Equity crowdfunding is working for South African startups. In May, Intergreatme raised over R29 million through equity crowdfunding. South Africa’s Beerhouse is edging closer to meet its target through Uprise.Africa too. The startup is targeting R3-million to fund the opening of a third outlet, having raised over R1-million so far through equity crowdfunding platform Uprise.Africa.
Here Is All You Need To Know
Beerhouse launched the fundraising campaign last month and with 26 days left in its funding campaign, the startup has raised R1,115,000 from 86 investors.
The target raise of R3-million is in return for a 37.45% stake in the bar’s new outlet planned for Tygerberg, Cape Town.
Beerhouse is looking to raise R3m over Uprise.Africa from investors in return for 37.45% stake in its new Cape Town outlet
To participate investors must invest a minimum of R1000. Investment is capped at R250 000 per investor.
The startup said it will use the R3-million for the design, construction and furnishes as well as launch the Beerhouse Tygervalley branch.
The project will involve transforming the current building, which previously housed the Starlight Diner since 2001, into the recognisable yellow Beerhouse design.
If the Tygervalley Beerhouse campaign is successful, its investors will be able to trade shares following the recently announced partnership between Uprise.Africa and ZAR X — a fintech-based licensed stock exchange.
Beerhouse has two branches at present — in Fourways, Johannesburg and Long Street, Cape Town. The company employs over 80 people in the existing branches and said it’s looking at creating about 30 more jobs in the new outlet.
The startup’s founder Randolf Jorberg said in a statement last week that the company is looking to replicate its current business model with the new Tygervalley premises.
“The Beerhouse management team are dedicated to creating a new space that is true to our brand where memories will be made for decades to come,” said Jorberg, who is originally from Germany.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
We’re working to bridge Africa’s infrastructure gap– Kanayo Awani
For Africa to compete in the global market there are several issues that need to be urgently addressed. Experts have identified Africa’s yawning infrastructure gap as a great impediment to its development efforts as almost every other issue related to the state of infrastructure. To this end, there has been calls for the continent to bridge this gap to enable it unleash its development potential. One organization that is at the forefront of this effort is the African Export-Import Bank (Afreximbank). Afreximbank in collaboration with sister pan African development finance organisations consider infrastructure as a critical factor for unlocking the continent’s trade potential, thus the need to make it a priority.
This much was reemphasized in a chat this correspondent had with Ms. Kanayo Awani, Managing Director, Intra-African Trade Initiative who says that Afreximbank acknowledges that infrastructural deficit has been hindering Africa-to-Africa trade and is working round the clock with other partners to bridge the gap.
According to Ms. Awani , the Bank is using three broad instruments to address the challenge of inadequate infrastructure on the continent to boost intra-African trade. She says the instruments are trade and project finance; risk guarantees as well as providing trade advocacy and advisory.
“Some of our initiatives are around industrial parks development and if you go to our booth, you will see a picture of an industrial park in Cote d’Ivoire and that project is meant to actually deal with infrastructure challenge so that manufacturers can just go there, set up and don’t worry about amenities,” Awani says.
She adds that Afreximbank is also working on an infrastructure study to identify the trade-carrying infrastructure across the continent. “Infrastructure is a big problem in Africa; there is no doubt about that. But, we think that the current stock of infrastructure is carrying just over a trillion volume of trade,” Awani says.
On the challenges of putting together the Intra-African Trade Fair, she says although it was not an easy task, the organizers were driven by their conviction that it was the right way to go and so the challenges eventually turned out to be opportunities for them. “Right now, there are about 1,100 exhibitors. The interesting thing about this trade fair is the complexity and comprehensiveness of the programme we have put together. First, it is a trade show and exhibition. Secondly, conferences are running alongside the trade show to deal with some of the opportunities available for intra-African trade,” Awani says.
Awani is glad that Afreximbank has enjoyed tremendous support from the African Union (AU) and the Government of Egypt in mounting the trade fair. According to her, the AU has been a driving force in marketing the fair within its policy framework and bringing together ministers of trade who are also holding their conference alongside the trade fair. On the other hand, the host — Egypt — represented by the Export Development Agency (EDA) of the Ministry of Trade provided excellent facilities for the fair. “Beyond facilities, they have provided immense support, including security among other soft infrastructure for this fair,” she says.
