While South Africa’s private equity market may be attracting the attention of the nation’s biggest fund managers, international investors are giving it a wide berth put off by lethargic output.
Private equity funds are struggling to raise foreign investment because off assumptions that South Africa doesn’t need development aid and because offshore investors are wary of locking their money in a country experiencing low growth, according to Samantha Pokroy, CEO of Sanari Capital.
“South Africa is middle income only by virtue of averaging,” Pokroy said in an interview. “We have a tremendously unequal society and there’s an enormous developmental need to tackle structural inequalities. Private equity is very well placed to focus on structural inequalities because of the level of influence that we have in the economy, in the businesses that we invest in.”
Samantha Pokroy, CEO of Sanari Capital.
The International Monetary Fund expects economic expansion of only 0.3% this year
The International Monetary Fund expects economic expansion of only 0.3% this year, and for growth to remain below 2% until at least 2028, with output held back by record electricity outages and logistical constraints. The focus on the top-line number blinds investors to pockets of growth, Pokroy said.
“Because of the fact that our market is not considered a hot market, there’s actually an enormous amount of untapped opportunities, which are extremely well priced,” she said.
Private equity funds raised R19.6-billion last year, a 22% jump from the previous year, according to the South Africa Venture Capital and Private Equity Association. Only 15% of that was from foreign corporates and other PE funds, the industry body said.
The Sanari 3S Growth Fund raised R1.25-billion rand in fundraising from investors including Africa’s largest asset manager the Public Investment Corp and Alexforbes Investments, which has R450-billion in assets under management and administration. The 10-year fund will have a final fundraising round by May.
In the first round last year, Sanari received R465-million, which it invested in Edulife Group, a network of private schools, technology company LightWare LiDAR, and biometric verification company Identity.
With the cash infusion, the fund can now book bigger deals both at home and on the continent and is increasing deal sizes to R50-million to R250-million from a cap of R20-million. It seeks portfolio returns of at least 25%.
The fund’s already targeting four other investments ranging from industrial technology, software and application, to health care and another group of schools with a footprint in nine African countries.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
The parent company of Vodacom, Vodafone Group, said it had made its first 4G calls using Open RAN as it invests in chipsets with Intel. Vodafone Group underlined its commitment to Open RAN networks on Monday by confirming it would create purpose-built chipset architecture for the nascent technology with Intel.
The European operator and parent of South Africa’s Vodacom Group also said it had made its first 4G calls using Open RAN over network sites shared with Orange in Romania, and it was partnering with Nokia to pilot the technology in Italy.
Open RAN allows mobile operators to mix and match equipment from various suppliers, potentially increasing flexibility.
The market remains dominated by proprietary solutions from Ericsson, Nokia and Huawei
Progress has been slow, however, and the market remains dominated by proprietary solutions from Ericsson, Nokia and Huawei, although the latter has been hit by government restrictions in countries including Britain.
Vodafone agreed in 2022 to work with US chip-maker Intel on the potential to design its own chip architecture.
The company’s director of network architecture, Santiago Tenorio, confirmed the partners would jointly create chipsets at its campus in Malaga, Spain.
The chipsets will be available to smaller third-party vendors to test their own algorithms without a large financial outlay in silicon, Tenorio said at the FYUZ industry event in Madrid.
He said the ability to produce silicon designs in testing sample quantities would significantly speed up the time to deliver innovation.
“Combining Vodafone’s networking expertise with Intel’s strength in silicon architecture design will enable rapid prototyping, verification and testing, eventually leading to a faster mass production of the chips the industry needs to accelerate,” he said.
Vodafone and Orange said on Monday they had successfully made 4G calls over a cluster of sites in a rural area near Bucharest based on Open RAN technology.
The two companies used hardware and software provided by Samsung, Wind River and Dell in the pilot, they said.
In Italy, Vodafone said a pilot with Nokia aimed to prove that Nokia’s Open RAN solution could achieve the same functionality and performance as its purpose-built RAN.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
TymeBank, a South African digital bank, has marked a significant achievement by reaching eight million customers as of October 6, 2023. This milestone highlights that TymeBank now serves one in every five eligible* South Africans.
CEO of TymeBank, Coen Jonker, commented, “We are pleased to have acquired eight million customers since our launch in February 2019. This reinforces our position as a rapidly growing digital bank and a credible alternative to traditional banks in South Africa. This growth aligns with our goal of becoming one of the top three retail banks in the country.”
