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The Next Wave

Outside of tracking fundraising metrics, the last $12bn to $15bn invested in African startups through VC should have been a learning experience. So what are we learning about these experiments in African venture capital so far?

Next Wave: What has $15 billion of investments in African startups taught investors?

As the population and youth unemployment grow side by side and disposable incomes fall, Africa’s need for stable, visionary and effective political leadership at all levels has never been more acute. But Next Wave is not a very political economy newsletter. We’ll leave that for others. Instead, let’s focus on what the broad technical features of what building a business despite the dreariness might look like.

How To Flip Africa’s Depressing Trajectory

Rwanda is Africa’s most ambitious ecosystem and country. A place I am optimistic about and invested in. Here’s how it can win for itself. This is the first of a series of ecosystem reviews, where I will attempt to pull at the threads of what often goes unspoken as African countries cultivate unique identities around technology, innovation and impact. Our first stop is my host for the past 7 weeks, the fledgling technology and innovation space in the Republic of Rwanda.

Next Wave: A roadmap for building a culture of venture in Kigali 🇷🇼

How many cities on earth have natural forest reserves occupying almost a quarter of the city area and are still entirely within city bounds? Not too many. Only one city on the planet—and perhaps the universe—fits the bill. Nairobi.

Next Wave: Kenya has an opportunity to provide regional leadership 🇰🇪

In Tunisia, raw talent and a tight-knit community of builders, entrepreneurs and tech workers could create Africa’s axis for deep tech. But not before a few important and urgent changes. With almost 5,000 students registered, Tunisia has the most number of student members in the Europe, Middle East and Africa region of the Institute of Electrical and Electronics Engineers. That is a stunning 1900 increase from 2011 when the country had only 263 student members. By total membership, Tunisia is the only African country in the Top 10 ranking of IEEE chapters in the EMEA region.

Next wave: Providing liftoff for Tunisia’s tech talent 🇹🇳

This week, I’ll take a break from the ecosystem review series to share a bit of my evolving thoughts on B2B retail digitisation in the past few weeks. The summary is that hurting FMCG sales leaves a question mark over how thick the digital layer in FMCG retail should be.

Next Wave: How much digitisation will be enough for B2B e-commerce in Africa?

Having a concentration of mature technology players but very little startup activity is precisely why Mauritius makes my list of interesting technology ecosystems to review. It is easy to dismiss Mauritius’s technology arena as simply a corporate IT and business process outsourcing world instead of a startup ecosystem. But that perception has too many blindspots. The island nation may house more business process outsourcing firms than what qualifies as a startup. But it is certainly not a laggard. It has just being too concerned with regular business administration, its bread and butter, versus pursuing innovation on its shores. And it knows this. Hosting some of Africa’s largest IT infrastructure players is a flex, but Mauritius wants more. And it wants this “more” to extend and enable its robust financial services sector.

Next Wave: Known for financial services, Mauritius wants the tech brand 🇲🇺

Ethiopia has always enchanted foreigners with its rich history and dated traditions. Some of them are preserved in the form of solid rock monoliths that defy explanation, given the crude tools of the era they were built. More recently, Ethiopia enchanted global emerging market watchers with its average GDP growth of more than 10% from the mid-2000s to the 2010s. This economic growth miracle dipped to 8% in 2015 and has since struggled to break 7% since 2019, around the same time that violent fraternal conflict drew storm clouds over economic reform and progress.

Next Wave: The Ethiopian miracle has been waiting too long 🇪🇹

In 2012, Jumia, Africa’s first ecommerce giant, revolutionised shopping by offering the service online, alongside shipping. Since then, they have grown as a market leader over the African continent. They have also gone on to list their shares on the stock exchange, in 2019. The listing went well; their stock prices surged 75% on its first day of trading. This made the company a unicorn with an over $3 billion valuation. But four years after that IPO, everything has crashed. Its stock now trades at somewhere around $4, losing nearly 70% of its value since its listing date.

Next Wave: Thinking about Jumia and the future of e-commerce 🛒🛍️

Last week, the Africa Climate Summit was held in Nairobi, Kenya. The conference was attended by key delegates from African countries, international organisations, and the private sector. The summit was a significant event for Africa, as it was the first time African leaders had come together to discuss climate change on a continent-wide scale. It also served as a platform for multiple electric vehicle (EV) companies—including BasiGo, which serves Nairobi with 20 electric buses for public transport—to showcase their products.

