Afridigest Week in Review: Fintech for the formally included

+A torrent of transactions +The rise of African mega-cities +The Tiger Global blueprint +Top 10 SSA remittance recipients +Non-obvious opportunities across the ecosystem +Videos, News, and More

Emeka Ajene

Nov 23, 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! Thanks for your understanding regarding the delay with this newsletter. And thanks to Shannon, Yele, Tarek, Adetolani, Peter, and Tobe for great calls/exchanges in recent weeks 💪

If you’re new, welcome 🙌 — you’ll receive a weekly digest like this one every Monday (or soon after) and, generally (but not always), an original essay/article on Saturdays. For past essays and digests, visit the archive.

Week 46 2021

📰 Deal of the Week

SIMPLYIFING BANK ACCOUNT-BASED PAYMENTS

Ozow, a South African EFT-focused payments platform, raised a $48M Series B led by Tencent with participation from Endeavor Catalyst and Endeavor Harvest Fund.

Unlike payments fintechs elsewhere across the continent that may be obliged to focus on ‘financial inclusion,’ at least in some form, Ozow operates in an environment where ~80% of citizens have a bank account. Consequently, its solution simplifies payments for South Africa’s ~50M bank account holders, allowing them to pay in seconds across e-commerce, PoS, e-billing, and P2P channels with instant electronic fund transfers (EFTs).

EFTs now represent ~30% of the volume of e-commerce sales in South Africa, up from ~4% before Ozow’s 2014 launch. Today, EFTs are South Africa’s second most popular payment option for e-commerce purchases after cards, and Ozow has been able to capture most of the growth in the sector — it disclosed last year that it had captured over 70% of South Africa’s instant EFT market.

💡 Why it’s the deal of the week: The deal appears to be Chinese internet giant Tencent’s first lead round on the African continent, following a trend of globally renown investors and institutions not only participating in Africa’s startup ecosystem but taking leading roles as well. It also serves as a reminder of the many differences between South Africa and other sub-Saharan markets.

⛏️ Go deeper:

Traction & Use of Funds: Ozow is currently adding ~120,000 users and processing ~$100M in transactions every month. It sees itself as an active acquirer in the future and plans to expand to Namibia, Ghana, Nigeria, and Kenya over the next six months. In South Africa, it’s focused on, among other things, the deployment of a Rapid Payment Programme ecosystem that allows users to make real-time payments using just their mobile numbers or email addresses.
Tencent in Africa: While this looks to be Tencent’s first round as a lead investor, the Chinese internet giant previously participated in the Seed and Series A rounds of both Paystack and Helium Health. (It also invested in now-defunct South African startup M4JAM via WeChat Africa, a joint venture between Tencent and Naspers.)
A Look Back: Hear from Founder & CEO Thomas Pays about how Ozow (then i-Pay) worked five years ago, its origin story, and more in this engaging CNBC Africa interview from 2016:

