Episode Transcript
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[00:01:25] Speaker B: Hello, and welcome to the Deadpoint Africa podcast. My name is Tim Godzream, and I will be your host for the day. So today we are. It's been a very slow news week, and we are just taking a look at some of the stories that have come across or that we've come across during the week. I think.
I guess the first one is Elon Musk meeting with the south african president. So if. If you've been keeping up with Starlink's woes in Africa or Starlink's expansion drive in Africa, you're probably aware that they are. They face significant challenges in expanding into South Africa. So right now, Starlink isn't. Isn't licensed to operate in South Africa. People can still. South Africans can still use Starlink, but the company isn't licensed to operate. And in the country and over, I think, last week or during the week, Elon Musk met with the south african president.
We don't know if there was anything serious. Both parties say the meeting was positive. Whatever positive means, we would find out. But I guess the question that a lot of South Africans have now is, would we finally see Starlink come to South Africa?
[00:02:44] Speaker C: Officially?
[00:02:45] Speaker B: Yeah, officially. Officially. So that's one question. It's not yet clear if that's going to happen. He might. I mean, South Africa has specific requirements that has sort of limited Starlink's ability to expand. Would they give in because of that? I mean, the president says the talks are positive. Is the politician speak or is. Is there something to that? I guess we'll find out in the coming weeks and months. So, yeah, South Africans might have something to cheer for in the next few weeks. But moving on from that, I think the next story we have is a fundraise, so we don't exactly. Cover fundraises frequently, but I think this month we've covered. This is the second fundraise I think that we have covered on the podcast and covering this for an interesting reason. So the story, let's hear. What's the story about. Zeno has raised some money. Let's hear about that first.
[00:03:37] Speaker C: All right. Yes, like you said, Zeno has raised some money. They actually raised $9.5 million. Zeno is an EV startup that is based in East Africa and mostly in most parts of East Africa, which includes Kenya, Rwanda, Uganda, and Tanzania. So what they basically do is what we've seen with a lot of EV startups in Africa. They kind of launched with plans to introduce swappable batteries. So pretty much coming in to EV's from the angle of two wheelers. Three wheelers, yes. And then making it possible that these vehicles do not really need to spend a lot of time charging, but you can just simply swap out batteries. Right. So what most business, what the business model with most tv startups is, you have a subscription, say a monthly subscription. Anytime your battery runs down, you can easily go to those different, they will have different centers across cities, and then you can simply go there, swap out your battery for a fully charged one, and use it for as long as each full charge can take you. So that's basically what Xeno is. And it is coming into a market where we've seen a lot of EV startups, including Applesand Basigo.
There are a couple of others as well in East Africa. So, yeah, as you know.
[00:05:07] Speaker B: All right, so a few interesting things before we get to the really interesting bit is it's founded by a former Tesla employee, which is, I think, one that's noteworthy. It is basically like, what is this former OpenAI CEO Ilya, who went on to start his own startup. I think that's probably, probably one of the fastest companies to get to a billion dollar valuation. So, yeah, that's one reason why I think this is interesting. The second is not directly tied to it. It's sort of a trend that I have noticed among EV's or EV startups in Africa, and that's basically EV startups and their founders. Right. So this, I mean, of course there's no, there isn't like, data to back every single thing up.
[00:05:58] Speaker C: Okay.
[00:05:58] Speaker B: But most EV startups on the continent are founded by Europeans or Americans, basically non Africans. Most EV startups are founded by non Africans. And is that a bad thing? Maybe, maybe not. That's basically what we want to look into. So let's see Bulu, what are your first impressions when you hear that perhaps the most funded EV startups in Africa are founded by someone who is in african? What are your first, what are your first thoughts? What are your first impressions?
[00:06:31] Speaker C: Let me be, I'll be honest, I'll also be very diplomatic with my, so that I will not cause problems. But what comes to my mind when I see all these startups, and especially some of the most funded ones, and seeing that they are not Africans, seeing that the founders are not Africans, what comes to mind is basically what will come to mind with any other startup. If you look at other startups that have non Africans on the team, you would agree that raising funds, they tend to raise funds more easily. There are a couple of examples we can look at.
