<h1>Renew Capital Legal Brief - March 2025</h1>The latest changes in Africa's regulatory environmentWith a growing presence in Africa’s startup ecosystems, the Renew Capital team stays on top of the legal landscapes shaping the venture capital and investment space and provides insights for investors, entrepreneurs, industry leaders and policymakers in Africa’s dynamic business environment.&nbsp;<figure class="image"><img src="/uploads/Legal_Brief_b1a20116be.png"></figure><h2>Egypt</h2>Financial Regulatory Authority (FRA) reiterates licensing requirements for insurance companies:The FRA has announced updated licensing guidelines for insurance companies. Current and prospective insurers must now be joint stock companies, meet paid-up share capital requirements and have qualified board members. Moreover, offering both life and property insurance services by the same entity is prohibited, except for&nbsp;microinsurance companies or&nbsp;HMOs. Existing firms have five months to comply with these new standards.Why it matters: Licensed insurance companies should conduct internal reviews to ensure compliance with the licensing requirements or face the risk of penalties or license revocation.<h2>Ghana</h2>2025 Budget Statement and Economic Policy of the Government of Ghana:The Government of Ghana, through the Minister for Finance, has presented the Budget Statement and Economic Policy for the year 2025. Key tax proposals include the abolition of several taxes, such as the withholding tax on lottery winnings and the electronic transfer levy, as well as exempting individuals earning the minimum wage or less from income tax. The proposed VAT reforms aim to eliminate the COVID-19 levy, reduce the effective VAT rate and raise the registration threshold to exempt small businesses, with implementation set for 2025. Additionally, the budget outlines plans to restructure and consolidate existing levies, introduce road tolls and establish a new legal framework for non-tax revenue collection.Why it matters: This is important because the changes outlined in Ghana's 2025 Budget directly impact the country’s economic environment, businesses and individuals. This could stimulate economic growth, improve disposable income for workers and promote entrepreneurship.<h2>Kenya</h2>Potential increase in banking license fees:The Central Bank of Kenya (CBK) is taking decisive action to modernize the licensing fee methodology for banks by linking license fees directly to the gross annual revenue of each institution. This new approach is a significant shift from the current system, which bases fees on the number of bank branches. The CBK has released draft banking (fees) regulations for public comment and upon approval, these regulations will require every bank to contribute a percentage of its gross annual revenue. The licensing fee will be set at an initial rate of 0.6% with a gradual increase to 1% by 2027.Why it matters:&nbsp;Increasing license fees for banks will undoubtedly create a ripple effect that impacts both customers and third-party service providers, leading to higher fees for banking services.<h2>Morocco</h2>Morocco's National Agency for Telecommunications Regulation (NATR) issues new labeling rules:The NATR has directed that all telecommunication devices (including phones, laptops, smartwatches and routers) be labeled with their Specific Absorption Rate (SAR) values. The SAR values should be displayed on the products, user manuals, packaging, or electronic labels. This new rule will become enforceable on May 1, 2025 and any contraventions will result in fines for manufacturers.Why it&nbsp;matters: Proper labeling of telecommunication devices will enhance consumer protection and ensure greater transparency in the Moroccan telecommunications sector.&nbsp;&nbsp;<h2>Nigeria</h2>Nigeria's Senate passes Investment and Securities Bill:The Nigerian Senate has successfully passed the long-awaited bill, which is now pending assent from the country’s President. This landmark legislation is set to modernize and strengthen the statutory framework for Nigeria's capital markets. Among the significant changes is the official recognition of virtual assets as securities.Why it matters: The bill, once approved, will significantly strengthen investor protection, align with the latest developments in the capital markets and lead to more efficient legislation.<h2>Rwanda</h2>Rwanda issues virtual assets bill:On March 6, 2025, the Rwandan Capital Markets Authority (CMA) unveiled a bill for the regulation of virtual asset operations in Rwanda. The bill aims to foster innovation in the virtual asset sector while also preventing and mitigating associated risks. The CMA will be the primary regulatory and licensing authority but will consult and collaborate with the National Bank of Rwanda to safeguard the integrity of Rwanda’s financial system.Why it matters: Once passed, this bill will advance financial stability in Rwanda and boost investors’ confidence in virtual assets’ businesses and activities in Rwanda.&nbsp;<h2>South Africa</h2>The South African Reserve Bank (SARB) redefines bank activities&nbsp;The SARB intends to exempt a certain payment activity from the scope of the “business of the bank”. This activity is the pooling of funds into a store of value or payment account by a non-bank for conducting payment activities. Therefore, non-bank entities that carry out such activities can operate without a banking license, subject to meeting stipulated conditions. A draft notice, to this effect, has been issued by the SARB for public comment.Why it matters: The exemption will ease the regulatory burden of payment service providers and other stakeholders that store funds to facilitate their payment services.&nbsp;<h2>Uganda</h2>Bank of Uganda is set to regulate mortgage refinancing institutions:On March 12, the Ugandan Parliament was presented with a landmark bill to regulate the establishment of mortgage refinancing institutions for the first time. Once passed, this bill will empower the Bank of Uganda to issue licenses to mortgage refinanciers and establish a robust administrative framework for mortgage refinancing operations across the country.&nbsp;Why it matters: Establishing mortgage refinanciers will increase access to finance for primary mortgage financing institutions and facilitate affordable housing in Uganda in the long term.&nbsp;<h2>Zambia</h2>Zambia’s Data Protection Commission (DPC) gets set to enforce data protection legislation:The DPC is ready to mete out fines and prosecute entities operating in contravention of Zambia’s Data Protection Act of 2021. Data processors and controllers are therefore encouraged to complete the registration process and implement robust security measures. The DPC intends to commence the enforcement measures in March 2025.Why it matters: Organizations that handle personal data face the risk of fines or legal action if they fail to comply with data protection legislation.<h2>Cross-border</h2>Ghana and Rwanda collaborate on a license passport framework:Both countries have agreed to a mutual framework that allows regulated fintech companies from one country to operate in the other with minimal additional regulatory requirements.&nbsp;Why it matters: This initiative enables Ghanaian and Rwandan fintech companies to expand their services with minimal regulatory barriers, driving significant innovation and fostering economic growth in both countries. &nbsp;

With a growing presence in Africa’s startup ecosystems, the Renew Capital team stays on top of the legal landscapes.

