Africa Tech Bytes #3
Episode 3: June 2021
Hey there, my name is Jesse. I am a techie-fanatic!
This is the 3rd issue of Africa Tech Bytes, which is a monthly newsletter that brings you all the interesting stuff happening in the African tech space: in bits and bytes. (Here’s a link to last months article for your enjoyment :) )
Why Africa Tech Bytes?
As you can guess, I consume quite a huge amount of content — videos (TikTok), articles, newspapers, memes — on technology but also in entrepreneurship and finance. Yes, you read right, I’m from the last generation that still reads newspapers and magazines :)
And because I am not a sponge, that takes takes takes, I have decided to put together some of the cool content I think would be of interest to others like me. I will also seek to answer the SO WHAT about the news I am sharing from my perspective.
This month, our Featured country is Ethiopia. Hope you enjoy! And please feel free to leave a comment below.
FEATURE* Safaricom Entry into Ethiopia
This was by far one of the biggest news coming off the Telco space globally. If you are like me, I celebrated this the same way I would if Kenya qualified for the FIFA World Cup. The Ethiopian economy has long been considered a closed one. However this seems to have changed upon entry of Abiy Ahmed, the country’s current Prime Minister. Last year it was announced that the country would award telecommunication licenses to 2 new operators, bringing in competition to the State owned Ethio Telco which had long been the sole operator. With a population of over 100 Million people, the news spread far and wide and attracted attention from its next door neighbor, Kenya’s Safaricom.
Safaricom, the largest telecommunication provider in Kenya, partnered with Vodacom, Sumitomo (Japanese conglomerate) and CDC (UK Sovereign Investment Fund) to put in a joint bid for the license and was awarded a few weeks ago. Safaricom has disclosed that it owns a controlling stake in the consortium with 56% ownership.
The Ethiopian Communications Authority (ECA) confirmed that the Safaricom group and another consortium led by South Africa’s MTN Group were the only parties to make bids in the auction for two operating licenses. The other firms that had initially showed interest and dropped out of the race are Etisalat, Axian, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile, Kandu Global Communications and Electromecha International Projects.
This news is a game changer for the region in that investment in the Horn of Africa country is expected to top US $8.5 billion. It will be the single largest FDI (Foreign Direct Investment) into Ethiopia to date. The entry will also fast track the country’s digital transformation through improved broadband and connectivity across the country. The positive economic impact of the investment will also be felt throughout the Eastern African countries, boosting confidence for other investors into the region and improving integration.
It is worth noting that Safaricom will not be immediately allowed to rollout mobile money services, thus locking out M-Pesa for about a year.
Ethio Telecom adds over 1M new Mobile Money users in 1 week
Ethiopia’s sole mobile operator, Ethio Telecom, recently launched a mobile money service, seeking to boost growth by offering cashless transactions. Its new Telebirr mobile financial service registered over 1 million subscribers after just one week of its official launch. This portrays the zeal that Ethiopians had for such a service due to the pent up demand. The new service, will mark a great shift for the country, where the banking system has been seen as inefficient with 19 commercial banks serving a population of about 115 Million. Telebirr will allow users to send/ receive money, deposit / withdraw cash at appointed agents, pay bills to merchants and receive funds from abroad. They hope to attract over 21 million users for the mobile money service in the 1st (first) year of operating, and rising to 33 million within 5(five) years.
This comes at the backdrop of Safaricom being awarded a license to operate as a Telecommunications Service provider in the country. Only Ethio Telecom however will be able to offer mobile based financial services for now, as foreign operators are currently barred by law from participating. The government therefore seems to be strengthening its hold on the mobile money space before the possible entrance of M-Pesa into the scene within a year.
The Kenyan telco giant cannot assume that it will automatically replicate the success it has had in Kenya. For Safaricom to be successful with M-Pesa in Ethiopia, it will have to battle an incumbent, providing an innovative, convenient and affordable service to Ethiopians.
Is the new gold in Africa Fintech?
Nowadays, it seems that in order to strike Gold in Africa you just need to launch a successful Fintech firm. Chipper Cash, a fintech platform that offers mobile, cross-border money transfer services has recently entered the league Unicorn startups. “Unicorn” is a term used in the venture capital industry to describe a privately held startup with a value of US $ 1 billion and above. This is not far long after Flutterwave, a Nigerian fintech firm achieved this status (which I briefly covered in a previous Africa Tech Bytes issue).
Chipper Cash is a 3 year old startup, founded by Maijid Moujaled and Ham Serunjogi. The company offers no fee, mobile based P2P cross-border payment services and is present in up to 7 (seven) African countries- Uganda, Ghana, Nigeria, Tanzania, Rwanda, South Africa and Kenya.
