Africa’s Digital Economy welcomes Web3


The global pandemic has had the unintended consequence of speeding up Africa’s digital economy. The transition to digital services and the adoption of transformative mobile technologies have been rapid in the last two years with e-commerce being the biggest beneficiary. This digital transformation has been driven by home grown solutions – some of which are built on blockchain and crypto. The world is moving to Web3, a new iteration of the world wide web based on decentralization with blockchain and crypto technology, allowing companies to build new things that provide unique value to society. In this first essay for 2022, I am going to expand on how that is happening instead of trying to predict what will happen.

In 2020, the International Finance Corporation (IFC) and Google estimated Africa’s Internet economy to reach US$180 billion by 2025, representing 5.2% of the continent’s gross domestic product (GDP). By 2050, they project it to reach US$ 712 billion, or 8.5% of the continent’s GDP. This growth is driven by a combination of increased access to faster and better-quality Internet connectivity, a rapidly expanding urban population, a growing tech talent pool, a vibrant startup ecosystem, and Africa’s commitment to creating the world’s largest single market under the African Continental Free Trade Area.

“The Mobile Economy Sub-Saharan Africa” report by the Global System for Mobile Association (GSMA) in September 2021, puts mobile technologies and services at 8% of GDP of sub-Saharan Africa in 2020 with contribution of more than US$130 billion in economic value added. This was made up of US$31 billion from the mobile operators and US$7 billion from other industry stakeholders. Indirect benefits made up US$11 billion and productivity gains brought US$83 billion of benefits. The economic contribution is set to grow past US$150 billion by 2025, including benefits from improved productivity.

Google and IFC are estimating the Internet economy to reach 8.5% of GDP by 2050, the GSMA puts the Mobile Economy in Sub–Saharan Africa in 2020 at 8% of GDP. While the Google and IFC work is limited to the Internet economy, the GSMA’s is about the mobile economy which includes services such as Short Messaging Service (SMS) which is a non-Internet service and predominant in Africa. For example, Mobile Money (MoMo) which is the leading form of electronic payment in Africa is an SMS based service – it does not need the internet to function. Hence it is available in the remotest parts of Africa where there is limited to no access to the Internet. Recent interactions of MoMo links it to the web so that it can be used for online purchases. The GSMA report also looks at other ancillary services that are born out of mobile services, for example, the agents that accept and process the cash into and out of MoMo are a totally new entrepreneurial addition to every economy where MoMo operates. They create employment and generate economic activity that is captured in the GSMA report so that report gives a more accurate account of Africa’s digital economy at 8% of GDP in 2020. My estimation is, 25% of Africa’s GDP by 2025 and more than 50% by 2050 – excuse this prediction but I had to make it to illustrate the larger point that Africa’s digital economy is going to be dominant by the middle of the century if not earlier. Web3 will be a crucial part of that development.

The venture capitalists (VCs) who provide the funding for these tech ventures invested more than US$5 billion in 2021 according to a 1 January 2022 report by Briter Bridges. This is equivalent to the combined African startup inflows recorded in 2018, 2019 and 2020. While it is regrettable that majority of the funding is international, local capital seems to find validation in international capital which suggests that we are going to see more local capital going into these tech ventures going forward. Fintech accounted for more than 60% of this funding and rightly so because of the innovation in MoMo which is the foundation for Fintech in Africa. It is impossible to participate in the digital economy without the existence of an electronic payment system, but now that we have a well-established Fintech ecosystem, it is having a cascading effect on e-Commerce and delivery. For example, Hubtel, a Ghanaian fintech, branched into e-Commerce and during the pandemic their food delivery business took off. They were also one of the three Ghanaian companies that built Ghana.Gov – a payment platform for government services in Ghana. Flutterwave, a Nigerian fintech launched Flutterwave Store – a portal for African merchants to create digital shops to sell online. They followed that with the acquisition of Disha to enter the creative space. Ivorian e-Commerce startup ANKA has raised $6.2M pre-series A. Egypt’s ride sharing company, SWVL is going public via a SPAC merger that would value it at US$1.5 billion – it is the beginning of many more such deals. Global e-commerce jumped to US$26.7 trillion during the part of the pandemic – online retail sales’ share of total retail sales rose from 16% to 19% in 2020, according to estimates in an UNCTAD report published on 3rd May, 2021.

The pandemic encouraged Healthtech innovations like Bisa from Ghana which allows you to get first-hand information about Covid-19 and other medical conditions and access medical professionals online by logging on the app. Over the last twelve months, Healthtech deals have reached over US$77 million in 56 funding rounds. mPharma from Ghana just closed a US$35 million series D while Africa Health Holdings closed a US$18 million series A last November and Nyaho closed US$5.2 million – which was partly used for their Healthtech platform, Serenity Health. South Africa’s RecoMed raised US$1.5 million to scale it’s online healthcare marketplace.

In December 2021, AlitheiaIDF, a leading female-run fund manager raised US$100 million to invest in more female founders. Aruwa Capital Management, another female founder focused fund made three investments in November 2021. Future Females Invest Angels (FFI Angels), an all-female angel investor group based out of Mauritius made four deals in 2021. Effort to close the gender disparity in funding in Africa is changing but a lot more needs to be done to close the gender gap in Africa’s digital economy.

“Our review of African countries’ policies and strategies demonstrates that most African countries have digital agenda documents. These are found as legal texts, stand-alone digital strategies, as sections of national development plans or within aspects of other policies.” said Olumide Abimbola, Faten Aggad and Bhaso Ndzendze in their recent publication which looked at the availability of digital agendas across the continent.

In Zambia, part of the government’s digital agenda is to launch their own satellite. A local startup Ignitos Space has a slightly different ambition, to use satellite data for precision Agriculture, etc. When the pandemic hit, Ghana’s Ministry of Education moved to use eCampus as the online learning platform for students who were home because of school closures. Ethiopia’s Ministry of Education announced a partnership with Cardano to create a blockchain-based digital identity for five million students and teachers. Cardano, one of the leading crypto platforms has a program focused on Africa. African blockchain and crypto companies like Topit, Luno and Yellow Card which recently raised US$15 million are leading the building of exchanges that trade globally. According to the BBC, Nigeria ranks third globally in terms of countries with the highest bitcoin trading volumes last year, after The United States and Russia. But in February, Nigeria abruptly announced that they were barring their banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies. Nigeria’s central bank launched the country’s own electronic currency, eNaira in October – the first in Africa and Ghana’s central bank plans to do same.

These technologies started off on Web1 which was predominantly text-based with SMS as the holy grail in Africa, with a subsequent move to Web2, a combination of the spoken word and moving images, aka multimedia. We are now moving to Web3 which is characterized by a great decentralization of the web using blockchain and crypto that creates transparency. The biggest pain point of Web2 was the centralized and controlled nature of multimedia databases that predominantly rested with big tech companies, including Facebook, Google, YouTube, Twitter, etc. Web3’s fundamental premise is to change that, so we don’t need permission from the big tech companies to use our data from their databases – a permissionless world beckons. Kenya’s ranking as the world’s leader in peer-to-peer (P2P) trading volumes for the second consecutive year in 2021 is going to challenge other countries to adopt more friendly attitude towards cryptocurrencies. Binance, a leading global cryptocurrency exchange has partnered with the Confederation of African Football (CAF) to sponsor the ongoing African Cup of Nations football tournament in Cameroon. Emurgo Africa’s $100m dedicated Africa blockchain fund is going to be a game changer. Senegalese American award-winning artiste Akon argued that crypto could change Africa’s future – that future is here.

