APRIL 25, 2021 This newsletter is a weekly in-depth analysis of tech and innovation in Africa that will serve as a post-pandemic guide. Subscribe here to get it directly in your inbox every Sunday at 3 pm WAT
Ghana’s president Nana Akufo-Addo captured my attention last week Tuesday. His stirring keynote address set the tone for what turned out to be an excellent virtual conference by the African Private Equity and Venture Capital Association (AVCA).
By now, the novelty of Twitter’s announcement of a first ever Africa office in Ghana has worn off. But when you put it in context of Ghana’s overarching plans to become the preferred destination for tech in Africa, the question becomes: who else is moving to Ghana soon?
Akufo-Addo’s address teased what the blueprint is. But first, a message from our partners:
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Now, let's dive in.
The argument for Ghana is not about market size. It is smaller than the four countries that have attracted up to 80% of venture capital investment in Africa over the last three years.
However, Ghana is promising an ingredient crucial for the business of innovation: a non-hostile environment that is welcome to capital.
Experiments need to be funded
For any African country to become truly innovative, various entrepreneurial experiments need to occur at the same time.
Not all experiments will succeed but they have a fair shot at surviving if their efforts are encouraged, rather than impeded. Even failures can provide lessons that compound towards future successes for our collective society.
The reality is that the 21st century’s most valuable experiments in entrepreneurship (Apple, Amazon, Tesla, etc) require massive capital. Most African governments cannot provide this support, hence the need for private equity and venture capital.
So what will Ghana do? Here’s what Akufo-Addo said to the AVCA audience:
“For us, in Ghana, we have worked to identify some of the constraints inhibiting the market growth of private equity funding in the country, which includes high inflation, the depreciation of the currency, competing government funding cost, financial literacy, family businesses hesitant to cede control to outsiders, valuation issues, and SME financials which are not in order.”
That is the Ghana president saying ‘bring your money here, we will not be in your way with questionable money printing and other shenanigans.’
Of course words are cheaper than action.
Some social issues could stand in Ghana’s plans to usurp its African rivals for global funds. The lived experience of some Nigerians in Ghana have raised concerns about xenophobia, which is not the reputation a country open to investments wants.
There is a political question too: the 77-year-old Akufo-Addo started a second term as president in January and will be out of office in four years. The private equity and venture capital industry thrives on long-term stability because their investments take years to generate returns; who can guarantee that?
“Let us put in place the financial infrastructure needed to absorb foreign capital efficiently, and undertake speedy policy and structural reform to attract private flows that Africa needs.
Sadly, countries that backtrack on reform will find their access to international capital limited, and what is available to them will be provided on costlier terms.”
Maybe it’s not an actual plan. It may be a thinly-veiled dig at a certain West African country, or a suggestion to the rest of the continent. It sounds like a good suggestion. She who has ears...
FROM THE CABAL
Speaking of Ghana, have you read the story of how the government collaborated with mPharma to distribute Covid-19 vaccines in the country? Gregory Rockson, the startup’s CEO, spoke to Daniel Adeyemi and gave a candid account of the social and business sides of such a partnership.
Instacart is going strong in Egypt. Not the actual $39 billion Instacart but a Cairo-based startup called Appetito which raised $450k to build out tech-enabled grocery delivery in North Africa. Here’s a brief on what Appetito’s model is.
Feels like we have had more insurtech news in the first half of this year than in all of 2020 (someone fact-check that please). The latest is from Mali where OKO has raised $1.2million in a seed round that includes Techstars, among other investors. The startup’s focus is insurance for farmers and is present in Uganda as well. One to keep an eye on.
It's the last week of April!
Thank you for reading the last Next Wave for April. Hope you are still keeping safe when you are out in public places - protect others by wearing your mask and sanitizing your hands.