Afridigest Week in Review: Notes on the new Nigerian Naira
Nigeria allowed the naira to trade more freely and the resulting currency devaluation has a number of implications for startups in the country.
This Afridigest Week in Review is a recap of what happened across Africa's tech ecosystem for Africa-focused founders, executives, and investors.
Welcome back, old & new friends 👋🏽! ICYMI, the first Curated Content email came out last Wednesday & feedback is still very much welcome.
📌 As mentioned previously, the cost of an Afridigest subscription will go up on June 22nd, but you can subscribe to get grandfathered in before then. We’ll continue to experiment a bit, but based on feedback so far, more premium paywalled content seems to be very much welcome.
If you’re new here: welcome — this Week in Review is sent on Mondays, the Fintech Review goes out on Sundays, and an original essay occasionally goes out on Saturdays. And as mentioned above, we’re changing things up a bit this month. For past essays and digests, visit the archive & Afridigest.com. And with that said, let’s get into it!
Week 24 2023: June 11-17
🔦 Equity & Debt Fundraises
If you’d like us to know about a fundraise, please submit it here:
💰 Investor ActivityEndeavor South Africa says that its Harvest Fund III (~$27.5M target) is on track for a first close of ~$8M in September. The fund will invest in up to 30 tech and tech-enabled startups.
Andile Ngcaba’s Convergence Partners rebranded to Solcon Capital. Solcon will focus on deeptech investments across South Africa, India, and Southeast Asia.
Egypt’s Acasia Ventures (formerly Cairo Angels) opened an office in Lagos, Nigeria, led by the indomitable Biola Alabi.
Pan-African initiative/investor Digital Africa will collaborate with Cameroonian incubator O’Botama to offer seed funding to local startups in the country.
🕵️♀️ In case you missed itNEWS
MTN faces headache in Cameroon over bizarre bank account seizure. $22M of the leading African telco’s cash has been frozen since September 2022. Why? Well, a Cameroonian business mogul allied with the country’s president is trying to recover value from loans gone bad. Said businessman (Ahmadou Baba Danpullo) had his South African properties liquidated by South Africa's First National Bank as a result of said loans, and he continues to work to hold various uninvolved South African firms operating in Cameroon somehow liable. Anything is apparently still possible in some African markets.
Egypt applied to join the BRICS bloc. The North African country is “very interested” in using alternatives to the US dollar to pay for imports.
Nigerian soonicorn Moniepoint in advanced acquisition talks ($) in Nigeria, Kenya. This news is the latest signal of a potential uptick in African fintech M&A in the months ahead.
OTHER ARTICLES
As war rages in Sudan, small startups are helping people find food, money, and flee (Rest of World)
'Invisible' informal workers rally for a role in green movement (Context)
Opinion: Growth needed from within for Africa to reach its huge potential (BusinessDay)
Social entrepreneurs have different reasons for creating their ventures (The Conversation)
🐤 Tweets of the WeekThis tweet from mPharma’s CEO reminded me of Week 20’s article on the types of ‘willigness to pay’:
Largely agree with this — with the caveats that there are, of course, many ways to win and some of the ‘noise’ mentioned here can in fact be a boon to growth:
And there’s this sign of the times:
🗣️ Community Corner and Opportunities (feel free to send yours in)🎰 OPPORTUNITIES
African entrepreneurs building solutions to health product distribution challenges are invited to apply before June 26th to the second cohort of the Investing in Innovation (i3) Africa program.
SDG-aligned African startups in Ghana, Kenya, Nigeria, and Tanzania with less than €2M in funding raised are invited to apply before June 30th to the develoPPP Ventures program.
African startups with plans to run their infrastructure on the cloud are invited to apply to AWS Startup Loft, a virtual, equity-free accelerator.
🙊 The last wordJUST MY THOUGHTS
If Nigeria is the epicenter of Africa’s startup activity (a relatively non-controversial statement), then the news of the week was the country allowing the naira to trade freely.
What does it mean for startups in the country? Some early thoughts:
Most directly, “revenue recognition in the mud.” On a dollar basis (as most tech investments are ultimately denominated), revenues generated in Nigerian naira (along with valuations driven by naira revenues) are now worth up to ~40% less. But this isn’t/shouldn’t come as a surprise:
Business lines driven by previous parallel exchange rates and FX spread will shrink.
Virtual card business lines are likely to become much less significant if/when Nigeria-issued cards become more viable for international transactions:
Startups with more hard currency exposure will remain/become more attractive:
Over the long term, more investors may be attracted to opportunities in Nigeria.
“The difficulty of getting your money out inhibits putting your money in.” — Tope Lawani, managing partner of Helios Investment Partners.
This is an overview and thoughts on what’s missing above are very welcome.
And of course, there are a variety of broader implications for Nigeria’s economy at large.
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