TymeBank
TymeBank continues to see a consistent increase in its customer base, with over 200,000 customers joining every month and a 70% account activity rate over a rolling 30-day period.
Jonker credited this success to their ‘phygital’ model, integrating digital banking into physical retail environments. He also acknowledged partnerships with retailers like Pick n Pay, Boxer, and TFG, which have helped optimize their distribution network.
Challenges persist, including ongoing outages at Home Affairs affecting customer identity verification during onboarding. Load shedding, although mitigated by backup power for TymeBank kiosks, disrupts store operations and impacts the network infrastructure.
TymeBank introduced PayShap, a unique service allowing free payments to mobile numbers linked to any bank account, in August. Their fixed deposit product, offering South Africa’s best savings rates at 11%, has been well-received.
Cheslyn Jacobs, TymeBank’s Chief Commercial Officer, noted, “We continue to see strong demand for our proposition, appealing to a wider range of consumers. We are nearing a balance of R1 billion in our fixed deposit product.”
TymeBank is also gaining traction among SASSA recipients, facilitating efficient grant payments.
The bank’s acquisition of Retail Capital, a major SME funder, has positively impacted their funding portfolio. They now support over 50,000 businesses with approximately R9.5 billion in working capital, representing a 20% increase since acquiring Retail Capital.
TymeBank’s international venture, GoTyme Bank in the Philippines, is progressing at a similar rate, reaching one million customers within a year of its launch.
In summary, TymeBank’s growth trajectory and innovative approach have led to this remarkable achievement of eight million customers in just four years, establishing the bank as a notable player in the digital banking landscape.
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the con
African Rainbow Capital Investments (ARC) has been an investor in Linebooker since 2017. In the latest round of investment, ARC injected approximately R67 million ($3.5M) into Linebooker, increasing its stake to just over 70% in the company. The primary purpose of this investment is to support Linebooker’s accelerated growth strategy. This strategy is aimed at enhancing Linebooker’s technology and operational capabilities to better serve its customers, especially in the areas of communication with transport companies and managing larger transport volumes. The majority of the investment will be allocated to technology improvements, while a smaller portion will be used for operational and personnel enhancements.
Why the Investors Invested
The decision by ARC to invest further in Linebooker is grounded in several key factors. In the first place, Linebooker has shown substantial growth potential over the years, with its annual revenues doubling in the past three years. This growth, in part, has been attributed to the ongoing challenges faced by Transnet, the state-owned transport company, in providing reliable transport solutions. In sectors such as mining, retail, farming, and manufacturing, Linebooker has filled the void created by Transnet’s inability to meet the transportation needs of these industries.
Additionally, Linebooker operates in diverse transport sectors, including fast-moving consumer goods (FMCG) and mining bulk. While FMCG operations were less affected by Transnet’s issues, the recent expansion into the mining sector has seen increased customer engagements due to the rail infrastructure’s unreliability. This diversification has helped Linebooker maintain strong growth rates even in the face of Transnet’s challenges.
ARC’s investment is also motivated by the immense potential within the South African transport industry. With a market size of approximately R270 billion ($14.2 Billion) , there is substantial room for growth. Even if Transnet were to resolve its issues and improve its services, the overall market size is large enough to accommodate significant players. Therefore, ARC’s decision to invest further in Linebooker is based on the belief that the company can continue to expand and capture a larger portion of this growing market.
Naudé Rademan is the CEO of Linebooker. Credits: Linebooker
A Look at Linebooker
Linebooker is an online freight platform that connects customers in need of transporting large goods with trucks and other transportation services. The company was founded in 2017 and has experienced rapid growth, with its annual revenues doubling over the past three years.
According to CEO Naudé Rademan, the company’s primary focus is on solving transportation challenges for various industries, including mining, retail, farming, and manufacturing. Linebooker has gained credibility and trust in the market by providing reliable transport solutions, particularly in cases where Transnet has failed to meet the transportation needs of these industries.
Linebooker’s partnership with ARC Investments has been instrumental in its growth, with ARC now holding just above 70% of the company’s ownership. This latest injection of R67 million in capital from ARC is intended to further enhance Linebooker’s technology and operational capabilities, allowing it to serve its customers more efficiently and handle larger transport volumes.
