Renew Capital has a presence in 14 African countries. We aim to provide insight into Africa's startup scene, along with the opportunities and challenges it presents through a series of blogs from our in-country team. If you share our passion for developing entrepreneurship in Africa, we invite you to check out our&nbsp;<a href="https://www.renewcapital.com/careers">open roles</a>.&nbsp;<h1>Nihal Grii on Innovation and Morocco's Modern, Diverse Culture</h1>Q&amp;A with Renew Capital's investment ecosystem manager in Morocco.Renew Capital is expanding its presence in Morocco and to showcase this remarkable country, we present an insightful Q&amp;A with Nihal Grii, Renew Capital’s investment ecosystem development manager in Morocco. In this Q&amp;A Nihal shares insights on Africa’s growing startup ecosystem, Morocco’s diverse culture, innovation and advances in sustainability.For more details, explore our&nbsp;<a href="https://latest-api.renewcapital.com//uploads/Morocco_Startup_Ecosyestem_Fact_Sheet_006a5a8686.pdf">Morocco Startup Ecosystem Fact Sheet</a>.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe1NnVkQvptzWTdcl4Llf0IyxJhFhVqSxhLRRGhQHluEu_v8KqJuxW-ywrf_JgbXa8KuKD7ZzN7tg6CZLm3PkeaOhInfzNkOo7jDVohmQtsGKl-baLD2EMNZB-2RvQ1YfMCuKOheorWHISryAGcft0fN4Ug?key=uetvN6jPUbvXgO7d4Bq6xQ" alt="Renew Capital founders and Investment Ecosystem Manager in Morocco pose for a photo after attending GITEX Africa 2024.">You have extensive experience in startup development. What initially drew you to work with startups?It's fascinating to see how startups can thrive and drive a nation's economy. What initially drew me to work with startups was their potential for innovation and impact. Startups can be an engine of job creation, technological advancement and economic diversification. They bring fresh ideas to life and solve real-world problems, often leading to significant improvements in quality of life. Seeing how a single startup can create jobs, attract investment and inspire an entire community is incredibly motivating. It's this dynamic environment and the chance to contribute to meaningful change that hooked me from the start.What excites you most about Morocco's and Africa’s innovation and startup ecosystem?What excites me most is the ambition and determination of Africans. There is a powerful drive to overcome challenges and find technological, scalable and impactful solutions to the many problems we face. It's inspiring to see members of the Moroccan diaspora returning with the expertise and resources to help grow the country and the continent. These individuals are true fighters, bringing energy and innovation that fuels the vibrant startup sector. The dynamism and potential of this ecosystem are truly exhilarating.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdgP7tbgu7_jLcMlmok-_RNsiZC5-UQbE1sNTyn8cV8iHS4twYTr6GfqwroeBSfMSV-lel4PGxpm-6_GrX9MIVBIZHwyNNIKjYt8uAV-IoxYJdcA19gdQkeO2S3heTDUOsWnLOyS-1xt6rIacxq2-tFSJ4?key=uetvN6jPUbvXgO7d4Bq6xQ" alt="Founders of Renew Capital and Investment Ecosystem Manager exploring the vibrant startup ecosystem in Morocco.">What is one thing you wish more people knew about Morocco, its culture and its opportunities?I wish more people knew about the incredible blend of cultures that make up Morocco—Arab, Berber, Andalusi, Mediterranean, Hebraic and African influences all coexist here. It's a unique cultural tapestry that enriches daily life. Additionally, Morocco's strategic location, especially in Tangier, where you can see Spain across the Strait of Gibraltar, offers unique opportunities for trade and cultural exchange. Moreover, Morocco is making remarkable strides in clean and sustainable energy, particularly in water management. With plans to increase desalinated water production tenfold by 2030, and the integration of solar energy reducing production costs dramatically, Morocco is turning its natural challenges into strategic advantages.&nbsp;Morocco is a wonderful place to live! We have thriving expatriate communities in cities like Casablanca, Rabat, Tangier and Marrakech. After-work events are frequent, offering great opportunities for socializing and networking. The blend of modern amenities and rich traditions makes life here both comfortable and enriching.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfH_h6RtOTSQqXrxFTblaPqiUWfRD5L5QYfHBCREsQiqk7sSm-rqJWwPwbu06y50EM5crAkjqaOTac_C_qK3HcPaCcoDwbg4ivA1UzxvxtChXSmJOKZlKmK0GkaWwe_Iz1kPEpVdgYiuWGTcDimb5Tj4ww?key=uetvN6jPUbvXgO7d4Bq6xQ" alt="Investment Ecosystem Manager reflecting on the Q&amp;A session against a beautiful green backdrop in Morocco.">Could you provide a brief overview of your role at Renew Capital and what you find most exciting?As Renew Capital’s investment and ecosystem development manager in Morocco, my role is multifaceted, involving project management, stakeholder engagement and investment sourcing and management. I support the execution of private-sector development projects, ensuring we achieve results and meet all project milestones. I also help develop and facilitate our core gender-smart programs by training and coaching SMEs. I also help build relationships with startups, SMEs, development organizations, government agencies and private sector partners.&nbsp; Part of my role also revolves around sourcing potential companies for our investment pipeline, processing new leads and performing due diligence.The most exciting aspect of my work is developing a robust investment pipeline in African countries. Recognizing that many African nations lack sufficient investment-ready startups, we strive to develop this pipeline not just for ourselves but for other investors as well.&nbsp;What advice would you offer to someone looking to enter the startup scene in Morocco?My advice for anyone starting in the Moroccan startup scene is to manage your reputation carefully. Be authentic and trustworthy—investors talk about their experiences, and a single bad experience can affect your future funding opportunities. Secondly, be realistic about your valuations. High valuations can deter potential investors, so use appropriate techniques to assess your true value and raise only what you need to scale. Finally, share feedback and collaborate with other entrepreneurs. Success breeds success, and a strong community can enhance the reputation of the country, attracting more foreign investors. By supporting each other, we can create a thriving startup ecosystem in Morocco.

I wish more people knew about the incredible blend of cultures that make up Morocco—Arab, Berber, Andalusi, Mediterranean, Hebraic and African influences all coexist here.

