Labs — the startup has onboarded >1K suppliers on its platform, with GMV reaching over $1M
Efreshli, an Egyptian online interior design platform, raised a $550K seed round
OneHealth, a Nigerian online pharmacy, raised an undisclosed amount from Akazi Capital, Growth Capital by CcHub, and others
Brayfoil Technologies, a South African provider of morphing wing solutions for renewable energy systems, raised an undisclosed amount from Katapult Ocean
BixBio, a South African genomics startup, raised an undisclosed amount from the Illumina Accelerator

DEBT

Tugende, an Ugandan tech-enabled asset-financing platform, received a $5M debt facility from Goldfinch — Tugende has over 28,000 active clients and has financed over $50M worth assets with loan loss rates under 1%
FairMoney, a French/Nigerian credit-led neobank, received an undisclosed debt facility from TLG Capital — this comes three months after FairMoney’s $42M Series B; the company has over 5M users, 1.6M of whom are unique bank account holders, and its average loan size is $35.

ADJACENT DEALS

d.Light, a global provider of distributed solar energy solutions, raised $15M led by Inspired Evolution, with participation from Dutch development bank FMO, Norway’s Norfund, Sweden’s Swedfund, Shell New Energies, and KawiSafi Ventures, a $100M private equity impact fund — The funds raised are in addition to the $10M obtained in May from Proparco; the company has raised over $200M total in debt & equity.

📚 Reads of the Week

DIGITAL VS. PHYSICAL UBIQUITY

A thoughtful read that contextualizes the growth in VC funding levels across the African continent and explores where the (venture-scale) opportunities lay

“"There are venture-level returns to be earned in Africa, but compounding will not happen if we are satisfied with just ‘bringing the internet’ to [insert] industry on the continent, especially if most are excluded from said internet.”

🥇 “The B-Side of African Tech” by Stephen Deng
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AFRIDIGEST THOUGHT CIRCLE

From cheap cross-border peer-to-peer payments to hedging against devaluation to inclusive decentralized finance to NFTs to blockchain-based customs clearances, and more, read opinions from leading figures at the frontiers of Africa’s cryptocurrency & blockchain space about the most exciting use cases for the technology in the African context.

“Blockchain could play a huge role in transforming financial inclusion across the continent, especially in the informal economy [that] the traditional banking industry has struggled to serve… As a decentralized platform open for anyone to use, blockchain technology not only offers lower barriers and a more inclusive system, but also makes it economically viable to onboard this section of the economy.”

🥇 “The most exciting applications of cryptocurrency & blockchain in the African context” — featuring leaders from Paxful, Helicarrier, AZA Finance, Adanian Labs, Bitmama, Yellow Card, Fonbnk, Bitnob, Luno & Afriex
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LIFE HAS ITS LIMITS

An interesting read containing a practical taxonomy of Indian/emerging market consumers.

“There are three Indias: India Unlimited, India Unconnected, and, in between those two, the India of 1.5 GB…. To go from 1.5 GB a day to limitless data is a rite of passage. You’ve joined the top echelons of Indian society.”

“The life and times of the 1.5 GB Indian” by Shivam Vij

📢 Today’s a good day to be altruistic. Share this with a colleague.

The Afridigest Week in Review is a must-read weekly recap for Africa-interested founders, executives, investors, and observers. Send it to someone who should be reading it.

📚 Quick Hits

FOR YOUR READING PLEASURE

Frontier giants: Companies to watch in emerging markets — Afridigest community members Sacha, Hayden, and Steven, along with your humble author, had the opportunity to write for The Generalist about exceptional growth markets companies that should be known by a broader audience
What if central banks issued digital currency? — Central Bank Digital Currencies take out many of the costs and risks implicit in the traditional system. If customers no longer need to physically deposit cash, then spending on physical infrastructure is a complete waste of money. the system is unnecessarily slow and expensive, and cross-border transfers are extortionary.
The SaaS metrics that matter — One of the best features of SaaS businesses is how easy they are to measure. Only a handful of metrics really matter: Revenue growth; Retention; Sales efficiency / Unit economics; Margins; Capital efficiency; & Engagement.
The future of money: A complete revolution — Increasingly, fintech isn’t just about stealing the incremental customer, or participating in the evolution of the industry from analog to digital. It is a fundamental overthrow of how things have been done historically: a complete revolution
Building a “community-first” company — The next evolution of companies will be created in public with early customers, partners, and supporters. They’ll be community-owned and operated, building upon the playbooks created by early NFT and play-to-earn projects. Founders can’t skip the community-building part anymore; it’s essential to company building.
Why we crave software with style over “branding” — It’s almost better to be different in an old way than the same in a new way. Evaluating software by its style — and how it makes us feel — recognizes tech as a part of our society and identity. Software has become so integrated into our lives that it is no longer simply a utility.

