Category Archives: Kenya ICT

Antler Nairobi Demo Day

VC funder and startup accelerator Antler Global held a demonstration day yesterday in Nairobi where founders of four companies got to explain their practical solutions to existing challenges in the sectors of health, fintech, advertising and e-commerce.

The Singapore-founded Antler has offices in London, New York, Amsterdam and now Nairobi, among others. Antler aims to turn exceptional individuals into great company founders through networks of advisors and by providing funding to enable the building of strong teams to launch and scale ideas. They currently have a portfolio of 120 investee companies.

The four new ones in Nairobi are among fifteen companies that have received pre-seed funding of $100,000 from the Antler East Africa Fund. They are drawn from 1,250 individuals who applied to join the Nairobi program which started in August 2019. The Demo day talks were by:

  • AIfluence: an Artificial Intelligence-based platform that connects influencers with brands and measures the impact and ROI of their campaigns. The company has lined up additional funding and advertising deals with Tik Tok.
  • Anyi Health: Enable patients to apply for credit right at hospitals.
  • ChapChapGo: Aims to fix the broken supply chain of fast-moving consumer goods, in which 70% of trades are still informal – with these purchases happening in a 19thcentury system where people queue to buy, queue to pay and arrange their own delivery. The company aims to leverage on wholesalers through an app, and by using WhatsApp for customer service and sales, to deliver goods at prices that are up to 25% cheaper for consumers.
  • Digiduka: Enables kiosks and shops receiving cash from low-income buyers to also process digital payment on. Many kiosk merchants find mobile money payments too costly and make many trips a week to purchase goods and permits in cash. The company aims to have kiosks double their income by offering digital services that will see them earn 75% of the commission, with Digiduka keeping the 25%. The founders say that pilot has been viable, with a payback period for kiosk owners of one month.

UNCTAD report shows an unequal digital global economy

The increased use of digital platforms in everyday lives across the world is leading to a divide between under-connected nations from hyper-digitalized societies

The Digital Economy Report released by the United Nations Conference on Trade and Development (UNCTAD) shows that China and the USA have done the most to harvest the digital economy and now dominate the rest of the world and leading to an unequal state of e-commerce. The two countries host seven global “super-platform” companies – Microsoft, Apple, Amazon, Google, Facebook, Tencent and Alibaba that account for two-thirds of the total market value of the seventy largest digital platforms with Naspers as the only African company in the group.

Google and Facebook collected 65% of the $135 billion spent on internet advertising in 2017, while, in Australia, Google took 95% of the “search advertising” revenue while Facebook took 46% of the “display advertising” revenue.

Europe’s share of the digital economy is only 4% while Africa and Latin America combine for 1%.  In Africa, progress has also been uneven with four countries – Egypt, Kenya, Nigeria and South Africa accounting for 60% of digital entrepreneurship activity. They are followed by a second tier of Ghana, Morocco, Senegal, Tanzania, Tunisia and Uganda (with a combined 20%)

The Report showed that the evolving digital economy has a major impact on achieving sustainable development goals (SDG’s) and calls for governments in developing nations to focus efforts on things like:

  • Skills development & re-education e.g. consider that in the Western world, you can do a whole university degree online.
  • Revising policies on data privacy & sharing e.g. have restricted local data sharing pools and have tariffs on cross-border data.
  • Revising competition regulations e.g. curb the tendency where platform companies tend to capture/acquire young promising companies in the developing world.
  • Taxation e.g. developing country governments should seek to tax digital platform companies.
  • Employment e.g. by setting minimum wages & work conditions for gig-economy workers.
  • Break down silos: no longer think of government as being separate from academia, private sector, civil society and tech communities.
  • Also, while the US and Europe have divergent views on data protection, it cites a survey which found that Kenyans had the least concerns about data privacy (at 44%).

Speaking at an unveiling of the Report in Nairobi, Dr. Monica Kerretts-Makau said that the world is trending towards a captive society where you have to be on a platform to transact in an economy and that presents problems and opportunities in the African context.