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.
With this latest figure, Swvl is now the third most valuable startup in the whole of North Africa and the Middle East (MENA) and it has just been two years since it started. Latest figures from Vestok New Ventures, one of SWVL’s $42 million Series B-2 VCs, led by BECO Capital and joined by many leading international and regional investors show that the startup is now valued at $157 million.
Dubai-based Property Finder ($400 million) and Kuwait’s Boutiqaat are the only two tech startups with a higher valuation, according to the publicly available data (or their own claim). Emerging Markets Property Group and Bayt are also likely to have a higher valuation than Swvl’s but they’ve never disclosed it.
Here Is All You Need To Know
Swvl’s valuation was revealed in a recently published financial report of Vostok New Ventures.
According to the report, Vostok invested $16 million in Swvl’s recent funding round (Series B-2) for a 10.2 percent stake in the company. This translates into a valuation of $156.86 million.
Recall also that Swvl last year raised tens of millions of dollars in its Series B-1 at a valuation close to $100 million. This means that the valuation of Swvl increased by almost 60 percent in less than seven months.
“The entrepreneur here is of very high quality. Previously at Rocket and Careem, Mostafa Kandil has built a team that executes well and at high speed. In fact, I believe that Mostafa may be the first Arab tech entrepreneur that builds a global product. All the other successes coming out of the Arab world have been either built by foreigners and/or have been solely focused on the local region,” said the report.
“Swvl’s ambitions are first pan-African but also to quickly take the product to South East Asia. Its latest international city, Nairobi, has
grown to the same size that Cairo achieved after 10 months in merely six weeks,” it added.
The report also notes that Swvl that recently expanded to Pakistan after launching in Kenya earlier this year is eyeing $1 billion GMV (Gross Merchandise Value) by 2023 and has plans to expand to Karachi, Lagos, and Johannesburg.
“We believe the overall target of USD 1 bln in GMV by 2023 is achievable and that Egypt alone could become worth at least USD 500 mln and, if successful in Lahore, Karachi, Nairobi, Lagos and Johannesburg, this upside obviously multiplies,” the report further reads.
Vostok also said that they have studied this opportunity for years but only invested now as Swvl has proven that there is real demand and that the economics work.
“The overall total addressable market in emerging markets is estimated at some USD 150 bln. Looking at Swvl’s cohorts and bus lines in Cairo where bus utilization is 60%+ you see a clear path to gross margins close to 30% over time, higher than taxi-hailing at roughly 20%, likely warranting also higher multiples for this type of business,”says the report.
About Swvl
Founded in 2017, Swvl connects commuters with private buses, allowing them to reserve seats on these buses and pay the fare through company’s mobile app. The buses available on Swvl operate on fixed routes (or lines).
The report by Vostok New Ventures, notes,”Swvl offers a premium on-demand bus service with third party supply. The algorithm
plans the most efficient routes and the most efficient bus stops for peak hours, and more flexibility is possible during off peak hours. Network effects arise through the snowball of the more users that are attracted to the service, the more bus owners will want to offer their supply, the more bus supply the more routes etc., the more customers etc.”
It won’t be a fair comparison but to give you some context, Careem had raised its $60 million round (Series C) at a valuation less than $200 million in November 2015, over three and half years after the company was founded.
Swvl is now in the same territory both in terms of total investment they’ve raised so far and the valuation, in almost two years.
The VC landscape in MENA is entirely different today with a lot more options when it comes to raising Series A/+ rounds so the funding is relatively easier to come by (than it was when Careem raised money) but what Swvl has achieved is still a very big feat.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
The received wisdom in Silicon Valley is that raising more capital from startups VC (venture capital) in larger and larger rounds is an essential part of the formula for success. But is this idea supported in the data?
Where is this data coming from?
When looking at the world of tech startups, there has been a clear trend toward more and more jumbo-size financings from startup VC s.
In what might be called foie gras’ing, the number of rounds sized $100M and above to US startups nearly tripled between 2016 and 2018.