Africa has been for several years considered un bankable given its low financial services penetration rate. However this drastically started to change with the advent of the mobile phone. Financial services technologies (Fintech) with mobile telephony at the center started to proliferate the African scene. Given Africa’s population of about 1.26 billion, with a large percentage being unbanked, there came a huge demand for fintech services to reach this population. The continent has also had a fast growing middle income populace, with an added appetite to spend.
Companies such as Chipper Cash have therefore been able to leverage this to offer financial services in Africa and reap the benefits. It is my belief this is just the beginning, and we shall see many more fintech success stories coming out of Africa.
Climate Activists win big over Shell — Exxon Mobil
As people continue continue to talk about the landmark ruling by a court against Shell as a win for climate change, there was a little known case that was also a win for those advocating for the same. ExxonMobil was involved in a case where an activist hedge fund, which owns a minority stake of 0.2% in the company. The hedge fund took on the giant win some sort of proxy war, requesting to have 2 of its reps as Board members at the oil giant. The nominees have in-depth experience in transforming energy firms, and pushing for action on climate change from a board level. They were able to further prove that in-action would erode shareholders wealth.
The win was significant in that it is not only positive for climate activists but also advocating for sustainable finance. We have seen a trend e.g. in Kenya with public companies such as Safaricom PLC and Absa Bank Kenya releasing annual sustainability reports. This is basically companies reporting on environmental and social performance, a struggling earth will leave struggling communities in its wake and that is not a conducive environment in which to do business.
Amazon Merger MGM
I have been closely following the ongoing streaming wars and I have concluded; The streaming world is so very extra! Amazon has made one if it’s largest bets ever by purchasing the traditional media giant behind James Bond for USD $ 8.45B. In comparison to its total spend on content, this may seem average. Amazon spent US $ 11 billion across its Prime Video, Prime Music and transactional video-on demand service in 2020.
What remains unclear is why Amazon is so bent on growing its steaming business; while we all traditionally know it’s strength in the e-commerce world. The tech giant is most likely seeking to increase the number of subscribers to its Amazon Prime service, thus locking in customers to an ecosystem that they may never want to exit.
Apple, another tech giant not necessarily in the media space , has also been spending large on original TV content / shows. In 2019 for example, they had committed to spend US $ 6 Billion on content and by 2020 had spent almost $17.3 Billion.
There is something ‘big tech’ has seen, and we shall soon find out as they take on the other well experienced media & streaming platforms (Netflix, HBO, Disney+). We also do hope that the increase competition shall translate to lower prices for consumers, *Fingers crossed*.
MTN Partners with IFC to scale Mobile Money Offering
Yes! We are still talking about mobile money!
This past month we saw MTN South Africa announcing that it would enter into partnership with IFC (International Finance Corporation) to expand its Mobile Money service, dubbed MoMo. The partnership valued at US $ 2 Million would see them target the unbanked and underbanked population by strengthening its networks of MoMo agents across the country.
The impact of this goes beyond growing MTN’s service offering, it seeks to support growth of employment opportunities for youth and women. This is because each new agent is expected to create employment and further bridge the digital divide gap and broaden financial access. The partnership will see MTN South Africa and IFC recruit over 10,000 Mobile Money agents in 2021 to increase access to affordable financial services in underserved communities.
Mobile financial services have become a significant part of the story that is the African Telecommunication operator. This follow Kenya’s Safaricom pioneering an alternative to banks with M-Pesa in 2007. We shall see several other investments of a similar nature by Telecom operators not only in Africa, but globally as they diversify their services and seek to serve largely underbanked and unbanked populations.
Other Great Bytes
Apple Glass
Did you know that Apple is mooting the idea of releasing Apple Glass? Here’s why I think it may actually work…. It is Apple!! 😃
They have had an experience of taking up ideas that other companies have tried and making it work. The smart phone, blue tooth earphones or the music player was not necessary novel. But given it’s great emphasis on design, robust testing, stable systems and it’s zeitgeist following, they have been able to bring relevance to almost any technology.
Let’s wait and see if they will succeed where Google glass failed and elevate what Microsoft HoloLens is doing for the mass market.
Microsoft Teases new Windows
During the MS Build 2021, Microsoft’s Satya Nadella teased that they will be launching a new version of Windows soon. The CEO however did not divulge any more detail on the same.
Techstars Startup Weekend Nairobi
Techstars Startup Weekend Nairobi is back. Bigger and better! Techstars Startup Weekends are 54-hour events designed to provide superior experiential education for technical and non-technical entrepreneurs.
This edition shall be held on July 23rd — 25th 2021. Register your interest to participate here.
That’s it for the month of May! If you enjoyed the bits and bytes, please leave a comment below. If you didn’t enjoy it, also leave a comment :)