In the long term, Linebooker’s goal is to continue expanding its market share within the R270 billion transport industry and to improve its technology and platform to offer better pricing and supply for its customers while reducing carbon emissions by optimizing transportation routes. Overall, Linebooker’s success is built on its adaptability, strong partnerships, and a commitment to solving transportation challenges in South Africa.
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the con
In recent developments within the African tech sector, two significant acquisitions have been announced, each with its unique implications for the companies involved and their respective markets.
Ecentric Payment Systems Acquires Thumbzup
Ecentric Payment Systems, a leading retail payment processor operating primarily in South Africa, has made headlines with its acquisition of Thumbzup, an innovative technology payment solutions company. This strategic move is expected to have far-reaching implications for both companies and the future of omnichannel retail in the region.
CoverAI founder, Chris Adolphus
Ecentric Payment Systems has a strong reputation for its high-quality technology solutions, catering mainly to Tier One enterprise customers and currently handling 20% of South Africa’s card transactions. As a trusted payment partner, Ecentric has a significant presence in the South African market.
The acquisition of Thumbzup’s intellectual property (IP) marks a significant expansion of Ecentric’s footprint into the broader retail sector. This move positions Ecentric to reach more national retailers in the tier-two retail sector and establish itself as a reliable partner for service providers supporting small and medium-sized enterprises (SMEs). The acquisition holds strategic importance in Ecentric’s growth plans.
Hassen Sheik, CEO of Ecentric, has emphasized the critical role of this acquisition in their strategic vision. He highlights the need for a robust in-store capability, which will facilitate the integration of point-of-sale devices and technology, especially for national retailers. This strategic move is expected to enhance Ecentric’s offerings, including devices, payment software, terminal management systems, and value-added services, allowing it to cater to a broader range of national retailers while reinforcing its commitment to omnichannel retail.
Additionally, this acquisition simplifies the payment process for new customers, offering a comprehensive solution for both in-store and online payment needs, supported by a streamlined reconciliation process. It also empowers Ecentric to enhance its current offerings to existing customers.
Ecentric is fully integrating Thumbzup’s IP, devices, and technology stack into its operations. The expertise of the acquired team is expected to reduce time-to-market for customer-centric solutions, particularly in integrating point-of-sale software with payment devices.
This strategic move positions Ecentric to actively engage in best-of-breed Android payment capabilities, expanding beyond traditional payment services. It aligns with Ecentric’s strategy to become a leading retail service provider, supporting consumers’ payment needs in various settings. The integration of skills and IP from Thumbzup enhances Ecentric’s capabilities and strengthens its value proposition for customers.
Writesea Acquires CoverAI
In another noteworthy development, Writesea, a New York-based firm specializing in white-label services for recruitment marketplaces, has acquired CoverAI, a Nigerian AI startup that gained attention for its unique technology.
CoverAI, founded by Chris Adolphus, garnered significant interest with its innovative technology based on OpenAI’s large language model. The startup’s technology can swiftly create or enhance CVs and offers a freemium model for users. To access premium features like interview preparation and job application tracking, customers can choose from one of three subscription tiers.
While Adolphus mentioned that the acquisition was a five-figure cash deal, specific transaction details remain undisclosed. However, he stated that Writesea’s competence and experience make it the ideal candidate to take CoverAI to the next level.
CoverAI remained a bootstrapped venture throughout its three-month existence, with Adolphus investing a minimal sum to launch the project. The challenges associated with using OpenAI’s GPT-4 for applications like CoverAI are highlighted, with tokenization costs contributing to the overall expenses.
Adolphus is already planning his next venture, which he anticipates will be more capital-intensive than CoverAI, with the goal of exiting with a substantial profit. This story underscores the dynamic nature of the tech industry and the potential for rapid growth and acquisition in the African tech sector.
These acquisitions are significant milestones in the African tech landscape. Ecentric’s acquisition of Thumbzup positions the company for broader retail sector expansion, while Writesea’s acquisition of CoverAI reflects the growing interest in innovative tech startups on the continent. Both acquisitions are expected to have lasting impacts on their respective markets.
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard
Egyptian insurtech innovator, Amenli, has successfully concluded a substantial $1 million equity funding round, with Alter Global at the helm, and support from Qatar Insurance Corporation’s (QIC) corporate VC arm, Digital Venture Partners (DVP). This promising startup, founded in 2020 by Adham Nauman, Omar Ezz El Din, and Shady ElTohfa, has been making waves by tailoring insurance plans for individuals, families, and SMEs in alignment with their specific needs.