Bonus:

Payments are eating the word (PDF) — A report from J.P. Morgan on the POWER+ (Platforms, Online, Wallets, Embedded, Real-time) mega-themes shaping the future of payments

🙈 Visual of the week

SHADOW / HIDDEN / GRAY / INFORMAL ECONOMY

“The shadow/informal economy includes all economic activities which are hidden from official authorities for monetary, regulatory, and institutional reasons.

Monetary reasons include avoiding paying taxes and all social security contributions, regulatory reasons include avoiding governmental bureaucracy or the burden of regulatory framework, while institutional reasons include corruption, the quality of political institutions and weak rule of law.”

Source: Shadow Economies Around the World: What Did We Learn Over the Last 20 Years? (IMF Working Paper - 2018)

🕵️‍♀️ In case you missed it

NEWS & ANNOUNCEMENTS

Co-founders of Kenya’s Wapi Pay 'step aside' from their roles as CEO & Executive Director pending an investigation of alleged assaults captured on video
- This comes after Kepple Africa announced that it’s relinquishing the rights of its stake in Wapi Pay, noting zero tolerance of such conduct
- Wapi Pay previously raised a $2.2M pre-seed round in Week 31 from Kepple Africa, MSA Capital, Transsion Holdings, EchoVC, Future Hub, and Gobi Ventures
Egypt's state-run epayments company ‘e-finance for Digital and Financial Investments’ (EFIH.CA) raised over $370M in its IPO — The IPO, Egypt’s largest in local currency terms ever and the biggest in dollar terms in 14 years, should boost the country's privatization plans in the coming years
Appzone launches next generation payment infrastructure for Africa on Blockchain — this is the foundation of Appzone's plans to build Africa's first decentralized payment network that allows inter-bank transactions to be processed directly between banks without any intermediary.
Google launched TaskMate in Kenya — It’s a crowdsourcing app that lets smartphone users get paid for doing various tasks; the app is also available in a pilot phase in India
Meet the 8 African startups selected for Techstars Toronto October 2021 batch — Lenco, OurPass, Healthtracka, Rentsmallsmall, Kyshi, Duhga, Fleri, and PayDay.

ESSAYS

Amee Parbhoo, Managing Director or Accion Venture Lab, writes ‘Embedded finance: More than a trend’ (Accion blog)
Malika Anand, Head of Insights and Learning at BFA Global’s Catalyst Fund, writes ‘Digital Finance for Climate Resilience: An Urgent Opportunity for Startups and Stakeholders in Emerging Markets’ (NextBillion.net)
Abubakar Idris, reporter at Rest of World, writes ‘Open Banking’s route to payments in Nigeria’ (Medium blog)

PODCASTS

Afrobility discussed how Fawry became one of the largest tech companies in Africa
The Flip discussed the identity and data layers of the Africa Stack
Connecting Africa discussed startups, funding, & failing fast with Zachariah George

VIDEO

Watch HolonIQ’s 2021 Africa EdTech 50
Watch the playback of Endeavor Nigeria’s 2021 Catalysing Conversations
Watch the playback of the TechCabal 2021 Future of Commerce segment featuring Onyekachi Izukanne, Co-founder & CEO of TradeDepot; Tracey Turner, Founder & Chairman of Copia Global; Kelvin Umechukwu, Co-founder & CEO of Bumpa; and Fatma Nasujo, Global Head of Operational Excellence at Sokowatch

LA FIN

Feedback, questions, notes for the community corner? Or just want to say hi? Message me on Whatsapp or Twitter (@eajene) or email me.

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