Catching up with African Tech: Week of July 29th
This week: WhatsApp may exit Nigeria over $220M fine. Shein and Temu expand across Africa. Helios and Gaia target $600M climate fund. Google announces 10 startups for Africa accelerator.
👋🏾 Hello people!
Another week, another digest. I hope the days have been treating you well.
I had a tough time finding Africa specific product launches this week; I wonder if it was just a quiet week 🤷🏾♀️
Anyway, if you know of a product that launched last week or the week after, please send them my way!
There’s still a lot to discuss today so let’s get to it.
This week in fundraising:
Product Spotlight: Kasha
Who they are: Kasha is a Rwandan e-commerce company focused on providing women with access to health and personal care products.
The problem they're solving: Some women in Rwanda and other parts of East Africa face barriers in accessing essential health and personal care products. These barriers include limited availability, high costs, and social stigma associated with purchasing certain products, particularly menstrual hygiene supplies and contraceptives.
How they're solving it: Kasha addresses these issues by offering an online platform where women can discreetly purchase a wide range of health and personal care products, including menstrual hygiene products, contraceptives, pharmaceuticals, and beauty items.
Customers can place orders via the Kasha website or through USSD on their mobile phones, making the service accessible even to those without internet access. Kasha also provides discreet delivery services, ensuring privacy and convenience for their customers.
You can learn more about Kasha here.
What’s happening in the ecosystem:
African Fintechs Raenest, Leatherback, Vesti, and Graph, pitch as alternatives to Mercury for US Banking Services
Last week we talked about the digital bank, Mercury’s sudden compliance changes and how it will be affecting startups in 13 African countries. Since the announcement was made about two weeks ago, African fintechs like Raenest, Leatherback, Vesti, and Graph are positioning themselves as new banking partners for African founders seeking to park operating capital in the US and Canada.
Executives from these companies report a surge in interest from startups looking for reliable banking solutions. Leatherback's CEO, Ibitade Ibrahim, noted a significant increase in LinkedIn inquiries, while Raenest and Graph launched marketing campaigns to attract new clients.
Despite the attractive perks offered by these fintechs, such as same-day onboarding and no international transfer fees for the first two months, some startups are opting for US-based Brex due to reliability concerns. The need for stable banking solutions is crucial as these startups manage investor funds and operational expenses. Fintechs like Leatherback and Vesti emphasise their robust partnerships with US-based banks and compliance with standard KYC and KYB processes to ensure reliability.
While some startups have already switched from Mercury, the long-term preference for local or international banking alternatives remains uncertain. The competitive landscape continues to evolve as these fintechs strive to provide secure and efficient financial services to African businesses operating internationally.
The Mercury Bank situation has also sparked a bigger conversation about the challenges African startups face, especially around perceptions. We must tackle how we are perceived in the global business landscape and the stereotypes the world has of us. More than anything, we need better identification systems and regulations aimed at tackling the fraud problem the continent is plagued with.
WhatsApp May Exit Nigeria Over Regulatory Demands
WhatsApp faces potential suspension of its operations in Nigeria following a $220 million fine by the Federal Competition and Consumer Protection Commission (FCCPC) for data privacy violations. The FCCPC has also demanded that WhatsApp stop sharing user data with other Facebook companies and third parties without explicit consent. Meta, WhatsApp's parent company, is appealing the order, claiming it misrepresents how the platform operates.
If WhatsApp ceases operations, it would have significant implications for individuals and small businesses that rely on the platform for communication and customer engagement. Three privacy lawyers have questioned the FCCPC's reliance on Nigeria's National Data Protection Regulation (NDPR) as the basis for the fine, suggesting it may not withstand legal scrutiny.
And while WhatsApp has over 51 million users in Nigeria, there are debates around Nigeria not being a quality market, which means WhatsApp is less likely to body the cost of the fine in hopes that future revenue will make it worth it.
The $220 million fine's proportionality has also been debated, with some industry experts questioning its impact on government revenue. The potential exit of WhatsApp from Nigeria would underscore the challenges of balancing regulatory oversight with the practical needs of businesses and consumers.
