The International Financial Corporation (IFC) , a member of the World Bank group, has invested US$10 million in Knife Fund III, a new fund managed by Cape Town-based venture capital firm Knife Capital.
IFC is the largest global development institution focused on the private sector in emerging markets, while Knife Capital is a venture capital investment manager that accelerates the international expansion of African innovation-driven businesses by leveraging knowledge, networks, and funding.
Adamou Labara, IFC’s country manager for South Africa
Knife aims to raise US$50 million for Fund III, which will primarily target investments at the Series B stage. Fund III follows Knife Fund II, which was launched in 2016, and Fund I, which was launched in 2010. IFC’s US$10 million investment will provide financial support to tech startups in high-growth sectors in South Africa with strong potential for expansion across Africa and internationally, including enterprise technology, software, health-tech, and fintech.
“We are excited to welcome IFC as an investor to our new Fund III and sincerely appreciate the endorsement that comes with the commitment,” said Andrea Bohmert, partner at Knife Capital. “With the first close of Fund III, we are finally able to support entrepreneurs on the next stage of the scale-up journey and thereby address a significant gap that currently exists in the African entrepreneurial ecosystem.”
Adamou Labara, IFC’s country manager for South Africa, said increasing access to venture capital promoted digital entrepreneurship and innovative tech solutions that enable better delivery of vital services such as healthcare, fintech, and logistics.
“By supporting funds such as Knife III, IFC can help more startups and digital entrepreneurs innovate and expand in South Africa and beyond,” he said.
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
South Africa’s largest independent payments processor, Adumo has landed $15m from the International Finance Corporation (IFC). IFC’s investments will support Adumo to make digital payment systems more affordable and accessible to smaller businesses in Africa, many of which currently rely on cash transactions. Adumo, South Africa’s largest independent payment provider with a presence in 14 other African countries, owns merchant acquirers Sureswipe and Ikhokha and payment processor Innervation Pan African Payments.
Paul Kent, CEO at Adumo
“The pandemic and associated impact on consumers and businesses are transforming the face of the payments industry with interest in cashless payment services at an all-time high. The funds we have raised from our new equity partners will help us roll out new payment innovations and purpose-based lending services to support consumers and retailers as they navigate an uncertain 2021,” said Paul Kent, CEO at Adumo.
The investment by IFC and the IFC Financial Institutions Growth Fund, a fund managed by IFC’s Asset Management Company, consists of up to $15 million in preferred shares to fund the growth of the company. IFC combines investments and advisory services to help financial intermediaries reach more small businesses in Africa and other emerging markets.
“Through this investment in Adumo, we will be helping small businesses tap into the digital economy, which is more important now than ever before. Digital payments are often the first step for a small business to build a credit history, which opens the way to access further financial services such as financing to grow the business,” said Sérgio Pimenta, IFC’s Vice President for the Middle East and Africa. “Supporting small businesses to access finance and financial services affordably and sustainably is a priority for IFC because of their potential to not only grow the economy but also create jobs.”
In South Africa, micro, small and medium-sized enterprises employ over 50 percent of the work force and contribute around 34 percent of GDP, but many don’t have access to key services that would help their business grow. Digital and mobile payment solutions can help businesses increase footfall and improve customer retention by supporting the transition away from cash-based transactions.
Adumo, previously known as Crossfin Transactional Solutions, processes more than $5 billion in transactions annually through more than 30,000 active clients and across 50,000 active card machines.
Adumo is South Africa’s largest independent payments processor, offering a range of smart payment solutions to large multi-national and independent retailers as well as entrepreneurs and informal traders. Adumo’s group companies, which include Sureswipe, iKhokha, Humble, Innervation Pan African Payment Solutions and Innervation Rewards, process more than R66-billion in transactions annually across more than 30 000 active clients and 50 000 card machines in 13 African countries.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
Yesterday, Google and the International Finance Corporation published a report entitled e-Conomy Africa 2020. It estimates that the economy of the African continent could gain 180 billion dollars by 2025 thanks to two things: greater access to a fast and quality Internet connection, as well as the realization of the African Continental Free Trade Area project.
Nitin Gajria, Google Director for Sub-Saharan Africa
“Google and IFC have created this report to highlight the role that the digital startup industry plays and other factors driving the continent’s growth, in order to showcase and support the opportunities that the continent presents,” Nitin Gajria, Google Director for Sub-Saharan Africa said. “For Africa, continuing this momentum requires investment in infrastructure, consumption of digital services, public and private investment, and new government policies and regulations.”
