Oluwanifemi and Emmanuel here.
Yes, it’s us again, and we can’t tell if you missed this combo, but we decided to give it a go one last time before we start feasting this festive season. Today, we’ll take a trip down memory lane through some of the news trends we observed on Techpoint Digest in 2021.
But first, let’s talk about what’s happening.
Music’s next frontier
Growing up, music came in cassettes or rolling discs, and I, sometimes, marvel at how much has changed since then. I mean, you either buy Daddy Showkey’s I in a store, or you wait for NTA to play. I’m probably not old enough to think of anything else, but you get my drift.
Today all you need, if you want to be legitimate, that is, is a decent Internet connection and either Deezer, Spotify, Audiomack, or YouTube music, and you can get your favourite songs at the click of a button or two.
Technology has changed the game in every industry, and entertainment has been a huge recipient. But what does the future hold? Our reporter, Bolu, had a chat with executives from Spotify and Audiomack to paint a pretty picture.
Have fun: Blockchain-powered music and bigger investments: The next frontier for music tech.
MAX raises $31 million for its electric vehicle subscription
Nigerian mobility startup, Metro Africa Xpress (MAX) has closed a $31 million Series B funding round. Interestingly, this is the first of other closes in this round that should be expected in the coming weeks.
This round was led by global private equity platform, Lightrock and UAE-based VC firm, Global Ventures. Other backers include Kenyan VC, Novastar Ventures, Japanese multinational, Yamaha — these two participated in a $7million round MAX closed in June 2019 — TMT Investments, and Proparco.
The fund would be deployed towards expansion into Egypt and Ghana in Q1 2022 and later into Francophone, Eastern, and Southern Africa to compete with the likes of Gozem. It will also go into the deployment of electric vehicles (EVs) and charging infrastructure, and the provision of credit and financial products to drivers, specifically those that utilise their vehicles for commercial purposes.
Apparently, MAX’s business model has evolved since it launched in 2015. From logistics to bike-hailing and now to offering vehicle subscriptions and other packages that help drivers to maximise revenue and minimise costs.
This is MAX’s largest VC-funded round to date. $8.2 million raised in four major funding rounds — through venture funding, angel investments, bank loans, and debt financing — and a previous raise of over $40 million of institutional debt for driver financing. The startup also moved into Nigeria’s capital market after completing the issuance of a ₦400 million ($1 million) bond in September 2020.
International calls get a new look
If you live outside Nigeria, it’s important to note that the country’s telecom regulator is finally regulating the cost of making a call to a loved one back home.
According to the Nigerian Communications Commission (NCC), from January 2022, the standard international termination rate (ITR) for calls will be pegged at a minimum rate of $0.045.
What am I talking about? Whenever you make a call from outside the country, your telecom operators pay Nigerian telecom operators a certain amount to complete the call successfully. Before now, the NCC fixed the amount at ₦24.
So what happened? Since the fee was in naira, the NCC is saying that the telcos have been losing money due to the devaluation of the naira. Consequently, it believes getting the fees in dollars will help the telcos make more revenue, even if the naira falls again.
The big picture: Even the NCC is betting that the naira would keep falling, but what can we do? When you convert the new fee, it’s just ₦18.4 now, but who knows what it would grow to tomorrow?
Trends we observed
Egyptian startup funding
I can guess that at some point this year, people in the African startup scene had exclaimed, “these Egyptian startups are on fire!” It felt like it was time to take lessons from them. The largest raise from an Egyptian company was $120m, and over $400m was raised this year, more than half of what the country had seen since 2015.
True, Egypt is part of Africa’s big four in terms of startup market size and funding, but the gap is quickly closing between Nigeria, Kenya, and South Africa. MaxAB’s $55m Series A, MNT-Halan’s $120m, Paymob’s $18m Series A, and Trella’s $42 million Series A made the highlights.
Generally, it’s a good year for Africa’s startup funding scene. Several Nigerian startups hit unicorn status, and Francophone Africa got its first unicorn. 2022 seems like the year to expect more exciting rounds
Of course, you should have guessed we wouldn’t miss this. Nigeria’s tech ecosystem was fraught with regulatory somersaults, which we have gotten used to for quite a while.
The crypto ban
First, we were hit with the Central Bank of Nigeria’s ban on cryptocurrency transactions. Though crypto is not illegal in the country and the Nigerian Securities and Exchange Commission (SEC) was planning progressive regulations for the space, that didn’t matter at all.
The CBN’s circular basically sent crypto users underground — peer to peer (P2P). The opportunity to regulate a decentralised space got swept away, creating difficulties for well-meaning users and breathing room for bad eggs. But nothing is scarier than “money made out of thin air”, right?
If the ban on crypto platforms had no constitutional grounds, then the Nigerian government’s ban on Twitter was a clear violation. But we had to roll with it because Twitter was apparently a “threat to national security”. The perfect excuse for African governments looking to censor free speech.
It’s been four months since Nigeria’s information minister said the ban would be lifted in a matter of days. I guess he wouldn’t be lying if it takes six months.
Startups want to digitise SME operations
Quite a handful of African startups came up with decent plans to digitise Africa’s informal sector. TradeDepot, Marketforce, Doroki, Capiter, Sabi, Alerzo, OmniBiz, Sokowatch, BIZ301, and several others are working on digitising different segments of SME activities that have been largely offline.
This would definitely be a space to watch in 2022,
Than previous years, Africa recorded more unicorns in 2021. For context, these are tech companies valued above $1 billion. The continent now has six unicorns, and more than half of them are Nigerian and fintech startups.
Interswitch is older in the record. Meanwhile, this year, Flutterwave, OPay, Wave, Chipper Cash, and Andela joined the list.
The bigger picture: We’ll leave this open-ended. Why not bare your thoughts in the comment section? The most interesting responses might just make it to Techpoint Digest on January 3rd.
What we are reading
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Merry Christmas and a Happy New Year!