Morocco

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Nihal Grii on Innovation and Morocco's Modern, Diverse Culture

<h1>Secrets of Mozambique’s Momentum</h1><figure class="image"><img src="/uploads/Whats_App_Image_2024_07_22_at_2_50_32_PM_2_5ed5992460.jpeg" alt="High-rise buildings skyline in Maputo, Mozambique showcasing the city's urban growth"></figure><h2>Straight Talk About Mozambique's Complexity</h2>We’ve been hosting members of Renew Capital Angels Network this week in Maputo, Mozambique. This is my fourth trip to this amazing country. And when I think of Mozambique, I think of&nbsp;stunning beaches, an unfortunate reputation for corruption and the challenge of not speaking Portuguese. Also liquified natural gas, or&nbsp;LNG, comes to mind. My approach to trying to understand a bit about this complex and beautiful place involves trying to put my finger on what really drives its&nbsp;national identity, exploring its beautiful places and flavors and identifying areas where positive change is happening.&nbsp;Here is a bit of what we have pieced together from our conversations with people this week in Maputo and our desk research.Mozambique: The Hard Facts<ul><li>Demographics: More than 50% of the population is under 18. (<a href="https://www.unicef.org/mozambique/media/4501/file/The%20Situation%20of%20Children%20in%20Mozambique%202021.pdf">UNICEF</a>)</li><li>Literacy Rates:&nbsp;Overall literacy is&nbsp;47%, &nbsp; female literacy is 28% and male literacy is 60%. (<a href="https://www.usaid.gov/mozambique/education">USAID</a>)</li><li>Mobile Penetration: 55%. (<a href="https://www.statista.com/statistics/1253675/number-of-mobile-connections-mozambique/">Statista</a>)</li><li>Government Spending: 72% of tax revenue is consumed by the public wage bill. (<a href="https://www.bloomberg.com/news/articles/2024-07-16/mozambique-to-cut-5-000-ghost-workers-imf-says-after-warning">Bloomberg</a>)&nbsp;</li><li>Economic Growth: Projections exceed 6% for the next few years. (<a href="https://www.worldbank.org/en/country/mozambique/publication/mozambique-economic-update-9#:~:text=Growth%20is%20expected%20to%20accelerate,production%2C%20and%20high%20commodity%20prices.">World Bank</a>)</li><li>Inflation: Under control, with a stable currency. (<a href="https://tradingeconomics.com/mozambique/inflation-cpi">Trading Economics</a>)</li><li>Poverty: Depending upon your source 65-75% of the population lives below the poverty line and it’s gotten worse the last 10 years. (<a href="https://clubofmozambique.com/news/mozambique-65-of-population-lives-below-poverty-line-260369/">360 Mozambique</a>)</li></ul>National Identity: Unidad National&nbsp;Mozambique achieved independence from Portugal in 1975, but a subsequent 16-year civil war between two political groups, FRELIMO and RENAMO, hindered national progress. The war, driven by demands for leadership representation from the central and northern regions, underscored the need for inclusive governance. War sucks. A lot of people died. They don’t want to go back to all that. So today, the phrase "Unidade Nacional" (national unity) reflects the collective understanding that national progress and cohesion depend on shared leadership across all regions. This principle is a cornerstone in evaluating policies, initiatives and business ventures to ensure they align with the country's goals for a unified future​. And of course corruption is just part of the way things are done around here.&nbsp;<h2>Chapo’s Challenge: Can a Lawyer from Central Mozambique Chart a New Course?</h2>The national election is on October 9th, 2024. FRELIMO's presidential candidate, Daniel "Chapo," is the first since Mozambique's independence to have no military background. Yep – read that again. He’s a lawyer, born in Inhaminga in central Mozambique. Chapo's focus on national unity is significant – not sure yet what that means, but this is what the people say. He was a governor in Inhambane Province, near Maputo, until earlier in 2024 and he is known for improving healthcare and fostering trust. He is expected to win by a wide margin due to RENAMO’s current fragmentation. Supporters believe he will make progress in infrastructure and healthcare, strengthening the social contract. Critics assume he’ll be a puppet.Mozambique’s LNG Mirage: Is the Gas Boom a Bust?&nbsp;Here’s a brief timeline of LNG in Mozambique:2010-2013 - LNG Discovery - Mozambique discovered 150 trillion cubic feet of natural gas reserves. Subsequent concessions were sold to major organizations.<ul><li>Total's Onshore LNG Project: Expected to produce 13.1 million tons per year, but delayed due to insurgency and security issues. Force majeure declared in April 2021.</li><li>ExxonMobil's Rovuma LNG Project: Planned capacity of 15.2 million tons per year, with final investment decisions delayed due to security concerns.</li><li>Coral South Floating Production Facility (ENI): Capacity of 3.4 million tons per year, exports began in 2022.</li><li>2017 - Insurgency in Cabo Delgado: Began in 2017, causing significant delays and security issues.</li><li>2019 - Cyclone Kenneth: Devastated the economy and impacted LNG projects.</li></ul>2024 - Recent News:&nbsp;<ul><li>Mozambique's&nbsp;new sovereign wealth fund, part of the agreement with the IMF, aims to manage $91.7B from LNG exports over the next few decades, with a focus on transparency and governance. (<a href="https://www.bloomberg.com/news/articles/2024-03-12/mozambique-approves-wealth-fund-decree-to-govern-lng-billions">Bloomberg</a>)</li><li>Rwandan Security Involvement: Rwandan security company Isco Segurança has been hired to guard TotalEnergie’s $20B gas project. This move has sparked criticism over Rwanda's economic interests in Mozambique. (<a href="https://www.ft.com/content/d89e861c-3872-4649-afc5-9cb6f53a18d7">FT</a>)</li><li>Ghost Workers: Mozambique plans to remove 5,000 ghost workers, aiming to reduce public worker spending and unlock a $60M IMF fund. No wonder 72% of tax revenue is spent on public wages. (<a href="https://www.bloomberg.com/news/articles/2024-07-16/mozambique-to-cut-5-000-ghost-workers-imf-says-after-warning">Bloomberg</a>)</li></ul><h2>Mozambique’s Startup Ecosystem</h2>The startup ecosystem is fairly nascent. However, the discovery of natural gas reserves and rich mineral deposits and the country’s strategic location have positioned Mozambique as an interesting player to watch among Africa’s startup ecosystems.We that hear aquaculture, fintech and the energy sectors have seen some activity in recent years, but we mostly looked at deals in the logitech space. We saw some fintechs but they still have significant progress to make before they can compete with their counterparts in Nigeria or Kenya.More importantly,&nbsp;the government is modernizing its investment and banking regulations&nbsp;to create a more conducive investment environment. Read: it won’t take three years to get a license. Yeah…let’s see about that!If you’re looking for evidence that things are moving, the government's promotion of Small and Medium Enterprises (IPEME) is providing support to budding entrepreneurs. Although we couldn’t find many examples yet, I’m sure they’ll be sprouting up soon.&nbsp;Additionally, organizations like MozInnovation Lab and Standard Bank Incubator have been playing a crucial role in nurturing startups by offering mentorship, training and access to funding. Key sectors include agriculture, fintech, energy and health tech, so we should have plenty of pipeline to look at, right? Sidenote: a large investment group just told us they see only two to five legit deals per month.&nbsp;We need to get this ecosystem activated, ASAP!And for the challenges: The typical stuff - developing a regulatory environment, inadequate infrastructure including the internet and a pretty significant skills gap, in particular for tech-related fields. Nothing new.&nbsp;I’d conclude with one word: pipeline! We need more. We want more. Mozambique, you are beautiful. We see your potential. Let’s do this!Go Deeper on Mozambique?<ul><li><a href="https://www.linkedin.com/posts/renew-capital_mozambique-in-12-photos-activity-7219971399195455490-rlMD?utm_source=share&amp;utm_medium=member_desktop">Maputo in 12 photos</a></li><li><a href="https://latest-api.renewcapital.com/uploads/FINAL_Mozambique_Fact_Sheet_15e04085a9.pdf">Mozambique’s Startup Ecosystem Fact Sheet</a></li><li><a href="https://www.google.com/maps/placelists/list/0TKmqgP4OdVTRIUk3u2YUL4M8PE4-A">Maputo Startup Ecosystem Google Map</a></li></ul> If you are interested in entering Renew Capital’s pipeline, visit&nbsp;<a href="http://venturelab.renewcapital.com">venturelab.renewcapital.com.&nbsp;</a>And if you want to read more of our thoughts on other African Startup Ecosystems visit our&nbsp;<a href="https://www.renewcapital.com/newsroom/the-momentum-of-african-startup-ecosystems-in-a-snapshot">Ecosystem Fact Sheet webpage</a>.

