Emeka Ajene ✍🏽
@eajene
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Insights on business, tech, & leadership in Africa • Africa Tech expert • Get smarter about tech in Africa → • Follow @AfridigestHQ
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In 2018, I moved to Togo & spent the next four years building Africa's super app, starting w/ Francophone Africa
Today, Gozem operates across multiple verticals in 🇹🇬, 🇧🇯, 🇬🇦, and 🇨🇲
I recently transitioned away & had some time to reflect
Here are 10 lessons I learned...
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African markets aren't monolithic
Different countries have different characteristics which require tailored approaches
That's one of many barriers to scaling across the continent
Here, for example, is a breakdown of Africa's eleven key fintech markets into four main archetypes
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1/ How should startups think about growth?
There are 4 basic options:
• Target an existing market/customer-base with existing products
• Target existing customers with new products
• Target new markets w/ existing products
• Target new markets w/ new products
Details 👇
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Africa’s largest banks (by revenue) are concentrated in South Africa, Nigeria, Egypt, and — to a lesser extent — Morocco
There are two takeaways here for me:
1. It's no coincidence that mobile money in Africa has struggled so far in countries where bank power is concentrated
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99% of bank accounts in Nigeria contain less than ₦500,000 (~$625)
97% of bank accounts in Kenya contain less than Sh100,000 (~$700)
93% of bank accounts in Uganda contain < Sh1,000,000 (~$275)
Financial inclusion & access is important, but it doesn't magically create wealth
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African markets aren't monolithic
Different countries have different characteristics which require tailored approaches
Relative to fintech, for example, some mkts are bank-led, others are mobile money-led, others are mixed
Here's a breakdown of Africa's 11 key fintech markets
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1/ If you're building a business in Africa, you should:
• understand the growing power of the African diaspora, and
• think about how to harness it for commercial impact
To get you started, here are 5 startups embracing the global African diaspora as a business strategy 👇🏽
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1/ Entrepreneurs building for African markets should look to the East — particularly to Southeast Asia & India — for business model inspiration, not to the West
That's an argument I've made for a while now — see this six-year-old essay, for example 👇🏽
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Asset-light business models require less capital
As such, they're alluring to founders & investors across Africa
But the reality is that you can't have asset-light models if the assets don't already exist
Many African mkts lack relevant infrastructure—making asset-light a myth
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Good health is often underappreciated
When your body's working properly, you don't give it much thought
But when it's not working properly, it consumes everything
'A healthy person has a thousand wishes, a sick person has just one'
Remember to prioritize your health
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Once seen as one of Africa's most promising startups,
@GroIntel
is officially shutting down — after $125M+ raised
Despite developing strong IP, Gro apparently had issues commercializing it at scale
It's a reminder that creating value ≠ capturing value
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One of
@Moniepoint
's East African M&A targets is now public
@CAK_Kenya
just approved the 100% acquisition of
@KopoKopoInc
, a Kenyan SME-focused payments & digital financial services provider, by the Nigerian business banking platform
Fintech M&A is likely to heat up across Africa going fwd
There've been rumors of a quiet East African
@moniepoint
acquisition
And there's now news that it's taking a good look at targets in Nigeria, Kenya, & Tanzania, and plans to make at least one acquisition before year end
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Very busy week for tech in Africa last week with ~$192M raised across 24 deals, including 9 African companies (so far) in
@ycombinator
's W22 batch
Here's a look from
@AfridigestHQ
at the deals that happened across the continent in the third week of the year 🚀
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If you haven't seen it yet, here's a version of the Chipper Cash story without the paywall
“After layoffs & a deep valuation cut, it’s focusing on the basics...
Chipper’s predicament is emblematic of the challenges many fintech startups face today.”
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“We're facing right now in emerging markets & especially in Africa the worst macroeconomic situation in a decade or more... It's heavily impacting the purchasing power of consumers.”
— Jumia's CEO on the earnings call today
The company lost 1M active customers over the last yr
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1/ Tech startups in Africa are increasingly raising cash in a unique way
Not by selling equity or borrowing, but by securitizing receivables — money owed by customers, but not yet collected
@SunKingGlobal
,
@MNT_Halan
, &
@maxdrive_ai
, for example, all securitized assets recently
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"Venture capital’s spray-and-pray strategy, which bets on one billion-dollar unicorn out of many initial investments, is not suitable for Africa."