The funding injection is set to catapult Amenli into a new growth phase. It will empower the company to amplify its workforce, enhance its product portfolio, and bolster its brand presence in the market.
Alter Global, a distinguished international VC firm focusing on emerging markets, led the funding round with notable enthusiasm. Represented in the region by Heba Ahmad, Alter Global expressed excitement about partnering with Shady and the Amenli team and announced their second investment in Egypt. Allen Taylor, a Partner at Alter Global, articulated their admiration for Amenli’s vision to transform Egypt’s presently underserved insurance sector, where penetration remains below 1%. Taylor remarked that Amenli has already constructed a robust technological infrastructure, providing them with a competitive edge in distribution and product innovation, thereby elevating the insurance experience for both individuals and SMEs.
Amenli has earned the endorsement of the Financial Regulatory Authority in Egypt (FRA) and has made accessible a wide array of affordable insurance products, catering to individuals, families, and SMEs. Moreover, the company has established smooth channels for handling client claims, ensuring efficiency and expeditious service.
With the infusion of funds, Amenli is gearing up to introduce new products that cater to both existing and emerging customer segments, addressing previously unmet insurance requirements. The company also plans to diversify its distribution channels to maximize efficiency and outreach. Furthermore, Amenli will intensify its focus on the B2B2C sector, leveraging its proprietary Insurance API to solidify its reputation as a trustworthy and innovative leader within the industry, staying true to its 2024 vision.
Lars Gehrmann, Group Chief Digital Officer at Qatar Insurance Company (QIC), commented on the alignment of Amenli’s vision with DVP’s Corporate Venture Capital (CVC) commitment to promoting insurtech innovation through early-stage investments within MENA. He expressed QIC’s eagerness to support Amenli’s growth and inventive approach to insurance in Egypt and beyond.
Amenli’s decision to secure additional funding coincides with a pivotal moment in the company’s trajectory. They have experienced remarkable growth, expanding fivefold in comparison to the same period in the previous year. This achievement is attributed to their commitment to product quality and the increased efficiency and impact delivered by Amenli’s core platform technology. With strong unit economics across their retail business, which includes services for both individuals and SMEs, they have exceeded targeted gross profit margins by an impressive 100% in H1 2023. Consequently, Amenli is shifting its focus towards business expansion, profitability, and positive cash flow generation.
Shady ElTohfa, CEO and Co-Founder of Amenli, underscored the significance of this strategic milestone, describing the funding round as a substantial validation and a resounding vote of confidence for the company. He emphasized that the backing of prominent investors, including Alter Global, QIC DVP, and Basil Al Moftah, all of whom possess extensive experience in the tech and insurance sectors, reinforces their belief in Amenli’s vision and their ambitious expansion plans.
Othmane Bennis, Head of CVC at DVP, highlighted Amenli’s technological prowess, lauding the company for establishing itself as a prominent insurtech player. Through a tech-driven, digital-first approach and building on their substantial traction in Egypt, Amenli is poised to rapidly expand access to insurance in underserved markets, thereby advancing financial inclusion and security in the region.
Shady ElTohfa also shared his vision for the future, stating, “During the upcoming phase, we are focused on expanding our team, strengthening our product offerings, and building a robust brand to deliver unmatched value to our clients. Our dedicated efforts revolve around providing tailored insurance solutions to our client base, empowering them through accessible payment options such as BNPL, convenient onboarding, and KYC processes, and ensuring a seamless claims process.” Amenli is well-positioned to revolutionize the insurance landscape in Egypt and beyond, and this funding round marks a significant step in that direction.
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard
The African Export and Import Bank (Afreximbank) is a child of circumstance.
Bank President Professor Benedict Okey Oramah puts most poignantly in well publicized message to stakeholders and the general public: “It was conceived at a time of great difficulty for the continent”, he says as he takes stock of the great strides and achievements of Africa’s award-winning trade and investment institution.
Before its establishment back in 1993, the mere sight of African countries trading amongst themselves seemed hard to behold. Like pawns on the global economic chessboard, African states were bit players sacrificed for bigger scores by the major trading nations. They themselves could not harness the strength that comes with a unified position on issues affecting them, leaving them as vulnerable single players whose weaknesses the developed economies took advantage of.