Cote d’Ivoire Tech Rising


When I first coined the KINGS (Kenya, Ivory Coast, Nigeria, Ghana and South Africa) term in September 2013, Cote d’Ivoire also known as Ivory Coast was a small “i” in the KiNGS. The country was just emerging from a tumultuous civil unrest that followed a disputed election in 2010 that ousted then incumbent, Laurent Gbagbo and set the country back. In 2016, when I wrote about “The KINGS of Africa’s Digital Economy” Ivory Coast had fully recovered, and its tech sector was on an acceleration path similar to Kenya, Nigeria, Ghana and South Africa. In 2017, encouraged by this impressive turnaround my team took our annual Angel Fair Africa (AFA) to the Ivorian capital of Abidjan. Archangel, Esther Dyson, the event’s keynote speaker reacted remarked “I was pleasantly surprised with the level of tech innovation and digital entrepreneurship” . This final essay to see off 2021, will focus on Cote d’Ivoire’s digital economy and the startups that have raised capital and are leading the charge in the country. In the concluding paragraphs, I will also highlight some of the non-KINGS countries whose digital economies have picked up pace in 2021 with the attraction of investments similar to the KINGS.

The francophone and the Portugese-speaking countries in Sub-Saharan Africa tend to get less attention compared to the English-speaking countries and thus Ivory Coast is rarely in focus. West Africa was predominantly colonized by the French such that only five out of the 15 countries in the Economic Community of West Africa (ECOWAS) were British colonies and thus English-speaking (Ghana, Nigeria, Liberia, Sierra Leone and The Gambia) while Cape Verde and Guinea-Bissau were the only Portugese colonies with Creole being the official language. The remaining countries in West Africa were French colonies and comprise Cote d’Ivoire, Togo, Benin, Burkina Faso, Niger, Mali, Senegal, and Guinea. With the exception of Guinea, all francophone countries in West Africa use the same currency – Communauté Financière Africaine (“CFA”) that is issued by the Central Bank of West African States (BCEAO; Banque Centrale des États de l’Afrique de l’Ouest). The francophone countries in West Africa are members of the West African Economic and Monetary Union (UEMOA; Union Économique et Monétaire Ouest Africaine) – a French union within ECOWAS. The CFA is pegged to the EURO and the members of the UEMOA have to keep 50% of their foreign assets in the French Treasury and have a French representative in its currency Board as a colonial-era arrangement to help stabilize the currency in the region. Ivory Coast is Africa’s 11th largest economy with a GDP of US$61B and population of 26M people with 13M active internet users. Having Ivory Coast as part of the KINGS is not only symbolic but important. In 2019, Ivory Coast ranked 110 in the World Bank’s Ease of Doing Business Report from 122 the year before.

According to Digest Africa, the 10 most funded startups in Ivory Coast have raised a combined $19M across 23 deals. Of these 23 deals more than half relate to early-stage investment: 12 are seed rounds, three are pre-seed rounds and grants each, two series A, and one venture deal, angel investment and series B. The largest amount was raised by “Afrimarket” in a series B round of $11.5M. The twelve seed rounds are worth $3.4M while the 2 series A are worth $3.3M. The most funded sectors by number of companies are financial services with three in the top ten while e-commerce and retail and energy and resources had two each. E-commerce and retail had the top two funded startups with Afrimarket and Afrikrea raising a stunning $16M (or 84%) of the $19M total. Financial services came in second with its three startups managing to pull in $1.17M .

On March 8th, 2021, leading Ivorian Mobility-as-a-Service startup, Moja Ride, raised funding from Toyota Tsusho. In May 2021, two Ivorian fintech startups secured funding from local Venture Capital (VC) firm, Investisseur & Partnership (I&P) through its I&P Acceleration Technologies program, which is funded by the French development agency. Djamo, a finance super app for consumers in French-speaking Africa based in Abidjan was accepted into the Silicon Valley-based accelerator Y Combinator with an investment of $125K. Even during the pandemic Ivorian startups like Starnews, Coliba, Easy2toofacil and Julaya raised capital showing the resilience of the ecosystem and its strength under stress.

Based on a report by Disrupt Africa, funding for health tech startups in Africa jumped 257.7% from $28.8m in 2019 to $103m in 2020. These startups provide a wide range of services from scheduling medical consultations to telemedicine and digitalized imagery. MaiSoin from Cote d’Ivoire uses a decentralized, gig-economy model, to facilitate the relationship between healthcare professionals and patients needing care at home or via telemedicine. In their first year of operations, they have had an average 50% growth month over month and are already looking at potential expansions in the region.

Last month, Nigerian fintech startup E-Settlement acquired the Ivorian QuickCash to start its expansion into francophone West Africa. And so did Kenyan logistics startup Sendy which also completed a strategic equity investment in Ivorian counterpart Kamtar to boost the former’s expansion plans in West Africa. These seem to signal that Cote d’Ivoire is being targeted as an entry market for francophone Africa. Same seems to go for Senegal where Gebeya, an Ethiopian tech startup expanded to as its foray into the francophone market. Though not one of the KINGS, Senegal is punching above its weight as a startup nation by being the first francophone country to produce a unicorn in Wave which raised $200M at a $1.7B valuation. Egypt is another country that has caught up with the KINGS by producing a unicorn, Fawry, that trades on the local stock exchange – a first timer. Egypt was also among the top four destinations for VC investments in Africa as at the end of November 2021 according to the Big Deal by Max Cuvellier and Maxine Bayen. According to their categorization below, there are about nineteen countries that are attracting investments beyond the KINGS totaling $4B in 2021 so maybe it is time for a longer or different acronym beyond the KINGS.

South Africa’s Mergers, Acquisitions and Exits


Mergers and acquisitions worth US$52B were completed in South Africa during the first half of 2021, with the value of deals growing by 958% from 2020 with the tech sector in the lead according to Refinitiv Data that provides financial markets and infrastructure data. According to Digest Africa, the value of mergers and acquisitions in the African tech ecosystem in 2018 was US$504M with 24 out of the 39 deals taking place in South Africa making it the country with the most mergers, acquisitions and exits among the KINGS countries. Which is why am focusing this oped about the 5th KINGS (Kenya, Ivory Coast, Nigeria, Ghana and South Africa) on mergers, acquisitions and exits. On the 1st of September 2021, ZipCo announced plans to fully acquire South African buy-now-pay-later (BNPL) fintech, Payflex. On the 17th of the same month, Tech company Advannotech Pty Ltd, acquired IT-TEC MN Pty Ltd a Western Cape-based information technology company specializing in ICT support, security, networking and infrastructure. In March, First National Bank (FNB) acquired local fintech firm Selpal.