Straight talk on Mozambique’s evolving startup scene, the impact of LNG and the journey toward national unity.

Ecosystems

Mozambique

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Secrets of Mozambique’s Momentum

<h1>Why We Invested in BuuPass: Easing Intercity Travel Across Africa</h1><figure class="image"><img src="/uploads/IMG_2464_15e39b05ec.jpeg" alt="A photo of Renew Capital Angel investors posing alongside BuuPass founders at their office in Nairobi, Kenya."></figure>Over 30 million Africans rely on buses for inter-city and cross-border transportation daily, contributing to a $40B domestic transport industry annually. However, transportation systems in the region are underfunded and lack the necessary technology to operate efficiently. Historically, bus operators have relied on unreliable paper ticketing, which requires customers to appear in person and wait in long lines to purchase bus tickets. Furthermore, companies often oversell bus tickets because they lack a digital system to track the number of tickets sold, resulting in customers arriving on the day of their travel with a paid-for ticket in hand, but no seat available on the bus.&nbsp;<a href="https://buupass.com/">BuuPass</a> provides millions of travelers with ease and convenience through digital schedules, online bookings and streamlined intercity travel. BuuPass, operating on a B2B2C model, partners with transport companies by providing a platform that digitizes their ticketing and bus management to minimize overselling, increase asset utilization and increase convenience for their customers.Renew Capital invested in BuuPass because of its growth potential, strong founders and significant impact on easing transport challenges in Africa. Other investors in BuuPass include Founders Factory Africa, FrontEnd Ventures and Google for Startups Black Founders Fund.&nbsp;<figure class="image"><img src="/uploads/Whats_App_Image_2022_09_28_at_09_52_18_6ccec1449c.jpeg" alt="A photo of BuuPass founders being congratulated at a startup event."></figure>Photo courtesy of BuuPass<h2>Strong Founders</h2>BuuPass was founded in 2016 by&nbsp;<a href="https://ke.linkedin.com/in/soniakabra">Sonia Kabra</a> and&nbsp;<a href="https://ke.linkedin.com/in/wyclife-omondi-86054064">Wyclife Omondi</a>. Sonia, from India, and Wyclife, from Kenya, met during college in the U.S. They identified transportation as a significant challenge in their home countries and envisioned improving the sector through digitalization. Their innovative idea gained traction when they secured $1M in funding to bring their concept to the market through the Hult Prize award supported by President Bill Clinton. With visionary leadership, they are quickly establishing BuuPass as a key player in Africa’s transportation sector.<h2>Demonstrated Traction</h2>BuuPass’ key milestones include:<ul><li>Since launching first in Kenya and offering both domestic and international routes, BuuPass has sold over&nbsp;<a href="https://techcabal.com/2024/04/30/buupass-acquires-quickbus/#:~:text=Since%20launching%20in%202016%2C%20Buupass%20has%20sold%20over%206%20million%20travel%20tickets%20and%20generated%20over%20%24100%20million%20in%20ticket%20sales.%20The%20platform%20%E2%80%9Ccovers%20national%20and%20cross%2Dborder%20routes%20in%20East%20and%20Southern%20Africa%20and%20has%20served%20over%2016%20million%20passengers%2C%E2%80%9D%20the%20company%20said.">6 million travel tickets</a> and generated more than $100M in ticket sales.</li><li>BuuPass has strategic partnerships with African telcos and super apps like M-PESA. Through its partnership with the M-PESA app, a financial super app, it provides booking services to around 10 million Kenyans who use the mobile money app.</li><li>As of 2024, BuuPass has raised a pre-seed funding round of&nbsp;<a href="https://techcrunch.com/2023/02/13/buupass-raises-1-3m-to-scale-mobility-sector-digitization-in-africa/">$1.3M</a> from investors including&nbsp;<a href="https://www.renewcapital.com/newsroom/press-release-renew-capital-invests-in-buupass-a-kenyan-tech-transport-company">Renew Capital</a>, Founders Factory Africa, FrontEnd Ventures, Adaverse, Gullit, Five35, Changecom, XA Network, Ajim Capital, Artha Ventures, Daba Finance, Google Black Founders Fund and several angel investors.</li><li>In 2024, BuuPass made headlines when they announced an investment from veteran Silicon Valley investor&nbsp;<a href="https://techcabal.com/2024/02/28/buupass-secures-investment-from-silicon-valley-legend-tim-draper/">Tim Draper</a> after being selected to pitch for the African region on the show "Meet the Drapers." Tim Draper is known for funding major companies like Coinbase, Baidu, Tesla, Skype, SpaceX, Twitch and Hotmail.</li></ul><h2>Orientation Towards Growth</h2>BuuPass has expanded its presence across Africa by acquiring&nbsp;<a href="https://techcabal.com/2024/04/30/buupass-acquires-quickbus/">QuickBus</a> in 2024. This acquisition added international routes across 16 African countries, including Kenya, Tanzania, South Africa, Malawi, Nigeria, and Ghana. It also granted BuuPass access to the South African and Nigerian markets, supporting their expansion plans to&nbsp;<a href="https://disruptafrica.com/2024/05/20/kenyan-mobility-startup-buupass-plans-to-enter-8-new-african-markets-by-2025/">eight more countries</a> by 2025.&nbsp;"BuuPass is not only assisting transport operators in running more efficient businesses but also supporting a connected Africa. Efficient transportation is a crucial step in economic development, and BuuPass is an exciting part of the continent's transition." — Laura Davis, Managing Partner and co-CEO of Renew Capital.

Find out why Renew Capital invested in BuuPass and how it's enhancing intercity travel in Africa with digital ticketing solutions.