Prof Benedict Oramah, president Afriexim bank
Three decades of working on its mandate of focused expansion, diversification and development of African trade, while operating as a first class, profit-oriented, socially responsible financial institution and a center of excellence in African trade matters, Afreximbank now stands tall among its peers in the multilateral financial institutions sphere to the approval of African leaders.
Early October, this year, in recognition of the Bank’s assistance to his country’s trade and economy in general, President Denis Sassou Nguesso of Congo Brazzaville honoured Bank President Oramah and Dr George Elombi, Afreximbank’s Executive Vice President, Corporate Governance and Legal Services, with the highest Presidential award of Officer of the Order of Merit. It was a clear testimony (shared by several other leaders as well) to Afreximbank’s far-reaching impact as the continent’s pillar of support in matters of trade and investment even to the most vulnerable economies.
Over the years, the Bank has been deploying innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. A key driver of the African Continental Free Trade Agreement (AfCFTA), working with the AfCFTA Secretariat and the African Union (AU), the Bank is setting up a US$10 billion Adjustment Fund to support countries to effectively participate in the AfCFTA.
The Bank’s growth has been nothing but momentous. At the end of 2022, its total assets and guarantees stood at over US$31 billion, and its shareholder funds amounted to US$5.2 billion. It disbursed more than US$86 billion between 2016 and 2022 and has investment grade ratings assigned by GCR (international scale) (A), Moody’s (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). Afreximbank has evolved into a group entity comprising the Bank, its impact fund subsidiary called the Fund for Export Development Africa (FEDA), and its insurance management subsidiary, AfrexInsure.
Afreximbank Group’s total balance sheet assets grew by 8% from US$27.9 billion as of 31 December 2022 (FY-2022) to approximately US$30.1 billion as of 30 June 30 2023. The growth was driven by the increase in loans and advances to customers, which grew by 13% to close the period at US$26 billion. The liquidity position remained strong at US$3 billion, representing 11% of total assets and achieving a Liquidity Coverage ratio of 310%.
Due to increased volume of interest-earning assets, particularly loans and advances and higher interest rates, total interest income recorded a strong growth of 107.1% to reach $1.1 billion for the half-year (H1-2023) period compared to $540.8 million for the same period in 2022.
Net interest income amounted to $663.6 million, up 76% from the prior year, mainly due to continuous effective management of interest expenses. Net Interest Margin as a result increased to 4.77%, compared to 3.47% last year.
The Group’s shareholders’ funds rose by 7.63% to US$5.6 billion as of 30 June 2023 compared to FY-2022. The growth was largely attributable to the $261 million fresh equity contributions from existing and new shareholders who have supported the ongoing General Capital Increase exercise which aims to raise US$2.6 billion paid-in equity by 2026. In addition, the growth in shareholders’ funds was also underpinned by $125.5 million internally generated net earnings after taking into account the approved dividend and other appropriations which amounted to US$209 million.
Speaking on the results achieved so far, Mr. Denys Denya, Afreximbank’s Executive Vice President, Finance, Administration and Banking Services, said that the strong set of results is driven largely by a focused execution of the Bank’s mandate as a countercyclical lender which generated increased volume of interest-earning assets, particularly loans and advances and benefited from a rising interest rate environment.
The Bank has been playing pioneering roles in different facets of both financial and development intermediation across Africa such as;
Promoting regional value chains: Afreximbank is supporting the development of regional value chains in Africa. This involves financing projects that link businesses in different African countries, and providing technical assistance to help businesses participate in regional value chains.
Developing trade infrastructure: Afreximbank is investing in trade infrastructure, such as roads, ports, and airports, to make it easier and cheaper to move goods around Africa.
Providing trade information and services: Afreximbank provides trade information and services to African businesses, such as market research, trade finance, and risk mitigation services.
In 2022, Afreximbank launched the Pan-African Payment and Settlement System (PAPSS), which is a digital payment platform that allows businesses to make payments across Africa without having to go through a third currency. PAPSS is expected to reduce the cost of cross-border payments in Africa by up to 40%.
In 2023, Afreximbank launched the Africa Trade Gateway (ATG), which is a suite of digital platforms that provides businesses with access to trade finance, trade information, and other trade-related services. The ATG is designed to make it easier and more efficient for businesses to trade with each other across Africa.
