Top of mind: Happy Sunday!
Hear ye, hear ye! Governments in Africa are finally paying attention to the outsized impact of tech on the economy and are setting up hubs to accelerate growth within the ecosystem.
Rwanda set the pace with its Innovation City, and now Cape Verde is taking on the baton to attract the best tech talents to the country.
And in other news, Nigeria’s Central Bank is not letting its digital currency – eNaira die quickly, and Smile Identity is helping startups combat fraud.
Let’s get to it.
3 big things:
- Cape Verde’s tech play
- eNaira’s adopt-or-die strategy
- Smile Identity has a plan
Cape Verde is making a big play for Africa’s tech talents
The short: Cape Verde is building a state-of-the-art tech hub to attract the continent’s brightest minds.
Leading transformation: Cape Verde is a beautiful cluster of islands on Africa’s western coast. Surrounded by the Atlantic Ocean, Cape Verde is a popular destination for tourists and vacationers.
But did you know that the Cape Verdean government has been working to transform the archipelago into an African tech giant?
Over a decade ago, the Cape Verdean government began a strategic pivot from its tourism-driven growing economy to attracting tech talent. The archipelago’s strategic location, with its proximity to Europe and the Americas, offered untapped economic opportunities.
The government installed fibre-optic cables to kick this off and worked with satellite internet providers to expand their coverage.
As a result, over 70% of the population now have access to the internet – trumping the 51% recorded in Africa’s largest economy, Nigeria.
The Silicon Valley project: After improving internet connectivity, the next step for Cape Verde’s government was to focus on infrastructure. Working with the African Development Bank, they set up Cape Verde’s Technological Park near Praia, the nation’s capital. The park opened last month and is a Special Economic Zone for Technologies (ZEET) – a tech hub designed to support rapid growth and business development.
The park houses everything from emerging startups to multinational tech companies – with an uninterrupted power supply, spaces for large events, and three data centres with state-of-the-art facilities.
Everyone loves a tax break: The tech park operates as a special economic zone, offering startups tax breaks and import duty exemptions. For example, companies in the area get a 2.5% reduction on the Corporate Income Tax (IRPC). Cape Verde also offers simple migration and prolonged stay programs, such as a green card and a remote working program for tech talent and ecosystem players who want to stay close to the action.
Dr Olavo Correia, Cape Verde’s Deputy Prime Minister and Minister of Finance, says it’s all a grand scheme:
“Our ambition is to transform Cape Verde into a digital nation, with a circulating economy and the Technology Park in Praia playing a critical role in this significant government strategy.”
All aboard: In the past, poor physical infrastructure and limited funding opportunities kept entrepreneurs away from Cape Verde. But that story is changing.
Cape Verde is now attracting founders, startups, and tech talent. The government-run venture fund, Pró-Capital reworked its model to accommodate SMEs and early-stage startup funding. The government also set up a €1 million seed fund to invest in 20 local startups and integration grants for tech startups across the continent.
Final thoughts: Cape Verde is well on its way to becoming a destination for not just tourists and digital nomads but also tech founders, talent, and businesses looking to take advantage of its Technology Park.
With its prime location, government investments in state-of-the-art infrastructure and initiatives to support startups and tech talent, Cape Verde will become a significant player in Africa’s tech scene within the next five years.
Nigeria’s Central Bank wants more people to use its digital currency
The short: Nigeria’s Central Bank changes its strategy as the eNaira struggles.
Weak numbers: In October 2021, Nigeria’s Central Bank (the CBN) launched the eNaira, Africa’s first Central Bank Digital Currency (CBDC) – 8 months after banning cryptocurrency-related transactions in the country.
However, years after its release, the adoption of the eNaira has been disappointingly low, according to the International Monetary Fund (IMF). Usage spiked during a cash scarcity at the beginning of this year, with eNaira transactions increasing by 63%, but lost momentum soon after the cash crisis was over.
Not buying it: Crypto enthusiasts still maintain they’d rather see the government embrace cryptocurrencies like Bitcoin and Ethereum instead of a government-run blockchain. Meanwhile, Nigerians are simply content with existing banking and fintech institutions.
Here for a long time: Unfazed by its shortcomings, the CBN says it will ramp up the adoption of the eNaira by educating citizens and improving the digital currency.
They started with a new strategy to co-develop the eNaira by partnering with tech companies like Convexity and ChamsMobile to build the USSD feature to give users additional use cases for adoption.
Startup onboarding: Despite Flutterwave being an early adopter of the eNaira as a payment method for remittances on its Send app, some fintech startups have complained about the infrastructure. So, to address this, the Bank plans to change the underlying infrastructure of the eNaira with a highly compatible system to increase startup adoption.
Final thoughts: The CBN is determined to make the eNaira a success but still faces growing pains. At the moment, its North Star is scaling adoption within financial institutions and startups – plus simplifying how the currency could be used in daily financial transactions, especially in areas with low internet connectivity.
Smile Identity is helping startups fight fraud
The short: Africa’s leading Identity Verification Company, Smile Identity, released a mind-blowing report to help startups combat fraud.
Grey listed: Eleven African countries, including Nigeria and South Africa, are currently on the Financial Action Task Force’s (FATF) grey list. The FATF is an inter-governmental body created by the G7 countries to combat money laundering and terrorist financing through policy advocacy.
The FATF believes countries on its grey list have deficiencies in their regimes’ defences against money laundering and terrorist financing.
KYC ramp-up: Startups like Appruve built infrastructure to support startups in accurately identifying users of their services to keep up with regional regulations. In an exciting acquisition play this year, Smile Identity acquired Appruve to expand its identity verification coverage across Africa.
As a result, more startups have increased their KYC processes to stay compliant with international partners. According to Smile Identity’s report – KYC checks grew by over 50% in the first half of this year as more companies adopted KYC standards.
The report also recorded a drop in fraud, with biometric verification reducing fraudulent users by 50% and listing facial recognition as the most secure form of authentication because it cannot be stolen, unlike pictures and other IDs.
Final thoughts: KYC has evolved over the years, with its current iteration using biometric verification being the most reliable.
Eleven African countries on the FATF grey list served as a wake-up call for the continent, leading to increased efforts to improve security within the ecosystem. So, it’s excellent that more startups adopt stringent KYC processes to keep their operations secure.
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