Interesting piece from one of the founders of Zumi, the Kenyan e-commerce platform that shut down last year
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1/ Africa's tech ecosystem has a bit of a gender problem
It's still pretty rare to see women on the founding teams of VC-backed startups
And it's even more rare to see women at the helm of VC-funded companies
That's part of why this list from
@AfridigestHQ
is important
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Neobanks are on the rise across African markets
African consumers tend to be financially underserved by incumbent banks
So, digital-first neobanks are stepping in to fill this gap in the market
And looking at customer acquisition to date, it seems there's a market in that gap
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Keep being paranoid
That's one of many lessons founders can learn from
@Eniolorunda
, Founder & CEO of Nigeria's largest business payments platform
@Moniepoint
He shared a lot of wisdom in our conversation about how he built the company
Watch it here:
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1/ Low-end smartphones dominate Africa
~80% of smartphones shipped to the continent sell for under $200, and half of those sell for under $100
Device affordability is among the key factors in bringing new folks online
But there are a number of other implications here too...
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On startup shutdowns across Africa:
The credit belongs to those actually in the arena
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The US & the UK are the top source countries for remittance inflows to Nigeria
The third may (or may not) be surprising—it’s neighboring Cameroon
In fact, Cameroon to Nigeria is the largest intra-African remittance corridor across the continent
Here's a look at the top five 👇🏽
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"It’s not an easy thing to be laughed at by serious people ... Somehow I just kept thinking, I know there are challenges but why can’t they see the opportunity?" —Mo Ibrahim, on pitching Celtel to potential investors in the late 90s
In 2005, Ibrahim sold Celtel for $3.4 billion
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The job of a CEO is
1. Defining the current reality, articulating the desired future, and charting the path towards it
2. Acquiring, developing, & retaining talent
3. Monitoring, managing, and maximizing the money
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"Most markets in Africa are sub-scale"
That's according to
@dokoudjou
whose firm
@MFS_Africa
has a presence in 35+ African countries
And it's true
Even Nigeria — Africa’s largest economy — has a smaller GDP than Boston, Massachusetts, for example
Here's a chart for context:
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When you experience early success, it's easy to overlook the role of luck and believe you're more skilled & gifted than you actually are
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Fintech is the hottest sector in African tech — but it's mainly been about payments & consumer/SME lending
Asset financing is among the fintech sub-sectors on the rise, however
And segments within it that enable entrepreneurship — like vehicle financing — are worth watching
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Here's a bit of African business history that should make for some good weekend reading
It's a 2007 case study on
@MPESAAfrica
by Nick Hughes, 'the father of M-Pesa,' & Susie Lonie, the original project mgr
M-PESA: Mobile Money for the “Unbanked” - (PDF)
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There are reports and then there are monster reports 👀
Highly recommend reading this new 200+ page monster of a report from
@FTPartners
& co
Especially if you're building or investing in fintech in Africa (or are otherwise interested in the subject)
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Fintech is big business in Africa
Here's a look at the 2022 revenues of some of the continent's fintech giants
• Egypt's
@MNT_Halan
• Kenya's
@MKOPAKenya
• Nigeria's
@Moniepoint
• Nigeria's
@FairMoney_ng
• Nigeria's
@Paga
• S. Africa's
@TymeBankZA
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2021 has been quite the year across Africa's startup ecosystem with the rise of fundraising mega-rounds and five unicorns minted
Here's a look at the $100M+ mega-rounds that happened across the continent this year 🚀
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African markets are far from monolithic
Even some of the most widely repeated narratives — like Africa leading the world in mobile money — should be thought of as generalizations
While mobile money is indeed king in certain countries, it plays a negligible role in many others
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1/ How do you build a tech unicorn in Africa today?
• You serve underserved markets that have lower levels of competition
• You get support from larger organizations that can accelerate your growth
• You maintain a sober view of reality & kill what's not working
Read on 👇🏽
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Success — real or perceived — attracts competitors & copycats
That's why 'moats' matter
Here's a look at some of the most common moats that help businesses deter & withstand competition
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With today's announcement, global talent network
@Andela
officially joins Africa's unicorn list
@InterswitchGRP
,
@theflutterwave
,
@OPay_NG
, and
@WaveSenegal
round out the list
Notably, 4 of the 5 achieved this status just this year & Andela is the only non-fintech unicorn
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1/ While Anglophone Africa sucks up most of the attention
#AfricaTech
gets, French-speaking Africa — and Francophone sub-Saharan Africa in particular — is a large, untapped market that offers some unique opportunities
Here's a look at some folks seizing those opportunities today
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1/ More than anywhere else in the world, Africa's internet economy is mobile-first or mobile-only
75% of online traffic in Africa comes from mobile—the highest percentage worldwide
Here are 3 implications for folks building for, investing in, or learning about African markets👇🏽
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Writing clarifies thinking
If you have ideas that are not yet fully developed or are otherwise murky, the exercise of fleshing them out in a structured, written piece can help
Sometimes the final version is pretty far from what you 1st had in mind
Writing is discovery at times
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It's time...
