Awabah, a digital platform that provides African self-employed people with access to pensions, has announced its inclusion in Techstars London’s accelerator program.
The startup provides micro-pension services for people in the informal sector and for those whose employers are not legally obliged to withdraw and transfer a pension. It will join nine other startups in the 2021 class and secure funding from the Accelerator when it has its sights on African expansion.
The Lagos-based company founded by Tunji Andrews, Tina Ajishebiyawo and Gboyega Olatunde builds wealth for the informal, especially self-employed, the population of Africa by ensuring that they can plan a decent life after retirement.
Founded in November 2020, Awabah gained over 700 customers in the first two months and has since committed to advancing the cause of future financial inclusion and security in Africa.
The company’s motto is “Those who know better can do better”. This means that building financial literacy is a big part of the customer acquisition strategy. It relied heavily on digital town hall meetings to meet, train and attract customers.
In July 2021, the company raised $ 200,000 in angel support from early-stage investors such as ODBA and Co Ventures and Correlation Capital. This new funding helped Awabah launch its services in Lagos and Ibadan. The startup plans to offer services in 5 additional Nigerian cities over the next 6 months.
Andrews believes the company is gaining a lot of acceptance because of its approach to customer acquisition. They operate out of Lagos and Ibadan and are in the process of establishing a presence in Ghana. Awabah already sees itself as the solution to Africa’s wealth redistribution challenges. The company has teamed up with 3 Pension Fund Administrators (PFAs) in Nigeria and hopes to increase these to 5 by the end of 2021. The partnerships will coincide with the launch in multiple cities to give millions more access to the AWABAH benefit.
“To put it simply, Awabah is an aggregate of tools for wealth creation that is sorely lacking on the continent. We bind the financial service providers on board, break their products into bite-sized pieces, sprinkle a bit of the Awabah magic on them and give this leverage for our customers. What’s even bigger is that our services are completely free to the customer. Financial services should liberate, not enslave, “said Tunji Andrews.
On the back, the Awabah model has many advantages. Nigeria has 70 million people in its workforce (people who are ready and able to work). Of these 70 million, 23 million are unemployed and a further 11 million are employed in formal occupations; This leaves 36 million Nigerians in some form of self-employment or entrepreneurship without a pension. Given the sharp decline in economic growth and the increasing scarcity of resources, we believe that Africa’s current job market will be extremely tough in old age if they don’t take retirement provision seriously.
Nigerians in the informal sector can see the real value by paying N100 weekly into a pension fund that brings in real returns of 4.5% per year for the rest of their working lives.
According to the Africa Asset Management 2020 report by PricewaterhouseCoopers (PWC), total assets under management in 12 selected African countries were US $ 293 billion in 2008, which has more than doubled to the US $ 634 billion by 2014. For 2020 US $ 1.1 trillion is expected 12 countries are: South Africa, Morocco, Mauritius, Namibia; Egypt, Kenya, Botswana, Ghana, Nigeria; Angola, Algeria, Tunisia).
Ajishebiyawo firmly believes that reducing poverty depends on helping people in the informal sector manage and increase their wealth. She insists that the reduction depends heavily on having access to various tools to generate income that is either infrequent or so frequently spent on everyday consumables.
“It’s not that people in informal jobs are too illiterate to control their finances; on the contrary, they manage highly complicated budgets with fragile margins. Effective retirement provision and savings help our customers to deal more effectively with the problems they are stuck in an inefficient cycle. ” Nigerians and Africans alike have money – but their income is unpredictable and uncertain; Awabah will fix that. “
Angel Investors Plans to List Africa-Focused SPAC Targeting Tech Startup
Angel Investors, Vishal Agarwal an investment banker, and Raj Kulasingam, a corporate lawyer have stated plans to list Africa-focused SPAC targeting only tech startups in the continent.
A report from Bloomberg said the two early-stage investors have been funding African startups since 2017, invested in over 50 startups, and so far made fivefold returns on their investment. They were also part of Acuity Ventures, an early-stage venture capital fund with stakes in Flutterwave Inc. and Paystack before the firms attained unicorn status.
Vishal and Raj saw the successful investment strategy of Swvl Inc. a Dubai-based ridesharing company merging with Queen’s Gambit Growth Capital, a blank-check company. The two investors believed that listing an African-focused SPAC will provide funds for startups needing capital to expand operations in the continent.
