Nigeria’s Twitter ban: Business owners count their losses
JUNE 27, 2021 This newsletter is a weekly in-depth analysis of tech and innovation in Africa that will serve as a post-pandemic guide. Subscribe here to get it directly in your inbox every Sunday at 3 pm WAT
What’s the one thing in the world that generates a lot of confusion, aversion and maybe even hate but still has lots of money thrown at it?
I’d say cryptocurrency and before you say “no, the correct answer is…” two contrasting crypto-related events from the past week sort of agree with me.
Placing these events side by side on a split-screen view, we can’t help but wonder again: what is all this crypto craze about and where can we safely say it is headed?
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 find out.
Rowing on a long ride
On April 30 last year, Chris Dixon and Katie Haun of Andreessen Horowitz, announced a $515 million fund. It was the firm’s second crypto fund raised to invest in services that will modernise payments and boost the creator economy, using blockchain technology.
Olanrewaju Odunowo/TC Insights
By even a sober measure, the last 12 months have thrown up a strong case for investing in the creator economy: NFTs. New TikTok celebrities. Gen Z millionaires riding bitcoin’s meteoric rise in value. Coinbase’s IPO. And so naturally, the a16z guys felt validated.
Not every aspect of the boom in the creator economy has been tied to crypto – Elsa Majimbo’s fame is based on the same tech that made Mark Zuckerberg a billionaire in 2008, barely a year after the first iPhone.
But convinced that “the next wave of computing innovation will be driven by crypto,” a16z has quadrupled their last fund – a new $2.2bn to invest in up-start and mature crypto-driven platforms in North America. Possibly in Britain and the rest of Europe too.
Meanwhile, $3.6bn worth of bitcoin has vanished in South Africa.
Two smart twenty-something year-olds are at large, and their phones are sending client calls to voicemail. As you can imagine, some of the affected investors’ frustration is diffusing across the continent, fanning flickers of crypto scepticism. After all, this is the second of such a scam in South Africa alone in as many years.
Olanrewaju Odunowo/TC Insights
If two kids can just up and leave after feigning to be legit for only two years (they founded their crypto exchange, Africrypt in 2019), what is it about crypto that is good and trustworthy?
“I think crypto will also have some negative news here and there but we should not let one bad incident paint the whole industry black,” Yele Bademosi, CEO and founder of Bundle, a Nigerian crypto-enabled startup, tells me.
“Long-term I think crypto’s reputation will be fine, the industry has evolved and come a long way. For every bad actor, there are 100’s of good actors.”
That is fine to say, but short term losses can do real damage. Left to fester, there might be no “long-term” benefits to enjoy at the end of the tunnel. Surely there must be a way to assure current crypto investors that they are not guinea pigs who may need to get burned now for the future industry to harvest stability.
Firewalls for the lab
Crypto optimists use the word “evolve” often because crypto is an experiment. Its decentralised nature and ambition to redefine global finance make it an especially controversial one. Yet, we are kind of accepting it as a necessary universal experiment.
Like all experiments though, crypto might need a controlled environment, stacked with experts familiar with titration techniques, people who know when to activate circuit breakers.
That means some form of regulatory oversight – South African financial authorities have not investigated AfriCrypt for lack of jurisdiction – but also the right people around crypto builders.
That is the other key takeaway from a16z’s announcement this week. A $2.2bn crypto fund is incredible but did you notice who they now have on their crypto team? One former director at the US SEC who has experience with digital assets. A former Hillary Clinton and Joe Biden advisor. A former VP of communications at Coinbase.
If Africa will throw billions of coins in crypto experiments, it would be ideal to know that startups in the space have a similar level of expertise around them, wouldn’t it?
FROM THE CABAL
In the four weeks of Nigeria’s Twitter ban, business owners have been counting losses. Here’s what they told Daniel Adeyemi in this detailed piece.
But there’s been some good news in Nigeria. Last week, Chaka became the first startup to be approved by Nigeria’s Securities and Exchange Commission to operate a stock trading app. It heralds a new era in fintech regulation in Nigeria – and Africa.
Next we go to Kenya to meet a man who gave up University education to become the chief of tech-enabled mobility. Jesse Forrester’s Mazi Mobility is not a first mover but reading his profile tells you he intends to move to the top asap.
Also in Kenya, Safaricom got into the super app race by launching… M-Pesa Super App. Not the most imaginative name but you get the motivation: M-Pesa is a clear leader that already does multiple, useful things. Retain the name and expand the features? Why not.
Finally to Malawi where the world’s first 3D-printed school has been launched. Michael Ajifowoke does a good job of explaining the backstory and significance here.
Have a great week
Thank you for reading the Next Wave. Please share today’s edition with your network on WhatsApp, Telegram and other platforms, and reply to this email to let us know what we can be better at.