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Pulse #62 - Investment opportunities: Ghana’s smart villages & new hospitals, record African startups join Y Combinator, Boko Haram fighters surrender

In this week’s Pulse:  
Defections weaken Boko Haram, Y Combinator funds more African startups, smart infrastructure for climate resilience, private financing could make Ghana regional hub for health tourism, outcry following South Africa nuclear power plan, Covid-19 job losses reverse employment gains, Mastercard stirs Nigeria’s ginger, and Uganda-Kenya trade war threatens EAC integration
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The Data Room

Despite the rapid growth in Africa’s VC funding in recent years, startup activity on the Continent remains largely concentrated in four ecosystems - Nigeria, Kenya, South Africa and Egypt. In 2020, the four countries raised ~$1.1bn, accounting for slightly more than half of all VC funding on the Continent. However, Ghana, Rwanda, Uganda and Morocco are showing signs of becoming future hotspots. Overall, the Continent raised $2.02bn in VC funding in 2019, 74% more than in the previous year. Although Covid-19 led to a 29% fall in VC funding in 2020, investor appetite will likely remain high, with the Continent forecast to attract >$10bn in 2025. Read below for more on investor interest in African startups. 

Numbers in the Spotlight

(USD5bn) infrastructure project to build 20 smart villages & 100,000 houses in Ghana

 (USD255mn) lent by institutional investors for two new hospitals in Ghana

30,000,000 jobs
 (30mn) and $190bn in GDP lost due to Covid-19 in Africa

60,000 ginger farmers
in northern Nigeria to get training, material and support from Mastercard Foundation

48,000 missing Africans
registered by the ICRC and the national Red Cross and Red Crescent societies

6,000 Boko Haram fighters
 surrender in northern Nigeria

2,500MW nuclear power plant
to be built by South African government - enough to serve ~1.6mn homes 

15 African startups
selected to Y Combinator’s accelerator programme

30% reduction
in mobile money tax announced by Tanzania’s government

On The Continent This Week

Effective internal and regional security, and foreign policy

Almost 6,000 Boko Haram fighters have surrendered. ~6,000 fighters from Boko Haram have surrendered in recent weeks, according to the Nigerian armed forces. The news comes a week after Cameroonian authorities announced that nearly 1,000 Boko Haram fighters had defected since May. While the Nigerian army attributes this to its counterinsurgency efforts, some security experts say the death of Boko Haram’s leader Abubakar Shekau in May could have dispirited fighters. With military capabilities of the terrorist group dented, hopes are rising for restored peace and stability in north-eastern Nigeria, and parts of Chad, Niger and Cameroon. But with reports of many Boko Haram fighters also defecting to the splinter group-turned-rival, the Islamic State’s West Africa Province (ISWAP), now is not the time to slacken the fight against militants.

Essential infrastructure, personal living-space & utilities

$5bn for smart housing in Ghana. A private infrastructure project led by US-based project development company Skybridge West Africa (SWA) will build 100,000 houses in 20 smart villages in Ghana in the next five years. The $5bn project will also build transport infrastructure, renewable energy sources, waste management systems, high-speed fibre-optic networks, 5G cell towers, last-mile wireless technology, schools and health facilities. The initiative, designed to emulate Duval County in Florida, will help cut Ghana’s housing deficit of 2mn units (as in 2020), as well as project the West African country as a case study for integrating smart infrastructure into housing plans in Africa. Smart infrastructure is vital for building climate resilience, as Africa remains the most vulnerable region to global warming, estimated to cost the Continent $200bn annually in adaptation and mitigation expenditure by 2070.

Home-grown digital infrastructure & platforms

African startups in YC increase by 50%. Y Combinator’s summer 2021 camp has admitted 15 African startups, up from 10 last year. Of the startups selected, five are from Nigeria (Infiuss Health, Lemonade Finance, Mecho Autotech, Payhippo, Suplias), four from Egypt (Amenli, Odiggo, Pylon, ShipBlu), two from Morocco, and one apiece from Kenya, Ghana, Zambia and South Africa. The selection reflects continued global interest in Africa’s startup ecosystem, which experienced an increase in VC funding from $400mn in 2015 to >2bn in 2020. Nigeria continues to lead the pack despite government crackdowns on startups, whilst Egypt’s startup-friendly environment and favourable banking regulations continues to make it attractive. With much of this funding coming from overseas, more funding from Africa is crucial to enabling the Continent to reap more rewards from its startups.

Access to financial services and products

Tanzania cuts mobile money tax by 30%. Tanzania’s government has slashed tax on mobile money transactions following public outcry over the levy, which became effective in July. The levy reduction restores the affordability of mobile money services and bolsters financial inclusion in the East African country where 26mn people, nearly half of the population, uses mobile money. Mobile money in Tanzania has transcended traditional purposes (sending and receiving money) to facilitate micro-insurance, e-commerce and pay-as-you-go services. With ~90% of startups in Tanzania saying they prefer mobile money to cash or bank payment, industry players said the tax increment had hit their revenues as many consumers avoided the service. Wider consultations could enable the development of taxes that are less disruptive.   

Proportional representation in politics, business and community leadership

UN marks first international day for people of African descent. The inaugural international day for people of African descent was celebrated on 31 August 2021. The UN Secretary General António Guterres said the day celebrated the “enormous contributions” of people of African descent and “a long overdue recognition of the profound injustices they continue to endure.” Whereas such a special day may not translate to concrete actions, it draws attention to the continued systemic discrimination against Black people. The day, which was designated after global movements against racial injustice such as #BlackLivesMatter, presents a yearly lens to evaluate progress in improving the lives of people of African descent.