Vishal affirmed that investors have developed a keen interest in Africa, he said, “as there is more interest in Africa, we want to give founders a route to market. A SPAC gives acceleration to our founders and is overall a good thing for the ecosystem.”
The growing interest in African startups has been asserted by Briter Bridges in the 2021 African Investment Report, which released data showing that African startups secured $4.69 billion in estimated funding in 2021, where the tech companies dominated the space by gulping $2.9 billion or 62 percent of the total funding.
However, data from SPAC research revealed that less than 1 percent of the 600 New York-listed SPACs are African-focused.
The biggest investment success recorded by Vishal and raj was with Kuda Bank, the African challenger bank, where they invested $600,000 and exited with 14.5 fold gain or $8.7 million in 20 months. Kuda Bank, a unicorn startup is valued at $500 million and has so far raised $91.6 million in funding.
Vishal said, “when we do dealmaking, we are influenced not only by being able to get in at the right price, but being able to come out, We are very conscious about that, and it’s not always straightforward to come out.”
Dario Giuliani, director of Briter Bridges said, “2021 was a year of recognition, where the newly-available resources and the increasing number of international investors shifting mandates to include Africa met hundreds of promising entrepreneurs to support”.
Vishal and Raj just like every investor identified a growing economy in Africa and the increasing tech-savvy youth population, but also the lack of financial infrastructure. The duo plans to fill this gap by investing in about 20 African startups this year.
Japan, NITDA to Launch Incubation Scheme for Nigerian Startups
The Japanese International Cooperation Agency (JICA) working with Nigeria’s National Information Technology Development Agency (NITDA), is set to launch iHatch.
iHatch is a startup incubation scheme designed to expand the number of innovation-driven enterprises by Nigerian youths.
The scheme will include a 5-month free intensive incubation program where entrepreneurs’ business ideas are shaped and perfected, through a series of coaching, lectures, and boot camps, to generate viable and scalable business models.
The initiative launched through NITDA’s subsidiary, the National Centre for Artificial Intelligence and Robotics (NCAIR) will focus on developing Nigerian youths’ innovation, entrepreneurial skills and technological know-how.
According to the Head, Corporate Affairs and External Relations of NITDA, Mrs Hadiza Umar, iHatch’s incubation program will provide an opportunity “for startups that have innovative business ideas along with a prototype of their products or services”.
The participating startups, Umar said, will receive free offline and online interactive training from experienced coaches and mentors from over the world.
Other benefits would include free co-working space for the duration of the programme and investment opportunities.
In his remarks, the Director-General of NITDA, Malam Kashifu Inuwa Abdullahi said, “iHatch seeks to establish a programme that will accelerate the process of taking ideas to impact, hence providing the much-needed jobs for our teeming youths, and also nurturing that entrepreneurial spirit in them, which will catalyse the Nigerian digital economy to the next level.”
African Tech Scene Rakes in $2.9 Billion, Nigerian Startups Dominate
The technology space is growing to become a very necessary one, with the existence of the pandemic and with the rate at which the world is advancing. This is reflected in the revenue gathered, as tech startups in Africa alone made well over $2.9 billion in 2021.
Of the total income brought in by African tech startups, startups owned and managed by Nigerians brought in the most, with a whopping $1.7 billion (amounting to about 60%) of the total amount coming from Nigerian startups which are creating new products, services and platforms.
Africa is giving a very good account of itself in the tech scene, as a recent report by Maxime Bayen’s – a venture capitalist and business consultant – business database Africa report stated that Africa is currently home to seven different tech heavyweights, referred to as unicorns which boats of valuations surpassing $1 billion.
The United States of America has noticed the blossoming tech scene in Nigeria and is now starting to provide support for the fast-growing, lucrative sector. The United States Ambassador to Nigeria, Mary Berth Leonard at the 2021 Nigeria Tech Summit announced the intention of the US government to provide sufficient support for the tech scene in Nigeria.
The support to be provided from the United States will ensure that the country’s tech scene continues to grow and provide a favourable environment that will boost a sector which will kickstart more global businesses, create more job opportunities and ensure that the citizens live a more prosperous life.
Of the seven African tech “unicorns”, three are owned by Nigerians. These three are Opay, Flutterwave and Interswitch. Mary Berth Leonard lauded the fact that Nigeria owns three of Africa’s seven heavyweights, and went on to say that Nigeria has the potential to do a lot more in the tech scene but only with the proper support.
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