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Why we Invested in BuuPass: Easing Intercity Travel Across Africa

<h1>Secrets of Ethiopia’s Momentum</h1>Renew Capital has been a player in the Ethiopian startup ecosystem for more than 10 years now, and in that time much has changed. With a population of 126.5 million according to the World Bank and year-on-year economic growth despite various market-disrupting factors, Ethiopia cannot be ignored. Though the startup scene is slowly gaining momentum, we are patiently waiting and willing to share our thoughts with those interested in taking a look. Stop by the Renew Capital office above Galani Cafe in Jacros to meet with the team. If you are an entrepreneur looking for financing for your asset-light, tech-enabled business check out the&nbsp;<a href="https://venturelab.renewcapital.com/">Renew Venture Lab and apply</a>.&nbsp;<figure class="image"><img src="/uploads/Photo_0_29119a7e5a.jpeg" alt="Beautiful Addis Ababa skyscraper in Ethiopia's bustling cityscape, showcasing urban growth and development."></figure><h2>Key Developments in Ethiopia's Market Liberalization</h2>The two most impactful changes to the startup ecosystem in Ethiopia in recent times are Safaricom's entry into the market and the government's decision in May to open the banking and retail sectors to foreign ownership. In the coming months, further liberalizations in Ethiopia’s capital markets are expected. Here are a few of the key factors investors should keep in mind about Ethiopia's startup ecosystem:Government Support and Reforms:&nbsp;Ethiopia has been making significant strides in creating a supportive environment for startups. The government has introduced various policies and reforms, such as the Digital Ethiopia 2025 strategy, the Science Technology, and Innovation (STI) policy, and the draft Ethiopia Startup Act. The proposed Ethiopian Startup Act aims to support startups by establishing a National Startup Council and an Innovation Fund, overseen by the Ministry of Innovation and Technology. The Act seeks to foster innovation, remove barriers to entrepreneurship, and enhance access to foreign investment. The Innovation Fund will offer startup scholarships, cover intellectual property fees, and incentivize incubators and accelerators. Startups will also benefit from tax exemptions and simplified trade license processes, reducing operational costs and barriers​ (<a href="https://innobiz-k.et/ethiopias-startup-act/">innobiz-K</a>,&nbsp;<a href="https://www.spotlightethio.com/post/what-ethiopia-s-startup-act-means-for-entrepreneurs">Spotlight Ethio</a>,&nbsp;<a href="https://business.linkupaddis.com/ethiopias-startup-act/">LinkUp Business</a>, <a href="https://afrikanheroes.com/2021/11/22/proposed-startup-act-nears-completion-in-ethiopia/">Afrikan Heroes</a>).Focus on Digitalization: The Ethiopian government is heavily invested in digital transformation initiatives. The Digital Ethiopia 2025 strategy aims to leverage technology for economic growth. Additionally, initiatives like the Addis Ababa City Administration's Innovation and Technology Development Bureau and events like the Digital Startup Marketplace showcase Ethiopia's commitment to fostering a digital economy​ (<a href="https://startupgenome.com/ecosystems/addis-ababa">Startup Genome</a>,&nbsp;<a href="https://ethiopianbusinessreview.net/ethiopian-startup-ecosystem-transformed-by-groundbreaking-legal-reforms/">Ethiopian Business Review</a>).Labor and Energy:&nbsp;Ethiopia is positioning itself as an attractive destination for data centers and business process outsourcing (BPO) services, leveraging its abundant and cost-effective electricity and large labor force. The country has made significant investments in its energy infrastructure, primarily focusing on renewable sources such as hydroelectric power, which currently constitutes the majority of its energy production. This abundant and inexpensive energy supply is a critical factor for industries like data centers that require reliable and cost-efficient electricity​ (<a href="https://www.worldbank.org/en/news/press-release/2024/04/03/energizing-afe-ethiopia-new-world-bank-program-expands-access-to-electricity">World Bank</a>,&nbsp;<a href="https://www.iea.org/articles/ethiopia-energy-outlook">IEA</a>). Additionally, Ethiopia boasts a large and youthful labor force, with more than 61 million people as of 2023. This workforce is increasingly becoming skilled and educated, thanks to investments in education and vocational training programs​ (<a href="https://data.worldbank.org/indicator/SL.TLF.TOTL.IN?locations=ET">World Bank Data</a>,&nbsp;<a href="https://ycharts.com/indicators/ethiopia_labor_force">YCharts</a>). The combination of affordable electricity and a sizable, educated labor force creates a conducive environment for data centers and BPO services, which can benefit from lower operational costs and a pool of available talent.<h3>Challenges:&nbsp;Despite these positive developments, challenges remain</h3><ul><li>Stability: Investors often question the country’s stability and macroeconomic conditions, asking, "Are my assets safe?"</li><li>Limited Funding: Local investors are scarce, and foreign investors are cautious due to the closed nature of the economy and elements of instability.</li><li>Regulatory and Bureaucratic Hurdles: Despite recent reforms, bureaucratic red tape still poses a challenge. The process of registering and incorporating a company, although simplified, can still be cumbersome, including complex tax laws and regulatory requirements that can deter potential entrepreneurs and investors​ (<a href="https://www.benjamindada.com/reforms-give-ethiopias-startup-ecosystem-a-fighting-chance/">Benjamin Dada</a>,&nbsp;<a href="https://bti-project.org/en/reports/country-report/ETH">BTI 2024</a>).</li><li>Infrastructure and Connectivity Issues:&nbsp;The cost and reliability of internet access can create barriers for the smooth operation of tech startups. Additionally, other basic infrastructure needs like transportation and electricity can be inconsistent, impacting business operations​ (<a href="https://www.capitalethiopia.com/2021/06/28/ethiopias-startup-ecosystem-ranks-top-100/">Capital Newspaper</a>).</li></ul>Ethiopia's startup ecosystem is slowly and steadily evolving, with substantial government backing and a growing focus on digital innovation. The potential for growth is immense, given the young and tech-savvy population, government support, affordable energy and labor, and the ongoing digital transformation efforts. Having called Ethiopia home for more than 12 years, I am hopeful the country will continue to overcome its challenges and become a strong force among Africa’s startup ecosystems.Go Deeper on Ethiopia<ul><li><a href="https://www.linkedin.com/feed/update/urn:li:ugcPost:7218873899587911680/" target="_blank" rel="noopener noreferrer">Addis Ababa in 12 Photos</a></li><li><a href="https://latest-api.renewcapital.com/uploads/FINAL_Ethiopia_Startup_Ecosystem_Factsheet_bbd213f998.pdf" target="_blank" rel="noopener noreferrer">Ethiopia’s Startup Ecosystem Factsheet</a></li><li><a href="https://www.google.com/maps/placelists/list/YI7_3BViBuFS28_hOMRGaSTsoB0yqA">Addis Startup Ecosystem Google Map</a></li></ul> Interested in other African Startup Ecosystems?&nbsp;<a href="https://www.renewcapital.com/newsroom/the-momentum-of-african-startup-ecosystems-in-a-snapshot">Download Renew Capital’s Ecosystem Factsheets on other Ecosystems</a>. We’ll be adding new ones every few weeks!&nbsp;

Renew Capital has been a player in the Ethiopian startup ecosystem for more than 10 years now and in that time much has changed. Learn about Safaricom's entry, labor force potential, energy investments and challenges facing entrepreneurs in this evolving ecosystem.