Investors of various types have fueled this trend, including hedge funds, sovereign wealth funds, mutual funds, and other asset managers.
But SoftBank Group’s Vision Fund in particular has come to embody this new normal.
The fund, with over $100B in capital, has rained money on startups across categories, from real estate (WeWork and OpenDoor Labs) to insurance (Lemonade) to bioengineering (Zymergen). SoftBank’s stake in Uber was an eye-popping $7.7B (pre-IPO) bet.
As Softbank and others plunged in, $100M+ mega-rounds became allmost routine.
“Rather than having [SoftBank’s] capital cannon facing me, I’d rather have their capital cannon behind me, all right?”
— Uber CEO Dara Khosrowshahi
Meanwhile, traditional VC funds are getting bigger and bigger, feeding into this cycle of capital abundance and lavishly funded startups.
Leading VC Sequoia Capital, New Enterprise Associates, and Accel have all announced record $2B+ funds in the last 12 months. Sequoia’s new $8B fund will be 4x larger than its previous biggest-ever vehicle.
To better understand whether Silicon Valley’s capital enthusiasm is grounded in reality, we used CB Insights data to analyze more than 500 VC -backed US tech companies that have seen $100M+ exits since 2013.
We compared low-raisers (less than $100M in VC) and high-raisers ($100M+) in terms of their valuation at M&A, as well as their performance at IPO, shortly after, and over the long term.
Key takeaways
After IPO, the most highly funded startups tend to underperform those who raised less.
In fact, the companies that raised the most almost uniformly struggled to create long-term growth.
Plenty of companies that raised <$100M have seen top exits.
The biggest exits, backed by the deepest-pocketed investors, are returning less and less as foie gras’ing becomes more common — and more extreme.
Exceptions like Facebook (both lavishly funded and successful) tend to get most of the attention due to survivorship bias.
How raising money affects long-term company performance
Silicon Valley has many success stories involving companies that raised relatively little.
To get a long-term perspective on how these two kinds of companies performed, we took a low-raise ($100M in total funding or less) and high-raise ($100M+) cohort and analyzed their short- and long-term stock performance.
Overall, low raisers outperformed high raisers, and saw a median increase in post-IPO value of 263% — compared to an only 64% median increase for high raisers.
For example, 6 out of the 11 highest valued high-raise companies — Snap, Groupon, Dropbox, Zynga, Lending Club, and GreenSky — have registered a negative change in value since their IPO. For companies that have seen an uptick in value, growth has been limited: Twitter and Zayo Group Holdings have seen growth of less than 100%, while DocuSign has only done slightly better.
But among the low-raise cohort, it’s a different story.
Six of the 9 most highly valued startups at IPO that raised less than $100M — Veeva Systems, Palo Alto Networks, ServiceNow, Tableau Software, Splunk, and Ubiquiti Networks — have tripled their valuations since going public. ServiceNow’s value has increased nearly 1,900%, while Ubiquiti Networks’ has increased roughly 800%.
Low raise companies are relatively common in top exits
Given the assumption that more money equals bigger outcomes, you might expect to see a ranking of top tech exits be completely dominated by companies that raised hundreds of millions in funding.
But, among the 50 companies with the biggest exits since 2012, 32% raised just $100M or less.
This low raisers group includes companies like Veeva Systems, which went public at a $4.4B valuation with just $4M in equity funding — making its biggest investor Emergence Capital Partners a 300-fold return on investment.
It also includes WhatsApp, which raised only $60M before its $22B purchase by Facebook in what was the largest-ever acquisition of a VC-backed company at the time.
Most of the biggest IPOs, though, still belong to companies that raised large sums of money, Facebook being the biggest example.
The biggest exits are returning less and less
Today, it’s not just Sand Hill Road investing big in startups — it’s SoftBank with its $100B Vision Fund, sovereign wealth funds like Saudi Arabia’s Public Investment Fund, investors like Tiger Global Management, and banks like Goldman Sachs.
Despite writing sizable checks, these latecomers have not always been able to reap the huge returns of years past. While valuations are bigger than ever, multiples are not, because the biggest exits today are creating less value with the money.
