Seeds of Opportunity: The African Growth Series
April 2023 | Issue 2
In this week's issue, you will learn more about:
- AFRICA OPPORTUNITY: Earned Wage Access
- AFRICA OPPORTUNITY: Financing Women-Led Startups In Africa
- AFRICA OPPORTUNITY: Fixing Africa's Broken Pharmaceutical Supply Chain
AFRICA OPPORTUNITY: Earned Wage Access
Global financial stress is increasing the popularity of on-demand pay or Earned Wage Access (EWA) systems in the US, Europe and now across Africa. These EWA solutions integrate with employer payroll systems and provide access to a portion of their salary for employees living paycheck to paycheck.
Startups offering EWA products experienced a CAGR of 120% from raising US$4.6 million in 2015 to over US$1.13 billion in 2021. Stress negatively affects mental health, productivity, and attendance at work and financial stress causes 70% of unscheduled absenteeism. Hence, companies that offer EWA report better talent acquisition, higher employee loyalty, and lower employee attrition. A staggering 40% of South Africa's 25 million active credit customers are behind on their payments, demonstrating the demand for EWA solutions across the continent. South Africa's Paymenow Group platform is taking advantage of this opportunity and has recently secured ZAR250 million (roughly US$14 million) from RMB - Rand Merchant Bank (RMB). Almost all Paymenow users reported an improvement in their overall quality of life, with 83% being able to save more and 95% reducing borrowing from moneylenders. Gamification on the platform helps educate and reward users for better money management. As the cost of living rises, small and medium-sized businesses become increasingly dependent on EWA platforms. Floatpays, another EWA platform, received ZAR15 million (US$1 million) from Naspers Foundry in 2022. Millions will benefit from cashing out accrued wages through Earned Wage Access solutions.
AFRICA OPPORTUNITY: Financing Women-Led Startups In Africa
2022 was an impressive year for startups in Africa, despite the global downturn in investments. Throughout the continent, 633 startups raised a combined US$ 3 billion in funding, representing a 55% increase from 2021. Of these 633 startups, 128 had at least one woman on their founding team, representing a slight decline to 20% from 21,5% in 2021. Historically, African female founders have faced several challenges in their entrepreneurial pursuits, including limited funding access. Despite these challenges, women comprise a significant portion of African entrepreneurs, contributing significantly to the continent’s GDP and 58% of all African businesses. AWS and Google have focused on women-led startups in Africa to address this imbalance. AWS Startups launched its Fem-Tech Startup Innovation Challenge, designed to facilitate innovation, networking, and investment opportunities for women-led start-ups throughout the continent. While Google launched a startup accelerator, “Women Founders Africa Program,” which aimed to empower and support women founders by providing resources and opportunities to scale their startups and address African problems.
Investing in women-led startups is vital in increasing the participation and leadership of women in the entrepreneurship ecosystem while promoting gender equality and driving economic growth in Africa.
AFRICA OPPORTUNITY: Fixing Africa's Broken Pharmaceutical Supply Chain
Africa accounts for 42% of the world’s approximately USD200 billion counterfeit pharmaceutical market. Beyond the economic impact of this illegitimate market, counterfeit medicines result in the death of nearly half a million sub-Saharan Africans every year.
A growing list of innovative companies is fixing Africa’s broken pharmaceutical supply chain using online medical platforms through which hospitals, pharmacies, and patients are able to procure and authenticate pharmaceuticals. In 2022, Ghanaian mPharma secured USD35 million in equity and debt funding, while Nigeria-based Remedial Health and DrugStoc each raised USD1 million and USD4.4 million in seed and equity funding, respectively.
The African pharmaceutical market is projected to register a compound annual growth rate of 6.2% between 2022 and 2026, reaching a total market value of about USD 260 billion by 2030.
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To find out more about opportunities in Africa, please get in touch with Lynne Martin.