Legal Corner

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Renew Capital Legal Brief - March 2025

<h1>Renew Capital Legal Brief - February 2025</h1>The latest changes in Africa's regulatory environmentWith a growing presence in Africa’s startup ecosystems, the Renew Capital team stays on top of the legal landscapes shaping the venture capital and investment space and provides insights for investors, entrepreneurs, industry leaders and policymakers in Africa’s dynamic business environment.&nbsp;<h2><img src="/uploads/Newsletters_and_Legal_Brief_1_f6e6e92849.png"> Egypt</h2>New fiscal incentives for small and medium enterprises (SMEs):<ul><li>The President of Egypt has introduced a new fiscal framework for SMEs engaged in professional activities, with an annual turnover of up to $40K (20M Egyptian pounds), provided they meet certain requirements. This framework offers exemptions from stamp duties, company and land registration fees and capital gains taxes, along with reduced minimum corporate income tax rates for qualified SMEs.</li></ul>Why it matters: The new fiscal framework establishes a conducive environment for business operations, thereby encouraging increased commercial activities and promoting economic growth.<h2>Ethiopia</h2>Ethiopia prepares for foreign investments in its exchange market:<ul><li>The National Bank of Ethiopia, alongside the Ethiopian Capital Market Authority and Ethiopian Investment Holdings, is actively pursuing the opportunity to allow foreign investments in the exchange market. The foreign investments may, however, be capped at a quota of 30%.</li></ul>Why it matters: Allowing the entry of foreign investors will boost Ethiopia’s exchange market and provide more capital inflow within the country.<h2>Ghana</h2>Ease of doing business: Ghanaian companies are now categorized into small, medium and large enterprises -<ul><li>Small companies - Companies with revenue or assets up to $26K (400K GHS)&nbsp;</li><li>Medium companies - Companies with revenue or assets between $26K to $646K (400K GHS to 10M GHS)&nbsp;</li><li>Large companies - Companies with revenue or assets exceeding $646K (10M GHS)&nbsp;</li></ul>With this categorization, small companies are now exempt from mandatory external audit requirements, while medium and small companies no longer need to file full annual returns with the Office of the Registrar of Companies.&nbsp;Why it matters: This new classification system reflects a significant step toward reducing administrative burdens for these enterprises.Introduction of carbon registry:<ul><li>The Ghana Carbon Registry has been established under the Environmental Protection Act of 2025. This critical database will effectively catalog mitigation projects aimed at reducing carbon emissions and will regulate the buying and selling of carbon credits within the voluntary carbon market. The Carbon Market Committee will oversee the registry and approve mitigation projects in the registry.</li></ul>Why it matters: The establishment of the Carbon Registry signifies Ghana’s commitment to the Paris Agreement and ensures the implementation of proper regulatory standards in the Ghanaian carbon market.<h2>Kenya</h2>Regulatory framework for carbon trading:<ul><li>On February 11, the National Environment Management Authority (NEMA) issued draft Climate Change (Carbon Trading) Regulations for public review. The draft regulations outline the regulatory authorities for carbon trading activities and requirements for establishing an exchange for trading registered carbon credits. Any comments on the regulations may be submitted on or before March 5.</li></ul>Why it matters: The draft regulations show Kenya’s devotion to achieving low-carbon climate development.<h2>Morocco</h2>Finance Law 2025: With the signing of the Finance Bill into law in Morocco,&nbsp;the Finance Law for 2025 introduced the following changes:<ul><li>Revised tax incentive scheme for corporate group restructuring;</li><li>Revised withholding tax rates on income from shares and dividends;</li><li>Exemption threshold for income tax for individuals increased to $4K from $3K (40K MAD FROM 30K MAD);&nbsp;</li><li>Extension of value-added tax (VAT) exemption on fresh or frozen seasoned meat;&nbsp;</li><li>Suspension of import tariffs;&nbsp;</li><li>New taxation rules for joint ventures and economic interest groups; and&nbsp;</li><li>Temporary VAT exemption on importation of select live animals and agricultural products.</li></ul>Why it matters: Companies and other stakeholders must proactively review their tax policies and measures to align with the new fiscal regulations.<h2>Nigeria</h2>Launch of Foreign Exchange (FX) Code:<ul><li>On January 31,&nbsp;the Central Bank of Nigeria (CBN) launched the Nigeria Foreign Exchange Code. The code sets the basic standards for all participating institutions in the FX market while reinforcing ethical market practices and good governance measures.&nbsp;&nbsp;</li></ul>Why it matters: The launch of the FX code signifies the CBN’s commitment to improving the FX market and ensuring compliance by all stakeholders. It is also expected to improve FX liquidity and stop unethical FX trading practices.<h2>South Africa</h2>Upcoming changes in the labor industry:<ul><li>The South African National Economic Development and Labour Council recently issued a law reform report proposing several changes including increased statutory severance pay, exclusion of startups from council agreements’ requirements, limitation of remedies for unfair dismissals and statutory provisions for large-scale retrenchment processes.&nbsp;</li></ul>Why it matters: The proposals, if accepted, present more favorable conditions for both employees and employers in South Africa.<h2>Uganda&nbsp;</h2>Electricity market moves from a single-buyer model to a multiple-buyer model:<ul><li>The Electricity Regulatory Authority has directed that consumers with the stipulated electricity demand (mostly industrial and manufacturing companies) can now purchase electricity directly from authorized generation licensees. This directive deviates from Uganda’s previous model of a single buyer purchasing electricity on behalf of the general Ugandan populace.</li></ul>Why it matters: This change provides qualified consumers with a dependable alternative for their electricity needs.&nbsp;<h2>Zambia</h2>Changes in Property Taxes:<ul><li>Starting on January 1, 2025, the Property Transfer Tax in Zambia increased from 5% to 8%. Additionally, moneylenders and building societies can benefit from tax relief on foreclosed property transfers.</li></ul>Why it matters: These changes will result in increased costs for asset transfers in Zambia but will encourage foreclosures in the property market.

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Renew Capital Legal Brief - February 2025