One measure of how well a company is able to turn its investors’ capital into value for shareholders is the ratio of money invested into the startup to its valuation at exit — or the company’s efficiency.
Startups are highly efficient on this metric if they can take in little money on their way to a big exit — such as WhatsApp or an Atlassian. Less efficient companies, like Snapchat or Cloudera, raise large amounts of money but can’t produce a proportionate return.
Over the last few years, the amount of money being raised by startups in the US has grown to staggering highs. Exits have gotten larger too. But the capital efficiency of the huge tech exits has taken a big dip, especially since the relatively halcyon days of 2013–2014.
Since 2013, multiples are down among all exits from $100M to $1B+ in size, but the biggest exits have been hit the hardest.
Today, medium-large exits ($500M to $1B) have higher efficiency than $1B+ exits. They had an average return of 8.9x in 2018, just below their 2013 ratio of 9.7x.
However, the average multiple on $1B+ exits has fallen from 16.1x to 6.9x — a 57% drop in just 6 years. That’s the difference between a company that raised $500M selling for $8B and the same company selling for just $3.45B.
Overfunding is evident in the data
Among venture capitalists, asset managers, and startup founders, there has not been much questioning of the idea that more capital is always a great thing. And its proponents justify what they do by pointing to their most visible, public-end result: the eye-popping returns from companies like Facebook.
What gets lost in most analyses are the M&A deals that return a tiny multiple on money raised, or companies that take on hundreds of millions in venture capital and then perform badly post-IPO. The duds get passed over as the Silicon Valley myth is further burnished by outliers like Facebook.
Despite the exceptions to the rule, many companies out there do seem to be overfunded, including:
SandRidge Energy ($3.6B at IPO, raised $870M)
GreenSky ($4.3B at IPO, raised $610M)
Zayo Group Holdings ($4.5B at IPO, raised $825M)
And this kind of overfunding is growing. A total of 12 of the top exits in 2018 raised more than $200M, compared to the 7 in 2017 and 3 in 2013.
The problem today is that more and more investors are getting in on the explosion of returns that technology has seen over the last decade. And at the same time, as institutional investors funnel unprecedented amounts of capital into the space, startups are showing signs of being unable to turn that capital intro greater value — with the worst effects at the top end of the spectrum.
The Silicon Valley love affair with mega-rounds needs reexamination. As much capital as possible and as quickly as possible is not only a bad formula for a great exit — it’s downright dangerous when viewed through the prism of long-term success in the public markets.
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
South Africa’s Rand Merchant Investment Holding (RMI), through AlphaCode, has granted entrepreneurial packages valued at R16 million to eight of SA’s most promising financial services startups.
This is a big pat on the back and will definitely go a long way in kick-starting things for these eight South African startups. It is also a chance to look into the type of businesses that attracted the latest grants.
Of course, all the eight startups are owned by black South Africans.
But First, Here Is All You Need To Know
All businesses are under two years old and at least 51 percent owned by black South Africans.
Each business will receive a package valued at up to R2 million including R1 million in grant funding and R1 million in support services including mentorship, monthly expert-led sessions, exclusive office space in Sandton and other business support services.
They will also have access to like-minded entrepreneurs, RMI’s extensive network of thought leaders, potential clients and capital.
The AlphaCode Incubate initiative, in partnership with Merrill Lynch South Africa and Royal Bafokeng Holdings, identifies South African financial services entrepreneurs with extraordinary ideas and businesses that could impact the financial services industry.
The Incubate programme has disbursed R21 million in funding to 23 black-owned financial services businesses since it began four years ago.
“We have seen a notable improvement in the quality of applications year on year. This is indicative that AlphaCode is making an impact in the maturing of the fintech ecosystem. The intention behind AlphaCode’s Explore, Incubate and Accelerate programmes is for RMI to discover the next OUTsurance or Discovery; we want to identify, partner and grow the future of financial services in South Africa. In fact, two of the participants this evening came through our Explore programme,” said Dominique Collett, head of AlphaCode.
“We have seen an increase in the number of female-led startups applying for this year’s programme — there are four female co-founded startups in the top 12 and three in the final six. There was also a stronger focus this year on alternative forms of lending,’’ she further said.
