Seeds of Opportunity: The African Growth Series
September 2022 | Issue 3
In this week's issue, you will learn more about:
- Zipline and Jumia – Automated Drone Deliveries in Ghana
- Tackling Climate Change with AI & ML
- Fintech Innovation in Africa
- Milestones for Renewable Energy PPAs in Africa
- ERP Myths & Truths
Zipline and Jumia – Automated Drone Deliveries in Ghana
Zipline, a California-based company, known for pioneering the delivery of blood and essential health products in Rwanda, Ghana, and Nigeria, has recently partnered with Jumia, Africa’s largest e-commerce company, to deliver everyday items to consumers. The move stems from Jumia’s push to provide Africans with greater access to everyday items such as electronics, fashion, health, beauty, and other consumables. Zipline’s instant logistics system will provide fast and convenient access for consumers while emphasising Zipline’s definition as primarily a logistics company and not just a healthtech. Pilot testing of the drone delivery began at the end of May 2022. During this time, Jumia reported that it could complete deliveries within an hour while using drones within an 85km radius from Zipline’s operational hub in Omenako, a village in eastern Ghana. While the goal is to deliver electronics, fashion, health, and beauty products, some products may be better suited for drone delivery than others. This is where Zipline’s expertise gained in delivering delicate products such as blood will come into play.
Once the service takes off in Ghana, both companies have indicated their hopes to broaden these drone deliveries to Cote d’Ivoire and Nigeria. Through this partnership, Zipline will be positioned as a potential keystone partner for online retailers looking to access parts of Africa with challenging roads.
Tackling Climate Change with AI & ML
Africa's temperature increase is expected to be 1.5 times faster than the global average, leading to the continent's glaciers completely melting by the 2040s, rising sea levels along the coasts, crop failures and extreme weather such as floods, droughts, and storms. These conditions will have devastating socio-economic and environmental impacts on Africa as it is home to 25% of the world’s remaining rainforests and weather-dependent industries, such as agriculture, will struggle to maintain productivity. To mitigate against these effects, leaders and innovation platforms are looking to fill the gaps in the availability of climate-related data so that researchers, governments and businesses can better understand and proactively work against the changing climate. Omdena has recently opened applications for an 8-week open-source project coordinated by their Lead of Kenya, Mitchell Odhiambo. The project focuses on using AI and ML to build a CO2 emissions model that can track decarbonisation progress for cities or sub-regions within Kenya. The model will use satellite data from NASA's Orbiting Carbon Observatories 2 & 3 along with publicly available data on critical CO2 emitting sectors, such as energy and construction, to predict the contribution from various industries and visualise CO2 measurements by region over time. Unlike proprietary software, the project's open source model will be developed through open collaboration and made available to the public-lending itself to continuous improvements as more participants gradually add to the code base long after the project has ended. Such initiatives driven by climate-related challenges could push Africa to be a centre of innovation to curb climate change.
Fintech Innovation in Africa
While the Covid-19 pandemic has severely affected market growth in many regions around the globe, it has highlighted the resilience of the African fintech ecosystem. Due to increasing internet penetration rates and accelerated network infrastructure growth, Africa is now the world’s second-fastest-growing fintech market. In fact, seven out of nine of Africa’s Unicorns are fintech (like OPay, a Nigerian fintech app that provides secure mobile payment services, which just secured USD 570 million in investment round funding). The reason behind the resilience in this sector is mainly because Africa presents an opportunity in this area, as traditional banking solutions have failed to provide for the population at large, in addition to the fact that there are few legacy competitors. As such, there is massive space to innovate and generate means through which the historically unbanked may receive financial solutions. In South Africa, the banking system is more developed than in the rest of the continent. As a result, the adoption of more innovative technologies has been slow. However, this has led to different trends in fintech, which operate in tandem with the established bank infrastructure and provide more flexible payment routes. In South Africa, between 2015 and 2021, USD 388,42 million in funding was secured by fintech start-ups, 53% of this in 2021. In addition, the most popular sub-sector of fintech is payments and remittances, indicating the space for growth and improvement in the industry.
Milestones for Renewable Energy PPAs in Africa
The Sola Group and African Rainbow Energy recently announced a significant milestone for the African renewable energy market. Securing $179 million in financing for its 200MW solar PV projects for Tronox Mineral Sands, in less than 6 months, the project is a first of its scale for private power purchase agreements in Sub-Saharan Africa. This milestone comes more than a year after the announcement to increase the licensing limit on renewable energy projects from 1 MW to 100 MW by NERSA. The two projects, which are 100% South African owned, financed, constructed, operated and managed speak to the potential of the private sector in driving the energy transition locally as renewable energy projects are capital intensive. Overall the cost of the project is estimated at more than $230 million, with the secured $179 million coming from a debt arrangement led by PepperTree Capital. Key stakeholders include the Development Bank of South Africa (DBSA), Absa, Nedbank and Standard Bank.
The output of the construction phase being launched will be 387,000 solar panels mounted on single-axis trackers to optimize module productivity. Through agreements with Eskom, the produced electricity will be transmitted through Eskom-owned transmission lines to the mines facilities in KwaZulu Natal and the Western Cape. Though it is still early days, the project highlights the opportunity that lies in the business model of private power through bilateral agreements.
ERP Myths & Truths
SYSPRO and Frost & Sullivan have released a whitepaper on the ERP Myths & Truths: Dispelling Misconceptions About Enterprise Resource Planning Systems in order to address the myths surrounding ERP systems.
Please click HERE to learn more.
To find out more about opportunities in Africa, please contact Lynne Martin.