<h1>African Startup Acts: Catalysts for Innovation and Economic Growth</h1>Across the African continent, there is increased focus and interest in startups as an increasing number of countries recognize them as pivotal drivers of economic growth. Tunisia’s pioneering Startup Act, enacted in 2018, has set a precedent, inspiring nations such as Senegal, Nigeria, and Côte d'Ivoire to adopt similar frameworks.&nbsp;These initiatives, which include tax incentives, simplified administrative processes and financial support, are part of a broader effort to foster local innovation. Currently, countries like Kenya, Zambia, Ethiopia and Ghana are in the process of drafting their versions of a startup law, each striving to strike an optimal balance between harnessing and empowering local talent and attracting global investment.<img src="/uploads/startup_acts_1_5a2b351a11.png"> Source:&nbsp;<a href="https://www.renewcapital.com/">Renew Capital</a><h2>Common Themes</h2>Startup Acts across Africa typically focus on fostering innovation, reducing barriers to entrepreneurship and encouraging economic growth. A closer look at these policies reveals a few key focus areas, including:<ul><li>Streamlining Bureaucratic Processes: A core theme of startup acts is simplifying and accelerating the process of registering and operating businesses. This includes reducing administrative burdens, offering one-stop-shop services and easing the procedures for obtaining permits or licenses.</li><li>Enabling Innovative Corporate Structures: To attract international investors, many of these laws aim to accommodate corporate structures that facilitate the inflow of foreign capital. In some cases, it involves introducing relaxed rules for foreign participation and making the local steps of completing a "corporate flip” seamless. This opens startups to the prospects of (i) accessing foreign investors, (ii) expanding within the continent and (iii) securing clean exits to bigger institutional investors and global companies.</li><li>Incentives and Tax Benefits: Many startup acts offer tax breaks, exemptions or reductions for new businesses to ease their financial burden in the early stages. These benefits often target specific areas like corporate income tax, value-added tax (VAT) and social security contributions.</li><li>Access to Funding and Financial Support: Startups often struggle with securing capital, so some startup acts create mechanisms for funding, including grants, loans and venture capital initiatives. They may also establish government-backed investment funds or incentives to attract private investors.</li><li>Legal Frameworks for Innovation: These acts aim to create a legal environment that supports entrepreneurial risk-taking and innovation. This might include intellectual property protections, support for tech-based businesses or frameworks that promote research and development.</li><li>Facilitating Talent and Workforce Development: Many startup acts emphasize education and skills development to ensure a steady pipeline of talent. This includes fostering entrepreneurship education and supporting training programs for both founders and employees.</li><li>Global Market Integration: Several startup acts aim to connect local startups with international markets by promoting exports, easing cross-border trade and facilitating access to global investors and partners.</li><li>Regulatory Sandbox and Flexibility: Some nations, inspired by global trends, include provisions for regulatory sandboxes—controlled environments where startups can test innovative ideas without immediately facing heavy regulatory restrictions.</li></ul><h2>The African Startup Acts Journey So Far</h2>Let’s take a look at the steps taken by African countries.<ul><li>Algeria: Has not yet implemented a Startup Act, but the&nbsp;<a href="https://www.meritas.org/insight/article/Establishment-and-Promotion-of-Startups-in-Algeria">Algerian Startup Fund (ASF)</a>, launched in October 2020, provides funding for innovative businesses and expanded in 2022 to support startups across all 58 provinces.</li><li>Côte d'Ivoire&nbsp;<a href="https://www.intracen.org/news-and-events/news/the-startup-act-takes-shape-in-cote-divoire#:~:text=Against%20this%20backdrop%2C%20the%20Startup,favourable%20legislative%20and%20regulatory%20framework.">adopted a Startup Act</a> in November 2023.</li><li>Egypt doesn't have a singular, comprehensive startup act like some other African countries but the government has implemented several initiatives and policies aimed at supporting startups and fostering innovation within the ecosystem.</li><li>Ethiopia: The Ethiopian Startup Act, also known as the&nbsp;<a href="https://shega.co/news/ethiopia-to-enact-a-startup-act">Startup Businesses Proclamation</a> has been in draft format for several years and is yet to be officially enacted. Recent feedback dialogues that Renew Capital has participated in indicate formal adoption may come any day.</li><li>Ghana: The Ghanaian Innovation and Startup Bill project is a joint initiative by Ghana’s private sector and the government to enhance the startup ecosystem through co-created legislation. The bill has been drafted but is yet to be ratified.</li><li>Kenya: The National Assembly passed the Startup Bill and it is now awaiting presidential assent to become law. Some&nbsp;<a href="https://www.msn.com/en-us/news/politics/kenya-s-senate-passes-controversial-startup-bill-mandating-r-d-spending-local-ownership/ar-AA1xIrsW">news sources</a> indicate that the startup community is not fully bought into everything that’s in the current draft. One example is the 100% Kenyan ownership requirement, as Kenya’s tech ecosystem owes much of its success to a blend of local expertise and foreign partnerships and investments.</li><li>Morocco: While there have been several initiatives aiming to support startups in Morocco,&nbsp;<a href="https://weetracker.com/2022/05/31/deep-dive-morocco-startup-ecosystem/">there is no official startup act yet</a>. The government is working on it as part of the Morocco Digital 2030 plan.</li><li>Nigeria: The Nigerian Startup Act was&nbsp;<a href="https://kpmg.com/ng/en/home/insights/2022/10/nigerian-startup-act.html">officially signed into law</a> by President Muhammadu Buhari in October 2022.&nbsp;</li><li>Rwanda’s&nbsp;Startup Act was launched in 2021 with the aim of fostering innovation and entrepreneurship in the country. The law is at its final stages of completion.</li><li>Senegal: The Senegalese Startup Act was formalized in 2020 and ratified by President Macky Sall in 2021, paving the way for innovation and encouraging high-growth startups in the country.</li><li>South Africa: While South Africa doesn't have an official startup act yet, there's a strong movement pushing for its establishment, named&nbsp;<a href="https://www.startupact.co.za/">The South Africa Startup Act Movement</a>. This is being championed by a diverse set of founders, investors and policymakers who see the impact this will have in the ecosystem.&nbsp;&nbsp;</li><li>Tanzania: The Tanzanian Startup Policy is under development, aiming to address challenges faced by startups and foster innovation.&nbsp;&nbsp;</li><li>Tunisia: The Tunisian Startup Act, launched in April 2018, was designed to support and foster the&nbsp;<a href="https://startup.gov.tn/en/startup_act/discover">growth of the country's startup ecosystem</a>. In practice, challenges remain—startups struggle with foreign currency restrictions and slow regulatory processes. There’s quiet talk of a potential revamp of the act but nothing is official.</li><li>Uganda: Startup Act Uganda is a&nbsp;<a href="https://www.uncdf.org/article/8206/doing-more-together-the-coming-of-age-of-startup-uganda-as-an-ecosystem-builder">collaborative effort</a> between the Ugandan tech startup ecosystem, Private Sector Foundation Uganda (PSFU) and Mastercard Foundation. It is still under discussion and hasn't been drafted yet.</li><li>Zambia: A startup bill is under development by the government, focusing on creating a supportive environment for innovation and entrepreneurial ventures.&nbsp;</li></ul><h2>The Big Picture&nbsp;</h2>The proliferation of startup acts across Africa signifies a shift towards nurturing homegrown innovation and entrepreneurship. As nations like Kenya, Zambia, Ethiopia and Ghana work diligently to craft and implement their own startup legislations, we hope they will collectively contribute to a more conducive environment for startups to thrive.&nbsp;

Startup Acts across Africa typically focus on fostering innovation, reducing barriers to entrepreneurship and encouraging economic growth. 