Ethiopia

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Secrets of Ethiopia’s Momentum

<h1>Renew Capital Legal Brief - July 2024</h1>The Latest Changes in Africa's Regulatory Environment<figure class="image"><img src="/uploads/Linkedin_Templates_21_eb566a2aff.png" alt="Photo of Renew Capital's July 2024 Legal Brief document."></figure>With a growing presence in Africa’s top startup ecosystems, the Renew Capital team works hard to stay on top of the legal landscapes shaping the venture capital and investment space. For the next few months, we will be publishing a monthly piece highlighting the significant legal and regulatory developments across Africa. We hope this offers insights for investors, entrepreneurs, industry leaders and policymakers in Africa’s dynamic business environment. If you like it, let us know at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a> and it may become a permanent offering. &nbsp;Key Legal and Regulatory UpdatesEgypt:&nbsp;<ul><li>New Fast-Track M&amp;A Notifications - Starting June 1, 2024, companies involved in mergers and acquisitions can notify the Egyptian Competition Authority (ECA) using a&nbsp;<a href="https://eca.org.eg/en-us/%D8%AC%D9%87%D8%A7%D8%B2-%D8%AD%D9%85%D8%A7%D9%8A%D8%A9-%D8%A7%D9%84%D9%85%D9%86%D8%A7%D9%81%D8%B3%D8%A9/economic-concentrations/notification-file-simplified-procedures">fast-track procedure</a> with a 20-business day timeline and simplified forms for specific transactions. This procedure applies only to specific transactions detailed in the&nbsp;<a href="https://eca.org.eg/getattachment/793b7930-dee1-4815-bc27-c73d2cf632a6/Notification-File-Economic-Concentrations-subject-to-Simplified-Procedures.docx">simplified notification file</a>.</li></ul>Ethiopia:&nbsp;<ul><li>Data Protection Law - The Ethiopian Parliament passed the Personal Data Protection Proclamation in April 2024, aligning with international standards. It empowers individuals with control over their data and enforceable rights against data processors and controllers.&nbsp;</li><li>Foreign Investment Expansion - The Ethiopian Investment Board (EIB) now allows foreign participation in export, import, wholesale and retail trade sectors, previously reserved for domestic investors. Conditions include relevant experience, market linkages, capital thresholds, procurement levels, and contractual commitments. Read the&nbsp;<a href="https://investethiopia.gov.et/wp-content/uploads/2024/04/Ethiopian-Investment-Board-Directive-to-Regulate-Foreign-Investors-Participation-in-Restricted-Export-Import-Wholesale-and-Retail-Trade-Investments-No.1001_2024.pdf">directive</a>.&nbsp;</li></ul>Ghana:&nbsp;<ul><li>Crowdfunding Guidelines - In June 2024, Ghana’s SEC launched regulations for crowdfunding, establishing a licensing framework for platforms and intermediaries. These guidelines exclude rewards-based or donations-based activities.</li></ul>Kenya:&nbsp;<ul><li>Carbon Project Regulations - The Climate Change (Carbon Markets) Regulations 2024 create a regulatory framework for carbon projects. The Designated National Authority (DNA) will oversee implementation, with a two-year compliance period for existing projects.</li></ul>Mozambique:&nbsp;<ul><li>Leniency Regime Proposal - The Competition Regulatory Authority (CRA) is consulting on draft regulations for a leniency regime. This regime offers reduced fines for companies or individuals who report anti-competitive practices and provide evidence against other offenders.</li></ul>Nigeria:&nbsp;<ul><li>Debt Capital for Private Companies - The Nigerian SEC proposed rules allowing private companies to issue debt securities to the public, subject to SEC restrictions. The proposed rules can be found&nbsp;<a href="https://sec.gov.ng/wp-content/uploads/2024/05/Rules-for-Exposure-Issuance-and-Allotment-of-Private-Companies-Securities.pdf">here</a>.</li><li>New Measures for Remittances - The Central Bank of Nigeria (CBN) introduced measures to ease foreign exchange pressures. These include same-day Naira settlement for diaspora remittances using the Nigerian Autonomous Foreign Exchange Market (NAFEM) rate.</li></ul>Rwanda:&nbsp;<ul><li>Digital Currency Plans - The National Bank of Rwanda (NBR) aims to issue a Central Bank Digital Currency (CBDC) by 2026. The NBR is currently conducting public consultations and feasibility studies. The report on the feasibility study is available&nbsp;<a href="https://www.bnr.rw/payment-systems/cbdc/">here</a>.</li></ul>South Africa:&nbsp;<ul><li>Deposit Insurance Operational - The Corporation for Deposit Insurance, a subsidiary of the South African Reserve Bank, began operations on April 1, 2024. It manages the Deposit Insurance Fund, covering up to R100,000 per qualifying depositor per bank.</li><li>Spectrum Hoarding Policy - South Africa’s new Spectrum Policy promotes spectrum trading, sharing, and pooling among licensees to prevent capacity hoarding.</li></ul>Tanzania:&nbsp;<ul><li>Mining Act Amendments - Proposed changes to Tanzania’s mining sector include increasing the minimum capital investment for a mining license to $5,000,000, introducing penalties for false data and delayed payments, and clarifying royalty payments on imported minerals.</li></ul>Tunisia:&nbsp;<ul><li>Startup Ecosystem Watch - Tunisia's pioneering Startup Act continues to influence tech investment and startup growth in the region. We are monitoring developments closely.</li></ul>Uganda:&nbsp;<ul><li>Stamp Duty Exemptions - The Stamp Duty (Amendment) Bill 2024 introduces exemptions for investments in electric vehicles and private equity funds, effective July 1, 2024.</li></ul>Zambia:&nbsp;<ul><li>E-Hailing Platform Regulation - New regulations require road licenses for all e-hailing drivers and set guidelines for operators, with fines for non-compliance.</li></ul>Contact us at&nbsp;<a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a> if you need to get up to speed on any of these ecosystem! Stay tuned for more updates in our upcoming briefs!Disclaimer: The information included in this blog does not constitute legal advice. Consumers should consult their legal advisors.&nbsp;

The Corporation for Deposit Insurance, a subsidiary of the South African Reserve Bank, began operations on April 1, 2024. 

Legal Corner

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Renew Capital Legal Brief - July 2024

