Your Curated Weekly Tech News Across Africa, 27th May 2024

谷歌 is embarking on a landmark project to construct the first subsea fiber-optic cable linking Africa to Australia, named "Umoja." This initiative comes in response to frequent outages in Africa caused by defective undersea cables, highlighting the need for more reliable infrastructure. The Umoja cable will begin in Kenya and traverse several African nations, including the Democratic Republic of the Congo, Rwanda, Uganda, Zambia, and Zimbabwe, before culminating in South Africa. South Africa is particularly significant as it hosts Google's first data center region on the continent, underscoring the importance of this connectivity for the region's digital infrastructure.

The terrestrial segment of the Umoja route, spanning various African countries, has already been completed, demonstrating significant progress in the project. Currently, efforts are focused on laying the cable across the Indian Ocean to Perth, Australia. This ambitious endeavor reflects Google's commitment to enhancing global connectivity and bridging the digital divide. Brian Quigley, Google Cloud's Vice President for Global Network Infrastructure, emphasized that Umoja will provide African nations with more dependable connections both within the continent and to the wider world, thus fostering economic growth and technological development.

By linking Africa directly to Australia, Umoja is set to revolutionize internet connectivity for many African countries, which have historically faced challenges due to unreliable and outdated infrastructure. This project is poised to improve internet speeds, reduce latency, and enhance overall network reliability, significantly boosting local economies and digital ecosystems. Additionally, the cable will facilitate better access to global markets and services, empowering businesses and communities across the continent. Google's investment in this project highlights its strategic interest in Africa's burgeoning tech landscape and its broader commitment to fostering global digital inclusivity.

More on this story: Google invests in undersea cables

South Africa is becoming a significant player in the fintech industry in Africa, with venture capital investment reaching $620 million in 2023. Fintech solutions, especially those addressing payment challenges, are attracting considerable interest across the continent. South Africa's developed tech ecosystem, established B2B network, and relatively low costs make it an attractive market for fintech companies. The market's shift from cash presents significant untapped potential, with up to 75% of transactions still being conducted in cash.

South Africa's stability amidst currency fluctuations in other African countries, such as Nigeria and Egypt, makes it an appealing destination for investors seeking a balance in risk and return. Fintech has evolved from standalone products to encompass financial infrastructure, lending, banking-as-a-service, and banking orchestration.

South Africa's market maturity and sophistication create a unique ecosystem where fintech companies like Weaver, TYME Bank, Yoco, and Retail Capital can thrive and achieve meaningful scale by focusing primarily on this market. There are also opportunities for later-stage investing, as companies are relatively unaffected by market cycles and can grow through disruption or by creating new industries. Endeavor expects this evolution to create a fertile investment market in the future, benefiting the country and its people.

More on this story: South African Fintech grows

Ghana's financial technology industry is rapidly growing, with over 70 fintech companies operating there. Fintech uses technology to automate traditional financial services and processes, such as online banking, mobile payments, peer-to-peer lending, digital wallets, and financial management tools. However, challenges to fintech adoption in Ghana include a lack of digital literacy among the population, data security concerns, regulatory compliance, lack of tech expertise, NFC support, and user retention and user experience.

The government plans to establish a FinTech Innovation Fund to support startups driving Ghana's digital revolution. Vice President Dr. Mahamudu Bawumia has championed the government's national digitalization agenda and encouraged stakeholders in the fintech and digital industry to collaborate in improving the legislative and regulatory environment to enhance the payments ecosystem and position Ghana for sustained financial inclusion.

Ghana's top 10 fintech companies include MTN Mobile Money, Zeepay, Hubtel, Expresspay, Kowri, Finance Plus, Ghanapay, Chango, Slydepay, and Payswitch. Each company offers unique digital financial services like mobile money, cards, and online platforms.

The Governor of the Bank of Ghana , Dr. Ernest Addison, emphasizes the need for fintechs to navigate regulatory requirements and meet compliance standards. He also highlights the information gap between investors and fintech startups to stimulate the payment ecosystem. High mobile phone penetration and local technology talent have resulted in various fintech solutions that have expanded access to financial services for the unbanked and underserved on the continent. Ghana's fintech industry is thriving, but challenges remain, including a lack of digital literacy, data security, regulatory compliance, lack of tech expertise, and user retention and user experience.

More on this story: Ghana's Fintech Ecosystem

Orca, a dynamic South African startup, has successfully raised $550,000 in a pre-seed funding round to combat fraud in emerging markets. The funding, led by Norrsken22 with contributions from First Circle Capital, Musha Ventures, Kara Ventures, strategic business angels, and close affiliates, will be pivotal in developing accessible fraud prevention tools. These tools are designed to be easily integrated and iterated with customers in South Africa, with a staggering 600% increase in reported fraud cases since 2018.

The surge in various payment methods has deepened the difficulty in identifying and preventing fraud, creating a pressing need for innovative solutions like those Orca aims to provide. Orca specializes in delivering modular fraud prevention services tailored to protect fintechs and banks across Africa from the detrimental effects of fraudulent activities.

The company's strategy involves expanding its team and focusing on building, validating, and refining its fraud and compliance products to address the specific challenges faced by financial institutions in emerging markets. The oversubscription of the funding round underscores the urgent need for robust fraud prevention measures and the complexity of the issues, particularly in Africa, where new payment methods are rapidly evolving.

Founded by an all-female team, Orca is tackling fraud and challenging the male-dominated tech startup ecosystem. The company's mission is to reach significant growth phases and lead innovation towards a future free of fraud. Over the next few months, Orca plans to significantly increase its workforce, aiming to assemble a world-class team dedicated to developing cutting-edge solutions. This inclusive approach to growth and innovation highlights Orca's commitment to diversity and excellence, setting a strong example for other startups in the region.

More on this story: Orca raises seed funding

Kenya has reintroduced the ICT Practitioners Bill, now updated as the ICT Authority Bill, 2024, to impose stricter regulations on the ICT sector through a system of licensing and registration for companies and professionals. This legislative effort dates back to its initial introduction in 2016, which drew significant criticism for potentially overlapping existing laws and creating barriers for skilled individuals by requiring university degrees. The updated bill aims to enforce accreditation by an authority under the ICT ministry for companies providing ICT services, necessitating minimum technical qualifications, relevant experience, and adequate resources. This accreditation process will also include a fee similar to the original proposal.

Despite the revisions, the ICT Authority Bill 2024 faces ongoing concerns. Key among these is the ambiguity surrounding the definitions of "ICT services" and the specific minimum technical qualifications needed for practitioners and companies. These unresolved issues raise questions about the bill's potential impact on the industry, particularly in how it might limit innovation and exclude competent professionals who lack formal degrees but possess significant practical experience. The bill's attempt to establish clear standards and improve the quality of ICT services is thus tempered by fears of regulatory overreach and stifling of the sector's dynamism.

The bill's journey has been contentious, narrowly missing passage in June 2022, just before Kenya's national elections. The timing of its near-passage highlights the political sensitivity surrounding ICT regulation in the country. Proponents argue that stringent regulations are necessary to ensure high standards and protect consumers, while critics warn that the bill could hinder the sector's growth and discourage talent. As Kenya moves forward with the ICT Authority Bill 2024, it must navigate these complexities to balance regulatory objectives with the need to foster an inclusive and innovative ICT environment.

More on this story: The ICT Practitioners' Bill rears its ugly head again