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African Startup Acts: Catalysts for Innovation and Economic Growth

<h1>Press Release: Power Financial Wellness Puts Financial Control Back in Workers’ Hands</h1>Renew Capital invests in Power Financial Wellness, a platform providing workers with the tools to manage their finances effectively.<a href="https://latest-api.renewcapital.com/uploads/FINAL_Power_Wellness_Financial_Press_Release_10c740a9c0.pdf" target="_blank" rel="noopener noreferrer">Download Full Press Release&nbsp;</a>NAIROBI, Kenya,&nbsp;December 26, 2024 – Power Financial Wellness is helping workers across Africa to better manage their money. The fintech company, with customers or subsidiaries in Kenya, Uganda, Tanzania, Zambia, Rwanda and India, offers an all-inclusive financial platform that helps workers in both formal and informal sectors to improve their financial health. The company works directly with employers and gig platforms to provide their workforce with access to financial tools that reduce financial-related stress and boost productivity. Power also provides its Platform as a Service to other regulated banks, lenders, SACCOS and HR platforms looking to digitize or embed financial services.<figure class="image"><img src="/uploads/Power_Financial_Wellness_4794de2d57.jpg"></figure>The fully digital platform provides workers with a range of services to improve financial health. These services include earned wage access, which enables workers to access a portion of their earnings before the end of the month to avoid predatory lending. The platform also offers savings and investment options, longer-term loans and insurance premium financing that supports workers enrolling in health, funeral and other essential insurances. All of these services are seamlessly integrated into workers’ income streams, which makes the financial management process simple and stress-free.“We believe in empowering individuals by giving them access to tools that enable them to pay, save, borrow and protect their financial health,” said&nbsp;<a href="https://www.linkedin.com/in/brian-corey-dempsey/">Brian Dempsey</a>, founder of Power Financial Wellness. “By linking these services directly to their earnings, we provide a frictionless way for individuals to manage their finances, reduce stress and take control of their financial future.”Power provides a financial wellness ecosystem where workers have the resources and guidance to improve their financial health and access the services they need in one place. Their solution is designed to not only support day-to-day financial needs but also provide long-term financial stability and growth opportunities for workers in both formal and informal sectors.“Power Financial Wellness is addressing a critical need in both the formal and informal economies,” said Esther Mwikali, senior investment manager at Renew Capital. “Their platform offers a comprehensive, easy-to-use solution that empowers workers to manage their finances, access savings and loans and protect their future. We are committed to continue backing growth-oriented founders across the continent.”Support to Renew Capital portfolio companies is provided in partnership with Global Affairs Canada.About Power Financial WellnessPower Financial Wellness empowers workers across Africa with tools to manage their finances, improve financial health and achieve long-term stability through an all-in-one platform. Visit&nbsp;<a href="https://yourpower.io/">https://yourpower.io/</a> for more information.&nbsp;

Renew Capital invests in Power Financial Wellness, a platform providing workers with the tools to manage their finances effectively.

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Press Release: Power Financial Wellness Puts Financial Control Back in Workers’ Hands

<h1>Why I Say No to Holiday Party Pitches: The VC Model Explained</h1>I’m no&nbsp;<a href="https://www.youtube.com/watch?v=0uMfatiUdqo">Buddy the Elf</a>, but I enjoy a good Christmas party. The decorations, the holiday sweaters and the spiked egg nog. It’s all great in my book.So, given my general enthusiasm for holiday cheer, I hope this won’t come off as a Mr. Grinch moment.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeBWkRNl6qQGDOG327OVkWMJvm15mW6P07DS5iDEjhmZeky_y99TX7pVAQGif2bSuAucWwufiDranUW7MwWrbOO95PULQe0LukE_NlKQi9ADpkJkwd4sBv-YwfLUZMq0qbKZg2A5xZ1FD-DXqAYTNs?key=rz7TkrBy_rsMUWlGE5ZSRaMu">Photo:&nbsp;<a href="https://unsplash.com/photos/a-red-cup-of-coffee-sitting-on-top-of-a-wooden-shelf-u1JqmWkKfSQ">Eggnog by Katie Azi_Unsplash</a>Ever since I joined&nbsp;<a href="http://www.renewcapital.com">Renew Capital</a>, an early-stage venture capital firm in Africa a couple of years ago, a few drinks into almost every holiday gathering, someone—without fail—will come up to me and ask, “Do you want to invest in my business?”So I listen to them describe how they really need outside investment to help their business grow. The passion in these ad-hoc pitch moments is invariably impressive and though I usually think it’s a wonderful business, my reply is almost always, “No, sorry — I won’t invest in your business.”These entrepreneurs sometimes look a little heartbroken, but as long as the eggnog wasn’t really spiked, I try to explain, usually saying something along the lines of the following:I work for a venture capital (VC) firm. VC is built on the idea that investors make an outsized amount of their returns from a very small number of their investments.&nbsp; Hence, every deal we make needs to have the potential to be a huge success. Love it or hate it, this is the "<a href="https://medium.com/leadership-prevails/understanding-the-vc-power-law-why-fund-size-matters-in-venture-capital-returns-b3dcc2681509">VC model</a>."<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe70qG8vXaypVuvKoqLiwML2WwcLIKBy_JS8DeodXleG7vcJiHO5hPKzZW9Yd3AyeT98J5xq_SNWKeF_ACybIsTskOqkpCx4bRASy8sghajR1AINI7R8pDZTiV73P0_loM9yPQzbSS0U5EObpd2s9w?key=rz7TkrBy_rsMUWlGE5ZSRaMu">Photo:&nbsp;<a href="https://www.linkedin.com/in/lucas381/">Lucas Robinson</a>For the VC model to work, we need companies that are either creating or working in a huge market, with the&nbsp;<a href="https://www.investopedia.com/terms/v/venturecapitalist.asp">potential to capture a sizable share of it.</a> In practice, that means that we seek companies with the potential to expand beyond their current countries of operation (i.e. not entirely focused on dominating one country). What does that really mean? Bluntly, we’re looking for companies targeting total addressable market sizes of more than a billion dollars in Africa.We also look for companies that are trying to solve seemingly intractable problems, often through the clever use of technology, removing the considerable friction that exists in most markets. This means we, like most VC firms, have a preference for fintech, e-commerce, SaaS, trade/logi-tech and mobile-first solutions.&nbsp;Can all of Africa’s problems be solved through these technologies? Of course not, but these technologies enable companies to scale quickly and at the risk of sounding like a catchy&nbsp;<a href="https://youtu.be/aAkMkVFwAoo?si=grG_5S4CnaaAbVK4">Mariah Carey Christmas song</a>, that’s what we are looking for.Is this model right for every company? Definitely not. The economic backbone of every single economy on the planet&nbsp;are the hundreds of thousands of small- and medium-sized businesses (SMEs) that are slowly and steadily increasing their revenue every year. These are fantastic companies. I want there to be hundreds and thousands more of them. I’ve even helped to build a few here on the continent and I’m really proud of them. But they are not (or were not, in some cases) VC-backable companies.Many solid SMEs and even some multinational companies grow without taking any kind of outside capital initially—they find ways to grow a business without (Mailchimp, Basecamp and Zoho are three such examples).Despite the frothy VC market in my adopted hometown of Nairobi, there are actually many other investment options to consider: impact investors, debt, local angel investors, revenue-based financing, working capital facilities, private equity (or micro-private equity) and even grants. Each of these is probably a better financing option for most of the business owners that I speak to.Does that mean I will try to avoid conversations about your new business plans when I see you at the holiday party? Of course not—I love those conversations. It's just that as a VC firm, we may not be&nbsp;<a href="https://www.weareuncapped.com/eu/blog/small-business-finance">the right capital for you</a>.If you're a growth-oriented founder leading an early-stage startup in Africa, apply to our&nbsp;<a href="https://venturelab.renewcapital.com/">Renew Venture Lab</a> to gain training and support. We look forward to learning more about your startup.Lucas Robinson has invested in, founded and run numerous businesses in Africa. He is a Principal at Renew Capital. One of the company’s training topics is focused on this very subject;&nbsp;<a href="https://share.hsforms.com/1vl4AMMceRsW3JTrqjT-LAAee4rj">sign up here</a>.