Afreximbank is also working to develop a number of other initiatives to support the AfCFTA, such as the Afreximbank Adjustment Facility, which will provide financial support to countries that are negatively impacted by the AfCFTA, and the Afreximbank Trade Insurance Programme, which will provide insurance against trade risks.
By supporting intra-African trade, the AfCFTA, and regional value chains, Afreximbank is helping to create a single Africa trade bloc. This will boost economic growth and development across the continent, and create jobs and opportunities for Africans.
Like President Nguesso, other African leaders are acknowledging and applauding the important role Afreximbank is playing in Africa. President William Ruto of Kenya says that “Afreximbank is our organisation. It supports our development, financing and implementation of identified projects.” President Bola Tinubu of Nigeria has assured the Bank of Nigeria’s support, saying that Africa’s largest economy is open for foreign direct investment and ready to make use of opportunities provided by the Bank.
Commending the leadership of Afreximbank for efforts aimed at linking Africans in the diaspora, the Prime Minister of Bahamas Mr. Philip Davis said that “Afreximbank’s growing presence in the Caribbean, underpinned by a physical presence, is a testament to our shared goal of a joint vision of pan-African prosperity”.
The Prime Minister of Barbados, Mia Amor Motley described the regional headquarters established by Afreximbank in the Caribbean as “one of the most outstanding Pan-African achievements of our era.” It is an outcome of the first African- Caribbean Trade and Investment Forum (ACTIF) initiated by Afreximbank in Bridgestone last September, after 500 years of deleterious relations between Africa and the Caribbean.
Excited with the huge potential of the continental bank on their continent, Prime Minister Motley said “the Caribbean Community eagerly anticipates the effective linking of a fully constructed CARICOM Single Market and Economy to a fully integrated and operational African Continental Free Trade Area undergirded by air, maritime and telecommunications connectivity between the Caribbean and Africa.” He added: “We, in the Caribbean Community, are determined to reclaim our Atlantic destiny, to reconnect with our African “heartland” and to realize the dreams and aspirations of the Hon. Marcus Mosiah Garvey and so many others of our outstanding Pan-Africanists, on both sides of the Atlantic Ocean, and Afreximbank are simply playing a role in helping us to accomplish this.”
Speaking on the need for an institution of Afreximbank’s stature, President Nana Akufo-Addo of Ghana said that the African continent would be unable to achieve its growth objectives unless it had strong development financial institutions.
Akufo-Addo called on African countries to support Afreximbank so it could expand its catalytic role in Africa, enhance its operations and be able to work consistently for Africa and the African Diaspora.
Speaking on the Bank’s agenda on climate finance recently, Prof Oramah disclosed that “Afreximbank is working to co-ordinate and support programmes which mobilise finance for climate-related initiatives, optimise nature-based solutions on the continent, and promote African food security and sustainable water supply, as well as investing in improvements to systems which manage and contain disasters when they occur.”
He announced that, to deal with the considerable intra-African trade finance gap, Afreximbank disbursed over $20 billion in the five years to 2021 and projected to double those disbursements to $40 billion in the five years to 2026.
In recognition of its extensive and impactful intermediation in trade and development, the African Banker recently bestowed on Afreximbank, the 2023 African Bank of the Year and the DFI of the Year awards.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
In the ever-evolving landscape of African startups, a disconcerting pattern has emerged that keeps investors on edge. Scarcely a week goes by without African investors grappling with palpitations, their hearts racing as they navigate the treacherous waters of controversy that have engulfed some of their most promising ventures. Recent events have only heightened these anxieties. The collapse of Dash, a once-promising Ghanaian fintech startup that managed to raise an astonishing $86.1 million, has sent shockwaves reverberating through the African startup ecosystem. However, these unsettling episodes are not isolated anomalies; they are merely ripples in a vast sea of controversy that has afflicted numerous founders across the continent. In this article, we delve deep into the common threads binding these controversial African founders, shedding light on the key factors that have contributed to their downfall.
Founder Experience Not Necessarily a Safeguard:
Perhaps one of the most profound observations stemming from these controversies is the unsettling revelation that founder experience does not necessarily act as an impenetrable bulwark against ethical lapses and financial mismanagement. Contrary to the notion that seasoned entrepreneurs, particularly those with illustrious pedigrees like Y Combinator alumni, would exhibit heightened ethical standards and impeccable financial stewardship, the stark reality paints a markedly different picture. The cases of Dash, Capiter, and Springleap resoundingly attest that even individuals with a decade or more of experience at the helm of their startups can find themselves ensnared in the web of scandal. This challenges the very foundation of the belief that founder experience alone serves as an infallible guarantor of ethical conduct and judicious financial management, raising profound questions about the vetting processes and oversight mechanisms within the startup ecosystem.
