Africa

🇸🇴 The worst flooding to strike Somalia in decades killed 29 people and forced over 300,000 people to flee their homes. Heavy rains have caused flooding in much of East Africa. Flooding in Kenya killed at least 15 people and a bridge in Uganda was submerged, cutting off a road that connects Kampala and oilfields in the northwest of the country. The deluge follows the region’s most severe drought in 40 years. The downpour was caused by the combination of two weather patterns, El Niño and the Indian Ocean Dipole, a climate analyst at the International Crisis Group told Reuters.

🇨🇩 Truckers in DR Congo went on strike last week impacting shipments of copper and cobalt mined by producers including Swiss commodities multinational Glencore and China’s CMOC Group from the mining hub of Kolwezi, Bloomberg reports. The drivers, who are mainly from Zambia and Tanzania, have refused to transport the metals which are usually taken by road from southeastern Congo to Zambia, destined for ports in South Africa, Tanzania and Mozambique. They are demanding an additional $700 per journey as a form of risk allowance.

🇳🇦 Namibia has started constructing Africa’s first decarbonized iron ore plant. The country’s investment promotion body said the HyIron Oshivela Project, which is being built in the west of the country and is backed by the German government, would be powered solely by green hydrogen. Steelmaking is among the world’s most polluting industries due to the use of coal-fired plants. The plant, in which Germany has so far invested €13 million ($13.9 million), is expected to generate 15,000 tons of iron annually with no carbon emissions once production begins in the last quarter of 2024.

🇺🇬 The U.S. and U.K. have advised their citizens not to attend Uganda’s Nyege Nyege festival, one of East Africa’s most popular music events. This year’s festival is scheduled to begin in Jinja today (Nov. 9). Citing the threat of terrorism and targeting of foreigners, an advisory from the British High Commission on Tuesday warned U.K. citizens against traveling to Jinja unless for ‘essential travel needs’.

The upper limit of the sum Ghana’s cocoa regulator said it has borrowed from traders to finance bean purchases by licensed buyers who source cocoa from smallholder farmers for export. The move by the world’s second-largest cocoa producer follows a delay in securing an international syndicated loan in September. That prompted the regulator to look elsewhere to plug the funding gap. Cocobod said it borrowed between $150 million and $200 million. The regulator added that it plans to borrow $1.2 billion for this season and the country’s parliament would start approval processes for the agreements to secure the $800 million syndicated loan this week.

Low on cash, African tech braces for an extended wave of startup closures

LAGOS — The ongoing struggle by some African startups to sustain operations in the wake of tighter fundraising portends a wave of shutdowns that will worsen over the coming year, investors, advisers and industry insiders say.

Nigerian genomics firm 54Gene, Kenyan logistics outfit Sendy, and South African transport data company WhereIsMyTransport are among the high profile African startups to close shop this year. Those three raised a combined total of more than $100 million from strategic investors like Google and Toyota, as well as early and growth stage venture capital and private equity firms. Each ran out of money and failed to raise more.

Some startups have shuttered or are struggling because of alleged mismanagement rather than fundraising problems. Dash, a Ghanaian fintech whose founder reportedly diverted millions of dollars from the business, closed in October. Given the startup raised over $86 million in the last five years, the episode has raised calls for more rigorous due diligence and steady oversight.

But those concerns are being superseded by the more immediate challenge of dwindling cash at a number of startups, prompting pre-mortems where closure seems inevitable.

“The biggest risk we have right now is the failure of good companies because they can’t attract the right kind of capital,” said Gbenga Ajayi, a partner at QED Investors which has three startups in its Africa portfolio. “That’s a sad reality and I think a lot more companies will fail in Africa because of that, relative to the rest of the world,” he added.

ALEXANDER’S VIEW

African investors and operators are mostly taking an optimistic view of the startup shutdowns so far, reassuring themselves that some failure is an inevitable feature of any industry built on venture capital. But there’s an effort to take a close look at the various causes of failure such as an egregious case of fraud and mismanagement versus struggling against tough macroeconomic conditions, or simply poor execution.

A subtext of the alarm concerns what it means for Africa’s nascent tech ecosystem that a wave of shutdowns is preceding notable exits for investors. The majority of venture funds invested in the continent’s startups have been from international investors. With the possible exception of development finance institutions that are more patient on recouping returns, investment managers expect most global money sources to retreat from Africa during a shutdown wave.

“I think where we’ll get punished more is if we don’t have winners,” Ajayi, of QED, said. Speculation about the ecosystem’s health is premature because there haven’t been enough failures to make an assessment, but “the adverse effect of not having winners is far greater than the effect of losers losing,” he said.

Read on for Room for Disagreement and The View from Nairobi

Nigeria’s President Bola Tinubu has signed into law a $2.8 billion supplementary budget that includes funding for a presidential yacht, new bulletproof cars for himself and the first lady, and renovations of his residential quarters. It has been widely criticized by citizens facing a cost-of-living crisis. Ebenezer Obadare is the Douglas Dillion senior fellow for Africa studies at the Council for Foreign Relations.

