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A TechCabal roundup of the
impact of the coronavirus pandemic
on tech & innovation in Africa

APRIL 5, 2020
This newsletter is a weekly special focused on the effect of the novel coronavirus, COVID-19 on African tech and innovation ecosystems. Subscribe here to get it directly in your inbox every Sunday at 3 pm WAT.  This edition is brought to you in partnership with Endeavor.

Hello,

Hope you are keeping safe? Welcome to the second edition of our coronavirus update. It’s been exactly one week since we started documenting and exploring the effects of this madness on the tech and innovations ecosystem in Africa. 

If you missed our first issue, here it is. In it, we examined the effects of the pandemic on ride-hailing with Uber suspending night pickups in Kenya and other likely ripple effects across the industry in Africa.

But a lot has changed since then! The ride-hailing giant suspended operations in Uganda, and because of a lockdown also ceased operations in the 2 Nigerian states it operates.  Its major competitor, Bolt, has reportedly suspended operations too and pivoted to deliveries.

Although ride-hailing has taken a hit, digital platforms that help people access essential services while they stay at home are seeing a surge in demand.

WHAT’S HAPPENING

An e-commerce boom?

One organization that appears to be benefiting from a lockdown is SA-founded internet giant, Naspers; the company’s stock price has risen by 11% since 2020 began, its best quarterly performance in a year. 

Demand for the digital products and services offered by Chinese company, Tencent in which Naspers has a 31% stake, has spiked because of the pandemic. Prosus NV, the Johannesburg-listed company that holds the Tencent stake has also risen by 17%.

Visitors on popular Chinese workplace chat apps including Tencent Conference have grown proportionally to the number of coronavirus cases.

Workplace chat users have increased as coronavirus cases grew. Source: Knoema

Despite the surge in traffic to digital platforms, China’s top search engine and short messaging platform, Baidu and Weibo warned investors in February that revenues are set to fall in the short term. This is amidst concerns that advertisers’ spend could reduce as more companies experience an economic slowdown, but this isn’t slowing Tencent.

Chinese companies aren’t the only ones seeing a surge in demand. UCook, a meal kit delivery service in South Africa said it has seen a “huge spike in demand” since the start of the lockdown in its own country. The platform has responded by scaling down its nationwide service to only Cape Town, Johannesburg and surrounding areas.

E-commerce companies in South Africa have been dealing with overwhelming customer demand in the last few weeks as a result of the lockdown. Platforms have responded by either scaling down operations or ramping up their capacity to deliver.

South Africa has always had a relatively well-developed e-commerce industry; from wine sellers to fashion and electronics stores. One estimate puts the number of shoppers in the country at 21.5 million as of 2019 and the number is expected to rise by 15% in 2021. An increase in demand could be the boost that the industry needs in a country where 63 percent say they prefer to make purchases at a mall. According to Urban Studies, 76 percent of South Africans visit a mall at least once a week.

South Africa has a well-developed e-commerce industry. Source: WeeTracker

Number of online shoppers in South Africa is growing every year. Source: eshopworld

On a regional scale, e-commerce hasn’t quite lived up to its promise. Jumia which declared itself the first African tech startup to go public has been struggling. Last week, Rocket Internet sold its 11% stake in the company divesting from the company it helped found. Konga, its major rival in Nigeria got sold two years ago at a price some insiders have described as “little or nothing.”

While new e-commerce models have since emerged, it is unclear whether the surge in demand during this pandemic could once again put a spotlight on the industry. Time will tell.

SPONSOR MESSAGE

For ambitious founders striving to build their companies in these unforeseen circumstances, access to capital is critical. Join Endeavor Nigeria and Eghosa Omoigui for a session on Optimising Capital Through the Crisis. Register for the webinar.

FROM THE CABAL
The lockdown in Nigeria is causing confusion for logistics businesses in the country.

There was no clear exemption for them when the president announced the lockdown. Since then, over 3,000 truck drivers on Kobo360’s logistics platform have stopped working because they’ve assumed that their cargo and truck will be impounded by law enforcement.

As Coronavirus cases continue to grow in Africa, Zikoko, our Sister publication under Big Cabal Media, has put together a microsite — coronafacts.africathat provides accurate information and free downloadable resources for the general public to help understand and keep up with the Coronavirus pandemic.

While a lockdown has disrupted ride-hailing, bike-hailing companies appear to be least affected. In Oyo, South-west Nigeria, a source claims SafeBoda, one of the popular bike-hailing startups, had its best week ever.

Google has launched a $6.5 million fund to fight coronavirus misinformation. In Africa, the company will fund Africa Check, a fact-checking organisation founded in 2012. The money will go to the latter’s Nigeria office where it has partnered with Nigeria’s Centre for Disease Control (NCDC) and Dubawa, a platform owned by Premium Times, on fact-checks.

In Africa, criminals could take advantage of pandemic anxiety to dupe people. In one example, scammers set-up an e-commerce website selling coronavirus medical products. In another case, they put together a website asking for people to enter their personal details to receive money from a former Nigerian vice president.

NEWS FROM AROUND THE WORLD
Coronavirus has created a sex boom.

Illicit Encounters, a dating website for those seeking extra-marital affairs, has experienced a 15 percent increase in activity based on this time last year. UK Meds, an online pharmacy based in Nottingham, reported a spike in Viagra sales and a 23 percent increase in orders of the morning-after pill

Following a slowdown owing to COVID-19, Chinese VC deals are making a comeback. Chinese firms recorded 66 venture capital deals for the week ended March 28, the most of any week in 2020. Advanced manufacturing and edtech are two sectors that have experienced an uptick in deals, and understandably so, because of their relevance in these times.

WHAT WE ARE READING

Africa’s GDP growth in 2020 could be cut by three to eight percentage points.

A new study by McKinsey revealed that depending on the scenario, Africa’s economies could experience a loss of between $90 billion and $200 billion in 2020. Scary! 

Your employee tested positive for Covid-19. What do you do? In this Harvard Business Review article, executive coach, Alisa Cohn shares tips for leaders to handle the situation when their employee tests positive. Check out the HBR’s coverage on leading and working through a pandemic.

Have A Great Week

Stay safe, stay inside, wash your hands and remember to keep practising social distancing.

You can subscribe to our TC Daily Newsletter; the most comprehensive roundup of technology news on the continent, and have it delivered to your inbox every weekday at 7 am WAT.

Follow TechCabal on Twitter, Instagram, Facebook, and LinkedIn to stay updated on tech and innovation in Africa.

Victor Ekwealor, Managing Editor, TechCabal

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