The 2019 issue of the Report, that was previously focused on the “information economy”, can be downloaded here.

EDIT June 2020: The Kenya Revenue Authority announced the introduction of Value-Added Tax (VAT) on digital marketplace suppliers in the Finance Act 2019. Member of the public can send their views on the draft proposal  by June 15 to stakeholder.engagement@kra.go.ke.

Airtel Africa – London prospectus peek

By the end of the week Airtel Africa will have a dual listing at the London Stock Exchange with a secondary one in Lagos after raising $750 million, by offering new shares to investors at 80 pence per share in June 2019, and valuing the company at £3.1 billion (~$3.9 billion).

The goal of the listing was to reduce the debt of the company further after it had earlier raised $1.25 billion from six global investors including Softbank, Warburg Pincus and Temasek in October 2018.

A peek at the 380-page prospectus and other listing documents:

About Airtel Africa: As at 31 December 2018, the Group was the second largest mobile operator in Africa, by the number of active subscribers(according to Ovum); they had 99 million mobile voice customer and 30 million mobile data one and 14.2 million mobile money customers.

Performance: For the financial year 2019 they had $3.01 billion revenue with 1.1 billion from Eastern Africa, $1.1 billion from Nigeria and $900 million from the rest of Africa. Of the total revenue, $2.9 billion was from mobile services with $167m from mobile money. Eastern Africa is Kenya, Uganda, Rwanda, Tanzania, Malawi and Zambia, and the rest of Africa comprises operations in Niger, Gabon, Chad, Congo, DRC, Madagascar and Seychelles. The company had a pre-tax profit of $272 million compared to a loss before tax of $9 million in 2018.

Managers & Employees: The Company has ten non-executive directors (including the Chairman). Also, Raghunath Mandava and Jaideep Paul will serve as chief executive officer and chief financial officer of the Group from their operational head office for Africa based in Nairobi. They will be enrolled in a company long-term incentive (share option) plan along with other executives of the Group.

Shareholders: Prior to the listing, top shareholders were AAML – a subsidiary of Bharti Airtel (68.31%), Warburg Pincus (7.65%) Singapore Telecom (Singtel 5.46%), ICIL – a Bharti Mittal family group (5.46%),  Hero (owned by Sunil Kant Munjal – 4.37%) and the Qatar Investment Authority (QIA) with 4.37%.

After the listing, in which the company will have sold between 14% and 18.9%%, the top shareholders will be AAML (56.12%), Warburg Pincus (6.28%) Singtel (4.49%), ICIL (4.49%),  Hero (3.59%) and QIA with 3.59%).  Also, subject to completion of a merger deal in Kenya, Telkom Kenya may acquire up to 4.99% if they exercise a flip-up right.

Other: 

  • Results for the (London) global and Nigeria uptake were announced on 28 June, and share accounts of new investors will be credited from July 3 and listed in London that day, and in Nigeria on July 4. 
  • Like other telco’s in Africa, 96% of their customers are prepaid. ARPU was $2.72 per user in 2019, down from $3 in 2018 and $3.24 in 2017.
  • Airtel has two distinct strategies; where they are market leaders (e.g in Chad), they price closely to market rates and where they are seeking market leadership (e.g in Kenya), they prioritize affordability.
  • Other Financing: In May 2019, the Company arranged for a “New Airtel Africa Facility” bank facility with Standard Chartered.
  • Other Deals: Ongoing settlement discussions in Tanzania, one over a tax claim, will see all cases withdrawn and boost the Government’s shareholding to 49% at no cost. In Kenya, they are merging with Telkom Kenya and in Rwanda, they are acquiring Tigo.
  • Listing Fees: The company will pay the fees and expenses for the listing totalling $35 million for the UK admission – and these include FCA fees, bank’ commissions, professional fees, costs of printing and distribution of documents.  The joint global co-ordinators and joint bookrunners were  J.P. Morgan Cazenove and Citigroup, joint bookrunners were Absa, Barclays, BNP Paribas, Goldman Sachs, HSBC, Standard Bank, the Nigerian joint issuing houses were Barclays Securities Nigeria and  Quantum Zenith Capital, while the public relations advisor was Kekst CNC.