South Africa and Nigeria, the two leading economies in Africa, have always been in fierce competition with each other. South Africa’s leading fintech, MFS Africa founded by Dare Okoudjou in 2010, announced on 20th October 2021 their acquisition of one of Nigeria’s leading super-agent networks, Baxi, subject to approval from the Central Bank of Nigeria making it the biggest intra-Africa acquisition and the second highest acquisition in Nigeria to date after the Stripe acquisition of Paystack last year. This seems like a response to Nigeria’s Jiji acquisition of South Africa’s Naspers’ OLX operations in 2019. Baxi’s 90,000 agent network processed over US$1B in transactions in 2021 to date. MFS Africa is the largest fintech interoperability hub in Africa connecting telecoms companies, banks and mobile money (Momo) operators across over 35 countries via a single Application Protocol Interface (API) with an estimated 320M Momo customers in 35 countries in Africa. At the height of the pandemic in 2020, MFS Africa acquired Beyonic in Uganda – another strategic acquisition that increased their footprint in East Africa in the same way the Baxi one increased their footprint in West Africa. In 2016, the company took a majority position in Sochitel, a leading airtime top-up provider based in London with operations in Joburg, Douala and Accra which they exited in 2020 at 3.5x book value.

MFS Africa has also been making some strategic early-stage investments to build a base of companies it can acquire later such as the investments in Maviance in May 2021, Numida in April 2021 and Julaya in July 2021. MSF Africa had earlier made investments in EzyAgric and Inclusivity in 2019 as they started their frontier investments program lead by their corporate development team. In a strategic move to enter the Chinese market, MFS Africa allowed China based VC firm LUN Partners Group to lead their B series funding round in which they raised a total of US$14M in 2018. Part of that capital is what they have used for their strategic investments and acquisitions to consolidate the market giving them an edge over their competitors. According to CB Insights the company has raised US$17.7M to date with which they have made all these strategic moves – including the partnership with Xoom – a Paypal service to bring new international Momo transfers to Africa.

These mergers, acquisitions and exits started in December 1999 when Mark Shuttleworth sold his leading digital certificate authority provision company Thawte founded in 1995 to VeriSign for US$575M. This was before mobile took hold on the continent making Mark the first African dot com millionaire at the prime age of 26 in the middle of the dot com bubble. This placed Africa on the global technology map for developing a global technology company that was at the time number two to VeriSign the acquirer. Mark used his acquired wealth in September 2000 to form HBD Venture Capital (Here Be Dragons), the first venture capital firm in Africa from Cape Town. Along with the fund, he started the Shuttleworth Foundation in 2001, a non-profit that aimed to improve access to and quality of South African education. In 2002, he became the first African to go to space as a tourist paying $20M for an eight-day trip to the International Space Station where he participated in experiments related to AIDS and GENOME. In 2004, he funded the development of Ubuntu, a Linux distribution based on Debian, through his company, Canonical Ltd. In 2005, he founded the Ubuntu Foundation with an initial investment of $10M.

Keet van Zyl who initially worked for Mark’s HBD later launched Knife Capital with Andrea Bohmert and Eben van Heerden in 2010. Knife Capital took over the management of seven HBD portfolio companies some of which they exited including CSense to GE, Fundamo to VISA and orderTalk to Uber Eats. Knife also exited iKubu a radar system for cyclists to Garmin in 2015 and disposed of their stake in a management buyout in FlightScope in 2017.

In 2009, the South Africa government introduced a unique tax incentive, Section 12J which allowed the wealthy to write off some of their taxes against investing in risking early-stage ventures. This led to investments in real estate but also in early-stage startup tech ventures through firms like Grovest, Karlon Ventures, Knife Capital etc who had section 12J dedicated funds. Even though the 12J is been phased out in 2021, it has generated significant momentum for investment and could later return in a different/better form . Some of these investments are going to find their initial public offering (IPO) on the new Cape Town Stock Exchange that started operations at the beginning of October 2021, the South African Stock Exchange (A2X) that currently offers 56 securities or the Johannesburg Stock Exchange (JSE). And so would the entrepreneurs who are pitching to raise at our 9th on 25th November 2021 in Mauritius.

The Fintech Unicorns of The Federal Republic of Nigeria


Celebrations are in order because Nigeria turned 61 on 1st October 2021. In the “KINGS of Africa’s Digital Economy”, I recognized Nigerians for their hustle and that hustle has to date produced four of the leading fintech unicorns in Africa namely, INTERSWITCH, FLUTTERWAVE, CHIPPER CASH and OPAY. You can make that five if you count JUMIA which was the first billion dollar plus valued company (AKA a unicorn) in Nigeria.

ANDELA is now the sixth, it begun in 2014 as a training platform for junior developers in Nigeria, expanding into other African cities and now a marketplace for remote technical talent for US companies. On September 29th, 2021, ANDELA announced a $200M series E raise at a $1.5B valuation making it the latest unicorn from Nigeria. ANDELA was co-founded by Iyinoluwa Aboyeji (AKA “E”) and Jeremy Johnson who is now the CEO after E left to co-found FLUTTERWAVE making him the only Nigerian tech founder with two unirons under his belt. E is now the co-founder of FUTURE AFRICA which is democratizing access to early-stage capital for startups in Africa.

On 17th September 2021, news came out that IHS TOWERS, Nigeria’s leading Telecoms Tower Provider and the fourth largest in the world had filed papers with the Securities and Exchange Commission (SEC) to go public on the New York Stock Exchange. The expected valuation of the business was around $10 billion which would make it the largest Initial Public Offer (IPO) in African telecom history. MTN Group which owns 29% of the company valued at $2.9 billion is looking to sell down some of its shares as part of the listing.

PAGA, a payment processing company in Nigeria (similar to PAYPAL) started by Tayo Oviosu in 2009 is on track to potentially be the next unicorn as it processed $2.3 billion worth of transactions in 2020 and $8 billion during the past four years. The company is now expanding into Ethiopia and Mexico as part of its global growth plan. Another future unicorn is CNG TRANSFER founded during the pandemic by Emmanuel Tochi and Vincent Omulo, a Nigerian and Kenyan, respectively. The startup’s flagship product is – a cross boarder intra-African money transfer platform built on blockchain enabling Africans to transparently move money from one country to another at no cost. Within a year of launch they have already processed 100 million of Kenyan Shillings in Kenya alone while operational in Nigeria, Zambia, Botswana, South Africa, Rwanda and Ghana.

Nigeria doubles down as the most populous country and the largest economy on the continent. At the same time, it has not yet taken to Mobile Money like Kenya and Ghana even though Sub- Saharan Africa leads the world when it comes to Mobile Money according to the Global System Mobile Association (GSMA). In August 2021, the Central Bank of Nigeria (CBN) froze the bank accounts of Nigerian fintech platforms RISEVEST, BAMBOO, TROVE and CHAKA for six months. In the same month, the National Information Technology Development Agency (NITDA) of Nigeria fined online lending company, SOKO LOANS N10 million ($25,000) for various infractions against its users including invasion of privacy and the “erosion of trust in the digital economy”. This suggests that the established institutions are threatened by these new players because the measures being taken on these regulatory infractions are too severe.

Meanwhile MTN GROUP has gone into a partnership with FLUTTERWAVE allowing businesses that integrate Flutterwave in Cameroon, Côte d’Ivoire, Rwanda, Uganda and Zambia to receive payments via MTN’s Mobile Money (MoMo) with plans to expand this into other key markets across the continent. This seems to suggest that MTN is going to expand its MoMo efforts in Nigeria through the partnership.