Google E-conomy report Africa Google E-conomy report Africa
Here Is What You Need To Know
The report indicates that the internet economy has the potential to reach 5.2% of Africa’s GDP. When the projection is extended to 2050, its contribution exceeds the $ 700 billion mark. In the short term, i.e. by the end of the year, Accenture (study contributor) expects i-GDP to be worth $ 115 billion, or 4.5% of total GDP ($ 2,544 billion). In 2019, it represented 3.9% of the economy with $ 99.7 billion.
Among other factors behind this growth, the report cites the rapidity of urbanization, the growing pool of technological talent, and the dynamism of the startup ecosystem.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
Before Africa can reach the uplands of digitization — the robotics and the AI — it must first do the hard slog of reforming telecoms markets and opening up to competition, argues the outgoing head of the IFC. In a COVID19-treatment facility in Rwanda, Akazuba, Ikizere and Ngabo are moving through the hallways relaying doctor’s messages and delivering blood samples.
Philippe Le Houérou, CEO of IFC, a member of the World Bank Group
The three health workers are not at risk of infection. They are robots. Meanwhile, Babyl, a chatbot, triages first medical problems and schedules physician appointments for 30 percent of the population. In Rwanda, digital technologies have become literal life savers.
Such inspiring examples, which are found across many sectors and countries in Africa, offer a glimpse into the profound development potential of digitization. A number of reports highlight (correctly) that a bright future awaits when vibrant digital business models permeate throughout economies to create new consumer markets; and when frontier technologies – such as AI and 3D printing – reshape entire industries.
The big pot of gold at the end of the path to digitization can lure us into believing that most countries are speedily heading towards it. Many are not. Digitization remains constrained by the poor state of internet connectivity. In sub-Saharan Africa, only 20 percent of the population subscribes to the internet. When people subscribe, they use it sparingly: The average user consumes 300 Megabytes per month, roughly enough for half an hour of video conferencing.
Addressing these constraints has little to do with AI, big data and an army of coders. The first steps to digitization are decidedly unsexy and very analog. Governments need to address vested interests, monopolization and regulatory barriers in connectivity markets to get people connected to the internet.
Fast internet requires a seamless integration of different providers. It travels through undersea cables, landing points, fiber landlines and wireless masts into the phone of the end-user. If one provider in this chain holds too much control, it can hold players downstream hostage to its pricing power and faces few incentives to upgrade its network.
In Africa, until today, monopolistic incumbents, often tightly linked to governments, operate critical infrastructure nodes for fast internet. Both mobile and broadband markets are the most concentrated in terms of ownership.
Even where companies compete, markets are not necessarily open for new entrants: Regulatory capacities to close down on collusive behavior and to enact important enabling regulations – such as granting new competitors open and fair access to existing infrastructure networks – are in many cases insufficient or absent.
Companies may find it attractive to ask for exclusive contracts. But investment that is contingent on adopting anti-competitive practices can end up blocking digital development.
Take a typical country where one government-owned telecommunications company owns all landing stations and has a dominant position in operating the fiber infrastructure. It charges money from retail companies to move their internet traffic through its lines. It is also a retail provider itself, competing with its own customers.
Competitors seeking to change the status quo by building out their own fiber networks have mostly been unable to obtain permits. Despite the country’s abundant connection to international traffic, internet quality is low; an investment backlog in the billions has accumulated.
Consumers pay for this lack of competition: A mobile bundle with 500 Megabytes of data costs on average 16 percent of monthly income, 10 percentage points more than the global average of 6 percent.
Once a bundle has been bought, poor connection limits user experience: 91 percent of the connections in sub-Saharan Africa are 3G or slower. In the face of prohibitive prices, only 2 out of 10 people subscribe to mobile broadband internet despite the fact that 7 out of 10 people are geographically covered by network.
Certainly, digitization requires more than open internet markets. It requires digitally savvy consumers, a workforce that keeps innovating, and entrepreneurial capacities to create new products and services that are relevant for local needs. Those capacities need to develop. But for people to build skills and for entrepreneurship to take advantage of fast connection, people and businesses must be connected in the first place.
The recipe for moving forward is in many ways simple: African governments must aggressively open infrastructure markets for investment; they must break monopolies and shut down rent-seeking behavior. For the complex modern internet value chain, the presence of strong politically independent regulators and competition authorities with the capacity and authority to instill competition is crucial.
Governments have the opportunity to cooperate across borders.