We seek companies with the potential to expand beyond their current countries of operation (i.e. not entirely focused on dominating one country). 

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Why I Say No to Holiday Party Pitches: The VC Model Explained

<h1>#StopGivingTuesday</h1>&nbsp;It’s Time to Invest in Africa’s Future<h2>Stop Giving to Africa</h2>It’s #GivingTuesday, and across the U.S., wallets are opening, charities are receiving and people are feeling good about giving. Some of you may be considering giving to Africa. But here’s some hard truth: charity isn’t helping Africa. Worse, it’s holding the continent back. With the world’s youngest and fastest-growing workforce—but the fewest jobs to match—Africa needs more than charity. It needs investment.I know—this sounds harsh. And yes, I’m biased. My wife&nbsp;<a href="https://www.linkedin.com/in/laura-davis-25764430/">Laura Davis</a> and I run an investment firm in Africa. Over the past decade, we’ve personally invested in about 50 startups across the continent. We do this because we’ve seen firsthand how investment—not charity—transforms economies, creates jobs and builds wealth.Let me offer two excellent reasons why you should consider moving from giving to investing in Africa:&nbsp;<ul><li>The “Oh No!” reason, and</li><li>The “Oh Wow!” reason</li></ul><h3>The “Oh No!” Reason: We’re Losing Africa</h3>The U.S. and the West are losing influence in Africa to China and Russia. China-Africa trade hit $282B last year, dwarfing the U.S.’ $45B. While Beijing is building railways, roads and ports, we’re sending planeloads of Americans on service trips, wearing matching T-shirts, ready to “help” Africa. Many Africans I speak with see charity efforts as outdated and patronizing—a relic of the 1980s.Meanwhile, China and Russia are treating Africa like the economic and geopolitical powerhouse it’s becoming. Ethiopia and Egypt recently joined BRICS+, signaling Africa’s shifting alliances and growing strategic importance. By 2050, 25% of the world’s population will live in Africa and the continent will hold 28% of the UN Security Council votes. Yet African leaders feel the U.S. doesn’t take them seriously—and frankly, they’re right.We’re falling behind because we’re stuck in an outdated view of Africa. Why are we still exporting handouts when we could invest in the entrepreneurs shaping Africa’s future? Capitalism works—it’s what we do best.&nbsp;<figure class="image"><img src="/uploads/Images_Website_Ratio_18_66c12a4288.png"></figure>Source:&nbsp;<a href="https://news.gallup.com/poll/644222/loses-soft-power-edge-africa.aspx?mkt_tok=ODEzLVhZVS00MjIAAAGS7gl9qAoPQNoaWqmpe2yrbLIC7aETi7NdaMFPLoxSgHL5s-XaG_Y8xnyQf-zWThDGGdEUGwwnc7WUsZ2Mnn3KoyULp4jY5fmg2j6sarpChZ4">Gallup</a><h3>The “Oh Wow” Reason: Africa is Booming</h3>Now for the exciting part. Africa is booming. Nine of the world’s 20 fastest-growing economies are in Africa. The continent is urbanizing faster than anywhere else and will soon house 13 of the world’s largest cities. Yet population growth continues to outpace private sector expansion. The opportunity is enormous—but only if you come looking for it.More than 60% of Africans are under the age of 25 and Africa’s youth are entrepreneurial, ambitious and ready to lead. A recent study found that 71% of African youth plan to start their own businesses within five years. Thanks to advancements in internet access, AI and mobile technology, launching a startup in Africa has never been easier—or more affordable.<figure class="image"><img src="/uploads/Images_Website_Ratio_22_9313e2173f.png"></figure>Source:&nbsp;<a href="https://www.renewcapital.com/">Renew Capital</a>Here are some examples:&nbsp;<a href="https://www.linkedin.com/company/mpostafrica/">MPost</a>, one of the startups we backed, is digitizing post office boxes in Africa. In some extreme cases, thousands of Africans have to share one P.O. box. MPost is making it possible to turn your mobile phone into a P.O. Box, enabling industries like e-commerce to flourish across Africa. Imagine the millions of jobs, economic value and wealth creation that could happen as this company scales. For a more traditional example, look at METAD, a specialty coffee company in Ethiopia. The founder had a vision of transforming Ethiopia’s coffee industry to make it specialty-grade before specialty coffee was all the rage. Today, METAD doesn’t just export world-class coffee to your favorite roasters and cafes—it employs thousands of workers, supports more than 10,000 smallholder farmers and provides health services and education to employees’ families, among other things. We don’t need to ask founders to go above and beyond making a profit; it’s just smart business in Africa. &nbsp;When young Africans see local founders securing investments, they think, “If they can do it, so can I.” That spark of hope spreads, fueling a ripple effect of ambition, innovation and a cycle of prosperity.<h3>Why All Eyes Should Be on African Startups</h3>Africa is the youngest continent on Earth, with a median age of 19. Each year, 8 to 10 million young Africans enter the workforce, but only 3 million formal jobs are created annually. This gap is a crisis—but it’s also the opportunity of a generation.Startups are the solution. They create jobs, drive innovation and build economies. Yet Africa receives less than 1% of global venture capital—a ridiculous figure for a continent that will soon be home to one out of every four humans on the planet.Imagine the possibilities if we focused our collective efforts on startups. In 2022, aid to Africa totaled $53B. Redirecting even a fraction of that to support startups could spark an economic renaissance. This shift is already happening in small pockets. Forward-thinking development organizations are working on blended finance projects, partnering with investors to lower the costs and risks for them to invest in Africa. But we need more charity checks to become investment checks.<figure class="image"><img src="/uploads/Images_Website_Ratio_21_794518c508.png" alt="An African map showing how aid funding exceeds startup capital, blended finance, and investment, highlighting the importance of investing in Africa instead of just giving."></figure>Source:&nbsp;<a href="https://www.renewcapital.com/">Renew Capital</a>If we focus, Western nations could accomplish a new vision: to invest in 10,000 startups every year within three years—a scale about 10 times Africa’s peak in 2022. At $100K per investment, this would require roughly $1B annually in pre-seed and seed-stage capital, or about 10% of what we currently give as charity to Africa each year. Combined with another $500M annually for technical assistance and ecosystem-building support from blended finance projects to prepare startups and provide post-investment support, this effort could create approximately 3.3 million jobs annually—closing the jobs gap by about 40%—at a cost to taxpayers of around $150 per job created. These are my own rough estimates, but imagine if we all focused on a bold target like this? Also, private capital doesn’t just generate employment; it catalyzes ecosystems, drives innovation and renews Africa’s image on the global stage. What a legacy.<h3>In Closing</h3>Obviously, I know we can’t stop all giving cold turkey—there’s too much entrenched infrastructure to dismantle overnight. But the time has come to move from giving to investing in Africa.And rest assured, there’s wealth in Africa. No matter how well-intentioned your charity or impactful your project is, there’s likely someone local who could be funding it and doing it better than you.&nbsp;I vote we replace #GivingTuesday (for Africa) with #StartupAfrica.I’d love to hear your thoughts. My objective is not to offend but to challenge us to think differently. Here are some questions that I’d love your thoughts on:&nbsp;<ul><li>Do you think giving is working?</li><li>Do you think investing will do more than giving?</li><li>What do you think is stopping the West from shifting its focus from giving to investing in Africa?</li><li>What else should we do to encourage Africa’s growth?</li></ul>Wondering How to Get Started?<ul><li>Think Differently: Poverty isn’t solved by giving; prosperity is created by investing. Read&nbsp;<a href="https://www.amazon.com/Prosperity-Paradox-Innovation-Nations-Poverty/dp/0062851829">The Prosperity Paradox</a> by Clayton Christensen.</li><li>Take an Investment Trip to Africa: Be part of a movement to create jobs and drive innovation. Join an investment tour to Africa. Meet entrepreneurs and see opportunities. We’ve got a group coming to&nbsp;<a href="https://www.gitexafrica.com/">GITEX Africa</a> in April.</li><li>Start Small and Diversify:&nbsp;You don’t need millions to begin, but no matter the dollar value, it’s best to diversify across countries. U.S.-based donors can use donor-advised funds to start. Join angel networks or explore Africa-focused VC firms.</li><li>Get Africa Smart:&nbsp;Subscribe to curated content on African startups. Check out&nbsp;<a href="https://theafricabrief.beehiiv.com/">The Africa Brief&nbsp;</a>(ours) or&nbsp;<a href="https://www.thisweekinfintech.com/tag/africa/">This Week in Fintech, Africa</a> (one of my favorites).</li><li>Be You:&nbsp;Be generous locally. If you want to help Africa, use your expertise to guide businesses and share your skills with African entrepreneurs.</li></ul>Disclaimer:This summary is intended for informational purposes only, is subject to change, and does not constitute investment advice or a recommendation to you. This summary is not intended as an offer to sell or a solicitation of an offer to buy an interest in any company (a “Company”) managed by Renew Capital or its affiliates. Such an offer to sell or solicitation to buy an interest in a Company may be made only by the delivery of subscription agreements relating to such Company and specifically delivered by Renew Capital to the recipient thereof. Investment in a Company is open solely to “accredited investors” (as defined by the SEC under the Securities Act of 1933, as amended) and, in addition, is intended only for sophisticated investors who meet the investor suitability requirements described in the subscription agreements and who can bear the risk of investment losses, including the potential loss of their entire investment.Investments with Renew Capital are speculative in nature and involve a high degree of risk. Renew Capital invests in companies located and doing business in sub-Saharan Africa. Investors should understand and be willing and able to handle the risks of investing in such frontier markets, which are more significant than the risks associated with investing in securities of U.S. companies or in other developed countries and include the risk of total loss of an investor’s entire investment. Investors should consult with their independent financial, legal and tax advisors to determine whether any particular investment or investment strategy is appropriate for them. Renew Capital does not make any recommendation regarding the appropriateness of any specific investment opportunity for any specific investor.