In July the CBN had said that it will launch the pilot scheme of its digital currency, the “eNaira” on October 1st, 2021. eNaira is a Central Bank of Nigeria-issued digital currency that provides a unique form of money denominated in Naira. It serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments . The eNaira is going to force the local banks to start looking at fiat money and crypto currencies differently. This coincides with an interesting development in the banking sector where seven of the 23 CEOs of Nigerian banks are now female. Gender balance and equity has been an important topic in the male dominated banking sector recently so it is a welcome development to see Nigeria embrace this shift which will eventually serve the banking sector better. This though does not preclude the banking sector from the challenges presented by the fintechs who are busy eating their lunch. There is a tussle between the fintechs and the commercial banks with the regulator leaning towards the later. This seems to be playing out in the proposed realignment of the outdated 2007 NITDA Act which seems to have licenses, fees, fines and sentences for startups. Would the female leaders of these banks come up with a solution? Time will tell.

The Fintech City that is Nairobi


Nairobi is the leading Fintech ecosystem city in Africa according to the 2021 Global Fintech Rankings published on 8th July 2021 in which it jumped 26 places to the 37th position globally beating both Lagos and Accra. Kenya’s President, His Excellency Uhuru Kenyatta stated at a UK summit that “Nairobi International Financial Centre (NIFC) has come of age to be the leading financial hub on the continent”. Kenya is making a major incursion to position itself as the financial hub of Africa on the back of its fintech advantage as President Uhuru Kenyatta signed a $184 million deal with Dominic Raab, Secretary of State for Foreign, Commonwealth and Development Affairs and First Secretary of State of the UK during his three-day official visit to that country. Kenya’s leadership of the Fintech world in African gives it the impetus to be an international financial hub but the realization of that requires Nairobi to implement critical reforms that would drive growth and attract the relevant actors.

Last month, I wrote about how Ghana is leading the charge in Africa when it comes to “Fintechs, SMEs and Digitization” but as it turned out Kenya is the kingpin when it comes to Mobile Money. 87% of Kenya’s Gross Domestic Product (GDP) is held in transactions via mobile wallets and phones compared to 82% of Ghana’s GDP according to the Five Strategies for Mobile-Payment Banking in Africa report by Boston Consulting Group (BCG). The report found that after China, Kenya and Ghana have the second and third highest mobile payment usage in the world. The two countries accounted for a large chunk of the whopping $15T to $20T made in mobile transactions last year. According to Max Cuvellier of The Big Deal, Kenya also led in Africa VC funding in 2020 in terms of the per capita raised as depicted in the graph below.

Even though the World Bank recognized Ghana as the fastest-growing mobile money market in Africa over the last five years, I am focusing this essay on Kenya and the fintech city that is Nairobi. Next month I will focus on Lagos, Nigeria, followed by South Africa and then Cote d’Ivoire. This is an indirect way of taking the temperature of the KINGS countries I postulated in 2013 would be leading the digital economy in Africa. I later doubled down in my 2016 book chapter under the auspices of “Digital Kenya – An Entrepreneurial Revolution in the making” edited by Dr. Bitange Ndemo and Dr. Tim Weiss.

Back in 2007, Kenya was no startup nation, it was one of the few countries in the world without a submarine fiber cable connecting it to the rest of the world. Submarine fiber cables provide high speed backbone connection to the Internet. That year, Safaricom, introduced MPESA (Mobile PESA – PESA means money in Swahili) a mobile money innovation that allowed one to convert airtime value into electronic currency via a Short Messaging System (SMS). That same year, in the heat of the country’s election crisis, a Public Private Partnership (PPP) was setup by Dr. Bitange Ndemo who was Permanent Secretary at the Ministry of Information and Communications Technology (MICT) to launch the first submarine fiber cable project under the auspices of The East Africa Marine Systems (TEAMS). At the same time Erik Hersman, Ory Okolloh, Juliana Rotich and David Kobia joined forces to develop a platform to spot and report the election crisis and they called it Ushahidi which means “witness” in Swahili.

MPESA became popular during the election crisis because movement was restricted, banks were closed, and people needed an alternative way to transfer money. Since MPESA was the only option, this simple and unique innovation that originally started in Indonesia took off and became very popular in Kenya. This was made possible by the no objection stances that the Central Bank of Kenya (CBK) took to the innovation because of the lobbying that came from Safaricom but most importantly the fortitude of government officials like Stephen Nduati Mwaura who is recognized as the Father of MPESA. Mr. Mwaura was the leading official at the CBK who led the process to establish the no objection to MPESA.

Dr. Ndemo was the leading official at the MICT who lead the process for the establishment of the TEAMS submarine cable, in which I was an active participant, in 2007. The TEAMS cable went live in 2010 together with another private sector led cable SEACOM both built on the Open Access Model that I had developed with Russell Southwood and Anders Comstedt under the auspices of Spintrack AB for the WorldBank in 2005. Mr. Mwaura is to MPESA what Dr. Ndemo is to TEAMS. MPESA is the foundation of Kenya’s fintech and TEAMS is one of the rails on which that fintech innovation rides into the global information superhighway.

Ushahidi was the third successful innovation from 2007 that had no government involvement except the grit and fortitude of Erik, Juliana, Ory and David who took it global. Erik, Juliana, Ory and David needed a “home” for Ushahidi as they had to develop it from coffee shops around the city due to the absence of innovation hubs, so they decided to setup iHub (Innovation Hub) which was the first innovation hub in Kenya. The success of MPESA, TEAMS, Ushahidi and iHub laid the foundation for Kenya becoming a startup nation (aka Silicon Savannah) and Nairobi a leading Fintech city. In 2015, President Obama brought the Global Entrepreneurship Summit to Nairobi in recognition of that. Today MPESA is the biggest fintech in Africa with 50 million active monthly users although Safaricom’s dominance of the Kenyan market as a significant operator has long term negative implications for competition and a free market economy. Innovation hubs have become the new normal in Nairobi and have spread across the continent such that today there are about a thousand of them – these are the spaces in which digital innovations are being created.

Below are two of those fintech innovations that are making Nairobi the leading fintech city in Africa.
Cellulant is a leading Pan African fintech focusing on digital payments founded in 2002 by Ken Njoroge and Bolaji Akinboro – starting originally as a ringtone business. It has a payments platform called Tinng, which makes it easy for merchants and shoppers to collect and make payments with different localized payment methods in different countries. Cellulant boasts of offices in 18 countries, 35 partnerships with the largest mobile money operators across the continent and provides mobile banking and payments to 120 banks. It processed over $150m transactions valued at $8bn in 2020 and claims to process 12% of Africa’s digital payments. After having raised a total of about $55m to date, Ken stepped down and a new generation led by Akshay Grover the current CEO has taken over the reins charting a new path for the future.

SaveApp is the latest fintech in the Nairobi ecosystem as it only launched its flagship product Ukonga on 1st September 2021. Founded by Aziz Omar a second time founder, SaveApp’s flagship product Ukonga allows you to round up your spare change at any transaction point and save it for the future. They have partnered with Octagon Africa, UBA and Naivas Supermarkets to make this a reality. The savings culture in Africa is almost non-existent so the idea that Ukonga would enable the user to start saving at a push of a button is revolutionary in Africa. This innovation is not unique but the execution of it charts the path for Nairobi and Kenya to bring another world class company to the global stage as the leading fintech city in Africa.