Taking down cross-country communication barriers and opening markets for regional competition, coupled with harmonized regulation and anti-trust prerogatives, can instill a virtuous cycle of investment and lower prices. Moreover, speaking with a common regional voice is the best way to enforce common standards on private companies and prevent them from demanding special treatment.
That the recipes are simple does not make them easy: Entrenched national interests and institutions are hard to break. Immediate revenue from high fees and taxes is hard to sacrifice in favor of future revenue. And conceding authority to regional bodies is unpopular.
First and foremost, the challenge of digitization is one of political will. The will to think bigger, to understand the big pot of gold as a call for taking the unflashy steps now and not as the soothing promise that digitization will happen by itself.
Philippe Le Houérou is the CEO of IFC, a member of the World Bank Group and the largest global development institution focused on the private sector in developing 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 IFC, a member of the World Bank group, the IFU, the Danish Investment Fund for developing countries, and PROPARCO, a subsidiary for the private sector of the French Development Agency (AFD) group, have made a capital investment of $ 108.5 million in Humania North Africa (Humania), a platform of private hospitals, helping to improve medical care in Egypt and Morocco.
Sergio Pimenta, IFC vice-president for the Middle East and Africa
“We are very pleased to continue to support Humania, our long-standing partner and client in the health sector,” said Sergio Pimenta, IFC vice-president for the Middle East and Africa. “Today’s agreement demonstrates the strength of our partnership with IFU and Proparco. This project is a good example of how the private sector can be used to expand access to medical care, build human capital, improve social inclusion and stimulate innovation in health systems in the Egypt and Morocco ”.
Here Is What You Need To Know
The investment envelope includes a contribution of $ 45 million for the IFC and $ 63.5 million mobilized from the IFU up to $ 43.5 million on behalf of the Danish investment fund SDG, and $ 20 million for PROPARCO.
The financial support will help Humania to develop a network of high quality tertiary hospitals in Egypt and Morocco. This project comes at a time when the COVID-19 pandemic is putting pressure on health services in the Middle East and North Africa. For IFC, this is the second partnership with Humania in this fiscal year.
In December 2019, IFC enabled innovative Islamic funding in the amount of $ 125 million for Humania, which is part of the Saudi health group Bait Al Batterjee (BAB). Thanks to these two partnerships, Humania North Africa will become a healthcare platform investing more than $ 360 million in the region.
“Our partnership with IFC, IFU and Proparco will help us make significant investments at a time when demand for quality health care is increasing,” said Sobhi Abdul Jalil Batterjee, President of Humania & BAB. “It will allow us to provide affordable, quality health care, including specialized services, while Egypt and Morocco face COVID-19.”
Sobhi Abdul Jalil Batterjee, President of Humania & BAB
“Our partnership will help redefine the contribution of the private sector to healthcare in these countries by building and operating hospitals in accordance with global best practices,” added Makarem Batterjee, vice president of Humania & BAB.
As a first step, Humania plans to build a new hospital in Alexandria and a clinic to complement the Saudi German Hospital in Cairo, Egypt. The project will also include a new high-quality multi-specialty hospital in the new ecological city of Zenata, in Morocco, a new city supported and funded by AFD.
Together, the two hospitals will have nearly 600 hospital beds and 240 outpatient clinics. The Humania group already operates the Saudi German Hospital in Cairo with a capacity of 200 beds and is already a leader in the Egyptian market.
The development of Humania is considered essential in these two countries where there is a shortage of doctors and hospital beds. Egypt’s health sector needs $ 60 billion in investment by 2050 to meet growing demand for medical services, while Morocco needs to improve the delivery of health care, especially for women and children.
According to Lars Krogsgaard, IFU Director of Investments:
“We are very pleased that by investing in Humania, we can help build capacity and introduce high-quality service to the healthcare sector in need.” in Egypt and Morocco. We are convinced that this investment will benefit patients and that it will be an important element in the ambition of these countries to ensure universal health care coverage. ”
Khimdjee Djalal, Deputy Managing Director of Proparco, said:
“At Proparco, we are very pleased to contribute, under the leadership of the Batterjee family and in partnership with the IFC and IFU, to the development of the health sector in North Africa through Humania North Africa. We have full confidence in the experience of Humania North Africa in helping to close the structural health care gap in the region and providing quality services to improve the quality of life for the population. This transaction is of particular importance for Proparco, because the region is currently facing the COVID-19 crisis which highlights the crucial need to develop quality and resilient health systems in countries like Morocco and Egypt ”.
