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BD Insider 225: Wasoko and Chipper Cash are shifting gears

Inside: Chipper Cash scale back from US and UK, Wasoko exits Zanzibar and crypto fees hike in Nigeria.

BD Insider 225: Wasoko and Chipper Cash are shifting gears
Wasoko

Since last Thursday, users across Africa have struggled with slow internet. NetBlocks reports severe internet outages in Ivory Coast, Liberia, and Benin, with disruptions also affecting Ghana, Nigeria, and Cameroon.

Providers like MainOne said it is due to damaged subsea cables and have warned that repairs could take up to five weeks. Meanwhile, MTN, a leading telco company on the continent also said it is utilising alternative network paths to maintain service.

While efforts to restore service are underway, Africa may face a month of sluggish web browsing.


Inside today's letter, we cover:

  • Chipper Cash's localisation play: We examine Chipper Cash's recent move to adapt its cost structure to local markets.
  • Wasoko's Zanzibar exit: We unpack the reasons behind Wasoko's departure from the Zanzibar market.
  • Nigerian crypto fees on the rise: We explore the Nigerian SEC's proposal to increase licensing fees for cryptocurrency providers.

We also have updates on the state of funding in Africa, other noteworthy information, and several opportunities.


The big three!

#1. Chipper Cash lays off US and UK teams, moves operations to Africa

The news: Chipper Cash is undergoing a restructuring. The pan-African company recently laid off 20 employees based in the US and UK. These roles will be relocated to its African markets, including Nigeria, Ghana, and South Africa, according to Ham Serunjogi, co-founder and CEO.

Why it matters: Despite strong revenue (over $75 million in 2021 and projected to be $100 million-$150 million in 2022), Chipper Cash faced a valuation cut in late 2022 (down 37.5% to $1.25 billion) according to Financial Times, before FTX's collapse.

"With these [latest] changes, we’re now almost profitable and expect to be cash flow positive before the second half of this year. Being a company that controls its own destiny isn’t just prudent, it is a competitive advantage," Serunjogi said. "This change will also allow us to be more operationally efficient in a number of key functions."

However, challenges remain. Their US remittance service halted in January due to a terminated bank partnership, is still unavailable despite plans for a February relaunch. According to the CEO, "The US has never been a focus for us – we have offered that product there as an extension of our African services."

Know more: Since mid-2022, the company has implemented multiple rounds of layoffs, impacting high-ranking officials like former COO Alicia Levine and former Kenya country director Leon Kiptum. These cuts weren't limited to positions; salaries for the now laid-off US and UK employees were slashed by 25% late last year.

"It is important we continue to pay attention to maintaining a high level of operational efficiency, in addition to cost efficiency," Serunjogi added.

💡
Chipper Cash closed out 2023 with strong user verification numbers: 10 million unique documents verified (passports, IDs, etc.), over 7 million selfies processed, and hundreds of millions of phone numbers and emails on record. Daily transaction volume topped 125,000, and their APIs handled over 300 million calls monthly.

#2. Wasoko scales back: shuts down Zanzibar, halts operations in Uganda & Zambia

The news: Like Chipper Cash, Wasoko, Africa's leading B2B e-commerce platform, is also streamlining operations. The company has shuttered its Zanzibar office and placed its Ugandan and Zambian operations on hold, emphasising that it is a temporary measure.

"This challenging decision was made as part of a broader company-wide restructuring to focus on the momentum we’ve built in our more mature markets," the company said. "Unfortunately, this pause in operations necessitated a reduction in staff as well."

Wasoko in Zanzibar: In 2022, Wasoko launched in Zanzibar via a with the local authorities which saw the launch of the Wasoko Innovation Hub in Fumba Town. The hub was home to over 500 software engineers, product managers, UX designers and researchers from Africa and across the globe.

It was the first private-public partnership between an African tech startup and the Zanzibar government for “Silicon Zanzibar”; a government initiative to attract and relocate tech companies from across Africa to the island. Despite pulling out of Zanzibar, Wasoko said it is still a "private sector ambassador for the initiative."

 MaxAB's Belal El-Megharbel and Daniel Yu of Wasoko

Zoom out: Wasoko's merger with MaxAB, an Egyptian e-commerce platform, nears completion at the end of March. The consolidation led to a 10% workforce reduction across both companies, with Wasoko citing position overlaps at all levels, including leadership, as a typical outcome of such mergers.

Nine former Wasoko employees, impacted by the layoffs, sued the company claiming the process violated Kenyan labour laws. However, Wasoko said it followed proper procedure, providing legally required notice and severance packages.