<h1>Press Release: Pumpkn Secures Investment to Transform Funding for African Agribusinesses</h1>Renew Capital makes its first-ever investment in South Africa in an agribusiness loan platform.<a href="https://latest-api.renewcapital.com/uploads/7_2_2024_FINAL_Pumpkn_Press_Release_6b346ca3f2.pdf" target="_blank" rel="noopener noreferrer">Download full press release</a>JOHANNESBURG, South Africa,&nbsp;July 2, 2024&nbsp;—&nbsp;Africa’s agricultural sector plays a significant role in the continent's economy, contributing about 35% to the GDP and supporting the livelihoods of nearly half of Africa's 1.4 billion population. Despite its immense potential, agriculture faces a funding gap hindering its growth. <a href="https://www.linkedin.com/company/pumpkn/">Pumpkn</a>, a South African startup, is actively addressing this challenge by offering and facilitating financial support for agribusinesses.<figure class="image"><img src="/uploads/Zuri_Instagram_1_0bd40616a3.png" alt="A photo of the three co-founders of Pumpkn, a South African startup that provides a digital platform to connect agribusinesses with financing by leveraging data for credit assessments."></figure>Pumpkn leverages data to make credit assessments of agricultural small and medium-sized enterprises (agri-SMEs). On the other hand, Pumpkn helps lenders easily identify bankable businesses and manage their loan portfolio. Pumpkn’s overall objective is to make agribusiness financing commercially viable for lenders and make loans accessible for agribusinesses. These loans help these businesses to obtain the necessary tools, machinery, and equipment to facilitate their growth.“Despite agriculture being the major GDP contributor for many African countries, many agriculture-focused businesses still have a hard time finding the financing they need to grow and thrive. Pumpkn is committed to working closely with agribusinesses to enable their growth, with a direct impact on job creation,” said <a href="https://www.linkedin.com/in/zaheerdindar/">Zaheer Dindar</a>, co-founder &amp; CEO of Pumpkn. "Pumpkn seeks to fill the financing gap for agribusinesses by providing farmers and entrepreneurs with the financial resources they need to thrive."Pumpkn stands out with its aim to provide fast loan approvals, zero paperwork and seamless accessibility. Pumpkn's intuitive platform directly links to agri-SMEs' bank accounts, empowering them to swiftly secure essential financing."We are witnessing an important shift in Africa, with technology playing a major role in boosting sectors including agriculture," said Adam Abate, principal of investment at Renew Capital. "We are thrilled to support Pumpkn on its mission and proud to have them as our first-ever investment in South Africa."*Ecosystem activation, pipeline development and capacity-building support provided to Renew Capital portfolio companies is generously supported by Global Affairs Canada.

Renew Capital makes its first investment in South Africa with Pumpkn, a South African startup enhancing agribusiness financing and leveraging data to bridge the funding gap for agri-SMEs in Africa's agricultural sector.

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Press Release: Pumpkn Secures Investment to Transform Funding for African Agribusinesses

<h1>Secrets of Kenya’s Momentum</h1>What a tenuous week to be in Nairobi. But this market is so much more than the current sad and complicated news coming out of Kenya related to taxes and youth demonstrations opposing the Finance Bill.&nbsp;Renew Capital has been a player in the Kenyan startup ecosystem for a few years now, with a great team of seven people. Stop by ABC Place, Waiyaki Way, 10th floor to visit our office and meet with the team. If you are an entrepreneur looking for financing for your asset-light, tech-enabled business check out the&nbsp;<a href="https://venturelab.renewcapital.com/">Renew Venture Lab and apply</a>.&nbsp;<figure class="image"><img src="/uploads/Whats_App_Image_2024_06_27_at_3_02_07_PM_3_f04d7feb7b.jpg" alt="Beautiful skyline view from the 10th floor of ABC Place, Waiyaki Way, Nairobi, showcasing high-rise buildings and lush green forested surroundings."></figure>Matt and I have flown down to Africa’s Silicon Savannah (Nairobi) from our home in Addis a number of times over the past 24 months, and every time it feels different. From bustling coworking spaces to a thriving entrepreneurial ecosystem, Nairobi is alive with a diverse set of increasingly mature founders who are tackling real-world problems with unique solutions. There are many examples to point to both successes and failures. And we have learned to appreciate how little we (and our Western investors) know about why this ecosystem is thriving.&nbsp;For one, I think M-Pesa is just a fascinating story. It started in Kenya as a way to help Microfinance Institutions (MFIs) get paid by customers who were in remote parts of Kenya who learned to use airtime minutes to trade things of value and blossomed into a revolutionary financing tool that has transformed the world.&nbsp;And we see new innovations emerging. This week we have seen many impressive entrepreneurs present their ideas and a few have that revolutionary feel to them.&nbsp;Here are some of our insights on the strength and potential of the Kenya ecosystem:<ul><li>The ecosystem is young and vibrant. The energy of the founders, their youthful zeal and their fresh ideas are unique to the other markets we have traveled to.&nbsp;</li><li>There is a large diversity of startups - we’re seeing edtech, fintech, healthtech, logitech, etc. The spectrum is larger here. And the founders are from all corners of Kenya and the world!&nbsp;</li><li>The industry is built on legends, like M-PESA. And the government is also more comfortable with innovation than what we’ve seen in other markets.&nbsp;</li><li>Nairobi is international - The UN, tourism and other factors have created an exceptional service industry and a very welcoming place for international investors to come in and out of.</li></ul>The startup ecosystem in Kenya is characterized by several features and trends:<ul><li>There’s a good amount of money here: Kenya has emerged as a leader in startup funding in Africa, raising $800 million in 2023 alone, which accounted for 28% of the total funding on the continent. This is a significant achievement, especially considering the economic challenges posed by global slowdowns and inflation​ (<a href="https://thefounder.africa/kenya-takes-the-crown-leading-the-big-four-in-african-startup-funding/">TheFounder</a>), (<a href="https://kenyanwallstreet.com/new-report-reveals-significant-growth-of-kenyan-startup-ecosystem-over-past-decade/">Kenyan Wall Street</a>).</li><li>Thankfully, the volume of pipeline is growing: The ecosystem is rich with diverse startups across various sectors including fintech, agritech, health tech and e-commerce. Kenyan startups are leading the way in leveraging technology to solve local problems and scale globally​ (<a href="https://startupstash.com/kenyan-startups">Startup Stash</a>), (<a href="https://thefounder.africa/kenya-takes-the-crown-leading-the-big-four-in-african-startup-funding/">TheFounder</a>).</li><li>The ecosystem is maturing: Kenya's startup ecosystem benefits from a robust network of innovation hubs, accelerators and incubators that provide mentorship, funding and networking opportunities. Institutions like iHub and programs like the Tandaa Grants have been pivotal in nurturing startups from inception to growth stages​ (<a href="https://vc4a.com/kenya/">VC4A</a>), (<a href="https://kenyanwallstreet.com/new-report-reveals-significant-growth-of-kenyan-startup-ecosystem-over-past-decade/">Kenyan Wall Street</a>).</li><li>The government is supportive: The Kenyan government has played a supportive role by implementing favorable policies and regulations that encourage entrepreneurship. Initiatives such as the Tandaa Grants and other supportive measures have been crucial in driving the growth of the startup ecosystem​ (<a href="https://kenyanwallstreet.com/new-report-reveals-significant-growth-of-kenyan-startup-ecosystem-over-past-decade/">Kenyan Wall Street</a>).</li><li>The tech infrastructure is solid: The growth of Kenya’s startup ecosystem is significantly driven by high mobile and internet penetration. The deployment of an underwater internet cable in 2006 and the subsequent rise of mobile phone usage have been instrumental in fostering digital innovation​ (<a href="https://africabusinessinsights.com/emerging-tech-landscapes-in-africas-startup-ecosystem-for-2024/">Africa Business Insights</a>), (<a href="https://kenyanwallstreet.com/new-report-reveals-significant-growth-of-kenyan-startup-ecosystem-over-past-decade/">Kenyan Wall Street</a>).</li><li>The talent pool is huge: A large portion of the startups are founded and operated by young entrepreneurs, reflecting a vibrant and innovative youth population. This demographic is key to the ecosystem's dynamism and resilience​ (<a href="https://vc4a.com/kenya/">VC4A</a>), (<a href="https://kenyanwallstreet.com/new-report-reveals-significant-growth-of-kenyan-startup-ecosystem-over-past-decade/">Kenyan Wall Street</a>).</li></ul>Look beyond the current headlines. Nairobi is a super vibrant ecosystem with a growing level of maturity. While South Africa and Nigeria are dusting themselves off from some hard times the Kenya Startup Ecosystem is still on the rise.&nbsp;In summary, Kenya's startup ecosystem strengths include attracting substantial investment each year, a well-developed cohort of diverse and innovative enterprises, strong support structures, and proactive government policies.It’s actually no secret that Kenya is a leading hub for entrepreneurship in Africa!Go Deeper on Kenya?<ul><li><a href="https://www.linkedin.com/posts/renew-capital_kenya-in-12-photos-activity-7212330742368894976-cAPG?utm_source=share&amp;utm_medium=member_desktop">Nairobi in 12 photos</a></li><li><a href="https://latest-api.renewcapital.com/uploads/FINAL_Kenya_Factsheet_da115e8c82.pdf">Kenya’s Startup Ecosystem Factsheet</a></li><li><a href="https://www.google.com/maps/placelists/list/GAmvN3pZHdikuLPqhZ1gTcdSxM01Ng">Nairobi Startup Ecosystem Google Map</a></li><li>See the Kenya Startups Ecosystem Timeline Below.&nbsp;</li></ul>Interested in other African Startup Ecosystems?&nbsp;<a href="https://www.renewcapital.com/newsroom/the-momentum-of-african-startup-ecosystems-in-a-snapshot">Download Renew Capital’s Ecosystem Factsheets on other Ecosystems</a>. We’ll be adding new ones every few weeks!&nbsp;Source:&nbsp;<a href="https://www.maitricapital.com/static/media/Understanding_The_Kenyan_Startup_Ecosystem_Report_Final.0f8b777030a052c19028.pdf">2023 UK-funded report by Kenyatta Univ and other partners</a>.

