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About 21.7 million Nigerians are unemployed—it’s a figure that is more than the population of 35 of Africa’s 54 countries. That number will likely rise given that Nigeria has also just suffered its worst quarterly economic contraction in over a decade due to the Covid-19 pandemic.
To its credit, Nigeria’s government has pushed social intervention programs amid pandemic, from cash relief for its poor to a $126 million credit facility for small and medium businesses. But so far, those plans have left out a promising, fast-growing business sector: tech startups.
Last year alone, Nigerian startups received nearly half of the total startup funding in Africa but with the record-breaking pace of investment inflows forecast to slow, coupled with the current negative macroeconomic factors, local startups are increasingly in need of tailored support.
In a new white paper Endeavor, the global entrepreneurship network, proposes a $50 million credit facility that allows startups access 75% of their six-month runway costs at a 5% interest rate (Nigeria’s average lending rate in 2019 was over 15%, based on IMF data).
The goal should be to keep startups afloat amid dire circumstances: a survey by the UK-Nigeria Tech Hub in May showed that 79% of local startups had less than six months of cash runway. Endeavor also recommends provisions for partial debt forgiveness if the funds are applied to employee salaries to slow the job churn that’s taking hold in the industry.
But the government must also look to make good on promises of an investment fund for startups in the long-term. Rather than disburse them through a government agency or organization however, Endeavor recommends investing the funds “in the most efficient way” through experienced local venture capital firms.
So far, in the absence of targeted government support, help is coming from within the ecosystem as venture capital firms are collaborating to offer equity-free, emergency grants as cash lifelines to local startups. Ultimately however, the onus remains on the government to live up to its promises of boosting its $2 billion tech ecosystem, says Eloho Omame, managing director for Endeavor’s Nigeria division. “If this segment is strategically important, then we cannot afford to move as nonchalantly as we seem to be.”
— Yomi Kazeem, Quartz Lagos correspondent
Five stories this week
Scientists in Nigeria, Sierra Leone, and the US have developed a $1 test for Ebola and Lassa virus. There has been a major breakthrough in the fight against two major viral hemorrhagic diseases that plague African countries. A newly developed solar-powered kit could yet enable care-givers to test patients for both the Lassa virus and Ebola virus in one swoop, Uwagbale Edward-Ekpu reports.
Ethiopia is demonetizing its economy with new currency to tackle cash hoarding and illegal trade. For the first time in two decades, Ethiopia has introduced a new notes to its existing slate of bank notes. The move, explains Samuel Getachew in Addis Ababa, is part of an attempt to tackle illicit financial inflows and cash hoarding in an already struggling economy.
The race to build facial recognition tech for Africa is being led by this award-winning engineer. One of the key shortcomings of facial recognition has been its failings with diverse demographies. Audrey Donkor spoke with 26-year old Ivorian engineer Charlette N’Guessan, who’s just become the first woman to win one of Africa’s most prestigious engineering awards. She and her team are building a more diverse dataset with a sizable representation of Black African faces to develop a better version of the technology.
The police officer who turned forensic archaeologist to search for thousands of Zimbabwe’s hidden dead. One of Keith Silika’s earliest childhood memories in Zimbabwe was of a young friend picking up a bomb he mistook for a toy and getting killed. As a young man Silika joined the local police force but in later years he has become a forensic scientist. Now he is trying to uncover how and where thousands of Zimbabweans were killed, then declared missing, across 50 years of anti government conflicts and protests.
How South Africa’s Jerusalema became a pan-African hit, then a global dance favorite. This month, Jerusalema, the South African hit song, became the most Shazam-ed song in the world. As Norma Young reports from Johannesburg, the track has evolved from being a fixture on local South African radio nine months ago to being a global phenomenon thanks to viral dance challenges and a star-studded remix.
Dealmaker
An Africa-focused music download service has raised $6.4 million from its IPO to help pay artists. As it doubles down on scaling its legal and free music downloads service across Africa, Mdundo has listed publicly on Nasdaq First North Growth Market in Denmark and raised $6.4 million. The startup has signed up 80,000 African artists with a catalog of 1.5 million songs.
•Elves, a Cairo-based app concierge service, raised $2 million from leading Egyptian venture capital firm Sawari Ventures as well as some of its existing investors. It brings Elves’ total raised funding since inception to $5 million with the most recent round being a $2 million raise in 2017 from Emaar, Kauffman Fellows Syndicate, and Dubai Angel Investors.
•Valenture Institute, a South African startup edtech start-up, raised $7 million in funding from GSV Ventures. The startup’s founder, Rob Paddock, has significant pedigree in the edtech industry having co-founded GetSmarter, an educational platform that was acquired for $103 million by 2U in 2017.
Chart of the Week
Facebook is moving closer to local talent and key markets with plans for a second office in Africa. Five years after opening its first Africa office, Facebook is set to set up shop in Lagos. The choice of Lagos, beyond being home a key African tech ecosystem, is also a play to be closer to Nigeria’s burgeoning tech talent, some of which have already risen through the ranks at Facebook. But it’s not just talent, Facebook will have one eye on Nigeria’s fast-growing population making it one of its key markets for years to come.
Quartz Gems:
Are commercial breaks coming to Netflix?
Netflix doesn’t have commercials—and it won’t any time soon. But that doesn’t mean it won’t embrace advertisers.
The streaming service had 193 million global subscribers as of June and is likely to surpass 200 million by the end of the year. For now, the only substantial way it monetizes that massive audience is from subscriptions.
But many observers—including marketers who want to reach those subscribers—believe the company needs to find other means through which it can capitalize on its legions of binge-watchers in the event subscriptions stop growing.
Read more about the ways Netflix is already working with advertisers, and what this means for the future of the TV ad, in this week’s field guide. If you’re not already a member, sign up to become one today.
Other things we liked
How the hero of “Hotel Rwanda” fell into a vengeful strongman’s trap. When Paul Rusesabagina got on to a private jet in Dubai some weeks back he claims he expected to land in Burundi and not in Kigali, Rwanda where he is now in detention on terrorism charges by the government of Paul Kagame. For the New York Times, Abdi Latif Dahir, Declan Walsh, Matina Stevis-Gridneff and Ruth Maclean dug into the dark history of the growing tensions between Rusesabagina, whose story is portrayed in the movie Hotel Rwanda, and the Rwandan president.
Ni hao, Africa? Mandarin is low on list of languages to learn. Despite the rise and rise of Chinese presence and investment across Africa, there’s still isn’t as much interest in learning Mandarin Chinese, reports Jevans Nyabiage in South China Morning Post, based on a survey. English is still the most important language for conducting China-Africa affairs across the continent say researchers.m
ICYMI
The True Story Award. A $32,000 global prize for print and online reporting is accepting submissions for its 2020/2021 edition. (Sept. 28)
Innovating Education in Africa Expo 2020. Organizations creating innovative, scalable educational solutions for Africans can apply for to receive grants of up to $100,000. (Oct. 9)
Keep an eye on
The Africa-America Institute’s 36th Annual Awards Gala. AAI’s first virtual event will take place on Tuesday (Sept. 22) 1 pm ET/5 pm GMT. Honorees will include Senegal president Macky Sall, Niger president Mahamadou Issoufou, and actress Issa Rae.
*This brief was produced while listening to Makom Ma Bobe by Jeannette N’diaye (Cameroon).
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