Another thought-provoking facet of these controversies is the remarkable diversity of industries and countries implicated. While the embattled companies span an array of sectors, encompassing fintech, e-commerce, advertising, etc., they all share the unfortunate distinction of being ensnared in a maelstrom of controversy. Similarly, these startups hail from disparate African nations, spanning Ghana, Nigeria, South Africa, and Egypt. This expansive geographic and sectoral diversity suggests that the issues at hand are not confined to a specific region or industry niche but rather indicate a more systemic problem entrenched within the overarching African startup ecosystem.
Recent Cases
Dash — Ghana (Fintech):
Dash, conceived in 2019, embarked on a mission to revolutionize cross-border payment solutions for mobile money users and bank accounts across Africa. However, in 2023, the startup’s founder Prince Boakye Boampongfaced a barrage of allegations, ranging from exorbitant $50,000 monthly salaries to the alleged diversion of at least $8 million of the company’s funds. These disconcerting revelations ultimately led to the demise of the company and the suspension of its founder. Notably, this founder boasted an extensive background, boasting over a decade of experience in a founder capacity and an illustrious stint as a Y Combinator alumnus. This case serves as a stark reminder that even a founder with a glittering track record can plummet from the heights of adulation to the depths of ignominy.
Capiter — Egypt (E-commerce/FMCG):
Capiter, founded in 2020, set out to disrupt the Egyptian e-commerce and fast-moving consumer goods (FMCG) sectors. Nevertheless, in 2022, the founders found themselves ensnared in allegations of misappropriating funds by investors, allegations they vociferously refuted. The ensuing turbulence culminated in the founder’s ouster by the Board of Directors and the eventual shuttering of the company. This case underscores the vulnerability of startups, even in their nascent stages, to internal disputes that can have cataclysmic ramifications.
Springleap — South Africa (Advertising Agency):
Springleap, established in 2012, stood as an exemplar of advertising prowess in South Africa. The founder, Eran Eyal, possessed a wealth of experience, amassing over a decade at the helm of various ventures and attracting international acclaim. However, in 2018, the New York Attorney General arrested Eyal, accusing him of absconding with $600,000 from investors through fraudulent solicitations. Subsequently, he was found guilty of duping investors out of millions in multiple investment schemes, including a $42.5 million initial coin offering (ICO). In 2020, he was ignominiously deported from the US to Israel. This case lays bare the global reach and devastating consequences of unscrupulous actions by founders.
The Ultimate Price of Founder Compromise: Death of Startups
In all these cases, the breach of trust by the founders had severe consequences for their startups. It led to the loss of trust and confidence among key stakeholders, including investors, employees, and clients. When trust is compromised, it becomes challenging for a startup to secure funding, maintain its operations, and continue to grow. Ultimately, the loss of trust often results in the shutdown of the startup as it becomes untenable to sustain the business under such circumstances.
These cases highlight the critical importance of trust and integrity in the startup ecosystem, and how a founder’s breach of trust can have far-reaching and detrimental effects on the company’s viability and survival.
Finally, the disconcerting trend of African founders embroiled in controversies raises profound questions about the nexus between founder experience, governance structures, and ethical behavior within the startup ecosystem. These case studies serve as cautionary parables for both investors and aspiring entrepreneurs, underscoring the imperative of robust governance, transparency, and ethical rectitude to ensure the enduring vitality of startups across the African continent. Only by grappling with these complex and multifaceted challenges can the African startup ecosystem continue to evolve, attract vital investment, and fulfill its enormous potential.
Find more of these controversies in our recently published article available here.
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard
South African private equity firm, Sanari Capital, has successfully raised R1.25 billion (about $65 million) for its growth fund. The firm aims to contribute to employment opportunities and economic growth within South Africa and across Africa.
The second closing for the Sanari 3S Growth Fund brings the firm closer to its goal of securing up to $100 million.
Notable financial institutions, including the Public Investment Corporation (PIC) and Alexforbes Investments, have joined as new investors in this round. The PIC manages capital for the Government Employees Pension Fund (GEPF), the largest pension fund in Africa.