During the event, contestants had just three minutes to pitch their businesses, with a couple of minutes set aside for questions from a top panel of judges.
“With the support networks that these eight businesses are now able to access, there is great expectation for their business development and traction over the 12 months of the programme,” concluded Andile Maseko, Head of Ecosystem Development at AlphaCode.
The winners are:
Mari
A digitised layby platform which allows for digital payments and savings. Customers should be able to make a layby purchase without incurring the cost of travelling to and from the store to make payments.
Founders: Lebogang Miya. Anesu Chogugudza and Tawanda Sibanda.
Spoon Money
A group-based micro-working capital finance platform for female informal traders.
Founders: * Nicolette Swart and Lorna McLaren
IsiDuli
Credit product for the development of backyard rental stock in townships.
Founders: Lunga Nodliwa and * Kobela Matemane
Oyi Medical Card
Oyi is a prepaid card solution to help those who would otherwise not be able to access the medical care that they should be able to afford.
Founder: Tamsanqa Ngalo
Budgie
Budgie is a free interactive application, that facilitates and assists spending based on a user’s created budget.
Founders: Nchila Mokoena, Popo Sechele, Thulo Sechele and Ruben Engelbrecht
okGo.live
OkGO.live gives access to people who are locked out of the market by reducing accident repair costs by +50 percent, reducing fraud claims by 75 percent and making customers self-service to lower premiums.
Founder: Thabang Butelezi
Olova
Olova offers a single payment platform for public transport systems. The lack of integration and interoperability between public transport systems is problematic and this what Olova aims to fix.
Founder: Sylvester Maganye
GetVanced
Income advancing platform based on employee’s earned income. GetVanced seeks to solve the issue of income timing by paying out employee advances based on income earned to date.
Founders: * Raeesa Gabriels and Brendon Harris
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Tanzanian startups have until today to apply to Seedstars Tanzania Accelerator Programme. Applications for the three-month acceleration programme close on Sunday (18 August, 2019). Successful applicants will each receive investments of $25 000. Applications are expected from startups in all sectors of the Tanzania economy.
Here Is All You Need To Know
The accelerator is an initiative of Seedstars and is supported by the Dutch Good Growth Fund’s (DGGF) Seed Capital and Business Development facility.
The programme will take place between 9 September and 30 November.
Applications for the Seedstars Accelerator Tanzania will close this Sunday (18 August)
Seedstars said in a post on Facebook yesterday (15 August) that between 10 and 12 startups will be selected for the programme.
The programme is driven by lean growth methodologies designed to help startups scale faster in addition to reaching their next investment milestones quicker.
Seedstars is looking for Tanzanian startups with a strong founding team, as well as regional and international stability.
In addition, to be selected for the accelerator, startups must be first time entrepreneurs between the ages of 20 and have a functional prototype or minimum viable product (MVP)
Startups selected for the programme will benefit from access to local and international mentors, guided workshops, one-on-one sesions, introductions to business and investor networks, as well as targeted training and assistance.
In addition, startups that take part in the accelerator will be provided with free office space at Seedspace Dar es Salaam for the duration of the programme.
Moreover, programme participants stand to benefit from increased investment readiness and the opportunity to receive funding from the accelerator’s partners.
Seedstars — the Swiss-based organisation that that assists tech startups in emerging markets — has put out a final call for startups to join its three-month Seedstars Accelerator Tanzania programme, which kicks off next month in Dar es Salaam.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Vista Bank: A commitment to visionary banking in Africa
The banking landscape on the African continent literally experienced the dawn of vista a few years ago, following the establishment of Vista Bank. The fast-growing financial institution which prides itself as “a new bank for a new generation” is one institution that is bent on helping African start-ups and businesses across borders and geographic divides. According to Mr Simon Tiemtore, founder of the bank, who is also the Chairman and Chief Executive Officer of Lilium Capital, the institution decided to support the African Export-Import Bank (Afreximbank) in mounting the trade fair as part of its contribution towards boosting intra-African trade.
