In this week's Pulse...
Twitter’s choice of Ghana shines spotlight on Nigerian business environment, Somalia President's mandate extension risks stability, AU-built vaccine manufacturing facilities to reduce foreign dependency, octopus-inspired Bafta winner draws attention to conservation, Somali-born refugee diversifying Scandinavian beauty at Vogue, and more
The Data Room
Africa’s tech startup industry has been growing at a phenomenal pace. Between 2015 and 2020, the number of funded startups grew 46% annually, 6-times faster than the global average. But as BCG analysis shows, Africa has a poor track record in sustaining and scaling startups, with the entire Continent having only 3 Unicorns and less than 20 Zebras, valued at $200mn. African startups rarely survive beyond Series B funding. As a result, returns on VC investments are weak - less than 3% on average across the Continent over 5 years, compared with around 11% in Asia-Pacific and nearly 16% in Europe.
Numbers in the Spotlight
(USD3.5bn) is the cost of construction for the pipeline to export Uganda’s crude the Tanzanian coast
(USD916mn) in compensation being demanded by Egypt from the Ever Given container ship for Suez Canal blockage
(USD58mn) in revenue generated in online auctioning of Mozambican ruby
(USD2mn) in unsecured credit provided to 3,000 SMEs in Uganda in ~1 year by fintech startup Numida
(USD1.1mn) in seed funding received by South Africa’s Quro Medical, for hospital-at-home service
killed by Avian influenza outbreak in South Africa
for manufacturing vaccines to be built across Africa by the AU
extension to Somalia’s president was granted without election
On The Continent This Week
Effective internal and regional security, and foreign policy
Somalia president's mandate extension risks peace and security. Leading donors, the US and the EU, are considering imposing sanctions against Somalia after the parliament in Mogadishu extended the president’s mandate by two years without an election. The decision, which has also made the AU, the InterGovernmental Authority on Development (IGAD) and the UN “highly concerned” threatens the already fragile peace, security and stability in war-torn Somalia. The extension, that includes preparing for universal suffrage, abandons a September 2020 deal in which president Mohamed Abdullahi and regional governments agreed an interim plan of voting through electoral colleges. Players are worried that the extension could cause a splintering of Somalia's security forces along political and clan lines. For instance, Mogadishu's police chief was fired after trying to shut down parliament ahead of the mandate extension vote, declaring it a theft of power in a public address. If the warring factions don’t reach a negotiated solution soon, these divisions could be exploited by local militants, Al-Shabaab, to make a stronger comeback.
End-to-end value chain capture
African Union to build vaccine manufacturing facilities.The AU has announced a partnership to establish 5 vaccine-manufacturing facilities in the next 15 years. The partnership with the Coalition for Epidemic Preparedness Innovations (CEPI), which helps run the global COVAX vaccine-sharing program, will see the Continent get facilities in Northern, Southern, Eastern, Western and Central Africa. If established, the facilities will help reduce Africa’s reliance on foreign production. The urgency to localise production has been accentuated by Covid-19 vaccine nationalism, which has seen Western countries hoard supplies. While there are less than 10 African facilities that could produce vaccines, most only engage in packaging and labelling. But weaning Africa off dependence on foreign pharma will take more than just 5 vaccine-manufacturing plants; the private sector can be incentivised through product purchase guarantees and other forms of preferential treatment.
Home-grown digital infrastructure & platforms
Twitter picks Ghana for first Africa office. Why? Whilst Nigeria has the highest number of Twitter accounts in Africa at 39.6mn, the American tech giant has chosen Ghana - which has a population of 32mn people - for its first office on the Continent. The company attributes its choice to local “support for free speech and online freedoms” and being home to the AfCFTA secretariat. The decision has reignited online rivalry between the two countries, known colloquially as the 'jollof wars’. Many Nigerians believe Twitter has snubbed their country, which is seeing rapid growth and investment in tech, blaming Nigeria’s “inconducive business environment.” A former Nigerian government aid commented that “our ease of doing business is so bad that it's easier for terrorists to get phone lines than law-abiding residents”. Notably, Ghana sat 13 places ahead of Nigeria in the World Bank’s ease of doing business index in 2019. Ghana, West Africa’s second biggest economy, is also the 43rd most peaceful country in the world - some 104 places ahead of Nigeria. With tech giants such as Google and Microsoft also choosing Ghana for expansion, Nigeria needs to urgently address the structural challenges impeding its competitiveness.
Baseline healthcare & disease protection
Can South Africa’s hospital-at-home startup cure inefficiencies in Africa’s healthcare?Quro Medical, a South African digital healthcare startup leveraging technology to make healthcare more accessible, has secured $1.1mn in seed funding to scale its operation across the country and the Continent. It offers a digitally-facilitated hospital-at-home scheme, which could help cure some of the inefficiencies afflicting healthcare in Africa, such as shortage of skills and facilities, long distances to healthcare centres, high traveling costs and long waiting times. About 29% of Africa’s population lives more than the two hours recommended by WHO from the nearest hospital. The Continent has a doctor-patient ratio of 1:5000, instead of the recommended 1:1000. Whilst tech-enabled hospital-at-home schemes provide a necessary complement to hospital admission and can aid in early discharge, they are more expensive than public healthcare and risk exacerbating inequalities in access to healthcare. As such, the achievement of universal baseline healthcare still depends on the provision of quality public services.