Moushmi Patel, Co-Founder, Partner, and Investment Director at Sanari
Sanari Capital’s Founder and CEO, Samantha Pokroy, expressed gratitude for the capital injection from these respected financial institutions, emphasizing their shared commitment to achieving both financial and socio-economic objectives. The funding is expected to address economic imbalances, promote transformation, stimulate economic growth, create jobs, and deliver environmental and financial returns.
The addition of PIC and Alexforbes complements Sanari Capital’s existing investor base, which includes the 27four Black Business Growth Fund, Telkom Retirement Fund, the Motor Industry Retirement Funds through the RisCura Manager Development Programme, and the National Fund for Municipal Workers (NFMW).
Moushmi Patel, Co-Founder, Partner, and Investment Director at Sanari, highlighted the fund’s transformative potential, allowing for investment in larger businesses and the expansion of their investment strategy focused on mid-market businesses. Patel also mentioned their continued support for Edulife Group, an affordable independent school group in South Africa.
Sanari Capital typically invests between R50 million and R250 million in well-established businesses positioned for growth through technology and market expansion. Ofentse Pelle, Partner and Investment Director, emphasized their commitment to digital and human empowerment, focusing on sectors with growth prospects and supporting local employers.
In line with global trends, Sanari’s investment philosophy emphasizes technology, connectivity, IoT, data, and services. Additionally, the firm strategically invests in sectors such as education, healthcare, food security, and eco-friendly solutions. Sihle Gumede, Partner and Investment Director, mentioned their encouragement of businesses to adopt a broader perspective, considering both local and regional opportunities.
The capital invested by the fund ensures 100% black ownership in portfolio companies, aligning with Sanari Capital’s commitment to diversity. Samantha Watermeyer, Partner and Operations Director, emphasized the fund’s alignment with the 2X Challenge, a global initiative promoting women’s participation in international economic development and leadership.
Sanari Capital’s recent funding success marks a step towards enhancing employment opportunities and stimulating economic growth in South Africa and Africa. As the fund enters its next phase, it aims to contribute to a more prosperous and inclusive future.
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard
DuckDuckGo said its talks with Apple failed because the iPhone maker was reluctant to give up Google’s billions. Apple considered switching to DuckDuckGo. The CEO of privacy-oriented search engine DuckDuckGo said its talks with Apple about a potential contract failed because the smartphone maker was reluctant to give up Google’s multibillion-dollar pay cheques, according to newly transcripts of a landmark antitrust trial of the Alphabet unit.
Gabriel Weinberg, who also founded the company, testified on 21 September on the effect on DuckDuckGo of Google’s US$10-billion in annual payments to smartphone makers and others to keep its search engine as the default on computers or mobile devices.
Google CEO, Sundar Pichai
Some of his testimony took place outside of public view.
The potential deal died in 2019, Weinberg argued, because of the Google payments to Apple
A redacted transcript unsealed late on Wednesday showed DuckDuckGo had struck a deal with Apple in 2014 to be shown as an option on Apple devices. Soon after, DuckDuckGo began pressing Apple to be made the default choice for users who wanted to work in privacy mode, which limited data collected on the user.
App makers seek to be the default in their area, whether it be search or maps or anything else, because many users are unable or reluctant to change defaults.
Weinberg said Apple seemed “really interested” in 2016, and executives of the two companies had meetings in 2017 and 2018 to discuss the shift to DuckDuckGo as the default in privacy mode. DuckDuckGo has about 2.5% of the search market, he testified.
In those meetings, Weinberg said, Apple executives would bring up the concern that its distribution agreements with Google may bar the change. The potential deal died in 2019, Weinberg argued, because of the Google payments.
Buying Bing
Apple’s John Giannandrea, in charge of machine learning and AI strategy whose testimony behind closed doors was also unsealed late on Wednesday, had testified in September that Apple had compared Bing and Google with an eye towards playing the two against each other.
Giannandrea testified about Apple’s toying with the idea of buying Bing or using it as a default search engine instead of Google, an idea that Giannandrea opposed because of Bing’s lower-quality search results.
The US justice department has said that Google, which has some 90% of the search market, pays about $10-billion annually to Apple, other smartphone makers and others to be the default search. That clout in search has made Google a heavy hitter in the lucrative advertising market, boosting its profits.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