Clearly, Vista Bank is committed to Africa’s transformation. Its mission is to build a world-class pan-African financial institution that promotes financial inclusion and fosters economic development of the continent. The bank’s vision is to make banking and insurance an integrated service to satisfy its customers’ financial needs and create value for all stakeholders using superior market knowledge, operational excellence and a culture of integrity.
In addition, Vista Bank is focused on maximising the opportunities in its respective markets to become the financial institution of choice through innovative banking and insurance products. This is why the board, management and staff of the bank are working tirelessly to “make cutting-edge digital banking solutions accessible to everyone” and “discover visionary banking.”
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.
Multiple currencies, threat to AfCFTA —Simon Tiemtore
Mr. Simon Tiemtore is the Founder, Chairman and Chief Executive Officer of Lilium Capital, an Africa strategic investment company with targeted sectors of investment in Financial Services, Energy, Hospitality, Agro-processing and FCMG. In this interview with KELECHI DECA, he talks about the prospect of the AfCFTA, SMEs trade finance and the prospects of diaspora banking among others. Excerpts:
How would you describe the African banking landscape?
The banking landscape in Africa is quite interesting because there are lots of opportunities. We always talk about finance and infrastructure gaps and I think banks are seeing an opportunity and providing the required financing and tapping into the market. Banks can’t do it alone and I don’t think any African bank has the financial muscle to fund the gaps alone and so, we do it in partnership with other financial institutions and Afreximbank is one of them.
One of your key markets is SMEs. How risky is doing business with SMEs?
We love SMEs and it is our bread and butter because 95 percent of our economies in Africa are made up of SMEs. The remaining five percent, which are large corporate, predominantly operate in the extractive industry because we are heavily commoditised economies such as in oil and gas and mining. So, these large corporates typically come with their own finance, which is long-term and so, we focus on SMEs.
I do believe the future of Africa is in SMEs and we just have to find better ways to work around, restructure them and restructure their credit.
You recently launched Simon Bank, a digital bank targeted at migrants. Why?
The diaspora today is the single largest source of flow of funds into Africa with about $70billion. Globally, the remittance market is a $660billion market and about $220billion comes from the US and $60billion comes to Africa on a year-on-year basis. Regardless of the immigration policy of the West, it is growing. Our aim is to capture the diaspora market with Vista Bank in locations we operate as we currently do by providing them with products that they can tap into and capture the remittance that they are bringing home. So, Simon Bank is the first digital diaspora bank and it covers the diaspora community because we are also targeting Hispanics, Filipinos, and Asians.
How much of trade finance do you engage in and to what extent would the AfCFTA boost trade in the continent?
We are doing a lot of trade financing. All we are trying to do now, especially in those heavy commodity-trading countries, is by providing letters of credit, pre- and post-export finance, and working capital for transformation. Afreximbank has been an ally by providing us with a line of credit for Guinea and The Gambia.
With multiple non convertible currencies all across the continent, how would trade integration work smoothly?
I believe for any economic zone to be successful, it is must deal with the issue of multiple countries. It is hard if you have over 30 currencies. Trade between, say Guinea and Gambia, becomes difficult. Guinea has its own Franc and Gambia has its own Dalasi. Trade between buyers and sellers in these countries cannot be done in their currencies but the dollar or euro. So, if you look at the three countries from where you operate, trade is difficult despite them being in the same West African Monetary Zone. So, if you talk about a free trade agreement and you cannot trade from a currency standpoint, there is a flaw. So, it needs to be sorted out. But I also believe there is the need to build infrastructure that supports exports. We have the right policy to support trade in the continent, but we need to focus on execution more.
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.
Africa needs huge investment in digital infrastructure to close the gap with the developed world, says Boutheina Guermazi of the World Bank at a summit on African Digital Transformation for Economic Growth. She believes investing in broadband technology and developing internet value chains will help Africa leapfrog several stages of its development.
Boutheina Guermazi during High Level Dialogue from Digitilization to Development. 2 April 2019. UNCTAD Photo / Jean Marc Ferré
Africa, she notes, can achieve this if it replicates the success of the mobile connectivity revolution. Africa’s broadband connectivity is still low and about one percent of investment goes to ICT and “it sends the wrong signal that information is a luxury,” she reiterates.