Again, no sufficient data to back this, but I mean, we have the likes of Carrie first, we have the likes of Pula even have. And that comes to mind. But then when you go a step further and then you niche it down to ev startups, right? Aside from the fact that the most funded ones are non Africans, a lot of the founders are actually non Africans, right? And then mostly in East Africa, I've noticed that the ones in other parts of Africa, such as like West Africa, for example, to me, basically 100% of them are african founders. Right? And then you also notice that maybe we are just, we are skewing it a bit. Because if you look at. So we are not the Kenya startup space generally. Generally we've seen, or even East Africa, we've seen a lot of startups that have non Africans on, on the founding team. You agree? Right. So maybe it's not just an EV team. Maybe it is now more of an east african thing.
[00:08:23] Speaker B: Okay, so let's see, um, a few things to note is one, most of the EV activities are taking place in East Africa.
[00:08:34] Speaker C: Yeah.
[00:08:35] Speaker B: Government regulations are playing a key role in doing a lot in that. So to your, to your thoughts on, like, because it's the region that we typically have a lot of foreign founders or non african founders, it kind of makes sense. Well, maybe, maybe it does. But on the other hand, why are we not seeing local african, local, like, why we not seen East Africans like Kenyans, Ugandans and all of that? Why don't we have them in that space?
[00:09:13] Speaker C: So there's a fundamental problem when it comes to Africa and startups that typically do hardware, right. This problem to me, and from some of the adverse startup founders, I've spoken to a couple of them, there's a problem when it comes to Stem education right. In Africa, which is a key component of building such startups, such companies, right.
If STEM education is not good, what will happen is the interest in those kind of startups will reduce, right? So take for example, if, for example, I went to school and growing up, I typically have access to a lot of computers, I have access to other boards, you know, different things. All these things are building blocks for building interest in those spaces, right? That's one. A lot of our founders probably do not have that interest in building those things. Even if they do, they do not have sufficient background to build those things. You also notice that some of the west African, I mean, some of the founders that we have that are in such spaces, what I also noticed is a lot of them schooled abroad. There are, most of the education was not really in Nigeria. Take for example, the founder of Ubemba, I think that's an AI startup, right? We call AI startup is not even in the country for one.
There's also the startup by the hardware startup that builds a lot of these drones and UAV. What's his name again? I can't remember his name now, but it's currently also not, not in the country. Well, in his own case, he didn't really, maybe didn't really get a lot of his education outside Africa. But the point is that fundamental problem, as it has, it plays, it plays a very important role in interest. Another thing is, we do not, because of this stem issue, because of this fundamental problem, which is the stem issue, you also do not have a lot of talent when it comes to building those things. So it now makes sense that it's people that have had enough experiences, who have economies where they've built a lot of similar startups, have enough experiences, have enough talent. It makes sense that they are the ones that will come in to build this kind of startups, EV startups, things like that. So I think that is probably why we are seeing a lot of foreigners in these spaces.
[00:12:06] Speaker B: Okay? So nothing to be, nothing to be particularly worried about.
[00:12:10] Speaker C: So I also have a theory. So, and this, this might be worrisome, right? And the theory is that if you look at the people that are investing in a lot of these startups, right, a lot of them are the investors, I mean, normally a lot of our investors in Nigeria, I say Nigeria, in Africa are foreign investors, right? That's one. But the interesting thing about investors in EB startups is not that they are just foreign investors, they are actually corporate visas, right? These are investment companies that are built out of a particular company. Right? So, for example, I think Toyota has one, right? And they've been doing a lot of investment in Africa, right.
My theory is that Africa is, when it comes to the resources needed for Ev's, the major resources, which is the battery. Right. We have. There's a lot of lithium deposits in Africa, right? And so far, mining these deposits have not exactly been very easy for a lot of these foreign companies. Right? So it's a theory. It's a theory before I get prejudicated. So my thought is, what if, you know, a lot of these companies are being built by their people in Africa, right? Get your guy to come here, build a company, right? Built the company, invest in the company, and then somehow it's just basically, you want to get information from. You want to get something from a company, right? You can easily get a mole into that company, get them. Get him employed. Get him hired.