Fintechs, SMEs and Digitization in Africa – Ghana leads the charge


Three leading Ghanaian fintechs; Hubtel, ExpressPay and IT Consortium joined forces to build Ghana government’s portal digital services and payment platform for Small Medium Enterprises (SMEs), Startups and citizens to access government services at the click of a button. Despite being competitors, these tech ventures saw the need to collaborate as a unified front for the Ghana government to entrust them with the building of a national asset in a revenue sharing arrangement between them and the government, enabling a conducive environment for the delivery of essential government services to consumers and businesses. This represents a constructive case study on the Public Private Partnership (PPP) needed to accelerate the digitization agenda in Africa with Ghana setting the pace. The portal currently processes payments for government services offered by the Passport Office, Ministry of Foreign Affairs & Regional Integration, Lands Commission, Food and Drugs Authority, National Service Secretariat, National Information Technology Authority, Registrar General’s Department, and National Schools Inspectorate Authority. The platform also serves the digitization and revenue-collection needs of other Ministries, Departments and Agencies (MDAs) and Metropolitan, Municipal and District Assemblies (MMDAs).

As of mid July, 2021, about 624,000 users have logged in to pay for 37 government services, comprising taxes, levies, royalties and stamp duties, directly into Ghana Revenue Authority (GRA) accounts.
Ghana’s Vice President, His Excellency Dr. Mahamudu Bawumia who launched the portal on 14th July 2021, opined that “Transactions will be recorded instantly avoiding any bribery and corruption regarding the quoted service.” According to Dr. Bawumia, “It is estimated that about 10 to 15 percent of revenue is lost through inefficiencies, theft or other accounting schemes. Going digital means, we can improve our revenue collection by an estimated $526 million annually.” Ghana will also derive expense savings of more than $7 million a year from the digitization mechanism, according to government projections. The Minister of Finance, Ken Ofori-Atta has recommended national awards for the three-tech firm at the launch saying, “if I had any power, I am sure the Order of the Volta will be conferred on each of them”.

A digitized government creates an enabling environment for a digitized private sector, research, academia, civil society, and citizens. Ghana, host of the African Continental Free Trade Area (AfCFTA) Secretariat, is leading this charge by awarding the national identification project to an African company, Margins Group. Margin was started in 1990 by Ghanaian entrepreneur, Moses Baiden and has been in the forefront of identity management. IT Consortium one of the innovative home-grown firms that built the portal and recently celebrated its 20th anniversary, was founded by Ebow Annamuah Mensah and was later joined by Joojo Esua-Mensah, Ato Yawson, Franklin Eleblu and Romeo Bugyei, who is now the CEO. Hubtel, which was founded by Alex Bram, Ernest Apenteng and Leslie Gyimah in 2005 (and were later joined by Kwadwo Seinti as CTO), is a leading Fintech and e-Commerce platform. The company started as SMSGH selling Short Messaging System (SMS) for corporate communication. In 2012, Hubtel was listed by Forbes as one of the leading startups in Africa. That same year, ExpressPay was started by Curtis Vanderpuije, Kodjo Hesse, Kwei Hesse and William Tetteh as an eCommerce marketplace and a payment gateway provider in Ghana.

Last month, Hubtel partnered with MTN Ghana to help accelerate digitization of the informal sector through the provision of digital tools such as a year of free connectivity, access to Hubtel e-commerce smartphone, etc via the MTN Business SME campaign launched under the theme ‘MTN Business, Your Partner for Growth’. This constructive collaboration between South African telecom giant MTN and Hubtel, a leading fintech firm with operations in Kenya and South Africa, is a remarkable example of Africa’s growing intra-Africa trade, collaboration on innovation and digitation of businesses, worth replicating in other African countries. The African Guaranty Fund (AGF) has woken up to the fact that “SMEs are the Coca Cola and Nestle of tomorrow” so they have given lending facilities to Equity Bank and Rawbank to on-lend to the SMEs for their growth and digitization. At a special edition of the MTN Business Executive Breakfast Series, hosted on July 8, 2021 as part of events headlining the company’s 25th anniversary, I made the case that an Africa-wide integration of digital strategies by governments is critical for the Africa Continental Free Trade Area (AfCFTA) to work. Governments do not only need to digitize but they must simultaneously integrate these approaches to ensure interoperability, transparency and inclusivity.

The Bank of Ghana (BoG) through the Ghana Interbank Payments and Settlement Systems (GhIPSS) introduced the Universal Quick Response (QR) Code payment solution last year to simplify merchant payments and reduce the use of cash. The QR Code has been made available to banks and payment service providers, as well as SMEs to enhance business transactions. As an additional step, the BoG has also initiated processes for a pilot central bank digital currency to further move the Ghanaian economy towards a cash-lite environment. According to Dr. Maxwell Opoku-Afari, First Deputy Governor of the Bank, “We anticipate that the Bank’s Central Bank Digital Currency (CBDC) project which would be piloted from this September in a sandbox environment would further advance financial inclusion, promote the efficiency and stability of the payment system, and foster competition in the financial sector.” He continued, “Digital Currency is part of the central bank acknowledging the need for digital payment and digital delivery of financial services, this is formally to get into that space and be able to provide a platform on which we can add more value to digital transactions”. Emphasizing that ” mobile money transactions are not backed by cash and hence limits the value addition,” Dr. Opoku-Afari asserted that the central bank’s digital currency is fiat money, that it is cash on its own so that financial institutions like banks and fintechs will be able to create value addition on the digital cash. He however said “Cryptocurrency is not yet legal in Ghana and not regulated by the central bank. That technology is very laudable, and we have setup a team that is studying it”. Adding that the Central Bank’s approval for the use of the digital currency by Ghanaians will be determined by how successful the piloting of the CBDC goes. Many African economies have expressed their desire to issue electronic versions of their respective national fiat currencies. However, apart from Nigeria, which announced the launching of its digital currency, due to debut on October 1, 2021, in response to Ghana’s , no other African country has taken demonstrable steps toward piloting a CBDC. In essence, Ghana is leading the path for digitization on the continent and until the rest of the continent is digitized and fully integrated, Ghana’s leadership may be in vain – hopefully not.

Are Mobile Operators the next Fintech Startups?


Africa’s leading Mobile Network Operators (MNOs), MTN, Vodacom and Safaricom, have recently made bold plans to venture into the increasingly dynamic world of fintech. On 23rd June 2021, Safaricom launched its super app, which creates an ecosystem of mini apps from the network operator as well as third party apps that feed off the super app. A month prior to this development, Safaricom, the leading MNO in Kenya announced plans to release an Application Protocol Interface (API) for the super app to enable third-party app developers to build more products and services on top of the super app. This means the super app is going to be an app store that consolidates the reach of Safaricom.