The project contributes to IFC’s goal of expanding the role of private medical providers in the MENA region, where public hospitals are struggling to keep up with the growing demand for medical services. The IFC invested and mobilized more than $ 286 million in fiscal year 2020 to support health care in the region.
This investment also responds to new medical and social challenges linked to the recent global health crisis, as well as to PROPARCO’s objectives of supporting the construction and modernization of hospitals and private clinics, in order to guarantee sustainable improvement in healthcare. health.
PROPARCO has invested in more than 1,355 additional beds in hospitals by strengthening the complementarity of public-private partnerships for quality services
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer.
The World Bank’s private sector arm, International Finance Corporation (IFC) has joined a consortium of investors to acquire TerraPay, a mobile payments switching company that has operations in Africa, Asia and Europe in a $9.6million deal. The deal involves other investors such as Prime Ventures, a Europe-focused venture capital firm, and Partech Africa, an investor in African tech startups and will see the mobile payment switching firm move to the next level of its expansionist aspirations. Before now, TerraPay has been on an incubation period under Comviva, an Indian-based mobile solutions company.
Ambar Sur, Chief Executive Officer of TerraPay
The International Finance Corporation (IFC) and Terrapay’s management team are other key participants in the acquisition. Sources that are familiar with the deal say that Prime Ventures, Partech and the IFC hold the controlling stake, while TerraPay key management also have significant stake. TerraPay facilitates business-to-business transfers and settlements for financial services companies. Money transfer operators, banks and mobile money startups are their primary clients. The company was founded in 2015 and has acquired more than 25 licenses enabling its global operations in about 60 countries.
Speaking on the development, Ambar Sur, Chief Executive Officer of TerraPay said that the company believes in its mission to address financial inclusion by making real time national, regional and global payments accessible to everyone, adding that “we are excited by this validation from our marquee investors, and look forward to growing rapidly and reaching most of the world’s under-served in the coming years.”
TerraPay’s value addition has been in reducing the cost of money transfers. Remittances are a significant contributor to the GDP of emerging markets. To cite one example, Nigeria received $17.57 billion in diaspora remittances in the twelve months of 2019. Remittances are a half-a-trillion dollar market globally. But it’s not all good news yet: the cost to send money to and fro averages around 9.3% in emerging markets compared to the global average of 7%. A number of factors, especially the cost of handling cash by senders and receivers, contribute to high cost of remittances in Africa.
After starting in Ghana, TerraPay has obtained licenses in 15 African markets. They partner governments and money transfer operators to create central transfer protocols that reduce the cost of financial services transactions. TerraPay’s revised corporate structure and $9.6 million investment from the acquiring parties will see it expand to more countries. By this, TerraPay becomes the latest addition to the IFC’s portfolio of African fintechs. They join Nigeria’s Interswitch, Egypt’s Fawry as well as Lulalend, Net 1 and Zoona from South Africa.
It is in line with the organisation’s mission to help streamline money transfer processes for diasporans while increasing financial inclusion in emerging markets, according to Paulo de Bolle, IFC’s Global Director for Financial Institutions Group. The IFC focuses its fintech searchlight on late venture or growth stage tech-driven businesses with existing revenues demonstrating commercial viability. It’s tickets are between $3 million and $20 million for a minority equity position, or a minimum of $10 million in debt with equity features.
TerraPay’s success over its five years of existence partly stems from partnerships with global money transfer companies. Western Union, Visa, Xpress Money, MoneyTrans, Paga, Ria, Instant Cash, Ripple and MoneyGram are among its partners. In December 2019, TerraPay partnered with UBA, a Nigerian bank, to offer real-time money transfer services to the bank’s 20 million customers. The service currently exists in Cameroon, Sierra Leone, Côte d’Ivoire, Ghana and Burkina Faso.
Cyril Collon, a general partner at Partech Africa, said his Africa-focused firm became interested in TerraPay as a result of the latter’s cutting-edge platform. He hopes TerraPay “will play a key role in reaching the interoperability goals necessary for true financial inclusion.” Based on its founding history of being incubated in India and incorporated in the Netherlands, TerraPay is not an African tech startup in the same breath as Kudi, Yoco, Trade depot or the other startups Partech Africa has invested in so far.
However, they have “built a platform geared toward facilitating flow of money first in African and within Africa,” Collon said while making the case that they are an African tech company. “Most of its revenue is in Africa by servicing today already 2/3 of all African countries,” Collon said.
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
