👨🏿‍🚀TechCabal Daily – JP Morgan is in town

Good morning! ☀️

Nigeria’s National grid may have collapsed again. Please spare a thought for remote workers in the country today. Away from our struggles in Nigeria, our reporter Ngozi Chukwu is live at GITEX. If you are attending, please say hello! We’ll bring you updates from Dubai.

Inside JP Morgan’s Kenya play

After 12 years of wait, US banking giant JP Morgan Chase has secured an operating licence from the Central Bank of Kenya (CBK) to open a representative office in Nairobi. While the representative office won’t be able to handle transactions like a regular bank, it will market JP Morgan’s banking and advisory services.

Jamie Dimon, JP Morgan CEO, said in the past that the bank would concentrate on big-ticket deals from the government and large multinationals with headquarters in the country. JP Morgan has been a lead arranger alongside CitiBank for the three Eurobonds that Kenya has issued.

Large international banks are also following their foreign customers who are setting shop on the continent, and whose capital needs local banks cannot meet. Local banks are restricted by the relatively small capital base, which makes it difficult to finance large infrastructural projects or multinational expansions. The entry could help East African countries secure syndicated loans to fund big projects like railways and roads.

The bank could take advantage of Kenya’s membership in the East African Community (EAC) to access other markets in the region. JP Morgan’s expansion into Kenya continues its inroads on the continent. The lender already has offices in Nigeria and South Africa.

The approval comes days before Dimon visits Nigeria, Kenya, South Africa, and Côte d’Ivoire. JP Morgan is also eyeing Côte d’Ivoire as its next destination.

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For many internet service providers (ISPs), gaining 1,000 active monthly customers and even a tiny fraction of market share can take a while since it is challenging to gain market share in areas where leading ISPs like Safaricom have already established dominance.

Despite these difficulties, SpaceX-owned Starlink now has 0.5% of Kenya’s internet market. When it launched in June 2023, there were fewer than 500 people and businesses were using satellite internet. That number has grown, with 4,000 satellite internet customers in Kenya by March 2024. By June 2024, it had doubled that number .

Behind its rapid growth is its popularity in upcountry areas where other ISPs don’t have robust coverage.

ISPs like Safaricom would need to spend hundreds of millions (KES) to lay fibre infrastructure to reach every nook and corner of Kenya. And it’s not always clear that some regions or communities can provide a return on those investments.

Yet, ISPs competing in Kenya may not immediately lose sleep because Starlink is expensive. A full kit costs KES 45,000 ($350), and a full-speed package at 200 Mbps costs KES 6,500 ($51) monthly. While not immediately related, Safaricom customers can get the same speeds but with no hardware costs.

Nigerian fintech startup Lendsqr whose customers are lending businesses—it mostly sells them software and holds their hands to ensure success in the tough sector that is lending—is going all in with a ₦1 billion ($612,000) fund. That fund will allow Lendsqr to give its customers, who are often in need of cheap-ish money they can lend to retail customers, overdrafts.

Bank deposits are the cheapest funds for lenders, which explains why commercial banks often have the cheapest interest rates. Yet, all animals are not equal, and digital lenders don’t often have cheap deposits to rely on. They may raise money from investors or take increasingly expensive debt—hello, interest rate hikes.

In theory, Lendsqr’s overdraft will allow a digital lender to take some money at 4% a month and make loans to retail customers. The PR people will say something like, “It will help its customers scale their lending business.”

Lendsqr argues that its rates are some of the most competitive in the market and claim the sweetener is that its clients only have to pay interest on the money they disburse. If they don’t issue loans, they don’t have to pay any interest (yet).

It ushers Lendsqr, which has typically played in the software business into the league of on-lending companies, which is a fancy way to say the ₦1 billion won’t come from Lendsqr, but from a financial institution or an asset management company it has declined to name.

I started writing this blurb in Dubai traffic at 8 PM, and it felt like a typical Monday night in Lagos.

As I returned to my hotel after a thrilling first day at GITEX, one of the world’s largest tech conferences, it was comforting to know that even the ‘City of Gold’ has its own traffic woes.

That’s enough musing about movement- or lack thereof.

When I said GITEX is one of the world’s largest tech conferences, I meant it literally. The event was happening concurrently in several locations—the World Trade Centre (WTC) and at least two buildings beside it and two buildings at the Dubai Harbour, about 30 minutes away from the WTC.

The venues were teeming with people—exhibitors, tech enthusiasts, policymakers, tech reporters, and investors from Europe, Asia, the Middle East, Africa, and America. It was a diverse crowd, but the excitement felt like a common language.

Enterprise technology providers like Cisco, Microsoft, and Huawei showcased AI technology, robotics and cloud computing.

There was an AI-powered cloning machine by Hewlett-Packard that could clone a person’s image and voice to create an avatar that can talk like a human. The set-up ranges from $200,000 to $2 million depending on the parameters.

There was also a self-checkout device that doesn’t require scanning the barcodes of items.

“The conferences were as exciting as the exhibition. My favourite panel discussion featured policymakers from Serbia, the Netherlands, and the UK discussing Europe’s tech ecosystem challenges. Their challenges mirrored those faced by Africa’s tech ecosystem.”

Local institutional investors, such as insurance companies and financial institutions, are risk-averse and view venture funding as ‘exotic,’ according to the panellists.

Additionally, a slow down in fuding and a low tolerance for failure among has led to a wave of startup closures. Restrictive regulations are hindering the creation and expansion of new technology and businesses.

Europe and Africa are confident they can leapfrog these challenges.

I am looking forward to the lineup at today’s event, especially

See you later, Habibi!