In May, MTN also announced plans to become a tech platform to rival the likes of Apple and WeChat as part of their Ambition 2025 which is currently being implemented. MTN, Africa’s leading telecom operator, is developing its Ayoba messaging platform into a super app that would include its Mobile Money (MoMo) application and video and music streaming services, largely inspired by the international success of WeChat, a powerful multi-purpose messaging, social media and digital wallet app. In April, Vodacom CEO sat down with CNN to discuss plans for building a super app in South Africa in partnership with Alipay. The new service will be integrated with Vodapay to create a financial services super app that will let users pay utility bills, transfer money and get connected with online merchants and suppliers. Although the partnership with Alipay was announced last year during the pandemic to bring the much-needed digital services to consumers under lockdown, it has taken almost a year for them to bring the service to life. This suggests that becoming a fintech startup is easier said than done.

In March, Liquid Telecom with operations in different African countries rebranded to Liquid Intelligent Technologies to show that it is now a one-stop-shop technology group. Very soon, the company would also launch a super app to allow consumers to access all its services through one platform. Although Orange, another MNO with operations in 18 African countries has not announced a super app, the company’s launching of Orange Bank Africa last year, in addition to their already existing Orange Money service, seems to play into the super app narrative. Airtel Africa has also not announced a super app although they had stella performances last year in the MoMo and data business.

Super apps act as a single point of entry for multiple consumer functions. The model emerged in Asia and allows a user to access a range of services — banking, ride-hailing, communication, hiring, trades, people, etc — all from within one app. Back in 2019, Cellulant from Kenya, a leading African fintech firm, also announced plans to launch a super app called Tingg. Super apps are trending not only in Africa. There is a global race to create the next super app that would rival the likes of WeChat, which has a billion users and now estimated to offer more than one million mini programs created by third parties. The other main player is Ant Group’s Alipay, which also has more than one billion users and offers 120,000 mini apps by third parties.

WeChat, owned by Tencent, the most valuable publicly-traded company in China, began making inroads in Africa in 2013 via South Africa’s Nasper, an early strategic investor in WeChat’s parent company. WeChat’s foray into Africa failed, with the company quietly exiting in 2017. Given that WeChat’s partnership with Nasper did not guarantee success, time would tell whether Alipay’s partnership with Vodacom would be successful. In 1994, Naspers, Koos Bekker and other partners launched MTN, which is currently Africa’s largest MNO. Major MNOs are all eager to become nimble fintech startups to compete with the agile young tech ventures, which begs the question, can old dogs learn new tricks? The answer could be yes because the MNOs have led the innovation in MoMo dating back to 2007, when Safaricom ushered in M-Pesa, a pioneering MoMo app into the Kenyan market, leading to a remarkable digital payment and mobile banking revolution across the entire African continent.

Today, all major MNOs have MoMo operations, which has become their new cash cow to the detriment of the banks. In some markets such as East Africa, the MNOs, including Safaricom, are operating “banking services” directly competing with traditional banks. In Nigeria, this has not been the case until the 3rd quarter of 2020, when the Central Bank of Nigeria (CBN) issued final approval to Glo, 9Mobile and Unified Payment subsidiaries to operate as Payment Service Banks (PSBs). In parts of West Africa, the banks, including Fidelity Ghana and Ecobank Ghana, managed to lobby the regulators to “force” the MNOs to work with them to deliver those banking type services. Back in East Africa, the question has been asked, “Is M-PESA transforming into a bank” with the launch of its super app? This question has led regulators and public policy makers in some countries to require the MNOs to separate their MoMo operations (classified as fintech) from their mainstream voice business. In some markets, the companies are also required to make some ownership of their fintech ventures available to the public through listing on the local stock exchange, just as they are mandated to list their voice businesses. In Kenya, there is a bill before parliament requiring the separation of M-PESA from Safaricom as a standalone fintech business.

The MoMo operations of the MNOs made the most significant returns under the pandemic because majority of transactions were done through their networks. Nigeria recorded $428B worth of e-transactions in 2020, 42% higher than in 2019. In Ghana, MoMo transactions outstripped cheques by $40B in the first quarter of 2021. This sent shock waves to the Ghanaian banking sector such that the banks are now forging collaborations as they fear for their future. In other news, Ghana is edging towards a state-backed digital currency to mitigate against the volatility of unregulated digital currencies, such as bitcoin (BTC). The value of M-Pesa transactions in Kenya grew by 32.9% year-on-year to $82B in 2020, whilst the volume of M-Pesa transactions grew by 14.9%, to 5.12 billion transactions. Orange’s MoMo service also saw an 18.9% increase in active users to total 19.6M customers by the end of June 2020. In Kenya, MoMo payment rate represents 87% of the country’s GDP; in Ghana the figure is 82%. These are the highest ratios in the world after China where mobile transfers represent 125% of GDP (this includes person-to-person transactions not included in GDP calculations).

On the contrary, South Africa where Vodacom and MTN reside, have not seen that much success with mobile money mainly because that country has a solidly entrenched banking system, with 70% of adults having a transaction account. Earlier attempts by both operators to introduce MoMo in South Africa failed but in February 2020, MTN relaunched its MoMo service with UBank and in December 2020, with the mobile telecom giant claiming 2 million new customers. Vodacom’s new Alipay app is their second attempt to carve out a fintech niche in South Africa, whilst Discovery Bank and Tyme Bank have launched exclusive digital offerings without the telcos. Things are clearly playing out quite differently in Southern Africa. Given that the MNOs are in a fist fight with the banks with regards to fintech, would the banks also seek to become innovative mobile startups now that the MNOs are becoming fintech startups?

Big Tech in African Fintech


I ended my May 2021 essay with the hypothesis “…leading fintechs might turn around and start acquiring the banks” and, sure enough, on the 12th of May 2021, the Competition Authority of Kenya in a gazette notice approved the acquisition of 84.89% stake in Century Microfinance Bank by Branch International Limited – a leading global fintech with operations in Kenya. One of the signs of a maturing ecosystem is home grown ventures mature into unicorns, gazelles and zebras, increased mergers and acquisitions and the entry of global tech giants hungry for a piece of the action – the subject of this essay and the final in this series to end the second quarter.

Whilst the Branch acquisition was unexpected, it was unsurprising when Twitter announced on 14th April 2021 that they are setting up their Africa HQ in Ghana. On the very same day Amazon announced an investment of $280M in their new 70,000 square meter office complex in Cape Town as their African HQ. Even though Amazon has been in SA since Amazon Web Services (AWS) first established its presence in Cape Town in 2004 and later opened a Joburg office in 2015, this is the biggest investment in an African HQ by a tech company. They subsequently partnered with the South African Post Office (SAPO) to establish the Amazon model in Africa. In February 2021, global music streaming giant Spotify announced, it is now available in more than 80 emerging markets including Ghana, Kenya, Nigeria, Tanzania and Uganda. Even though Facebook has had an office in SA since 2015, Mark Zuckerberg’s visit to Nigeria in 2016 led to the opening of their second Africa office in Lagos in 2021. Amidst the pandemic last year came the big news, Stripe acquired 100% of Paystack a leading African Fintech – this was the strongest signal that big tech in coming into African Fintech. This is because the African fintech sector is heating up and big tech does not want to be left out.

