#23: African Tech Roundup—On Startup Cities & Internet Growth.

Updates about startup cities & internet growth in Africa, as well as updates on key activities in the African tech ecosystem.

Apr 04, 2024

👋🏾 Hello, my people!

I'd like to begin by welcoming the hundreds of people who have joined #vizifam since our previous issue. I am so glad to have each and every one of you on board! Please consider this my welcome.

As usual, we have a lot to cover in this issue. To begin, I'll discuss my observations on the potential rise of startup cities in Africa, as well as some updates on internet growth on the continent over the last month.

I'll also go over some interesting country-specific tech news, as well as fundraising, acquisitions, and contractions in the ecosystem. And, as always, I'll conclude by sharing some exciting fellowship and funding opportunities, as well as what I've been reading and listening to this week.

We have a lot to discuss in today's issue, so let's get started.

🔗: check out the related readings for all the topics in the roundup

Are startup cities the future of Africa?

A few weeks ago, I saw a LinkedIn post announcing that Honduras-based startup city Próspera is expanding to Africa. I found it very interesting because Itana announced a funding round a few months ago to build Africa's first startup city.

They stated that they will take a digital first approach and have established a "digital zone that allows global companies such as tech startups, e-commerce companies, and business service providers to operate and provide services remotely without the need to be physically present in Nigeria."

They also offer a digital residency program that connects you with other entrepreneurs, creators, and builders who are committed to Africa's growth and development. They are also building a physical city in Lagos, Nigeria, which they are calling the "Itana District." The goal is for the district to serve as a model for future African cities.

The concept of free zones isn't new. A free zone, also known as a special economic zone, is an area within a country that is intended to stimulate economic growth. These zones are typically subject to different and more favourable economic regulations than other regions within the same country, such as tax breaks and the ability to pay lower tariffs. They also tend to promote and attract foreign direct investment (FDI).

Nigeria currently has about 42 free zones, the majority of which serve the oil and gas and manufacturing industries. These free zones have greatly benefited the economy by providing space for businesses to produce essential goods for consumption and export at a lower cost. That's what makes these free zones so wonderful.

And, while these free zones are typically capital-intensive projects, the benefits far outweigh the expenses. The hope is that the development of Itana District will signal the beginning of high-technology free zones in Africa and that more influential individuals and firms in Africa will continue to develop these zones, resulting in the growth we envision for our continent.

Partech raise offers hope for seed-to-growth stage startups:

Partech recently closed its second Africa-focused fund, the largest to date, with €280 million to invest in African startups at all stages, from seed to Series C, which is great news for African tech companies. Many of these businesses struggled last year because there was insufficient funding to support their expansion.

This resulted in a 33% decrease in seed stage deals and a 39% decrease in growth stage deals in Africa, which is quite significant. So, while this money will not undo the damage, it will reduce the burden on seed-to-growth stage startups.

This new funding from Partech is significant because it means that these companies will now have the support they require to grow and succeed, especially since they are at a critical stage where they require additional assistance to achieve their goals.

Internet growth in Africa:

In the last newsletter, I discussed internet penetration and Africa's race to 5G internet. Well, the story continues. Twelve African countries experienced an internet outage two weeks ago due to damage to undersea cables, which are used to connect the majority of these countries to the internet.

Some of the countries affected by this issue included Nigeria, South Africa, Ghana, Benin, and Ivory Coast. The cost of Nigeria's internet outage was estimated to be $500 million. And that was only for four days, which I find absolutely insane. If there is one positive outcome from this, it is that it strengthened the case for taking satellite internet more seriously.

Surprisingly, Ghana recently discussed possibly lifting its ban on Starlink. The Ghanaian minister of telecommunications also encouraged existing internet service providers to look into satellite service. It could be related to the fact that a popular streamer, Kai Cenat, who was on a West African tour, was forced to cut his trip to Ghana short due to the outage.

While Starlink remains prohibited in Zimbabwe and Botswana, Zimbabwe appears to be taking steps of its own to launch more satellites into space. While the satellites they have launched in the past and plan to launch in June 2024 are earth observation satellites, I suspect they will launch an internet satellite in the near future.

In addition, Gabon and Uganda continue to invest in increasing internet penetration. Gabon recently announced a partnership with Moov and Airtel to expand mobile phone and internet access to 200 Gabonese villages. Ugandan tower infrastructure company TowerCo recently announced a $40 million funding round aimed at expanding mobile phone and internet access in the country's rural areas.

