More green backs for Kenya

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Markets

The Nigerian government, through the Ministry of Communications, Innovation, and Digital Economy, plans to team up with the Nigerian Exchange Limited (NGX) to encourage startups to go public on the new NGX Technology Board.

Sidebar: The NGX Technology Board is a board on the Nigerian Stock Exchange tailored for tech-based companies to list and raise capital from retail and institutional investors.Like the foreign board, National Association of Securities Dealers Automated Quotation (NASDAQ), The board was introduced months ago to give tech startups access to the exchange with less stringent requirements. The board also aims to replicate the conditions that attract Nigerian tech companies to foreign initial public offerings (IPOs) and, in doing so, provide entry and exit opportunities for local investors.

However, local startups still prefer foreign exchanges. This preference is due to these exchanges offering access to foreign retail and institutional investors who often have a larger investment appetite. For example, startups like OPay and Flutterwave are seeking listings in foreign markets while primarily operating in Nigeria and other African markets. The Minister of Communications, Innovation, and Digital Economy, Bosun Tijani, called for more investments in these startups, saying Nigeria has been too cosy with oil, and it's time to spice things up and boost productivity in other sectors.

He stated that his ministry will work to make this happen by creating fintech-friendly regulations, facilitating access to funding, improving digital infrastructure, and supporting the export of tech products and services—all factors that will enhance startups' scalability and profitability. The NGX has also promised to further soften listing rules and improve the board for startups.

Grow your networks, gain visibility, and secure funding for your early-stage tech startup. Apply for this year’s MEST Africa Challenge #pitchcompetition and unlock the next stage of your startup’s growth.  Apply by 9th October 2023.

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Starlink’s African challenge

East Africa's private equity market has experienced significant growth in recent years.

How so? Per the East Africa Venture Capital Association (EAVCA), a total of 478 deals worth $8.6 billion closed over the past decade. The region also recorded a jump in exit activity in FY 2022, marking the highest numbers in a decade. Furthermore, there have been 51 private equity exits out of 427 investments in the region. The financial services sector recorded 14 exits, while the healthcare and energy sectors had nine and seven exits, respectively. Among the countries, Kenya led with 36 exits, followed by Uganda with eight, and Rwanda with three. Tanzania and Ethiopia reported two and one exit, respectively.

However, these figures may not capture all exits, as some are not officially reported or disclosed. The data also doesn't account for investments exited via forced liquidation. Looking ahead, it's expected that 2023 will have even more exits, and these are important for fund managers who want more money from organisations that support development (development finance institutions).

Zoom out: Private equity investors mainly exit through three avenues: selling to trade players, secondary buyouts, and management buyouts (MBOs). The surge in exits is a promising sign for the coming five years as investments made in the past seven years reach maturity, and fund cycles conclude.

In January 2023, Starlink, the satellite internet service owned by Elon Musk's SpaceX, commenced operations in Nigeria, marking a significant milestone as the first African country to receive the service. Since then,  it has expanded its reach to four additional African nations, including Rwanda, Mozambique, Mauritius, and Sierra Leone, with plans to launch in nineteen more African countries by 2024.

Mobile internet penetration in Africa remains at 43%, below the global average of 66%. Starlink’s emergence in Africa heralded promises of broader connectivity with download speeds up to 220Mbps. However, real-world performance is subject to variables such as latency and weather conditions. 

Recent Q2 data from Ookla, an internet and connectivity intelligence firm, paints a nuanced picture of Starlink's global performance. Starlink has demonstrated promising download speeds in Africa, but its upload speeds present a mixed scenario. Starlink's median upload speed of 13.72Mbps in Nigeria surpasses the combined average of 10.6Mbps from other providers, enhancing its value proposition. Conversely, in Rwanda, Starlink's upload speed lags behind other ISPs, averaging just 6.88Mbps compared to 10.05Mbps. Ookla observes that Starlink's upload speeds generally align with the company's expectations, falling within the 5 to 20 Mbps range. This area remains a focal point for improvement if Starlink aims to solidify its presence in Africa.

Whether Starlink is poised to become the preferred internet provider for Africans seems unlikely in the near term. Ookla noted, "Satellite-based services can play a crucial role in bridging the digital divide by extending internet reach beyond existing fixed networks, especially in areas where fiber deployed isn’t commercially viable, offering competitive speeds.

“However, its high equipment cost might limit Starlink's customer adoption in the near future. Instead, the operator can address enterprise customers as the satellite already serves a range of enterprise verticals, such as banking, logistics, and transport.”

As Starlink continues its expansion across Africa, its performance metrics indicate both promise and challenges. Its ability to address issues like upload speeds and cost-effectiveness will be crucial in determining its long-term impact on internet accessibility in Africa.

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US-West Africa Tech Challenge

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