Exporting culture and identity

Wizkid hit becomes the US’s most Shazam’ed song. Nigeria's Wizkid’s hit ‘Essence’ featuring his countrymate Tems has become the most searched song on music search platform Shazam. Former US President Barack Obama even included the hit in his top 30 songs of 2020. This comes weeks after >20,000 tickets for Wizkid’s November concert in London sold out in just 12 minutes. Wizkid’s success demonstrates the increasing popularity of African music. In 2020, ‘Jerusalema’ by Master KG of South Africa also became the most Shazam’ed song in the world, and inspired thousands of dance challenges. PwC expects the music industry in Nigeria to grow by 13.4% in 2021 to reach $73mn. Increased copyright will enable African artists to earn more, as they continue to break new grounds.

End-to-end value chain capture

Mastercard stirs Nigeria’s ginger. The Mastercard Foundation has partnered with Agrolog General Services Limited, a Nigerian agribusiness company, to provide training, materials and support to 60,000 ginger farmers in the northern state of Kaduna. In aiming to improve yields by ~40%, this intervention will boost domestic production of the superfood, whose demand on both the local and the international markets as a herbal remedy has surged since Covid-19 emerged. In 2020, Nigeria, which is the second largest consumer of ginger in the world, only produced 18k tonnes of the crop vs. a domestic demand of 762k tonnes - leading to price tripling. The global ginger market registered an annual growth of 19% to reach $7.3bn in 2020 - indicating opportunities across ginger processing, powder, oil, medicine, tea and confectionery.

Baseline healthcare & disease protection

Growing investor appetite for Ghana’s healthcare sector. Investec Bank is leading a consortium of institutional investors loaning €215mn (~$255mn) for two hospitals in Ghana. It’s the latest in a string of moves displaying the rising international investor appetite for Ghana’s healthcare sector. In July, Deutsche Bank lent €55mn for the construction of two hospitals, and in 2020 Standard Chartered Bank advanced €78mn to the Ghanaian finance ministry for another hospital. Whilst Ghana’s government says these deals will improve access to quality healthcare for 3mn Ghanaians, they also afford investors the opportunity to tap the huge market of 200mn people in nearby Nigeria. Nigerians spend ~$1bn annually on healthcare services abroad, as rising demand for quality and specialised care meets stagnating public health budgets.

High value skills development and talent repatriation

Covid-19 cost Africa 30mn jobs. Covid-19 and restrictions instituted to curb its spread have caused the loss of 30mn jobs and $145bn-$190bn in GDP in Africa, according to the AfDB, reversing recent gains in employment and economic growth. Lockdown restrictions have been most damaging to the informal sector, whose workers often rely on the daily sale of household goods and services. Accounting for 81% of jobs, the informal sector is the principal source of employment and the backbone of economic activity in urban Africa. Ramping up Africa’s vaccination coverage beyond the current 3% will facilitate the re-opening of economic activity. Pre-Covid, AfDB estimated that the Continent needed to create 12-15mn jobs annually, just to absorb youths entering the labour market.  

Scaleable energy

South Africa's new nuclear power plan causes outcry. Plans by South Africa’s government to install new nuclear capacity to solve domestic energy problems has drawn criticism from experts who have described the move ‘a wasteful and costly diversion’ from the country’s electricity supply plan, which prioritises generating 33GW of power mostly from solar and wind by 2030. While the additional nuclear capacity of 2,500MW, enough to serve ~1.6mn average homes, will help Africa’s most industrialised nation minimise regular load-shedding that cost the economy $8.3bn in 2019, it would be expensive amidst an estimated budget deficit equal to >10% of GDP for next year. Government could consider public consultations to reach consensus on such large public asset projects, especially as a South African court in 2017 declared a controversial nuclear procurement unlawful because it lacked public consultation.

Intra-continental connectivity, collaboration & trade

Ugandan minister in trade row with Kenya on Twitter. Uganda’s Agriculture Minister Frank Tumwebaze has complained about incessant trade restrictions imposed by neighbouring Kenya. In a tweet tagging his Kenyan counterpart, Tumwebaze said Uganda was “not happy” with the restrictions on its sugar. Kenya regularly bans imports of Ugandan sugar, milk, chicken and maize - protectionist tendencies that cast doubt on deepening integration in the East African Community (EAC). Ugandan exports to Kenya have steadily increased at an annual rate of 12.7% in the last two decades and it remains Kenya’s leading export destination in Africa, accounting for 28.6% of Kenya’s total exports on the Continent in 2019. Efficiency in intra-EAC trade, currently the highest among trade blocs in Africa, may hinge on the empowerment of regional institutions to arbitrate disagreements.

Upgrade Your Life


Our selection of online content, courses, tools and offers to help you build your personal repertoire.

  1. An essential guide to start-up success - TEDTalk Playlist
  2. Designs for living – Alek Wek takes fashion to the max - FT Feature
  3. Ethiopian legendary singer, Elvis’ Alemayehu Eshete dies in Addis Ababa
  4. Obama’s playlist featuring Wizkid’s Essence
  5. Impact investing - Free online course
  6. Can financial therapy untangle our relationship with money? BBC Worklife 
  7. 6 strategies for exhausted working parents - Harvard Business Review

History Class

ESwatini at 53: Will the king respond to calls for democracy? - (Al Jazeera’s) Inside Story
Boko Haram: A decade of terror explained - BBC Africa

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