Scaleable energy access
What signing of pipeline construction deal means for Uganda. Uganda, Tanzania and oil firms Total and CNOOC have signed agreements to kickstart the construction of a $3.5bn pipeline to export Kampala’s crude. The 1,445km pipeline running from Ugandan oilfields to Tanzania’s seaport of Tanga, will be the longest electrically heated crude pipeline in the world. It can also be used to export Tanzanian and Mozambican gas to Uganda and the region. The signing of the agreements speeds up the commercialisation of Uganda’s oil, 15 years after the discovery of significant deposits - which reduced in value from $6bn in 2013 to $18bn in 2018 due to a fall of crude oil prices. To reap full benefits of oil, Uganda should learn from the likes of Nigeria, which depends on oil for over 80% of exports and half of government revenues, and ensure they guard against the 'Dutch disease' by re-investing income into diversifying the economy. Oil production could see further benefits for Uganda if local companies are supported to become competitive enough to win lucrative service contracts in the oil sector.
Essential infrastructure, personal living-space & utilities
The environmental cost of the Suez Canal blockage. Last month's Suez Canal blockage caused a spike in sulphur dioxide emissions, visible from space. Satellite evidence showed sulphur was being emitted by the more than 350 ships idling in ‘hotelling mode’ from 23-29 March. When sulphur combines with water in the atmosphere, it acidifies rain, which can harm plants and aquatic species. The pollution threatens the limited biodiversity of the largely-desert country, and the nearby Mediterranean Sea, whose more than 17,000 marine species make it one of the world's biodiversity hotspots. Sulphur oxides also threaten human health, contributing to respiratory, cardiovascular and lung diseases. The pollution renews the impetus to fast-track the switch to cleaner energies for the shipping industry, which commits to cut its emissions of greenhouse gases by 70% by 2050 versus 2008 levels.
Proportional representation in politics, business and community leadership
African, Female, Muslim, Refugee: Bringing diversity to Scandinavian fashion. Vogue Scandinavia has appointed Mona M. Ali as their new editor of diversity and inclusion. Born in Somalia, Ali who fled to Sweden as a child, rose to prominence after founding Fiiri (Somali word for “look”), a model and creative agency for people of colour. Through Fiiri, Ali aimed to “showcase the people of colour, the people that have been ignored and unseen, not just the typical blond, blue-eyed [ones]” in Scandinavia. With a black population of ~5%, and a Muslim population of ~5% (in Denmark, Norway and Sweden combined), Ali’s appointment has the potential to shift perceptions of beauty and share a more diverse narrative, in a relatively undiversified part of the world.
Access to financial services and products
Ugandan startup giving unsecured credit to SMEs. Kampala-based fintech startup Numida, which offers credit to SMEs often overlooked by traditional financial institutions, has closed a $2.3mn seed round. SMEs are crucial to Africa’s economy - contributing up to one-third of GDP and two-thirds of the workforce, However 5 out of every new business fails, and most SMEs face inadequate funding options, largely due to lack of collateral. Numida overcomes this by using a proprietary bookkeeping tool to track the credit history and cash flow data of users, enabling SMEs to access unsecured credit of up to $3,500 in under 2 hours. To date, it has provided more than $2mn in unsecured credit to 3,000 SMEs in Uganda, disbursing around $250,000 per month. However with a financing gap of $136bn, government intervention is still required to support SME growth.
High value skills development and talent repatriation
Can entrepreneurship training tackle profitarchy in Africa? About 10,000 women from across Africa will learn business skills under a programme named Women in Africa 54 (WIA54). The training could help reduce inequalities between men and women in business outcomes in sub-Saharan Africa (SSA). Despite SSA being the only region with more female than male entrepreneurs, women earn 34% less profits than men, partially attributed to poorer access to finance, training and opportunities for women. Additionally many societies across the Continent remain patriarchal, with customs often giving men control over property and land, vital sources of collateral. The overall funding gap for female entrepreneurs in SSA is estimated at $42bn, and it is believed that $316bn in GDP could be gained by 2025 if the gap is bridged. The long-lasting solution lies in structural changes around access to education, finance, property ownership and inheritance, unpaid domestic care, taxation, etc.
Exporting culture & identity
Can South Africa’s octopus-inspired Bafta winner attract more funding for conservation? A production showing how South African filmmaker, Craig Foster, befriended an octopus while free-diving in the frigid waters of Cape Town has bagged the Bafta award for best documentary. The film named ‘My Octopus Teacher’ has also been nominated for an Oscar in the Best Documentary Feature category. It draws attention to the beautiful habitat of the octopus - a kelp forest off the coast of Cape Town - that constitutes part of one of the world’s richest ecosystems, and the urgent need to preserve underwater forests and Africa’s natural attractions. Such limelight is overdue, as Africa’s wildlife faces a $1bn conservation-funding deficit. Wildlife is crucial for growth and livelihoods in Africa, generating $29bn annually through tourism, and employing 3.6mn people before Covid-19.
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