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In this week’s Pulse:
Achieving unicorn status in Africa getting shorter, exit of British banks an opportunity for African banks, Nigerian army culpable in #EndSARS Lekki massacre, converting Africa’s diesel & gasoline vehicles to electric, the growing threat of Islamist extremism in East Africa, potential cure for bilharzia in pre-schoolers, Togo’s digital cash transfer system becomes a case study for emergency response, the World Bank recommends the closure of Kenyan public universities, and how committed is South Africa to ending reliance on coal?
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2021 has been remarkable for Africa’s startup industry - already giving birth to four of the Continent’s seven unicorns. As the volume and size of VC deals in Africa continues to grow, the time it takes for the Continent’s startups to achieve unicorn status has reduced. E.g. Interswitch and Fawry, founded in 2002 and 2008, needed 17 and 12 years respectively to reach a $1bn valuation, while the remaining five unicorns took <5 years to get there. The four startups that flew to the unicorn world in 2021 took ~3.75 years to arrive. |
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Numbers in the Spotlight
$2,300,000,000
(USD2.3bn) lost annually by 7 West African countries to illegal fishing
$1,500,000,000
(USD1.5bn) fund created by 12 donor countries to protect the Congo River Basin
$372,400,000
(USD372.4mn) approved by the IMF for Covid-19 response in Tanzania
$200,000,000
(USD200mn) to be spent on creating 780 public agricultural service centres in Nigeria
$7,500,000
(USD7.5mn) raised by Nairobi-based startup Opibus for mass production of electric vehicles
10,000 East Africans
petition to ban single-use plastics
1,500MW
of additional coal-fired electricity generation capacity planned by South Africa
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On The Continent This Week
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Proportional representation in politics, business and community leadership
Nigerian army culpable in #EndSARS Lekki massacre. An inquiry commissioned by the Lagos state government has found that the Nigerian military did not adhere to its own rules of engagement when they shot 48 individuals and killed 11 during the #EndSARS demonstrations in Lekki last year. Moreover, the army refused to allow ambulances to access victims requiring assistance. Nigerian authorities are yet to comment on the report, and questions remain about whether the findings will afford an opportunity for bringing the perpetrators to justice. The massacre was considered by many as an attempt to stifle youth voice, as they convened to peacefully demonstrate against repeated torture, extortion and murder at the hands of a rogue police unit - the Special Anti-Robbery Squad (SARS).
Home-grown digital infrastructure & platforms
Togo’s digital cash transfer system - a case study for emergency response. Other African countries are interested in replicating Togo’s digital cash transfer system, which has distributed relief money to nearly 1mn Togolese (~$22 to women and ~$20 to men monthly) whose incomes have been affected by Covid-19. By channelling funds through mobile money, the system named Novissi (which means “solidarity” in local Ewe language) has accelerated access to relief financing for vulnerable Togolese. Previous cash transfer schemes involved door-to-door registration and hand distribution of money - requiring months and costly administration. This is an example of how digitalisation can address governance challenges in Africa, especially under social distancing regimes.
Access to financial services and products
African banks can capitalise on the exit of British banks. Atlas Mara is in advanced stages of exiting Africa, Barclays Bank has left the Continent, and Standard Chartered bank plans to close 100 branches in Africa, Asia, and the Middle East. These exits could create an opportunity for African financial institutions to grow without significant competition from foreign players with larger asset profiles and operational capabilities. Ugochukwu Nwaghodoh, the Group CFO at UBA, says local knowledge gives African banks a greater chance of success on the Continent than foreign players. Meanwhile McKinsey (2021) expects the impact of Covid-19 on the return on equity (ROE) for banks to be less severe in Africa than in developed markets.
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End-to-end value chain capture
Converting diesel & gasoline vehicles to electric. Nairobi-based startup Opibus has raised $7.5mn in pre-series A funding to begin mass production of electric buses and motorcycles, repurposed from diesel and gasoline vehicles. Increasing the lifespan and efficiency of Africa’s fleet of dated vehicles through conversion to electric will lower carbon emissions, cut the Continent’s vehicle import bill and save lives. Africa imported >1.2mn used vehicles in 2017, making the Continent a destination for 40% of the world’s used vehicles (UNEP, 2020). Used vehicles also emit more gases (than new cars) that cause air pollution, which the UNEP calls a “silent killer” responsible for ~7mn deaths in Africa every year.