🔦 Other deals

A TORRENT OF TRANSACTIONS

African Health Holdings, an operator of 40 tech-enabled healthcare facilities across Kenya, Ghana, and Nigeria, raised an $18M Series A led by Asia Pacific Land and Natural World Limited, with participation from TRB Advisors, Breyer Capital, M3, Valiant Capital, Kepple Ventures, SUNU Capital, and others — AHH currently offers telemedicine services in Ghana that are used by ~200,000 patients annually; it will use this funding to expand its telemedicine offerings to Nigeria, Kenya, and elsewhere
NFTfi, a South African marketplace for NFT collateralized loans, raised a $5M Series A fund led by 1kx with participation from Sound Ventures, Maven 11 Capital, Scalar Capital, Kleiner Perkins, and various others — Over $26.5M has been disbursed on NFTfi’s platform since its 2020 launch and participating lenders have earned over $500K in interest
AURA, a South African AI-enabled medical and security response platform, raised a $4.7M Series A led by MultiChoice Group with participation from KLT Holdings and Buffet Investments — The company has over 400,000 active users in its network
Drugstoc, a Nigerian e-health pharmaceutical distribution startup, raised a $4.4M Series A led by AAIC with participation from VestedWorld, the German Development Bank, and others — The startup connects ~400 manufacturers to ~3,200 doctors, hospitals and pharmacies
Kippa, a Nigerian financial management and bookkeeping app for SMEs, raised a $3.2M pre-seed round led by Target Global with participation from Entrée Capital, Alter Global, Rally Cap Ventures, and others — Kippa has witnessed $300M in “recorded transactions” on its platform and has registered 130,000 active merchants since its June launch
Voxcroft Analytics, a South African open source intelligence and risk analytics company, raised a ~$2M Series A from Knife Capital — VoxCroft team is spread across 13 countries and it has main offices in South Africa and the United States; the company accurately predicted the recent insurgency in northern Mozambique and enabled responses to riots in South Africa
Shuttlers, a Nigerian tech-enabled shared mobility startup focused on commutes to and from work, raised a $1.6M seed round led by VestedWorld with participation from Interswitch, Rising Tide Africa, Launch Africa, EchoVC, Consonance Investment, CcHub Syndicate, CMC XXI, Alsa, ShEquity, Five35, Sakore, and Nikky Taurus — Shuttlers has over 100 buses on its platform, has recorded over 2 million trips since inception, and sells more than 6,000 bus tickets daily.
Career 180, an Egyptian career advising & skills development platform, raised $200K from EdVentures — Career 180 plans to merge with Egyptian freelance platform Freelance Yard to create an integrated, youth-focused employment platform
Mecho Autotech, a Nigerian platform connecting car owners with mechanics and car part vendors, raised an undisclosed pre-seed from Ingressive Capital, Ventures Platform, Tekedia Capital Investment, and others — Mecho participated in Y Combinator's Summer 2021 batch and has 7,000+ verified technicians on its platform, which it claims is Nigeria’s largest network of certified automotive technicians
Aboki Africa, a Nigerian provider of digital foreign accounts for Africans, raised an undisclosed amount in its pre-seed round led by Abdul Hassan (CEO of Nigerian open banking infrastructure provider Mono) with participation from Niche Capital, Ingressive Capital, and others
KIWE, an Egyptian peer-to-peer money exchange platform, raised an undisclosed amount led by dfin (Digital Finance Holding) with participation from EFG Hermes, Marakez for Development, and others
LazerPay, a Nigerian startup building a gateway for crypto payments, raised an undisclosed amount from Nestcoin, a Nigerian crypto-focused venture builder and operator — LazerPay allows individuals anywhere to accept stablecoins like USDC and USDT for online payments; this is Nestcoin’s first announced investment
T40 (Travel 4.0), a Nigerian mobility tech solutions provider, announced it raised undisclosed funding earlier this year from LabEight Africa and Greentec Capital — T40 has so far partnered with over 40 intercity transport and logistics companies and processed over 6,000 bookings in 2021; the startup is currently raising a $500K pre-seed round

OTHER DEALS: CRYPTO INCUBATION, IMPACT VC

Four African startups each received $125K as a part of their selection into the third batch of Crypto Valley Venture Capital’s CV Labs:
- Mazzuma, a Ghanaian international remittance and mobile money platform
- HouseAfrica, a Nigerian digital property validation system
- Pravica, an Egyptian blockchain-based B2B communication startup
- CARMA, a Nigerian P2P data marketplace for the unbanked
Norrsken, an impact VC fund, announced that it invested undisclosed amounts into PesaChoice, a Rwandan fintech offering salary advance microloans, and VIEBEG, a Rwandan a Rwandan health-care focused logistics platform — Norrsken also announced that the beta-open its Norrsken House co-working space & entrepreneurship hub in Kigali is less than a month away

ACQUSITIONS

Tyro, an Egyptian online tutoring platform, is acquiring Nafham, an Egyptian creator and curator of educational content linked to public K-12 chool curricula, under a share-swap agreement — Nafham boasts ~6M annual users and +150M video views while Tyro has completed over 50K paid sessions and is financially self-sustaining; the transaction “will make [Tyro] the largest edtech platform in the MENA region providing both, live online tutoring as well as recorded educational video content”
OfficeBox, a South African office supply-focused e-commerce company was acquired by SovTech, a custom software development company, for an undisclosed amount

📚 Read of the Week

A MEGATREND TRANSFORMING THE CONTINENT: URBANIZATION & THE RISE OF MEGA-CITIES

A detailed multimedia profile from the Washington Post of five cities predicted to be among the world’s largest by 2100: Lagos, Khartoum, Kinshasa, Mombasa, and Abidjan

“Lagos is projected to become the world's most populous city by 2100. Other cities in Africa will also see a steep rise in their rankings, with African cities making up 13 of the top 20 by century's end.”