He's your guy. Right. It's easier for you to infiltrate that company through that person. So I'm thinking that could be a theory. That could be a way they're trying to, you know, get into Africa and make whatever extractions they want to do easier.
[00:14:10] Speaker B: Okay. One conspiracy theory down.
I don't know if I. If I subscribe to the theory that they are maybe sending people to like. Because, I mean, it's a roundabout way of all of that, but I think it's still. Yes, we have a healthy number of non Africans building startups in the east african region. That's. That's clear. But I think what this should. And this is. This is a thought I had earlier in the week for some core sectors, like, really core technological sectors. We might find that. Or we. We might. Yeah, we might find that. A few years from now, we are in, like, we are seriously lagging behind.
I guess AI is one, Ev's are one, or is the other. And the reason for this is we lack the skill either because we haven't trained for it in our universities, tertiary institutions. We lack the skill. And the other would be, we lack the necessary investments to back all of this up. So for EV's, obviously, it requires a lot of.
Requires a lot of investments. We've talked about how, while they might be more efficient for a user, they are still more expensive to acquire. And that initial cost will represent a major stumbling block for anyone who wants to acquire product.
[00:15:45] Speaker C: Actually, they are.
I think we are getting. We are finding a way around it, especially in Africa.
[00:15:53] Speaker B: We are not really finding a way around it.
[00:15:55] Speaker C: The way around is just two wheelers.
[00:15:57] Speaker B: That's not the way around it.
[00:15:58] Speaker C: Okay.
[00:15:59] Speaker B: What we are doing is basically playing at the bottom of the pyramid. Yes, you're using an EV, but your ev is what a two wheeler, how exactly you really want. And okay, we are seeing governments, at least in Nigeria, push back on the use of two wheelers in certain areas of the, of the, of the cities. Do you. And now that's where you are playing. So what would probably happen is that you would have, you would have EV's, but those EV's would be used for what, maybe delivery bikes, right. Not for personal consumption. And I don't know how many delivery bikes we could possibly have compared to probably personnel vehicles.
The gap, like it's. You're, you're missing out on a whole lot. So the person who can provide, I think we've said this on podcast before, that anyone who can figure out how to provide EV's significantly cheaper would cash out big in Africa. That's probably going to take a long time, but again, we might find ourselves losing out on the major value that can be gained from these industries because we are not investing in these startups. Um, so for Zeno, um, when I was looking through the list of invest of investors, most of the investors, I think four DX is probably the only one that is slight. It's not even african, if I, if I, if I remember correctly.
[00:17:25] Speaker C: We're just used to them.
[00:17:26] Speaker B: Yeah. So we don't have a local vc investing in EV's and they probably have very good reasons for that. But again, without rambling is I think we are going to miss out on the major value creation that can come from that industry if we, if we continue on this trajectory. The other is like a wake up call for governments. I think educational curriculum needs to be overhauled. A lot has been said about the need to overhaul our educational curriculum and make sure that it, it's keeping with the times, but nothing there. Not a lot being done in that line. And we might have to pay the price at some point if you do not take it seriously.
[00:18:10] Speaker C: We're already paying the price.
[00:18:11] Speaker B: Well, anyway. Anyway, moving on to the second story and probably the last slurry for the podcast. It is just nothing too deep. Safaricom and two other companies, part of a consortium that wants to help the ministry of Health in Kenya digitize their health system or healthcare system. Bulu, do you want to tell us what's happening there?
[00:18:40] Speaker C: All right, so Kenya wants to create an integrated healthcare information system, basically digitizing their healthcare. And doing this is a couple of investors that will be doing this with $800 million. Some of the investors include Safaricom Convergence apparel Limited. That's a firm linked to an indian businessman.