My least favorite word in Africa tech investing:
Leapfrogging.
Yes, we “leapfrogged” cards to go to mobile money.
But, we won’t leapfrog nonexistent infrastructure investment, poor leadership & unequal access to opportunities.
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Here's a look at the top businesses folks across Africa want to start
Clothing businesses attract the most interest worldwide
But in Nigeria & Kenya, it's all about agent banking (POS & M-Pesa businesses) 👀
P.S. The data's based on search engine queries for "start a business"
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People love to talk about Africa's 'fast-growing middle class'
But that's generally based on old data
Here's the reality: growth stalled over the last decade
While consumer expenditure across Africa is on the rise, most of that's driven by population growth—not rising incomes
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Why do cross-border payments matter in Africa?
@MFS_Africa
boss
@dokoudjou
explains:
"Cross-border [payments are] something that we need because our markets are too small... Your market has to be the whole of Africa if not beyond... It's not about remittance, it's about trade."
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Mobile wallets are on the rise everywhere
They're now the most widely used payment type globally—overtaking cards in 2019
And while you might think of M-Pesa first when you think of e-wallets & mobile money across Africa,
@MTNGroup
has actually led the continent here since 2021
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Across Africa & elsewhere, success in lending depends on 3 Ds:
• data
• distribution
• & dollars (i.e., balance sheet access)
Here are 3 Africa-focused startups using unique/proprietary data to build smart credit models while enjoying in-built distribution that lowers CAC:
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Startups across Africa increasingly describe themselves as operating systems for X
e.g.:
-
@MarketForceHQ
OS for retail distribution
-
@orda_africa
OS for restaurants
-
@VendeaseAfrica
OS for food supply
Here's a good breakdown of the Vertical OS model
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"The idea that Africa can leapfrog development without making commensurate investments in infrastructure is at best laughable and at worst naive."
—
@amaka_og
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Startup founders often prioritize the wrong things
Here's a worthwhile read that draws from a study of 200 executives at fintechs across Africa to identify three things founders worldwide should prioritize:
· Customers
· Communities
· Market acceptance
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Where are the exits in Africa?
According to a recent
@AVCA_Africa
survey, that's a question Limited Partners (the money behind VC & PE firms) are increasingly asking
"Fund managers are struggling to exit investments & distribute cash to investors"
→
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3 lessons I've learned:
· When you have momentum, keep going — it's hard to regain if you lose it
· When you have leverage in a situation, use it (wisely) — things can change quickly
· When you see it, bet big — the juiciest opportunities are rare, be aggressive when they come
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Africa is poised to be the fastest-growing fintech market worldwide this decade
And given certain characteristics — for example, only ~2% of Africans have credit cards — there's a lot of room for builders to chart a path that looks quite different from the West & other regions
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@asemota
"One way startups can reduce this ‘uncertainty risk’ in a given market is by pursuing geographic diversification."
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1/ ~50% of payments in developed markets are done with cards
In emerging markets, the figure is 20%
And across Africa, the figure is a fraction of that
While there's an interesting opportunity for non-card payments across Africa, Visa & Mastercard aren't asleep at the wheel...
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What are VCs in Africa telling their portcos right now?