Explore Kenya’s dynamic startup ecosystem, including its vibrant fintech scene, diverse innovations and supportive environment fueling growth.

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Secrets of Kenya’s Momentum

<h1>Digital ID: Boon or Big Brother for Africa's Economies?</h1>Deep Dive on Digital IDs in Africa<figure class="image"><img src="/uploads/Linkedin_Templates_24_d8b9edf6d9.png" alt="African map highlighting emerging markets poised to unlock 6% of GDP by 2030 through digital ID systems."></figure>In Context: In 2019,&nbsp;<a href="https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/digital-identification-a-key-to-inclusive-growth#">McKinsey published a report&nbsp;</a>stating that in 2030, emerging economies could unlock economic value equivalent to between 3% and 13% of GDP if governments implemented digital ID systems. More specifically, the report noted that Nigeria could unlock 7% (~$23.6B) and Ethiopia could unlock 6% (~$20.8B) of GDP. Economic benefits can be derived from the efficiency of:&nbsp;optimized e-government services, verifiable tax collection, electronic KYC, formalized business registration and verifiable asset and land ownership.&nbsp;Five years later, Modular Open Source Identify Platform (MOSIP) is now active in nine African countries in the pilot or implementation phase. Rwanda, Egypt, South Africa, Nigeria and Kenya are also working on implementing their own non-MOSIP systems. Meanwhile, data protection concerns have slowed progress in some countries (<a href="https://nation.africa/kenya/news/data-protection-concerns-slow-down-digital-identity-initiatives-4244758#google_vignette">Nation</a>). And without proper controls, digital IDs can give rise to&nbsp;<a href="https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/digital-identification-a-key-to-inclusive-growth#section-header-3">political manipulation and social control</a>.&nbsp;How big is the challenge? According to UNICEF, nearly half of all African children under five are unregistered (<a href="https://data.unicef.org/resources/a-statistical-update-on-birth-registration-in-africa/?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">UNICEF</a>) and according to the World Economic Forum, a little less than half of Africans use some banking service (<a href="https://www.weforum.org/agenda/2023/11/africa-digital-mobile-banking-financial-inclusion/#:~:text=Today%2C%2048%25%20of%20Africa's%20population,at%20pace%20across%20the%20continent">World Economic Forum</a>). Countries are up against major obstacles to transition to digital IDs.Some experts believe that digital identification systems&nbsp;unlock value for countries in five key ways:<ul><li>Efficient and corruption-free distribution of government benefits&nbsp;and&nbsp;optimized e-government services.</li><li>Digitized and verifiable tax collection,&nbsp;increasing tax revenues.</li><li>Electronic KYC&nbsp;for financial transactions. In 2023, Egypt increased its digital KYC requirements, adding biometric requirements for certain transaction sizes to combat money laundering.</li><li>Formalized business registration greatly benefits informal businesses' connection to formal institutions, customers, and vendors.</li><li>Verifiable asset and land ownership to combat theft and to facilitate sales and purchases.</li></ul>What is the continent’s progress towards digital IDs?&nbsp;The MOSIP is active in nine African countries in the pilot or implementation phase. So far, Togo, Morocco, Ethiopia and Uganda are implementing the system and Guinea, Niger, Sierra Leone, Madagascar and Burkina Faso are running pilot projects. And notably, as of March 2024, Ethiopia had onboarded 4 million citizens onto its MOSIP platform.Several other African nations are also making progress in implementing their own digital ID systems to enhance governance, service delivery and commerce:&nbsp;<ul><li>Rwanda: Rwanda's Single Digital ID system, initially planned for 2023, aims for full citizen onboarding by 2027, with the core software bids closing in June 2024.</li><li>Kenya:&nbsp;Kenya is also&nbsp;<a href="https://www.biometricupdate.com/202405/kenya-unveils-ambitious-digital-id-biometric-passports-issuance-plans?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">upgrading</a> its digital ID platform and rolling out biometric passports. The Maisha Munda digital ID system, re-launched in February 2024, targets issuing 32 million IDs by 2026.&nbsp;</li><li>South Africa:&nbsp;South Africa's new biometric and digital ID system called NIS launched in 2022 and was planned to be&nbsp;<a href="https://www.biometricupdate.com/202201/new-biometric-digital-id-system-in-south-africa-to-enhance-service-delivery-security?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">fully implemented by 2024</a>, however, we expect that implementation is still ongoing and challenges remain but progress is being made&nbsp;<a href="https://www.biometricupdate.com/202405/africas-digital-id-experiences-yield-lessons-on-engaging-stakeholders-open-standards">particularly around registering births.</a> The system’s primary objective is to aggregate all disparate forms of information regarding its citizens and foreigners into one centralized system.</li><li>Egypt:&nbsp;Egypt’s digital ID system and online verification processes for e-government services are core components of the country's&nbsp;<a href="https://www.euromoney.com/article/2bxwt8tfi8c46o8ipo83k/sponsored-content/egypt-pushes-digital-transformation-agenda?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">2030 Digitalization Strategy</a>. The Egyptian government is also&nbsp;<a href="https://dig.watch/updates/egypt-institutes-new-digital-id-checks-on-certain-fintech-transactions?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">enforcing biometric verification&nbsp;</a>for certain non-bank fintech services to combat money laundering as of 2023. Requirements are tiered based on the risks associated with each transaction.&nbsp;</li><li>Nigeria:&nbsp;Nigeria's National eID, launched in 2014, seeks to increase adoption beyond the current 13.6%. The government has also indicated that it plans to distribute social benefits to about&nbsp;<a href="https://www.biometricupdate.com/202403/nigeria-rwanda-use-digital-id-for-social-welfare-payments?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">60 million citizens</a> using its digital identification system.&nbsp;</li></ul>Learning from India’s ID SuccessIn 2012, India launched its Aadhaar digital identity system to provide unique digital identification systems to all of India’s citizens. Since then, the program has been a success, though concerns remain about the potential for the platform to be abused. The initiative has led to a more efficient distribution of government services and welfare, a substantial increase in digital payment use under India's Unified Payments Interface (UPI) and a reduction in corruption. The program grew rapidly even though before Aadhaar was launched, 40% of Indians lacked official birth certificates, and 60% lacked bank accounts, underscoring Aadhaar's relevance to emerging and developing markets (<a href="https://www.forbes.com/sites/tylerroush/2023/11/02/what-is-aadhaar-indias-id-system-sam-altman-is-reportedly-modeling-his-eye-scanning-crypto-project-worldcoin-after/">Forbes</a>). An Indian non-profit launched MOSIP in 2018 with funding from the Bill and Melinda Gates Foundation. It is derived from the Indian Aadhaar digital ID system, which achieved almost 90% enrollment in less than a decade and facilitated a boom in digital payments and consumer spending in the country. As of 2023, 90% of Indian adults had an account at a formal financial institution.<figure class="image"><img src="/uploads/Linkedin_Templates_25_8f6d3e5560.png" alt="Graph illustrating the rapid enrollment of nearly 90% of India's population in Aadhar digital ID in under a decade, with billions linked to bank accounts."></figure><figure class="image"><img src="/uploads/Linkedin_Templates_26_696ce93979.png" alt="Rising retail payments through digital wallets, showcasing the rapid expansion of the Unified Payment Interface in India."></figure>Source:&nbsp;<a href="https://www.imf.org/external/pubs/ft/fandd/2021/07/india-stack-financial-access-and-digital-inclusion.htm">International Monetary Fund</a>