#3. Nigeria might hike crypto exchange registration fee by 400%

What we know: Nigerian crypto exchanges may face a significantly steeper registration fee. The country's Securities and Exchange Commission (SEC) proposed a rule change that would bump the fee from ₦30 million ($18,620) to a hefty ₦150 million ($93,000).

Additionally, the application fee would rise from ₦100,000 ($62) to ₦300,000 ($186). These new fees would come into effect if the amendments are approved.

The SEC claims these changes aim to provide clarity, incorporate industry feedback, and reflect recent engagements with the Central Bank of Nigeria (CBN).

Zoom out: In December 2023, Nigeria's Central Bank (CBN) ended a two-year ban on cryptocurrency transactions, seemingly embracing digital assets. However, this positive step was followed by a series of actions that cast doubt on the country's true stance on crypto.

Earlier this year, the CBN blocked access to cryptocurrency exchange websites, citing concerns about currency manipulation. This move was further amplified by the arrest of two executives from Binance, a major cryptocurrency exchange, leading to Binance's exit from the Nigerian market.

This series of events paints a confusing picture for cryptocurrency enthusiasts in Nigeria. The initial lifting of the ban offered hope for crypto adoption, but the subsequent actions by the CBN have created uncertainty and a sense of crackdown.

Related Article: South Africa grants regulatory nod to 59 crypto firms

💰 State of Funding in Africa

Egyptian fintech leader MNT-Halan has acquired Advans Pakistan Microfinance Bank in a full ownership deal. Financial details of the acquisition are undisclosed.

This move allows MNT-Halan, a unicorn since its $400 million funding round last year, to expand its microloan services to Pakistan. The company is a prominent lender to the unbanked in Egypt, having disbursed over $2 billion in loans.

Meanwhile, here's a breakdown of startups that secured funding last week:

  • Simera Sense, a South African optical payload solutions platform has raised $14.8 million. The round was led by NewSpace Capital and Knife Capital.
  • Nigerian Web3 and crypto startup UXLINK secured over $9 million in an undisclosed round from several investors including OKX Ventures, Web3Port Foundation, Manifold, UOB Venture and Comma3 Ventures.
  • Egyptian ad-tech startup dKilo landed a $3.2 million seed funding from Upturn Ventures.
  • YouVerify, a Nigerian ID verification startup has raised $2.5 million in a pre-Series A investment from Elm.
  • Morocco-based super app, ORA Technologies secured $1.5 million in seed funding from undisclosed local entrepreneurs.
  • Egypt-based B2B healthtech 30Med has raised pre-seed funding for unknown value from anonymous angel investors.

📚 Noteworthy

Here are other important stories in the media:

  • Pioneering virtual premiere in Nigeria: In an exclusive interview with Bendada.com, independent Nigerian filmmaker Laju Iren talks about how she wants to change the way you watch movies with virtual cinema premieres
  • How Xiaomi overthrew Samsung in Nigeria's smartphone wars: Samsung’s new distant third position is a break from the norm given its longstanding hold on the market, Andrew Christian explores the new ranking in the Nigerian smartphone market.
  • Stories of triumph and resilience: Jessica Long, co-founder at Maad talks about how she built her company from a tiny garage and and her experience with rejection.
  • Inside Eyowo’s excruciating ordeal with Nigerian regulators and the neobank’s path to restoration: Two months shy of its second anniversary as a Nigerian digital bank, Eyowo faced its biggest setback ever: the revocation of its banking license. In this article, the founders shared what happened and the arduous attempt to turn the tide.
Also Read: Eyowo: We have restored customers' access to their funds
  • The latest on Nigeria's crackdown on Binance: Nigerian authorities have continued their scrutiny of cryptocurrency exchange Binance. Local authorities are now seeking data on Binance's top 100 Nigerian users. Meanwhile, the two detained executives have been identified: Tigran Gambaryan, leading Binance's criminal investigations team, and Nadeem Anjarwalla, the company's Africa regional manager.

💼 Opportunities

Jobs

We carefully curate open opportunities in Product & Design, Data & Engineering, and Admin & Growth every week.

Product & Design

Data & Engineering

Admin & Growth

Other opportunities

  • Internship for women: Moniepoint has launched this year’s edition of the Women-In-Tech initiative. It is a six-month internship across various teams, including engineering, and data at the fintech.
  • For Nigerian entreprenuers: The Nigerian government via the NSIA Prize for Innovation is offering startup founders an opportunity to win up to $220,000 and an all-expenses-paid training programme in Silicon Valley. Deadline: March 23, 2024.
  • Become a VC investor: Applications are open for the Dream VC 2024 Venture Capital Fellowship. The deadline is on April 14.

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