Here’s a glimpse from
@Kola_Aina
:
• Avoid fundraising now if you can
• Explore local currency debt
• High growth is very good
• Be pragmatic about valuations
• M&A is an option
• If you have to shut down, be an adult
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Africa doesn't exist
At least not as we know it
The national boundaries we have today were drawn arbitrarily
Here's a look at the continent if its borders were drawn along historical ethnolinguistic divides
(via
@AfridigestHQ
's visual of the week — )
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Here's a throwback to my conversation with
@Eniolorunda
, Founder & CEO of Nigerian business & personal banking platform
@Moniepoint
I asked him for his advice to founders aspiring to build large companies in or for Africa and here's what he said:
"Choose your markets wisely" 💡
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Raising money doesn't guarantee success
Here's a look at six of Africa's best-funded startups that raised a combined ~$450M and still shut down
(via
@AfridigestHQ
— )
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Nvidia is the 6th most valuable company in the world today
And it has an unconventional culture built by Founder & CEO Jensen Huang that should be studied more
Here's a fascinating interview where he talks about company design & his leadership philosophy
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Here's a throwback to my conversation with
@pyjama_ceo
— the 'deals man' himself — about doing African tech deals
"If two founders want to do a deal, then it's done...Sometimes some people allow themselves to be led by valuation & not really be led by what really & truly exists"
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Disposable income in Africa is a myth
~80% of consumers spend <$11 per day in total
And disposable income levels are generally 15-30% of the world avg
That's why many of Africa's startups today focus on B2B opportunities or consumer essentials
You can't get blood from a stone
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The fourth quarter is when legends are made
I had a coach who used to say that — and it's that time of the year again
Giving maximum effort despite being bruised, burnt out, and beaten up is often the difference between winning & losing
Let's close out the year strong, friends
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Most startups fail
So the closure of any given company shouldn't be entirely surprising
But the shutdown of Nigerian genomics startup 54gene raised a lot of eyebrows
@IngressiveCap
was an investor so I asked
@MayaHorganFamod
about how its failure affected the firm's approach👇🏽
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1/ With all major 2021 Africa Tech & VC reports now out from Partech, Briter Bridges, The Big Deal & others, it's clear that 2021 was a remarkable year for
#AfricaTech
2022 is poised to build on this momentum — at least if Jan is any indication
Let's dive into what happened 👇🏽
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1/ One of the paradoxes of Africa's tech ecosystem today is that the best way to distribute digital services is often through offline means
Here's a good interview with
@DavidIAdeleke
where
@Eniolorunda
underlines this point:
💡 Hybrid strategies are key
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🚨 I've been asked to help identify startups across sub-Saharan Africa for this program
So if you're a great fit or want to recommend a company that's a great fit, please ping me
🚨 African startups that have raised less than $250K are invited to apply before August 31st to the OST Grow investment readiness program
It’s a 12-month program designed to help innovative startups raise their first $1 million
🗓️ Deadline: Aug 31st
🌐
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Good news, friends: I'm now officially a Wikipedia editor
(Anyone can become one of course, but still 😄)
My first article—on one of Africa's brilliant tech entrepreneurs—just went live
The work to help folks worldwide get smarter about tech & business in Africa continues 🫡
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Here's one way to think about fintech in Africa:
As eight customer-facing financial services verticals, supported by an underlying infrastructure layer
And the pace of disruption / market evolution varies by sub-category and is either led by incumbents or fintechs or both
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"You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be."
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Brainwashing aside, here's some data on transport costs in Africa
In some countries, even the richest 20% spend more than half of their income on transportation
Two things that should be cheaper in Africa but we have been brainwashed to seek the more expensive options are housing and transportation.
Yes, comfort is desirable but it does not have to be expensive. Cheap and practical comfort is a disruptive solution.
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3 lessons I've learned:
· When you have momentum, keep going — it's hard to regain if you lose it
· When you have leverage in a situation, use it (wisely) — things can change quickly
· When you see it, bet big — the juiciest opportunities are rare, be aggressive when they come
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Global trade hit a record $32 trillion last yr
But the industry is still largely offline
There's a big worldwide opportunity for tech solutions targeting importers/exporters/carriers in 4 areas
Trade financing + moving goods, money & data
Here's a look at the global landscape
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"This is the best essay on African business I've read. It's inspiring & shows many different angles of how companies are really built...All founders should read it."
That's the opinion of one of Africa's most successful tech founders
Here's the essay 👇🏽
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2: Talent development is a differentiator
"Knowing but not telling is what kills old men. Hearing but not heeding is what kills young men." — Igbo proverb
Attracting necessary talent is a challenge for all organizations, and doubly so for young organizations...