High value skills development and talent repatriation
Kenyan universities face closure in World Bank loan deal. As part of funding discussions, the World Bank is recommending the closure and merger of Kenyan public universities to reduce their cost to the taxpayer and stem duplication of courses. Kenya’s 102 public higher education facilities registered a deficit of ~$55.3mn in the year to June 2021 and received ~$624.9mn in state financing for their operations. The matter reignites the debate about the World Bank’s role in destroying Africa’s higher education when it advised African governments to shift investment from higher education and focus on primary education under the Structural Adjustment Programs (SAPs) in the 1980s-90’s. A dramatic reduction in public financing for higher education resulted in a deterioration of the quality of teaching and research - e.g. expenditure per student in Africa's public universities fell from an avg. of $6,300 in 1980 to $1,500 in 1988 (Salmi, 1991). Moreover, SSA has the lowest tertiary enrollment in the world.
Baseline healthcare & disease protection
Potential bilharzia cure for pre-schoolers. Pharma co. Merck has successfully trialled a drug against bilharzia in children under the age of 6 years in Cote d'Ivoire and Kenya. Bilharzia is the second most socioeconomically devastating parasitic disease after malaria, affecting ~120mn people in SSA (WHO, 2014). A 3-week dosage of Merck’s oral tablet named arpraziquantel achieved >90% efficacy in infected children. The new drug raises hopes for a cure in children under the age of 6 years, who up until now didn’t have a standard treatment for the disease. Current bilharzia control largely focuses on oral treatment, but a more comprehensive approach incorporating potable water, adequate sanitation, and snail control would also reduce transmission.
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Essential infrastructure, personal living-space & utilities
South Africa still wants more coal power. Civil society groups have sued South Africa’s energy authorities over national plans to construct new coal-fired power plants. Whilst energy minister Gwede Mantashe argues that obtaining the right to build new coal power plants is worth a court battle, such a move would conflict with the recent COP26 deal that pledged $8.5bn from wealthy nations to help South Africa cut reliance on coal for ~87% of its electricity generation. Some experts say additional coal power would help address regular power outages, while others say it would put additional lives at risk. >5,000 South Africans die annually of pollution from the country’s coal industry (South African government, 2019).
Intra-continental connectivity, collaboration & trade
West African countries join forces against illegal fishing. Cape Verde, the Gambia, Guinea Bissau, Guinea Conakry, Mauritania, Senegal, and Sierra Leone have agreed to combine efforts and assets to fight illegal fishing along their shared coast. Such a harmonised response could help save the €1.9bn (~$2.2bn) jointly lost by these countries to illegal fishing every year. About 1,000 industrial fishing vessels (largely foreign) and ~50,000 canoes operate in sub-regional waters, causing overexploitation of aquatic resources, which are critical for sustaining lives and economies. Coastal cities, ports, coastal agriculture, industries and fisheries account for about 56% of West Africa’s GDP (World Bank, 2017).
Exporting culture and identity
Cambridge College wants to remove memorial over slavery. Having become the first institution to return looted Benin bronzes, Cambridge University’s Jesus College is set to appear before a court to defend plans to remove a memorial to a top benefactor - Tobias Rustat. Rustat invested in the Royal African Company, which “shipped more enslaved African women, men and children than any other single institution during the transatlantic slave trade” (according to historian William Pettigrew). The global campaign to remove tributes that celebrate racism and colonialism has gathered steam following the Black Lives Matter protests. But while many institutions across the world are contemplating how to deal with their links to slavery, action remains limited.
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Effective internal and regional security, and foreign policy
The growing threat of violent extremism in East Africa. This week’s twin suicide bombings in Uganda’s capital, Kampala, were the latest indications of the growing threat of Islamist extremism to East Africa. Militant Islamist ideology is a recent phenomenon in East Africa, which, according to Abdisaid Ali (Chief of Staff to Somalia’s President) aims to disrupt enduring norms of tolerance and interfaith collaboration in the region. Experts believe rebuilding domestic solidarity and stemming the influence of foreign extremist ideology could halt the spread of Islamist extremism. But heavy-handedness or extrajudicial security actions may reinforce exclusionist narratives deployed by extremists. Projections suggest 5,110 violent events will be caused by Militant Islamist groups in Africa in 2021 (Africa Center for Strategic Studies).
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Finally...
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