The time has come to move from giving to investing in Africa.

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#StopGivingTuesday

<h1>Reflecting on Two Years at Renew Capital: An Interview with Chukwudi Ofili</h1><figure class="image"><img src="/uploads/Linkedin_Templates_b7aeec3f66.png" alt="Professional portrait of the Director of Legal at Renew Capital, based in Lagos, Nigeria."></figure>Two years ago, Chukwudi Ofili shared his&nbsp;<a href="https://www.renewcapital.com/newsroom/homecoming-my-journey-to-renew-capital">journey</a> of returning to Nigeria after a stint abroad as part of a successful legal career to date. Since then, he’s been on an exciting chapter of professional growth while witnessing significant developments across Africa's investment landscape. In this follow-up interview, Chudi reflects on the lessons he’s learned and the future he envisions.Chudi, it’s been two years since you joined Renew Capital. Can you tell us about your experience so far and what stands out for you as the firm grows across Africa?It’s been an exciting two years with Renew Capital as we’ve expanded across 14 countries in Africa. With this growth, I’ve had the chance to learn a lot, both personally and professionally. Over time, I’ve learned a few lessons that have really shaped my experience here.<ul><li>Adaptability.&nbsp;This has probably been the most essential skill. With things moving so fast, being prepared for every situation just isn’t realistic. You have to stay flexible, find ways to add value on the fly and embrace the challenges as they come.</li><li>Learning never stops.&nbsp;I have had to unlearn and learn during my time at the firm. I’ve learned to navigate the nuances involved in closing venture capital (VC) investments in tech-enabled startups across different jurisdictions in Africa. At the same time, I have had to build capacity in relation to fund formation and compliance in the United States.&nbsp;</li><li>Curiosity. This is highly encouraged at Renew Capital as we are always looking for new opportunities and different ways to create value for our founders. That mindset has been vital for me.</li><li>Africa’s potential is undeniable. Having been actively involved in ecosystem development, deal reviews and engaging with founders from across the continent. There’s an abundance of opportunities for disruption and innovation with the accelerated adoption of technology.&nbsp;</li><li>Legal frameworks are catching up.&nbsp;Some governments are recognizing that innovation needs the right legal environment to thrive. We’re seeing progress, but founders still need strong legal support to build scalable and investment-ready businesses.</li></ul>You’ve mentioned how law plays a role in innovation. How have you seen governments across Africa support this?At Renew Capital, we’ve been keeping track of these changes through our monthly Legal Briefs. We have, for example, seen updates to corporate laws that are supposed to help startups grow in places like Nigeria, South Africa, Ethiopia and Kenya. For example, in the&nbsp;<a href="https://www.renewcapital.com/newsroom/renew-capital-legal-brief-september-2024">September 2024</a> legal brief, the Ethiopian Capital Markets Authority (ECMA) launched a regulatory sandbox that allows fintech companies to test new products in a controlled space. This trend is also taking place in countries like Nigeria, Ghana and Rwanda. We’re also seeing increased adoption of startup and finance laws across Africa in places like Nigeria, Kenya, Morocco and Ethiopia.You also highlighted adaptability as a key lesson. Why do you think that’s been so important for you?As we’ve grown so quickly, we had to make a lot of changes as we entered new markets, which also comes with its own fair share of new challenges. Being adaptable has been essential for navigating all of that. Whether it’s changing our processes or adjusting to different legal and business environments across Africa, you’ve got to be flexible to succeed here.Looking forward, what excites you most about the next generation of African entrepreneurs?&nbsp;I believe that there is a general consensus that Africa is the world’s next growth market. With the many challenges that we face across the continent, African founders within Africa and in the diaspora are utilizing technology to innovate and provide solutions to the socio-economic challenges that we face on the continent. However, lack of access to capital and the lack of the necessary skills to build scalable and profitable businesses remain pain points for many founders. Notwithstanding, there has been increased activity by Africa-focused and experienced investors who are working hard to close this gap and address these challenges. There is optimism about the African potential.

