Nigeria’s SEC strikes
APRIL 11, 2021
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The best African tech news from the past week was from North Africa. 

Payments provider Paymob closed an $18.5m Series A to expand to Saudi Arabia, and two venture capital firms separately announced initiatives with a combined value of more than $150m. 

What jumps out: innovators and investors in Cairo, the Egyptian capital and epicenter of this flush of cash, are determined to give Nairobi, Cape Town and Lagos a run for that Tech Capital of Africa crown. 

What’s understated: it might happen sooner than later, judging by recent trends.

The Flutterwave Mobile app, the app that turns any smartphone into a mobile POS is now redefining commerce. The Flutterwave Mobile App makes it super convenient for anyone to take their business with them anywhere, anytime. Learn how you can take your business anywhere, anytime here.
Now, let’s dive in.

Innovating up North

According to a report by Partech Partners, 86 venture capital equity deals were completed by tech startups in Egypt in 2020. 

No other African country had as many deals. Egypt was the destination for 24% of all equity deals in African tech in 2020. Between 2019 and 2020, the number of deals in the North African country grew 83%.

Yes, Egypt still lags behind Nigeria and Kenya in the value of deals.


But while Nigeria and Kenya witnessed massive reductions (-59% and -42% respectively) in the amounts investors offered in 2020, VC investment in Egypt increased by 28% that year – the highest growth rate among the top four countries.

Olanrewaju Odunowo/TC Insights

2021 has started on a high for Egypt. In Q1, 34 startups in the country raised $22 millionthis is twice the amount raised by 24 startups in Q4 2020, according to Wamda, a MENA-focused publication.

What’s driving this enthusiasm in Egypt?

Partech suggests “high quality entrepreneurs and increased activity from regional MENA funds” are responsible. 

Ahmed El Alfi, founder and chairman of Sawari Ventures, agrees. His firm has one billion egyptian pounds (~ $71m) to invest in more Egyptian startups; he is confident of finding great deals and that more investors will be looking for deals.


“The quality of entrepreneurship is better than it was, there are more experienced entrepreneurs who are now starting companies,” El Alfi told Wamda.


“The funding has been improved as well; because more investors from outside Egypt are acknowledging the talent and opportunities in Egypt.”


Swvl’s $42 million raise in 2019 remains the largest by any startup in the region. Founded in Cairo, the bus-hailing company is an African pioneer, with its model now spreading to Nigeria. But out of the three Swvl co-founders, two have moved on to found other tech businesses in the country. 

It is a sign of maturing entrepreneurship ecosystems for employees of stable companies to be able to start new ventures without resulting in any damage to the companies they leave. So as more Egyptian startups get funding, build and scale, we can expect the birth of new startups who dream big, get funding and keep the curve on an upward trajectory. 

How do you bet?

Partech put the total equity VC funding raised by African tech in 2020 at $1.43 bn, a 29% reduction from 2019. Egyptian startups got $269 million or 19% of the funding in 2020. 

AfricArena projects that Africa will raise between $2.25 and $2.8 billion in 2021. If Egypt did well in a bad year for Africa, it stands to reason that Egyptian founders will be getting lots of calls year round. 

Seeing interesting tech developments worth paying attention to in Egypt and North Africa? Let me know:


It’s official: the SEC in Nigeria has come out against startups whose apps offer Nigerians the opportunity to trade stocks on foreign stock exchanges. It is not going after these startups directly though, but clamping down on its member capital market organisations partnering with those startups. Muyiwa has a brief on the policy here.


If someone asks you why Airtel is seeling 11.5% of its $2.65 billion mobile money business, share this with them.


Adieu LG, but you know who’s still going strong in the smartphone business? Nokia. Their partnership with HMD Global enters a new phase of stability with the roll out of these new devices. But will these have any impact on the Transsion-dominated smartphone market in Africa?


Hitting pass mark


In 2014, Tricia Martinez and Samer Saab founded South African crypto startup Wala to facilitate remittances and payments across Africa. Although the startup gained early traction, things started to go downhill a few years later due to a mix of lack of funding and poor infrastructure.


Eventually, the startup closed shop in 2019.

Boluwatife Sanwo/TC Insights

Source : The Better Africa Report

South Africa had 24% of the total number of equity rounds in 2020, but it also had the highest failure rate for funded startups out of the top 4 tech hubs in Africa. It was followed by Nigeria while Kenya had the lowest.


It’s unclear why Nigeria and South Africa have such high failure rates. One plausible reason could be regressive policies that make it difficult for startups to do business and access (follow-on) funding.  


South African startups domiciled abroad have a hard time accessing funding from local early-stage investors, according to research by AfricArena. This is due to laws that prevent these investors from investing in foreign businesses. 


Compare this with Kenya, which currently ranks 56th globally (4th in Africa) for ease of doing business. South Africa and Nigeria rank 84th and 131st respectively. With regards to protecting  minority investors, Kenya ranks 1st globally.


When it comes to talent, South Africa has struggled in the past to recruit and keep international talent. Its own Home Affairs Department said it didn’t have adequate policies to do so. Kenya, on the other hand, is reportedly the best African country for hiring international talent. 


The issues around talent and access to funding may account for some of the low valuations of South African-based startups. Although startups with lower-valuations may attract more investments, it puts them at risk in the long term.


Investor commitment may dwindle because they would prefer to pay more attention to their portfolio startups with higher valuations. As money is only one side of the investment coin, the startups may suffer. It could also affect how they raise money in the future. 


Kenya has its fair share of failed startups too. But there’s a lot that African countries, not just the big four, can learn from it about creating a prosperous environment for startups. 


Get TechCabal reports here and send us your custom research requests here.


Written by Boluwatife Sanwo

Have a great week ahead!

Thank you for reading today’s edition of The Next Wave. Stay safe when you are out in public places – protect others by wearing your mask and sanitizing your hands.


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– Alexander O. Onukwue, Staff Writer, TechCabal

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