Next Wave: Africa is years away from adopting eco-friendly transportation

Smallscale modern retail in Africa will not completely replace open markets in Lagos, souks in Cairo, or storied markets like Karatina in central Kenya. But a subtle shift that can become a major marker of African retail is underway.

Next Wave: A modern retail wave is building up across Africa

One of the biggest news stories last week, at least in Nigerian tech circles, was my colleague’s (Ngozi Chukwu) reporting about Payday, the virtual card app. Per her reporting, Payday which announced a $3 million pre-seed earlier this year is now seeking a buyer after a potential deal with Moniepoint fell through amidst internal strife and customer complaints. Like Payday, two other fintechs, Dash and Float, raised significant sums which were subsequently lost or misappropriated. Stories like this, where startups raise significant sums only to go bust months down the line, inevitably get a lot of attention. The businesses involved usually have thousands of customers and interested stakeholders from investors to regulators.

Next Wave: Africa’s investors have their work cut out for them

Tech startup founders face a series of challenges on the path to success. When do they finally get to reap their rewards? The thing with arguments like how much a founder should earn is, it is subjective. We can speculate and harmonise based on an industry standard but who sets it anyway? If indeed there is a standard for how much a founder should earn, it is still subjective and mostly dependent on the founder to set.

Next Wave: When is the ultimate Eldorado for a startup founder?

With the inclusion of venture debt, venture inflows to Africa totalled $6.5 billion across 853 deals – but Somalia did not get any of this share.

Next Wave: Somalia should be part of the tech ecosystem conversation in Africa

It’s easy to talk about how African entrepreneurs will face more challenges with raising funding because VCs dashed (a Nigerianism for a gift, typically in cash) millions of dollars to poorly thought-out venture experiments or outright fake businesses. A lot of people like to talk about this and go on and on about it. I don’t. I intensely dislike the discussion because not only is it distracting, it is fodder for bad assumptions and priors. Priors in this sense is the statistical probability of an outcome regardless of unknowns. For me, the meaning of new reports detailing bad founder behaviour is simple. Everyone needs to grow up and stop being sheep.

Next Wave: Do VCs still believe in VCing?

In the last 10 years, venture capital has become a global industry, but the latest crisis will test how much the underlying principles of VC investing apply outside of Silicon Valley.

Next Wave: Rewriting the venture capital “theory-of-everything”

The new goal for African telcos is becoming technology platforms not just old goody mobile carriers. Twenty-five years ago when Mohammed Ibrahim was setting up MSI Cellular Investments, the mobile network provider better known as Celtel, in Africa, few people thought mobile phones had a future in Africa. But the Doubting Thomases were wrong and the few hardy believers like Mo were right. From a few thousand telephone connections in the late 1990s, sub-Saharan Africa has today become the epicentre of the GSM mobile phone revolution.

Next Wave: Africa’s mobile revolution has hit a plateau

“A startup is a lonely place. You are working on something that no one believes in, that you’ve been told time and time again will never work. It’s you against the world.” – Marc Randolph, co-founder, Netflix.

Next Wave: The mental price of being a founder

African governments are pushing for digital IDs without informing people of their privacy implications. Many African countries plan to gradually phase out traditional IDs with digital alternatives. This transition has become commonplace in recent years as governments throughout the continent slowly call for digital identification. Key progress can be seen in Kenya, Ethiopia, Uganda, and Rwanda.

Next Wave: Maybe Africa needs to pause its rush to adopt digital IDs

The Estonian tech ecosystem was not built in one day. According to the East European nation’s ambassador-at-large for Africa, Daniel Schaer, Estonia, which achieved independence in 1991 from the Soviet Union, was just like any country across the globe that has freed itself from colonisers. It was poor but had big ambitions, and based on who you ask, it has managed to achieve them. Part of its development agenda was to modernise its government and the overall public sector.

Next Wave: Estonia is invested in exporting its tech to Kenya 🇪🇪 🇰🇪

Africa Fintech Summit

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