About Airtel in Kenya:

  • Airtel is the second-largest telco in Kenya with 13.1 million subscribers and market share of 28%.
  • Telkom Kenya is expected to acquire a shareholding of 32% in Airtel Kenya in an ongoing business transfer deal. 
  • The company is working with Kenya’s Central Bank to reverse a negative (Kshs -2.7 billion) capital position as a requirement to be part of the national payment system. They expected to lose another Kshs 1.2 billion this year.
  • Airtel has proposed to separate the mobile money business from the telecommunication one and fund the new one with shareholder loans. They had committed to recapitalize the company by Kshs 3.85 billion ($38 million) by August 2019.

Stanchart opens eXellerator Lab in Nairobi

Standard Chartered Bank today announced the opening of an innovation lab in Nairobi, its first in Africa.  Run by Standard Chartered Ventures (SC ventures), the eXellerator lab will work with clients, staff, and local fintech companies on banking solutions for the future. This will be the fifth such lab after the first in Singapore, then Hong Kong, San Francisco, Bangalore, London and now Nairobi.

Stanchart Kenya CEO Ngari Kariuki CEO said that SC ventures, launched in March 2018, had a mission to invest in disruption and come up with new business models by partnering with fintechs in Asia, Middle East And Africa, scaling little ideas, giving them a global platform and investing in the companies. Kennedy Mubita the Africa Regional Head for SC Ventures said that the eXellerator was based on principles of human-centred, design, having a lean startup mentality, embracing an entrepreneurial spirit  (enabling staff of the bank to suggest ideas and develop them into products with rewards) and that the bank would also invest in local companies through a $100 million innovation fund. So far they are developing ten ventures drawn from 1,500 ideas submitted globally, with a notable one being Credit Card Buddy from Indonesia.

At a Q&A after the launch, It was queried what pipeline of projects Stanchart would target given that there were very few companies able to absorb series B funding here. The bank will have a country venture challenge, one of three in Africa, and will seek to work with companies to address payment gaps and trust gaps in value chains across all sectors.

Like with the video banking launch, tried and tested in Asia, Nairobi is the launchpad for the eXellerator lab program in Africa. Other banks with innovation labs in Nairobi include KCB with its Vooma Lab and I&M bank, which has a digital factory, called iCube.

Rewiring Education

This week, the M-Pesa Foundation Academy and Nairobi International School hosted author John Couch, who was first Vice President of Apple Inc., for a talk session on “rewiring education.” The chief guest was Kenya’s Cabinet Secretary for ICT, Joe Mucheru. 

Rewiring Education speakers.

Excerpts from the rewiring education Q&A: 

  • Kids come into employment fully trained in things that are no longer relevant. They then have to unlearn that, and we are working with universities to modernize the curriculum.
  • Schools have to hire teachers who are registered with the Teachers Service Commission. But those who are there only have B.Ed (Bachelor of Education degrees), and lack skills to stand in front of students who are far ahead of them in technical knowledge.
  • The Kenya government has developed a brilliant curriculum, that will start next year, but teachers have not been trained to deliver this. International schools take three years to retrain a teacher.
  • The median age in Kenya is 19 years, and half the civil service is made up of teachers.
  • The most important skill to have in life is (to embrace) continuous learning.
  • Schools can currently evaluate student memorization, but not their creativity and innovation abilities.
  • “When I was studying at Berkeley, California in the 1970’s, people thought the social revolution was taking place in the streets, but I knew it was taking place inside computers.”
  • Safaricom set out to provide connectivity to all schools in Kenya and the government was to provide the devices.
  • “The way we are teaching kids is a disservice and I am in the process of suing the UK government for wasting thirteen years of my life!”
  • The US also treats teachers as a union problem, not a professional occupation. Teachers are underpaid and under-trained.