🥇 “Africa’s rising cities: How Africa will become the center of the world’s urban future” by Max Bearak, Dylan Moriarty, and Júlia Ledur

📢 Spread the love. Share this with a colleague.

The Afridigest Week in Review is a weekly recap for Africa-interested founders, executives, investors, and observers. Share it with someone who should be reading it. 🙏

📚 Quick Hits

FOR YOUR READING PLEASURE

Tiger Global: how to win — Tiger’s current private market thesis is simple: we are still in the opening stages of the digital revolution. It’s developed a fund capable of executing on this thesis around the world, around the clock, ceaselessly and sleeplessly. For now, at least, it is the closest thing venture capital has to a winning machine.
Stop letting OKRs masquerade as strategy — OKRs must be a complement not a substitute for strategy. One problem is the ‘multiplicity of objectives’ that leads companies to call each objective/key results loop a ‘strategy,’ but an organization (at a given level) has one strategy, not multiple strategies.
The fuel & the engine: A simple metaphor to create an efficient marketing function — The fuel is all the stuff that you say to your audience. The engine is all of the channels and processes you use to get the fuel out to your audience, plus the tools and metrics you use to track efforts. When you combine the fuel and the engine, your business grows fast.
GitHub for X — The next decade will do to cognitive tasks what Uber did to unskilled labor. The "Github" model will make knowledge work more flexible, compensation more fluid, and the overall environment more dynamic and volatile.
Seed rounds at $100M post-money — In a world where we are seeing more and more $100M valued seed rounds, one has to ask the question what are the investors expecting?

Bonus:

Pay & get paid: How NFC & QR codes changed the way we do things — A detailed look into the history & evolution of NFC & QR codes, how they converge in payments, and how South Africa’s Ukheshe leverages the technologies
Talent wars: What effect is big tech having on the Kenyan tech ecosystem? — About 10 years ago, we had few well-funded startups and demand for developer and design talent in the ecosystem was low. But this changed in less than 5 years with increased fundraising and investments in tech talent and innovation teams from corporates. This was the first talent squeeze we saw and what we are seeing at the moment is a repeat.
Predictions around African Fintech — If banks cannot become tech companies in terms of their recruitment practices, customer-centricity, and leading with tech, then over the next 10 years, a retreat into banking as a utility is likely, with continues consolidation and the emergence of big four utility-like banks in most markets
Playtime is over for mobile money, Wave is here [French] — Wave has proven that it’s possible to practice another business model in the field of mobile money, one that facilitates true financial inclusion. In a continent where the majority of people live on less than a dollar a day, every penny counts for the most vulnerable

🙈 Visual of the week

REMITTANCES TO SUB-SAHARAN AFRICA

“Remittance flows to Sub-Saharan Africa are expected to reach $45 billion [in 2021] … Nigeria continues to dominate remittance inflows into Sub-Saharan Africa … [and] the cost of remittances to Sub-Saharan Africa remains particularly high (8 percent). Corridor-specific data reveal that remittance costs tend to be higher when remittances are sent through banks than through digital channels or through money transmitters offering cash-to-cash services.”

Source: Migration and Development Brief 35 (World Bank, PDF)

🕵️‍♀️ In case you missed it

NEWS & ANNOUNCEMENTS

Nigeria’s TeamApt is targeting a $150M fundraise at a $1B valuation (Bloomberg)
Nigeria’s Paga is the first fintech in Africa to support ultrasonic sound for contactless payments authentication (Electronic Payments International)
South Africa’s Shoprite quietly launches mobile banking to 20 million customers (TechCentral)

VIDEO

Etop Ikpe, Autochek’s CEO, discussed his journey and Autochek’s business, revenue model, and future plans with Renaissance Capital
Tomiwa Lasebikan, CPO at Helicarrier (Formerly, Buycoins), discussed his background, building crypto products in Africa, and more with Peace Itimi’s Founders Connect
Chikodi Ukaiwe, Showlove’s CEO, discussed the gifting industry globally and in Africa with Arise TV

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.

Thanks for reading 🙌 And thanks in advance for sharing this Week in Review across your social networks.

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