Emerging economies could unlock economic value equivalent to between 3% and 13% of GDP if governments implemented digital ID systems.

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Digital ID: Boon or Big Brother for Africa's Economies?

<h1>Ethiopian Bank Trials Revenue-Based Financing&nbsp;</h1>Cooperative Bank of Oromia has made 18 collateral-free loans for female and male entrepreneurs as part of a first-of-its-kind pilot in the country<ul><li>Innovative Lending -&nbsp; The Cooperative Bank of Oromia introduces revenue-based financing to support entrepreneurs in Ethiopia, with a focus on women.</li><li>Collateral-Free Loans -&nbsp; Revenue-based financing allows loan approval based on evidence of income rather than collateral.&nbsp;</li><li>Supporting Women - A significant portion of the loans disbursed under this pilot program have gone to women.</li></ul><figure class="image"><img src="/uploads/WB_cb4210cc00.png" alt="Image of entrepreneur showcasing her garments in the bustling streets of Addis Ababa, highlighting resilience and innovation in Ethiopia's SME sector,"></figure>In the bustling streets of Addis Ababa, Betelhem Tamene, the dynamic entrepreneur behind a small-scale garment production company, embodies the resilience and ingenuity of Ethiopia's burgeoning small and medium sized enterprise (SME) scene.&nbsp;&nbsp;Tamene's journey epitomizes the challenges faced by women-owned businesses in accessing traditional financing. Armed with determination and a 100,000 ETB ($1,700) revenue-based loan from the Cooperative Bank of Oromia (CBO), she recently embarked on a mission to procure inputs for her diverse product line, ranging from trendy t-shirts to essential student uniforms.&nbsp;Unlike conventional loans with rigid repayment structures and high thresholds for credit history and collateral, Tamene gravitated toward the flexibility of the revenue-based financing (RBF) model. The new lending product is spearheaded by CBO in collaboration with the World Bank's Africa Gender Innovation Lab, Renew Capital and Rise Addis Advisory.Tamene is excited about the new loan product: “This loan offers a great deal of flexibility as repayment is tied to revenue, which is especially beneficial for businesses like mine that experience seasonal fluctuations [and] often struggle to meet the collateral requirements of traditional bank loans.”With the aid of “Souqpass,” CBO's newly launched digital platform, Tamene digitized her financial management. This platform provides a transparent and efficient system that aligns loan eligibility with actual business performance, providing an alternative to collateral-based financing for entrepreneurs like Tamene.&nbsp;On the other side of Addis, Emebet Abit owns a children’s boutique and school accessory shop and noted that she feels she now has an edge over her competition. She also received a collateral-free loan for 100,000 ETB ($1,700) loan and used Souqpass as part of the process. Since using the platform to track her expenses, revenue and inventory, she has consolidated insights about her business through the user-friendly summary dashboards.&nbsp;<figure class="image"><img src="/uploads/IMG_2199_3b78d4caea.jpeg" alt="Image of an entrepreneur using the Souqpass platform to access a loan application portal, illustrating how visibility into business performance helps reduce reliance on collateral for financing."></figure>Using the Souqpass platform unlocks access to a loan application portal where entrepreneurs can qualify for loans based on the actual performance of their business. The increased visibility into operations reduces the need for the bank to rely on collateral as a risk mitigation measure.Bridging Capital With InnovationBank financing has long been a roadblock for many entrepreneurs, especially women entrepreneurs who often do not have the collateral that banks need to access financing. In addition, a fixed loan repayment schedule is unresponsive to fluctuating macroeconomic realities and the natural seasonality that some industries experience.&nbsp;In basic terms, RBF means that entrepreneurs can pay as they earn. In its simplest form, there are no fixed payments. Their revenue dictates the amount they pay. If a business has a rough month when they do not generate revenue then they do not have to pay.This type of financing is common in the world of venture capital and fintech providers but CBO has pioneered the approach in Ethiopia with support from World Bank's Africa Gender Innovation Lab, Renew Capital and RiseAddis Advisory. To the delivery team’s knowledge, CBO is the first traditional bank to deploy the model.&nbsp;A Step Towards Inclusive FinanceSo far, loans have been disbursed to 20 entrepreneurs, with a majority of them being women. There are two repayment options available:<ul><li>The pure RBF model where companies repay 20% of their revenue each month (no payment if they have no revenue).</li><li>A hybrid model&nbsp;where companies repay 20% of their revenue each month along with a small fixed payment (3% of revenue projections at the time of loan approval).&nbsp;</li></ul>The project team is monitoring loan performance and plans to refine repayment structures and risk management approaches as the pilot progresses.&nbsp;CBO’s revenue-based financing pilot program is still in its early stages, but this could very well become a key innovative strategy for banks to close the financing gap for entrepreneurs across the continent.&nbsp;

Cooperative Bank of Oromia has made 18 collateral-free loans for female and male entrepreneurs as part of a first-of-its-kind pilot in the country