Right. So what this is supposed to do is digitize the healthcare system. And how exactly will this work? So they are basically going to build in a period of, I think, over ten years. Those investors recover their money. But what they are actually doing is they want to deliver an health information exchange system. Right. Different. Different kinds of health systems. That will mean that health information is exchanged easily. There is interoperability between the health information of Kenyans, basically, which will improve healthcare. So some of the problems you see with our health care system, I don't know if it's the same outside Africa, but mainly in Africa. Some of the major problems is your health information is not interoperable. For example, live in Lagos and your hospital has your information. If you leave Lagos at any point to somewhere else, it's like basically creating another database for your health information in that separate place. So these are some of the things that digitization of the healthcare system will solve.
[00:20:26] Speaker B: Okay. So, I mean, it's just the deal was announced or the partnership was announced this week. And it's barely. I mean, today's Thursday. It's barely Friday. And we have already seen. Safaricom has seen some pushback on that. So apparently the chair of Safaricom, Adio Kawaja, is linked to one of the companies. So his law firm has advised convergence in the past. And opposition politicians see that this represents a conflict of interest.
[00:20:59] Speaker C: And convergence is one of the companies.
[00:21:01] Speaker B: Yeah, convergence is one of the companies that.
In the consortium. So, yeah, they are saying, this guy doesn't deserve to be or Safaricom doesn't deserve to be a part of this consortium because the chairman of the company is linked. And, okay, it's not just because of that. There's also the issues like his accusations now. Okay, they are. They're also referring to the fact that he has a relationship or a close relationship with the kenyan president. It's interesting. It's an interesting ton of events.
[00:21:36] Speaker C: Does that really. Does that really.
[00:21:39] Speaker B: Does that really matter?
[00:21:40] Speaker C: Yeah.
[00:21:41] Speaker B: Well, it does and it does. So conflict of interest in the sense that. Okay, yeah, this is me playing devil's advocate.
They could look at it as, did you get this. Did you get this deal through a.
Like, was the process transparent? Was the process fair?
Or did you. Were you. Were you included in this deal because you have a relationship with this person? And then the fact that he even advised or his law firm advised his second company, it's a consulting of three people, this is a huge deal, $800 million. And then of the two companies that are part of it, you're the chair for one, and your law firm advised the other. Right? It. Yeah, I think they have some leg to stand on because the question now becomes, okay, yes, Safaricom is contributing about 17% of the 800 million, but convergence is contributing a significant portion. So between the two companies, they are contributing, I think, nearly half, if not. Yeah, nearly half or more than half, actually, of the money that would be invested, which also means they could make a significant amount of money from GTO. So, yeah, I think they are. They are well within their rights to question whether the process was fair.
I don't know what that means for Safaricom, whether.
I mean, this is just coming how many months after. So the training Safaricom has been in, they've been under fire ever since the kenyan protests. First it was, did you collude with the government to cut off Internet connection? And now you're being asked whether your or your chair is being sort of accused of. Your chair has been accused of conflict of interest. So, yeah, I don't know. I wonder how that will play out. Would the government have to review the contracts? Because if sufficient pressure is mounted, they might decide to review the contract.
Would they? I don't know. Would they review the contract or would they just brush it aside? Would the kenyan people be involved? Because this is the second time in, I think, the last three months that Safaricom is being.
[00:23:58] Speaker C: Is, I think, because doesn't necessarily.
Doesn't affect them directly.
[00:24:04] Speaker B: It does affect them directly. It's the government. So Safaricom would be working with the government. Convergence would be working with the government. So that affects them, whether they would be involved and to what extent. I think that's probably what would sway the outcome of this situation, whether the government decides, okay, you know what? Let's review this thing because people are getting antsy and stuff. But, yeah, I think that's it. Um, well, earlier I said that this has been a slow news week. And, yeah, we've come to the end of the podcast.
This is probably the shortest podcast you're going to be listening to from us in a very long while. But, yeah, it's been.
It's been great catching you up on a few of the stories from across Africa. I mean, just three of them. But yeah, if you have the stories want to. Before we leave, just take a minute to send your reactions to the podcast. If you enjoyed listening to the podcast, you can send us email at podcastechpoint Africa. We would read your email and we respond, just be very nice and gentle when you're, when you're sending them. You can also take some time to share the, to share the podcast with your friends.
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