Chukwudi Ofili, Director of Legal and West Africa Investment Manager at Renew Capital, reflecting on his two-year journey at Renew Capital.


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Reflecting on Two Years at Renew Capital: An Interview with Chukwudi Ofili

Renew Capital has a presence in 14 African countries. We aim to provide insight into Africa's startup scene, along with the opportunities and challenges it presents through a series of blogs from our in-country team. If you share our passion for developing entrepreneurship in Africa, we invite you to check out our&nbsp;<a href="https://www.renewcapital.com/careers">open roles</a>.&nbsp;<h1>Nihal Grii on Innovation and Morocco's Modern, Diverse Culture</h1>Q&amp;A with Renew Capital's investment ecosystem manager in Morocco.Renew Capital is expanding its presence in Morocco and to showcase this remarkable country, we present an insightful Q&amp;A with Nihal Grii, Renew Capital’s investment ecosystem development manager in Morocco. In this Q&amp;A Nihal shares insights on Africa’s growing startup ecosystem, Morocco’s diverse culture, innovation and advances in sustainability.For more details, explore our&nbsp;<a href="https://latest-api.renewcapital.com//uploads/Morocco_Startup_Ecosyestem_Fact_Sheet_006a5a8686.pdf">Morocco Startup Ecosystem Fact Sheet</a>.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe1NnVkQvptzWTdcl4Llf0IyxJhFhVqSxhLRRGhQHluEu_v8KqJuxW-ywrf_JgbXa8KuKD7ZzN7tg6CZLm3PkeaOhInfzNkOo7jDVohmQtsGKl-baLD2EMNZB-2RvQ1YfMCuKOheorWHISryAGcft0fN4Ug?key=uetvN6jPUbvXgO7d4Bq6xQ" alt="Renew Capital founders and Investment Ecosystem Manager in Morocco pose for a photo after attending GITEX Africa 2024.">You have extensive experience in startup development. What initially drew you to work with startups?It's fascinating to see how startups can thrive and drive a nation's economy. What initially drew me to work with startups was their potential for innovation and impact. Startups can be an engine of job creation, technological advancement and economic diversification. They bring fresh ideas to life and solve real-world problems, often leading to significant improvements in quality of life. Seeing how a single startup can create jobs, attract investment and inspire an entire community is incredibly motivating. It's this dynamic environment and the chance to contribute to meaningful change that hooked me from the start.What excites you most about Morocco's and Africa’s innovation and startup ecosystem?What excites me most is the ambition and determination of Africans. There is a powerful drive to overcome challenges and find technological, scalable and impactful solutions to the many problems we face. It's inspiring to see members of the Moroccan diaspora returning with the expertise and resources to help grow the country and the continent. These individuals are true fighters, bringing energy and innovation that fuels the vibrant startup sector. The dynamism and potential of this ecosystem are truly exhilarating.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdgP7tbgu7_jLcMlmok-_RNsiZC5-UQbE1sNTyn8cV8iHS4twYTr6GfqwroeBSfMSV-lel4PGxpm-6_GrX9MIVBIZHwyNNIKjYt8uAV-IoxYJdcA19gdQkeO2S3heTDUOsWnLOyS-1xt6rIacxq2-tFSJ4?key=uetvN6jPUbvXgO7d4Bq6xQ" alt="Founders of Renew Capital and Investment Ecosystem Manager exploring the vibrant startup ecosystem in Morocco.">What is one thing you wish more people knew about Morocco, its culture and its opportunities?I wish more people knew about the incredible blend of cultures that make up Morocco—Arab, Berber, Andalusi, Mediterranean, Hebraic and African influences all coexist here. It's a unique cultural tapestry that enriches daily life. Additionally, Morocco's strategic location, especially in Tangier, where you can see Spain across the Strait of Gibraltar, offers unique opportunities for trade and cultural exchange. Moreover, Morocco is making remarkable strides in clean and sustainable energy, particularly in water management. With plans to increase desalinated water production tenfold by 2030, and the integration of solar energy reducing production costs dramatically, Morocco is turning its natural challenges into strategic advantages.&nbsp;Morocco is a wonderful place to live! We have thriving expatriate communities in cities like Casablanca, Rabat, Tangier and Marrakech. After-work events are frequent, offering great opportunities for socializing and networking. The blend of modern amenities and rich traditions makes life here both comfortable and enriching.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfH_h6RtOTSQqXrxFTblaPqiUWfRD5L5QYfHBCREsQiqk7sSm-rqJWwPwbu06y50EM5crAkjqaOTac_C_qK3HcPaCcoDwbg4ivA1UzxvxtChXSmJOKZlKmK0GkaWwe_Iz1kPEpVdgYiuWGTcDimb5Tj4ww?key=uetvN6jPUbvXgO7d4Bq6xQ" alt="Investment Ecosystem Manager reflecting on the Q&amp;A session against a beautiful green backdrop in Morocco.">Could you provide a brief overview of your role at Renew Capital and what you find most exciting?As Renew Capital’s investment and ecosystem development manager in Morocco, my role is multifaceted, involving project management, stakeholder engagement and investment sourcing and management. I support the execution of private-sector development projects, ensuring we achieve results and meet all project milestones. I also help develop and facilitate our core gender-smart programs by training and coaching SMEs. I also help build relationships with startups, SMEs, development organizations, government agencies and private sector partners.&nbsp; Part of my role also revolves around sourcing potential companies for our investment pipeline, processing new leads and performing due diligence.The most exciting aspect of my work is developing a robust investment pipeline in African countries. Recognizing that many African nations lack sufficient investment-ready startups, we strive to develop this pipeline not just for ourselves but for other investors as well.&nbsp;What advice would you offer to someone looking to enter the startup scene in Morocco?My advice for anyone starting in the Moroccan startup scene is to manage your reputation carefully. Be authentic and trustworthy—investors talk about their experiences, and a single bad experience can affect your future funding opportunities. Secondly, be realistic about your valuations. High valuations can deter potential investors, so use appropriate techniques to assess your true value and raise only what you need to scale. Finally, share feedback and collaborate with other entrepreneurs. Success breeds success, and a strong community can enhance the reputation of the country, attracting more foreign investors. By supporting each other, we can create a thriving startup ecosystem in Morocco.