That being said Nigerian users are unhappy about potentially losing access to the platform, and everyone is hoping for a favourable turn of events.
Shein and Temu, Chinese e-commerce brands expand across Africa:
Chinese e-commerce giants Shein and Temu are rapidly expanding their presence in Africa, with South Africa as their primary foothold. Shein has experienced explosive growth, increasing its South African user base by 300% in just one year. Temu, a newcomer that launched in January 2024, has quickly become the country's most downloaded app, signaling strong consumer interest.
While Temu currently operates only in South Africa on the continent, Shein has already extended its reach to Algeria, Morocco, the Democratic Republic of Congo, and Mali. This expansion strategy highlights Shein's ambition to capture a larger share of the African market. Both platforms are transforming the e-commerce landscape by offering affordable products and wide variety, attracting price-sensitive consumers.
Despite facing new challenges such as a 45% import duty and 15% VAT on certain imports in South Africa, these platforms continue to thrive. Their success is part of a broader trend in global e-commerce, with social commerce sales projected to reach $8.5 trillion by 2030, up from $700 billion in 2024. As Shein and Temu continue to adapt and innovate, they are poised to reshape retail across Africa, challenging both local and international competitors like the recently launched Amazon.
Helios Partners and Gaia to raise a $600 million investment fund.
Helios Investment Partners and Gaia Fund Managers are launching major climate-focused funds targeting Africa, aiming to raise $600 million collectively. Helios, the largest Africa-focused private investment firm, has secured $200 million from eight state-linked institutions for its Climate, Energy Access and Resilience (Clear) Fund, which has a $400 million target. Meanwhile, Gaia has committed $50 million towards its $200 million Gaia Africa Climate Fund.
These initiatives aim to capitalize on Africa's renewable energy potential and address agricultural challenges posed by increasing drought severity. The funds will invest in green energy, sustainable transport, agriculture, and resource efficiency projects across the continent. This surge in climate-focused investments reflects growing recognition of Africa's unique position to leapfrog traditional energy infrastructure and adopt sustainable solutions, while also addressing critical development needs.
Google for Startups Accelerator Africa: New cohort of ten startups announced:
Google for Startups Accelerator Africa has announced its 2024 cohort, selecting 10 innovative startups from nearly 1,000 applicants across Kenya, Nigeria, Rwanda, and South Africa. The chosen startups are leveraging artificial intelligence to address critical challenges in Africa.
The diverse cohort includes:
CDIAL AI (Nigeria): Enhancing multilingual communication
Earthbond (Nigeria): Providing affordable energy solutions
Fixxr (South Africa): Revolutionizing vehicle maintenance
Lifesten Health (Rwanda): Innovating health and wellness programs
MyAIFactchecker (Nigeria): Combating misinformation
Nakili (Kenya): Digitalizing salon management
NextCounsel (Nigeria): Boosting lawyer productivity
Nobuk Africa (Kenya): Simplifying group financial management
Rana Energy (Nigeria): Offering clean energy solutions
Triply (Kenya): Building Africa's travel operating system
Opportunities:
Open Startup is seeking African startups for its second GROW program. Designed to help early-stage companies scale and secure funding, the program offers mentorship, workshops, financial support, and networking opportunities. Applications close August 31st.
Mastercard Foundation AfOx Scholarships has open applications for the 2025 Scholarship to pursue a fully funded Master's degree at the University of Oxford. Targeting African students, the scholarship covers tuition, living expenses, and other support. Application Deadline, 6 January 2025
Jasiri Talent Investor is seeking talented East African entrepreneurs for its fully-funded 13-month program. The initiative focuses on nurturing high-impact businesses by providing comprehensive support, including mentorship, funding, and resources. Applications close October 17, 2024.
On an unrelated note:
Here are some of my favourite reads of the week:
Signing Out:
Alright, folks! We’ve come to the end of this issue.
As we wrap up, if you feel like we missed any big news or insights this week, please let us know what they are in the comments. I’m sure the community would benefit a lot from it!
I’m wishing you the best week yet.
See you next week ✌🏾