In some ways, these could actually be seen as late comers to the party because even though some have been around much longer, in 2007, Google setup it first African office in Kenya hiring now Minister of ICT, Joe Mucheru to lead the charge even though it had some sales guys in SA dating back to 2006. Google has since built an extensive presence in Africa. Microsoft has also had presence in South Africa dating three decades back but in 2013, it launched its Microsoft4Afrika initiative in Kenya to start investing in start-ups, SMEs, partners and youth.

In 2019, Microsoft launched a $100M initiative to establish development centers over the next five years starting with Kenya and Nigeria and recently announced the establishment of two data centers to bring services closer to its users. That puts Microsoft in the forefront of initiatives aimed at the African tech ecosystem. In 2013, the International Business Machines (IBM) Corporation also opened a $100M research facility in Kenya followed by Oracle making its first Africa acquisition of Nimbula, a provider of private cloud infrastructure management software which was how Oracle entered the cloud business. In the same year, Chinese tech giant, Tencent, opened an Africa office in South Africa through Naspers (their shareholder) to operate WeChat Africa to somewhat unsuccessfully compete with WhatsApp. Tencent is now primarily responsible for the operations of the JOOX music entertainment app. Back in 2001, Naspers made a $34M investment in China’s Tencent Holdings for 33.3% which is now valued at more than $175B so Tencent could afford to have an Africa office. In May 2021, Dutch listed technology investor Prosus NV increased its stake in Naspers to nearly 50% in a share swap deal that will move part of their holdings in China’s Tencent to Amsterdam.

Even though Alibaba, another Chinese Internet giant does not yet have a formal Africa operation, it’s founder Jack Ma has made periodic visits to Africa since 2017 suggesting that they may setup an office soon especially since he stepped down to focus on philanthropic activities on the continent. The latest evidence of this is their partnership with Flutterwave. In 2019, Chinese owned Opera browser, launched Opay into the Nigerian market to make its debut into Africa with a $50M investment. Opay is now raising $400M at a $1.5B valuation – joining the unicorn club. In 2008, another Chinese tech manufacturer, Transsion opened offices in Nigeria and later other countries for the African market with a focus on low-cost phone brands like Tecno, Itel, Infinix, etc some of which it now manufactures in Ethiopia. It has recently setup Transsnet in a joint venture to focus on creating an application layer on top of their smart phones – for example, Boomplay for music and Palmpay for payments.

Finally, we have also seen the trend of the CEOs of some of these big tech companies visiting the continent to ascertain things for themselves. So far about eight of them have made multiple trips including then Google Chairman Eric Schmidt’s visit in 2013 to Kenya following which he wrote a detailed observation. With this much attention on Africa as the current nexus of global tech innovation, is it possible that some of the new Special Purpose Acquisition Companies (SPACs) that have raised soo much capital through the public markets (such as Tidjane Thiam’s Freedom Acquisition I Corporation) would also start looking at acquisition targets in Africa? especially when leading fintechs like Flutterwave have made it known that they want to go public.

Mergers and Acquisitions in African Fintech


On 1st of April, as I was publishing my Uniconization of African Fintech piece, Mastercard was busy announcing their $100 million investment into Airtel Money (Airtel Africa’s mobile money subsidiary) to acquire a minority position – half what TPG Capital. Even though I had gotten wind of the transaction knowing that Mastercard was already in bed with Airtel Money – some part of me thought of it as an April fools joke…:-). On the 12th of April 2021, Mobile Telecom Network (MTN) announced the valuation of their mobile money business at $5 billion making it the 7th African fintech unicorn with plans to bring in minority shareholders before going public. Given that Visa is already in bed with MPESA (Vodacom and Safaricom’s mobile money business), it is a matter of time before Visa also invests. The unicornization of African fintech is the first trend but the second, topic of today, are the mergers and acquisitions in the sector.

Mergers and acquisitions are slowly taking shape in the African fintech sector but, unlike the uniconization, they are manifesting on two interrelated tracks that may or may not eventually converge. The first track is maturing fintechs are acquiring smaller and earlier stage ones to grow their market share and establish territorial presence as Andrew Takyi-Appiah, CEO of Zeepay, told me. On the 28th of April 2021, two headlines made the news; AZA bought Exchange4Free whiles Ajua acquired Wayawaya. Zeepay had earlier acquired Zambia’s Mangwee Mobile Money and MSF Africa had acquired Beyonic last year. In 2018, Emergent Technology acquired Interpay Africa in Ghana and back in 2016, Interswitch acquired Vanso – the infographic below gives you more details.

The second interrelated and accelerating track that has the African banks at the center of it. Some of the big banks in Africa have realized that if they are not careful, African fintechs would take over what used to be the domain of banking. This has led some of them to establish ways to gain visibility into the market so that they can make snap acquisitions and strategic investments to protect their interests. The first evidence of that came through on the 24th of March 2021 when First National Bank (FNB), South Africa’s most innovative bank acquired 100% of local fintech firm Selpal to gain access to their community and township based “mom and pop” businesses.

FNB Commercial, together with Edge Growth, manage the Vumela Enterprise Development Fund with other South African banks following whiles the phenomenon is slowly crawling up to Eastern and West African banks. Standard Bank setup a corporate venturing arm and also backed Founders Factory to cultivate ventures for them to invest in. Nedbank has a VC team that has made eight investments so far. Amalgamated Banks of South Africa (ABSA) made their first investment in 2019 followed by the second one in 2020. Rand Merchant Bank (RMB) has their own accelerator, Alphacode that is incubating startups. Ecobank Group has their fintech challenge which annually selects startups that have strategic fit for integration. Equity Group which owns Equity Bank has also launched the Equity Investment Bank (EIB) to back early-stage funds that would back startups. A totally different approach but with the same ramifications.

Then we have those banks that seem to be late to the party or have still not come to terms with the changing landscape and continue to lobby regulators not to allow fintechs into their space. That came to a head on last month in Nigeria when the lenders kicked MTN Mobile Money (MoMo) off their shared platform because MTN MoMo halved it commission charged on the banking channels to 2.5%. The regulator had to intervene to restore MTN MoMo to the platform and reinstated the commission to 4.5% for the purchase of airtime via the banks. Whilst this may look trivial; it is really about the banks that are not on the fintech wagon realizing that fintechs are putting their business and margins at a significant risk. For example, in Ghana, MTN MoMo has about 15 million active accounts whilst all the 23 banks collectively have about 5 million bank accounts – that is a 3:1 ratio.

In Nigeria, the Central Bank is yet to approve payment-service licenses to MTN Nigeria and Airtel Africa after two years of them putting in their application which would allow them to provide most banking functions except lending and taking foreign-currency deposits. Whiles that seems to be a showstopper, Nigeria’s recent open banking regulations have forced the banks to share their data with the fintechs. This levels the playing field to some degree but begs the question whether the banks would change their strategy and start looking to acquire the fintechs or whether the fintechs like Flutterwave, Interswitch, Fawry, Airtel Money, MTN MoMo or MPESA which are all worth more than a billion dollars might turn around and start acquiring the banks. Whichever way it goes, M&A is going to characterize the African fintech space as the second major trend after unicornization for the foreseeable future.