For Rwandan Jean Philbert Nsengimana, Special Advisor, Smart Africa, the digital gap should also be viewed from the context of its exclusion of a large chunk of Africans from economic, social and political activities. There is a market failure for the provision of digital infrastructure as too much responsibilities are given to the private sector, he asserts and wonders why access to information is not seen as vital to human existence as electricity and water have become.
He calls on governments to lead by example by building digital infrastructure for its own use and partner with the private sector to scale up. Digital adoption, he says, will be easy when better products are built and government invests in digital literacy.
Yousry Atlm, Vice President, Marketing, Huawei Technologies, Egypt says the future of technology is here and it is about applications, big data and cloud computing. There is so much government can benefit from by deploying technological products and platforms such as plugging revenue leakages. Just by getting governments to deploy intranet, it could save a lot of time in processing information. Government must work with the private sector to close the information gap in service delivery, he advised.
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.
Good news for South African businesses and individuals. Bad news for banks and other credit lending institutions. A new law that will allow South Africans go away with their indebtedness has been signed into law by South Africa’s President Cyril Ramaphosa. Another unofficial name of the new law is ‘debt relief Act’ and it aims, among other things, to provide relief to over-indebted South Africans who have no other means of paying their way out of their over-indebtedness.
Here Is All You Need To Know Under The Law
Under the new Act, certain applicants can now have their debt suspended in part or in full for up to 24 months.
This debt may then be extinguished altogether if the financial circumstances of the applicant do not improve.
To have your debt completely written off, the following conditions, however, must be met:
The unsecured debt must not be more than R50,000 ( about $3276.90);
The unsecured debt accrued through unsecured credit agreements, unsecured short term credit transactions or unsecured credit facilities only (i.e in all cases, the debts are backed with no collateral);
You must have earned no more than R7,500 a month over the last six months;
The National Credit Regulator, South African agency responsible for this new arrangement, must then assist you (the debt intervention applicant):
With the process of being declared over-indebted;
To your debt obligations, or the obligations of your joint estate, re-arranged;
To have your debt intervention application considered for an order of a Tribunal, set up to that effect, to be made.
A debt intervention applicant whose debts have been rearranged must then be issued with a clearance certificate by the National Credit Regulator within seven business days after the debt intervention applicant has — (a) satisfied all the obligations under every credit agreement that was subject to that debt re-arrangement order or agreement, in accordance with that order or agreement; or (b) demonstrated as prescribed —
(i) financial ability to satisfy the future obligations in terms of the re-arrangement order; or
(ii) that there are no arrears on the re-arranged agreements contemplated in subparagraph (i); and
(iii) that all obligations under every credit agreement included in the re-arrangement order or agreement, other than those contemplated in subparagraph (i), have been settled in full.
The National Credit Regulator must then submit a copy of the clearance certificate to all registered credit bureaux.
Prospective Applicants Under The New Credit Amendment Act Can Commit Any Of The Following Offences
Under the new law, it will now be an offence for a person to intentionally submit false information related to debt intervention.
Again, any person who intentionally alters his or her financial circumstances, or persons who intentionally alter their joint financial circumstances, to qualify for debt intervention, will also be guilty of an offence.
However, it is not yet clear whether the law will come into effect from the date of its signing or whether it will go back in time to cover old debts.
Bad News For South African Banks
South Africa’s banking industry has previously raised concerns with the bill after it proposed writing off billions of rands worth of debt from every-day South Africans.
The Banking Association of South Africa (Basa) has made it clear that it does not support the principle of debt forgiveness — for very obvious financial reasons, but also for what it would do to the lending and credit industry.
Aside from the costs banks would incur writing off the debt, the most likely reaction from banks would be to make lending conditions much tighter which would make it more difficult for the poor to secure credit, Basa said,
A figure on how much the bill would cost local lenders has not been nailed down, but according to Intellidex analyst, Peter Attard Montalto, the bill could force losses at local banks in the region of R25 billion.
“This bill is of serious concern to the banking sector and could, through the imposition of a new income-based personal insolvency and debt affordability regime, force losses on the banking sector of around R25 billion,” he said.
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