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With OPay's mega-round earlier this week, a new unicorn was minted and the continent now has 3 confirmed private unicorns & 5 tech companies valued at over $1 billion, excluding telco mobile money subsidiaries
These days, unicorns seem to be less of a rarity across the continent
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The job of a CEO is
1. Defining the current reality, articulating the desired future, and charting the path towards it
2. Acquiring, developing, & retaining talent
3. Monitoring, managing, and maximizing the money
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21
68
Startups targeting African markets should probably have a multi-country mindset early on
For one, most African markets are relatively small where it matters — meaningful scale comes via expansion
Secondly, many African markets are highly uncertain — diversification is a shield
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Banks in sub-Saharan Africa — with the exception of Southern Africa — don't really lend to the private sector
But the appetite for credit is virtually unlimited in the region
So non-bank lending solutions are particularly important
Here's a quick overview from
@AfridigestHQ
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Africa is one of the fastest-growing crypto markets globally
And looking at crypto flows between Africa & the world is an interesting way to understand the continent’s financial connections
• 30% of crypto outflows go to East Asia
• Inflows are more balanced, but Europe leads
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Fully agree with this
If you enable entrepreneurship & economic empowerment — i.e., help people make money — you'll make money too
In my view, it's one of the major venture opportunities across Africa & other emerging markets right now
Read more here:
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Should entrepreneurs in Africa build more apps or focus on models closer to the real economy?
That's what I asked
@KeenKenna
, Co-Founder & CEO of Nigerian agtech platform
@ReleafAfrica
Here's what he said:
Founders should "build in parts of the market that are anti-fragile" 💡
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1/ Entrepreneurs building for African mkts should look to the East for biz model inspiration, not to the West
That's an argument I've made for a while now
Here's a clip of Ashraf Sabry, CEO of Egypt's Fawry, talking about building the fintech giant in the mold of Eastern firms
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Some quotes I think about regularly:
"Everything around you that you call life was made up by people that were no smarter than you." - Steve Jobs
"Things around you weren't just always there; people made them happen... The world is a museum of passion projects." -
@collision
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Africa has a number of well-known tech unicorns
But there are some "hidden unicorns" too: telco mobile money subsidiaries
And today's news that Mastercard is buying a stake in
@MTNGroup
's ~$5B fintech unit is a good reminder
Here's an excerpt from a 2021
@AfridigestHQ
article
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Africa's digital opportunity isn't evenly distributed
Four NEKS countries—Nigeria, Egypt, Kenya & S. Africa—are home to ~33% of Africa's population but attract ~75% of VC funding raised
Why?
Well one answer is that they account for 60% of Africa's 'iGDP'
(via
@AfridigestHQ
)
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There are 4 Ms of employee motivation:
• Meaning
• Mastery
• Membership
• Money
Companies that get them right build high-performing cultures that people love working in
@Moniepoint
is a good example — watch CEO
@Eniolorunda
explain below
(P.S. Subscribe to
@AfridigestHQ
)
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1/ One lesson businesses can learn from Amazon is to turn cost centers into new revenue streams
The company famously transformed its tech infrastructure — a significant cost center for large e-commerce players — into AWS, which now generates over $80 billion in revenue annually
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Storytelling is a superpower
The core of marketing is storytelling
A main driver of hiring is storytelling
A key part of fundraising is storytelling
People — customers, colleagues, investors, etc. — are hardwired to respond to compelling stories
Build the storytelling muscle
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We don't need any more Afro-optimists, we need Afro-pragmatists...
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Here's a throwback to when I used to promote parties in Boston 😄
Life is really a marathon, remember to give yourself some grace
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Food delivery can be a difficult business anywhere in the world
And with
@Jumia_Group
killing Jumia Food in Africa this week, now's a good time to revisit this chart on food delivery platform unit economics
"Despite explosive growth, platforms are struggling to make a profit"
"The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers."
— Jumia CEO Francis Dufay
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Payments in Africa is estimated to be a ~$3 trillion annual opportunity
Here's a breakdown of total payment volumes across the continent from
@MultiChoiceGRP
What stands out to you? 🤔
(via the
@AfridigestHQ
Fintech Review —)
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Five things truly matter for young businesses
• The team
• The market: size, growth rate, head/tailwinds, etc
• The product/service
• Go-to-market strategy: how you find customers
• Biz model: how you make money
And for venture-scale startups, market might just matter most
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"No problem can stand the assault of sustained thinking"
Smart people tend to hold that dear
If they focus hard enough on a problem, they'll eventually get to the right answer
But the truth is there's rarely one right answer
Life, like strategy, is about choices and tradeoffs
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1/ A week ago
@tarykuh
& I gave a well-received masterclass on The State of Tech in Africa Today at the
@Africa_NXT
conference
Here's a thread containing our slides & a bit of commentary
(When you get to the end, kindly let me know what slides resonated the most for you🙏🏽)
👇🏽
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Spicy title here
But despite the criticisms of this op-ed, its content isn't particularly controversial—or new:
• African markets aren't capitalizing on their demographic boom
• Productivity growth & per capita income growth are missing
Read it here:
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