The Unicornization of African Fintech


The first quarter of 2021 ended on a great note as two African fintech businesses gained unicorn status, a rare fit amidst a raging global pandemic which is finally being aggressively tackled by the speedy supply of much-needed vaccines. Such is the African story – a trail of surprises in the midst of uncertainty. On 18th March 2021, Airtel Africa announced it had received a $200M investment from TPG’s Rise Fund at a valuation of $2.65B making it the latest African unicorn. Exactly a week before, March 10th, 2021, Flutterwave from Nigeria also announced a $170M investment from Avenir Growth Capital, Tiger Global Management and others at a billion-dollar valuation. In the tech world hitting a billion-dollar valuation is a big deal – you earn the name Unicorn, a mythical animal that represents the statistical rarity of successful ventures coined in 2013 by Aileen Lee of Cowboy Ventures. Most global technology companies strive for unicorn status preferably before they go public. As of March 2021, there are about 614 unicorns globally with a total valuation of $20041B according to CB Insights. Given that the Africa tech ecosystem is maturing we are now seeing the manifestation of this mythical animal which is the subject of this essay to start the second quarter of a defining year.

These developments brought into sharp focus the uniconization of African fintech, ignited the debate whether unicornization abroad is the way to go for African tech ventures or whether according to Marieme Diop of the Dakar Network Angels, the focus should be on Gazelles (i.e. companies valued at $100M with $15M to $50M in revenues listed on the local stock exchanges) to boost the African market and create liquidity at home? There is yet a third animal in the African kingdom introduced by Keet van Zyl of Knife Capital who argues that Zebras are less spotted profitable sustainable businesses that have an impact stripe – they solve really meaningful problems. In my view we are going to have the manifestation of all three and even more as different entrepreneurs and investors pursue different approaches. After all Africa is large enough to accommodate many unicorns, gazelles, zebras, etc. What is important to all businesses is the need to build strong unit economics at the foundation as Reid Hoffman’s blitzscaling is now giving way to Tim O’Reilly argument. More importantly the recent crush of WeWork has everyone going back to the fundamentals – positive unit economics. This is more so apparent in the African context given the dynamics and challenges of operating in our markets, which led to the construct of the zebra and gazelle. Not so long ago the unicorn was a sought-after mythical construct in the African context, which has now been found.

With the addition of Airtel Money and Flutterwave, Africa now has six fintech unicorns making fintech the leading sector in Africa’s digital economy. The other four are Fawry, a local Egyptian payment company that listed on the Egyptian Stock Exchange in 2019, that started as a gazelle and became a unicorn last year at the height of the pandemic. This is a strong case study that highlights a firm’s ability to start as a gazelle (or zebra) and become a unicorn. Unicornization through acquisitions was successfully demonstrated by Vodacom and Safaricom that completed the acquisition of MPESA, which has more than 41.5M customers across Kenya, Tanzania, Lesotho, Democratic Republic of Congo, Ghana, Mozambique and Egypt processing more than $12B in transactions, from Vodafone last year during the pandemic. Interswitch also gained unicorn status with the $200M investment from Visa that valued the firm at a billion dollars. Finally, there is the debatable “Africa unicorn”, Jumia (an e-Commerce company which could fall in the fintech category) who debuted on the New York Stock Exchange (NYSE) in the second quarter of 2019 but has since been in and out of unicorn status. It is no surprise that the unicornization of the African continent started with fintech enterprises since every economy thrives on payment for goods and services and the innovation in Mobile Money (MoMo) changed the dynamic in Africa significantly. In the past, commercial banks have struggled to introduce electronic payment systems like debit and credit cards, however MoMo from the Mobile Network Operators (MNOs) came from nowhere as a surprise in Kenya. During the 2007/8 election violence in the country, MoMo suddenly became the only efficient means to make payments and MPESA (M for “Mobile” and “PESA” for Money in Swahili), the Safaricom brand took off. It has since been replicated by many MNOs and successful global fintech startups such as Stripe. The global GSMA 2021 MoMo report has Africa leading in growth.

Airtel Africa’s variant is Airtel Mobile Commerce BV (“AMC BV”), a wholly owned subsidiary of Airtel Africa Plc which trades as Airtel Money – the entity into which the TPG Rise Fund invested. Airtel Africa (originally Celtel which was acquired by Zain and then sold to Bharti Airtel of India) brought in Chidi Okpala from United Bank for Africa (UBA) in 2012 to join Airtel as the founding CEO of Airtel Money. Chidi was the right man for the job, having spent twelve years at UBA and Accenture with extensive knowledge and hands-on experience. This was a brave move which panned out well, resulting in a roll out across 17 countries. At the time of Chidi’s departure from Airtel Money in December 2015, he had set the business on the right footing, with 30M customers and $2B in monthly transactions. Today, Airtel Money is a unicorn and according to Chidi “I am delighted with the exceptional foundational work myself and team did back then, and the current phenomenal work being done by the current team.” Chidi has since gone on to launched Asante Financial Services, which he hopes to make a unicorn by 2025. He reckons that his Airtel Money experience prepared him for the Asante journey giving him the first taste of entrepreneurship albeit within a larger corporate.

Olugbenga Agboola (aka “GB”), Co-Founder and CEO of the second unicorn, Flutterwave, had a similar career path. He started as an Applications Engineer at Paypal (under the Paypal Mafia..;-) with a brief stint at Google Wallet Product Management then moved into the banking sector in Nigeria where he held positions with GT Bank, Standard Bank and then at Access Bank as their head of digital factory and innovations. While at Access Bank he saw the fragmentation in payments across Africa and together with his co-founder, Iyinoluwa Aboyeji (aka “E”) who had then exited his first startup, Andela, joined forces to start Flutterwave. It is important to know that while GB had come from a corporate executive background, joining forces with E who came from a pure entrepreneurial background was a perfect fit. E started as the founding CEO and later handed the reigns over to GB in October 2018 who, in turn, has done a great job of taking the company to unicorn status within three years. According to GB “Covid-19 played a big part in our growth because we were able to quickly onboard more customers”. He reckoned that “people who might not have said yes to online payments have now said yes because of the pandemic.” This confirms my earlier claim in a previous essay that the pandemic is speeding up the digitalization of the economy in Africa. Chidi and GB are both corporate executives who turned into entrepreneurs and from my previous essay they come with unique strengths which in the case of Flutterwave combining with E’s straight up entrepreneurial genes may be partly the reason they got to unicorn status faster .

However, in his excellent oped, Dr. Israel Ovirih a Lagos-based investment banker, serial entrepreneur and tech-evangelist outlines the critical ingredients for getting to unicorn status.
1. How big is the problem, or the pain and how serious is it? What are the products, services and derivatives created by the startup to alleviate or eradicate the pain? Are they being properly product-ized? Or service-tized? Is it being done in a creative and innovative manner?
2. The GRIT in the founding team and leadership, which dovetails into measuring their unflinching commitment, smartness and, if you like, the do-or-die optimism which drives the dream and its execution.
3. The amount of traction they have gained and how clear their roadmap is, in the face of the various contradictions in the local legislation or policy.
4. The present financial health of such startups and how healthy they are capable of becoming, considering their Value Proposition and Execution Story to date.
5. Finally, the strength of the market; local, regional, continental and indeed global.

The last point has a strong bearing on whether a company can become a unicorn, gazelle or remain a zebra as the market which some call the “Hand of God” is the ultimate determinant.

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