African airlines posted the second-highest annual growth in passenger traffic in the second quarter, according to data from the International Air Transport Association. But while other industry metrics for passenger revenue and total distance were also up in the quarter compared with a year ago, the African air industry is still struggling overall to match pre-COVID numbers. For example, international passenger traffic remained 12% below pre-pandemic levels even while outperforming 2022 numbers by 44%, driven by Africa-Europe and Africa-Middle East routes.

As the chart shows, most of the region’s major markets outperformed their 2019 levels in terms of air passenger traffic in the second quarter. Nigeria stood out with 52% more passengers than pre-pandemic levels. But South Africa, struggling with a sluggish economy for a few years, was the only major market which remained below its pre-pandemic level with 3% fewer passengers than the same period in 2019.

Ethiopia’s Amhara conflict threatens Lalibela’s historic churches

Fears are growing that the conflict engulfing Ethiopia’s northern Amhara region could threaten historic 13th century rock-hewn churches in the town of Lalibela. Concerns about the UNESCO World Heritage site come amid intensifying fighting between Ethiopian government forces and Amhara nationalist militia group FANO in the historic town. The conflict threatens to morph into a full-blown war that continues to damage infrastructure and has claimed hundreds of lives.

Lalibela includes 11 medieval monolithic cave churches and is seen as a spiritual site that attracts tourists from around the world, including Ethiopia’s Orthodox Christians population that come for an annual pilgrimage.

The site was drawn into Ethiopia’s last conflict, the civil war fought in the northern Tigray region. In 2021, the Tigray People’s Liberation Front rebel group held the site for several weeks amid heavy fighting.

French President Emmanuel Macron visited the site in 2019 and pledged to donate resources and expertise for its renewal as it was near ruin as a result of neglect. However, that was suspended due to the civil war that spilled over to the region. And, although the civil war ended in late 2022, the latest fighting marks a continuation of regional unrest.

— Samuel Getachew in Addis Ababa

Transsion is now the world’s fifth largest phone maker thanks to Africa

💰 What is Transsion’s story? Transsion is a phone manufacturer based in Shenzhen, China, whose brands are Tecno, Itel and Infinix. Though largely unknown to Chinese consumers, Transsion really began establishing a presence in Africa in the 2010s to become the top selling phone maker there, overtaking Samsung in 2017.

💰 So why are we talking about it now? Well it ended 2022 with a 43% share of Africa’s smartphone market and this month new data shows it is now one of the top five smartphone vendors in the world and could even soon be top four. With its share price up 60% year-to-date on the Shanghai Stock Exchange, it is valued at $14 billion.

💰 How did it rise in Africa? Transsion’s story in Africa has been described as “a textbook case of superior marketing and understanding consumers’ needs.” The company has also been credited for producing devices with a so-called ‘glocalization’ strategy such as marketing dual SIM card phones and camera phones better calibrated for darker skin tones.

💰 How has it stayed ahead of competition? Transsion set up its first Africa assembly factory in Addis Ababa in 2011, a base from which it increased its shipments of relatively affordable feature and smartphones to key markets. Its phones have stayed below the higher price points typical of Samsung and Apple products while aspiring towards the cutting edge designs and features of the premium phones. Want a foldable phone? Tecno has one that is probably the most affordable on the market.

💰 What’s Transsion’s next move? It is looking to break into Southeast Asia but with countries like Singapore where consumers have higher purchasing power. “Southeast Asia is a good place for companies like Oppo and Transsion to grow high-end users,” reports Nikkei Asia.

— Alexander

Archeologists have unearthed evidence of pastoralist communities who lived around Lake Turkana, northern Kenya, about 4,000 years ago, and how they interacted with each other. The team looked at the use of beads by herders who lived in the region, focusing on the types of minerals and rocks they had used to make the adornments and where these materials came from. They established that the herders wore colorful stone beads — some as part of necklaces, bracelets, and earrings — which may have had special meaning. Analysis of minerals from beads collected from three archeological sites hundreds of kilometers apart, with Lake Turkana between them, suggested there was a cultural connection between the regions.

• Francophone West Africa’s leading super app has bought a fintech startup in Benin to launch mobile money in the subregion.
• GitHub’s AI coding assistant has gone from an experiment to a moneymaker, the company’s CEO Thomas Dohmke said in an exclusive interview.
• TikTok is telling advertisers that #Israel is trending, but not #Palestine.
• Senate Republicans announced a long-awaited plan to tax carbon-intensive imports. But it’s unclear if the bill will be able to achieve its twin aims of lowering global emissions and protecting U.S. jobs.

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— Yinka, Alexis, Alexander Onukwue, Martin Siele, and Muchira Gachenge