Going after hard problems 🌚
Nigeria's SEC Ban, Motorbike taxi market in East Africa, driving financial inclusion for an informal workforce
Hello there,
The 35th edition of the Forbes billionaires list is out.
There are 2,755 verified billionaires in the world. The US still has more billionaires than any other country, with 724 worth (up from 614 last year), but China is closing the gap with 698 (up from 456 last year).
Africa has over 20 billionaires on the list, with Egypt producing the most with six billionaires.
Meanwhile, Nigeria has only three billionaires and two of them make their money from cement! 👀
Going after hard problems
Via @kyanekassiri
Last year it was a ban on Motorcycles (Okada) in Lagos. Two months ago it was the ban of cryptocurrency exchanges.
Earlier this week, it was the turn of investment tech companies in Nigeria.
What’s happening?
On Thursday the 8th of April, the Securities and Exchange Commission (SEC) of Nigeria issued a directive that basically said foreign securities (stocks) should not be sold to Nigerian investors by these platforms.
This directive comes at a time when investment technology companies like Bamboo, Trove and Chaka have become popular with Nigerian investors. These companies offer the opportunity to buy the shares of publicly traded companies in the U.S.
Why is the government doing this: Possibly to spur investment in Nigerian listed companies 😕 and protect the outflow of Naira in exchange for dollars.
Why it matters
Regulatory environment: This move is a reminder that regulatory risk is a threat to running a business in Nigeria. With one regulation your business can be wiped off.
Quicker wins: One of the reasons the popularity of investment tech companies has soared is because of the consistent rise (Bull run) American tech shares have enjoyed in the past year. Tesla shares, for instance, gained 774% in 2020 alone and Jumia’s shares jumped 1,900% from $3 per share in 2020 to $60 per share in February 2021. These returns sound unbelievable compared to the returns of Nigerian listed companies.
Still going green with Motorbikes
The Motorbike taxi market in East Africa is blowing up right under our watch.
What is this gist?
San Francisco-based Ecosystem Integrity Fund (EIF) has invested 3.5 million dollars into Ampersand—a ride-hailing startup and Africa’s first electric motorcycle company. Ampersand leads the region’s motorbike taxi market.
The Motorbike Industry in Rwanda
In Rwanda, motorcycle taxis are a very common means of transportation. As of 2019, about 30,000 motorbike taxis were operating in the city’s capital, Kigali alone. This funding is the largest ever venture capital fund investment from EIF to Sub-Saharan Africa
While others banned bikes;
The Rwandan government is making efforts to have just electric motorbikes on the streets of the country. Unlike in Lagos, Nigeria where the activities of motorbikes were banned in the state.
The fuss about electric bikes
“Electric transport will happen in rich nations first and trickle down to developing countries later, second-hand.” Ampersand founder, Josh Whale.
Eastern Africa is the fastest-growing population and is set to double by 2050. It also has the largest numbers of electric motorcycles on the continent.
What this Investment means for Ampersand
Ampersand assembles electric, cheaper and cleaner motorbikes and produces at least 75% less carbon than petrol motorcycles and zero tailpipe emissions.
To help drivers change their batteries and as fast as refiling a petrol motorbike, Ampersand also runs a network of battery swap stations. This funding could be the region’s greatest chance of expanding its major transport sector.
Driving financial inclusion for an informal workforce
Just last week, we wrote about Mastercard tapping into mobile money services through investment in Airtel’s mobile money unit.
If you remember correctly, we suggested that mobile money services provide the opportunity for financial inclusion for people without access to traditional banking services.
While telcos like Airtel are driving financial inclusion on one end, another fintech is driving this on the other hand.
Awabah
Funny name for a startup but who are we to judge ;) Awabah is a pidgin term that can be broken into Awa - Our and Bah -money. Launched in November 2020, the Nigerian startup focuses on providing financial services to the unbanked in remote locations.
What kind of financial services?
Micro-pensions. Basically, it's a scheme where money is collected from different individuals and invested collectively to yield returns.
Because people like local traders, transporters and artisans working in informal sectors typically don’t make plans for retirement/or a time where they wouldn’t be able to work, this product lets individuals save at least N1000, daily, weekly or monthly and invest the total sum as a group. It uses a local agent network to build trust, using people in remote areas who residents are already familiar with. It tries to give the individuals a sense of community vibes where everyone in that vicinity will want to save with.
Regulation and Partnerships
Because the startup is not a licensed pension fund administrator, it has partnered with Leadway Pensure to handle this. It has also established partnerships with the Lagos State Employment Trust and Riby, a digital solutions provider for savers.
The Numbers
From a report released by pwc in 2017, over 80% of the working population in Sub Saharan Africa are not covered by any pension arrangement. Nigeria has a large and fluid informal sector with over 59 million workers growing at a rate of 3% annually. Nigeria’s micro-pension industry is expected to grow to about N1.7 trillion by 2022.
Currently...
The company claims to have about 4000 clients eagerly interested in its offering who have already made financial commitments.
The tricky thing about offering financial services is the risk aspect. There will be some questions. Like what kinds of investment opportunities will these micro-pensions expose these informal workers to? What is the predicted return? It's very important to understand that these guys have very little so losing their savings and investment will hurt a little.
Worth reading 📚
Quote 💭
Feel compliments as deeply as you feel insults.
– James Clear