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TechCabal Daily – Brace for Impact

Living through COVID-19 in an African country has felt like a lot of waiting around. For what? I’m not sure. While the internet says we are in an apocalypse, daily life has pretty much stayed the same. But that’s about to change: governments across the continent are shutting their borders and restricting movement in a bid to slow the spread of the virus. Beyond its symptoms, though, COVID is grinding the global economy to a halt. One wonders what that means for Africa’s smartphone market, and for the industry at large (ground zero, Wuhan is the world’s largest producer of optical fibre).

Transsion, the continent’s largest phone manufacturer, has not published guidance about the effects of the outbreak on its business, but we can make an educated guess. While Nigeria’s smartphone market grew 5.3% quarter on quarter (QoQ) in Q4 2019, the IDC expects a 15.4% decline in Q1 2020, and another 3.9% in Q2. Since most phones, Transsion’s included, are produced in China, the supply chain disruptions will likely mean limited supply on the continent.

Even though Transsion operates factories in India, Bangladesh, Pakistan, and Ethiopia, they all rely on critical components from Shenzhen. And even during a recovery, component suppliers will likely prioritize large companies like Apple over everyone else. In Bangladesh, the company’s production rate could drop by up to 40% if the supply crunch continues. “We’re failing to launch new products due to the shortage of raw materials… This situation will worsen if the crisis prolongs,” said Rezwanul Haque, CEO of Transsion Bangladesh.

For Transsion’s Nigeria business, the damage is two-fold, as the drop in oil revenue from its biggest customer (China) will mean less purchasing power for consumers in the short to medium term. The company reported $3.6b in revenue last year, up from $3.2b in 2018. It may have to double down on its digital services to make up the lost revenue.

We don’t yet know the extent of the damage, but we should expect it to be wide ranging. Africa could run out of smartphones this year; the inevitable march of adoption could get stopped in its tracks. What would that mean for the tech industry’s growth story?

On a more optimistic note…

Here’s the full list of African startups in the YC W20 batch:

Avion (drone delivery system), Bamboo (online investment brokerage), crowdForce (agent network for hire), Eze (used phones reseller), Healthlane (doctors on demand), NUMI (U.S. goods importer for East Africa), Send (digital freight forwarding), Swipe (Brex for Africa), Tambua (radiation-free lung imaging), Termii (Twillo for Africa), WorkPay (payroll and time tracking for SMBs), and Yassir (financial services for French-speaking Africa).
 
Due to the outbreak, this demo day (YC’s 30th) was held over the internet. It’s not yet clear what effect that will have on the companies.

uLesson, the edtech startup founded by Sim Shagaya, has launched its mobile app in five countries.

The subscription based digital learning platform is now available in Nigeria, Ghana, Liberia, Sierra Leone and Gambia. Once a user is subscribed, the company ships a small USB device loaded with educational content that can be consumed offline. “You can enjoy all our content without worrying about expensive streaming and data costs,” its FAQ says.

The model is similar to Byju’s in India, which currently reports 35 million users and 2.4 million paid subscribers. Access to high quality educational materials is a thorny issue in the African education industry. The internet could help, but high bandwidth costs discourage streaming of educational content. uLesson’s offline approach is a potential solution. 

The company raised $3.1 million last year to fund product development and its initial roll out. But the fact that this is the largest raise by any Nigerian edtech platform says a lot about how underdeveloped the space is.

Is the market deep enough? Is Africa like India? Too early to tell. We will revisit this conversation in a few months’ time.

From June 23-25, 2020 at the 8th Digital Africa Conference & Exhibition, industry professionals, researchers and captains of industry will gather to discuss and present the state of AI in Africa, best practices and opportunities. The event will hold at the Baze University, Abuja. Visit www.digitalafrica.com.ng to learn more or email nofodile@digitalafrica.com.ng for sponsorship, exhibition or participation details.

Do you have tech ideas or solutions that can innovate the energy sector in Nigeria? Then participate in the GPI Innovate Energy Hackathon. Awesome cash prizes to be won and participants also get a chance to work with GPI after the event. Register NOW! Entries close March 27, 2020

After a three year struggle, MTN settles with the Ugandan government.

The telecom giant’s Ugandan subsidiary has agreed to list 20% of its stock on the Uganda Stock Exchange, as part of new licencing requirements introduced last year. It has also agreed to pay $100 million for a 14-year licence in the country. Both stories should come as a relief for the telco that has clashed repeatedly with the government over the last few years.

In Other News
+ SafeBoda has 1m Play Store downloads 
+ “We are 100 percent behind it, we are just a bit slow in our bureaucracy,” say Kenyan regulators about Project Loon, Google’s balloon-powered internet service.

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That’s all for today,

See you tomorrow

– Abubakar

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