Afridigest Week in Review: What do Jumia & Chipper Cash have in common?

Emeka Ajene

Aug 21, 2023

∙ Paid

Welcome back, old & new friends 👋🏽!

📌 In today’s edition, we put DFS Lab’s Stephen Deng in the Hot Seat to talk about 'the 3Fs.' We shine a light on the mirage of Africa’s middle class. And we take a quick look at last week’s news on Jumia & Chipper Cash.

And in case you missed it, the H1 2023 update to the fintech transactions database went out on Saturday.

If you’re new here: welcome — this Week in Review is sent on Mondays, the Fintech Review goes out on Sundays, and additional content goes out on (some but not all) Wednesdays/Saturdays. For past essays and digests, visit the archive & Afridigest.com.

And with that said, let’s get into it!

Week 33 2023: Aug 13-19

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🔦 Equity & Debt Fundraises

Six deals were announced for a total of ~$33M in disclosed funding this week.

Full details are available below after the paywall.

💰 Investor Activity

South African early-stage investor and accelerator Founders Factory Africa (FFA) announced that it raised $114M from Mastercard Foundation and Johnson & Johnson Impact Ventures.
- FFA provides up to $250K in equity to startups at the idea, pre-seed, and seed stages, plus up to $150K in nondilutive funding, as well as additional operational support.
- Since its launch in 2018, FFA has supported 55 startups across 11 African countries, including Uganda’s Asaak, Nigeria’s Winich Farms, and Rwanda’s Viebeg.

🔥🪑 In the hot seat with DFS Lab's Stephen Deng

DFS Lab is an early-stage investor and accelerator focused on the next generation of digital commerce across Africa. Its portfolio includes Nigeria’s Bumpa, Kenya’s Pezesha, and Tanzania’s Nala. I caught up with its Co-Founder & Managing Partner Stephen Deng in this week’s Hot Seat feature.

🕵️‍♀️ In case you missed it

NEWS

Kenyan B2B e-commerce platform Twiga Foods underwent a “corporate transformation initiative” that saw it lay off a third (~283) of its 850 employees.
Elsewhere in Kenya’s B2B e-commerce space, MarketForce turned to crowdfunding for “a small community funding round” of up to $1M.
P.S. Tweet features are not endorsements.

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👀 Visual of the Week

THE MIRAGE OF THE MIDDLE CLASS

People love to talk about Africa's ‘fast-growing middle class.’

That tends to be part of an ‘invest-in-Africa-now!’ narrative used to separate (naive?) investors from their money.

But that’s based on old data.

Here's the reality today: growth stalled over the last decade.

Source: Reimagining Africa’s economic growth. McKinsey. (With Afridigest edits.)

While consumer expenditure across Africa is on the rise, most of that's driven by population growth — not rising incomes.

That’s not to say that there aren’t reasons to be excited about opportunities across Africa — they’re plenty of them. But being a realistic optimist is recommended. (Shout out to Tim Motte.)

So, why does Africa’s ‘magic middle class’ continue to be promoted today?

Well, “it's difficult to get a man to understand something when his salary depends on his not understanding it.”

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🐤 Tweets of the Week

A throwaway phrase from one of Paystack’s co-founders became a meme used by brands & individuals alike:

Seem like more & more founders are quoting scripture these days but in any case, I agree with this message:

Lastly, some interesting thoughts here about Transsion. (Pair with our intelligence brief on Africa’s smartphone market.)

Bonus:

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🗣️ Community Corner and Opportunities (Send to submissions@afridigest.com)

🎰 OPPORTUNITIES

Early-stage African blockchain startups are invited to apply before November 30th to the 6th batch of the CV Labs accelerator program. CV VC may invest up to $135K in exchange for 7% equity (and/or 4% future token supply) of selected startups.

The last word

💭 Just my thoughts

ACT 1

What do you call a unicorn that loses its horn?

That was a question I posed in Week 16’s newsletter and it came up again this week, thanks to this Forbes profile of cross-border payment platform Chipper Cash — an (erstwhile?) member of Africa’s unicorn list.

The piece is definitely worth a read and it brought to my mind several aspects of company building. But I think most people paid more attention to the “deep valuation cut,” so here’s the relevant snippet:

I don’t have much more to say about Chipper right now, so I’ll return to the question at the start of this section: What do you call a unicorn that loses its horn?

A pelican?

ACT 2

Elsewhere in the news last week, Jumia released its Q2 2023 earnings and the market reacted negatively.

I’ll point you to the thoughts I shared on Linkedin last week, including my opinion that Jumia's 'Amazon of Africa' vision is dead.

*Remember: tweet features are not endorsements.* 😊

ACT 3

What do Jumia and Chipper Cash have in common?

Well besides being former billion-dollar companies, the two now seem firmly focused on cost reductions and the path toward profitability.

He who has ears to hear, let him hear.

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✨ The rest of this newsletter — which contains details on announced fundraises — is available to premium subscribers whose support makes this work possible. ✨

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