Beyond internet penetration, telecommunications companies are working to improve internet speed and reliability. Namibia and Somalia's leading internet service providers have announced that they will be testing 5G services in their respective countries, which is very exciting. And Mauritius currently boasts that 80% of its population uses 5G internet services.

I'm personally interested in tracking Africa's internet penetration and growth trend because data shows that more advanced economies have the highest internet penetration rates. So, if we're talking about expanding the African economy and making Africa the world's future, internet penetration and growth are critical to achieving those goals.

Country-Specific Spotlights:

RobotsMali, a government backed initiative, is using generative AI to preserve the country’s national languages and cultures by teaching them to school children.
Viamo, a Canadian company, has launched an AI-powered mobile phone service in Nigeria that operates offline, allowing users in remote areas without internet access to access AI technology via SMS or voice calls. The service is aimed at the world's poorest communities and is being expanded to other countries such as Pakistan, India, and Tanzania.

The latest GitHub Developer Report ranks Nigeria as the country with the second-largest growth in GitHub developer accounts in the world. With a whopping 45% growth in accounts from 2022 to 2023.
Benin-based electric vehicle company Spiro has exchanged over 10,000 old motorbikes for electric models in four African countries, but there are concerns about the long-term viability of its business model.
Touch and Pay, the startup behind the Cowry card, is transforming Lagos' public transportation system by enabling contactless payments, with 3.8 million users making 500,000 trip payments daily. The company is now looking to expand its successful digital payment platform to other states within Nigeria and into Ghana, aiming to raise $4 million for further growth.
Kenyan fintech Triply, focusing on streamlining payment processes for the travel industry, has been selected for Y Combinator's winter 2024 batch, targeting the enhancement of efficiency and exposure for small travel businesses in a burgeoning local travel market.

Key Moves in the Market: Acquisitions, Contractions, Fundraises & Expansions:

🔗: relevant links

Contractions:

MTN Group is selling its equity interests in MTN Guinea-Bissau and Guinea-Conakry to Telecel in order to exit smaller markets in the West and Central Africa region, as revealed in its 2023 financials.
Kenyan e-commerce startup Wasoko closed its Zanzibar office, paused operations in Uganda and Zambia, and laid off employees as part of a restructuring before completing a merger with MaxAB. High-profile executives resigned, and former employees sued for unsatisfactory exit packages. The merger consolidated roles, resulting in over 100 job losses.

Expansions:

Kuda Bank expands globally with payment licenses in Tanzania and Canada, targeting African migrants with remittance and wallet services.
Bolt expands into Egypt and Botswana, offering discounts and waiving driver commissions as part of its strategic African market expansion strategy.

Acquisitions:

Deel acquires PaySpace, a South African HR company, to enhance global payroll services, expanding its reach and capabilities.
Nigerian fintech Carbon has acquired Vella Finance and launched an AI-driven business banking platform to support SMEs.
FairMoney is negotiating a $20 million all-stock deal to acquire Kenyan digital bank Umba, aiming to bolster its footprint in Africa.

Fundraises:

French VC Ring Capital launches a €50 million Ring Africa fund for French-speaking West Africa, focusing on impact startups.
P1 Ventures secures $35 million for expansion in Africa, attracting the World Bank’s IFC as a partner to support tech startups.
Dodai, an Ethiopian EV startup, raised $4 million in Series A funding, with 80% allocated for electric motorcycle parts and batteries.
Tunisian AI startup Clusterweb raised $600,000 from InstaDeep's CEO and other investors to advance Arabic language models for improved user experiences in AI products.
Simera Sense secures a $14.75 million investment to expand production capacity, develop technology, and increase output to 200 payloads per year.
Ilara Health has secured $4.2 million in funding to enhance healthcare access in Kenya by equipping clinics with diagnostic tools and offering health services to uninsured workers.
Roam, an electric vehicle enterprise based in Kenya, has secured $24 million in Series A funding to escalate its manufacturing of electric motorbikes and buses, signalling a significant push in the African EV market.
Bfree, a Nigerian debt collection startup, secures $2.95 million to expand its ethical recovery services and develop a market for distressed debts in Africa.
Kenyan mobility startup BuuPass secures backing from Silicon Valley’s Tim Draper to advance its goal of digitizing Africa's long-distance transport sector.

Opportunities: Courses, Fellowships & Accelerators.

On an unrelated note:

Here are three of my favourite reads and listens this week:

Signing Out:

Alright, folks! We’ve come to the end of this issue. I hope you found it insightful. If you did, please let me know in the comment section. Your thoughts light up my day, so I'd love to hear them!

rapport by vizible.

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