I wish more people knew about the incredible blend of cultures that make up Morocco—Arab, Berber, Andalusi, Mediterranean, Hebraic and African influences all coexist here.

Morocco

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Nihal Grii on Innovation and Morocco's Modern, Diverse Culture

<h1>Digital ID: Boon or Big Brother for Africa's Economies?</h1>Deep Dive on Digital IDs in Africa<figure class="image"><img src="/uploads/Linkedin_Templates_24_d8b9edf6d9.png" alt="African map highlighting emerging markets poised to unlock 6% of GDP by 2030 through digital ID systems."></figure>In Context: In 2019,&nbsp;<a href="https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/digital-identification-a-key-to-inclusive-growth#">McKinsey published a report&nbsp;</a>stating that in 2030, emerging economies could unlock economic value equivalent to between 3% and 13% of GDP if governments implemented digital ID systems. More specifically, the report noted that Nigeria could unlock 7% (~$23.6B) and Ethiopia could unlock 6% (~$20.8B) of GDP. Economic benefits can be derived from the efficiency of:&nbsp;optimized e-government services, verifiable tax collection, electronic KYC, formalized business registration and verifiable asset and land ownership.&nbsp;Five years later, Modular Open Source Identify Platform (MOSIP) is now active in nine African countries in the pilot or implementation phase. Rwanda, Egypt, South Africa, Nigeria and Kenya are also working on implementing their own non-MOSIP systems. Meanwhile, data protection concerns have slowed progress in some countries (<a href="https://nation.africa/kenya/news/data-protection-concerns-slow-down-digital-identity-initiatives-4244758#google_vignette">Nation</a>). And without proper controls, digital IDs can give rise to&nbsp;<a href="https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/digital-identification-a-key-to-inclusive-growth#section-header-3">political manipulation and social control</a>.&nbsp;How big is the challenge? According to UNICEF, nearly half of all African children under five are unregistered (<a href="https://data.unicef.org/resources/a-statistical-update-on-birth-registration-in-africa/?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">UNICEF</a>) and according to the World Economic Forum, a little less than half of Africans use some banking service (<a href="https://www.weforum.org/agenda/2023/11/africa-digital-mobile-banking-financial-inclusion/#:~:text=Today%2C%2048%25%20of%20Africa's%20population,at%20pace%20across%20the%20continent">World Economic Forum</a>). Countries are up against major obstacles to transition to digital IDs.Some experts believe that digital identification systems&nbsp;unlock value for countries in five key ways:<ul><li>Efficient and corruption-free distribution of government benefits&nbsp;and&nbsp;optimized e-government services.</li><li>Digitized and verifiable tax collection,&nbsp;increasing tax revenues.</li><li>Electronic KYC&nbsp;for financial transactions. In 2023, Egypt increased its digital KYC requirements, adding biometric requirements for certain transaction sizes to combat money laundering.</li><li>Formalized business registration greatly benefits informal businesses' connection to formal institutions, customers, and vendors.</li><li>Verifiable asset and land ownership to combat theft and to facilitate sales and purchases.</li></ul>What is the continent’s progress towards digital IDs?&nbsp;The MOSIP is active in nine African countries in the pilot or implementation phase. So far, Togo, Morocco, Ethiopia and Uganda are implementing the system and Guinea, Niger, Sierra Leone, Madagascar and Burkina Faso are running pilot projects. And notably, as of March 2024, Ethiopia had onboarded 4 million citizens onto its MOSIP platform.Several other African nations are also making progress in implementing their own digital ID systems to enhance governance, service delivery and commerce:&nbsp;<ul><li>Rwanda: Rwanda's Single Digital ID system, initially planned for 2023, aims for full citizen onboarding by 2027, with the core software bids closing in June 2024.</li><li>Kenya:&nbsp;Kenya is also&nbsp;<a href="https://www.biometricupdate.com/202405/kenya-unveils-ambitious-digital-id-biometric-passports-issuance-plans?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">upgrading</a> its digital ID platform and rolling out biometric passports. The Maisha Munda digital ID system, re-launched in February 2024, targets issuing 32 million IDs by 2026.&nbsp;</li><li>South Africa:&nbsp;South Africa's new biometric and digital ID system called NIS launched in 2022 and was planned to be&nbsp;<a href="https://www.biometricupdate.com/202201/new-biometric-digital-id-system-in-south-africa-to-enhance-service-delivery-security?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">fully implemented by 2024</a>, however, we expect that implementation is still ongoing and challenges remain but progress is being made&nbsp;<a href="https://www.biometricupdate.com/202405/africas-digital-id-experiences-yield-lessons-on-engaging-stakeholders-open-standards">particularly around registering births.</a> The system’s primary objective is to aggregate all disparate forms of information regarding its citizens and foreigners into one centralized system.</li><li>Egypt:&nbsp;Egypt’s digital ID system and online verification processes for e-government services are core components of the country's&nbsp;<a href="https://www.euromoney.com/article/2bxwt8tfi8c46o8ipo83k/sponsored-content/egypt-pushes-digital-transformation-agenda?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">2030 Digitalization Strategy</a>. The Egyptian government is also&nbsp;<a href="https://dig.watch/updates/egypt-institutes-new-digital-id-checks-on-certain-fintech-transactions?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">enforcing biometric verification&nbsp;</a>for certain non-bank fintech services to combat money laundering as of 2023. Requirements are tiered based on the risks associated with each transaction.&nbsp;</li><li>Nigeria:&nbsp;Nigeria's National eID, launched in 2014, seeks to increase adoption beyond the current 13.6%. The government has also indicated that it plans to distribute social benefits to about&nbsp;<a href="https://www.biometricupdate.com/202403/nigeria-rwanda-use-digital-id-for-social-welfare-payments?utm_source=theafricabrief.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=deep-dive-on-digital-ideas-in-africa-june-28-2024">60 million citizens</a> using its digital identification system.&nbsp;</li></ul>Learning from India’s ID SuccessIn 2012, India launched its Aadhaar digital identity system to provide unique digital identification systems to all of India’s citizens. Since then, the program has been a success, though concerns remain about the potential for the platform to be abused. The initiative has led to a more efficient distribution of government services and welfare, a substantial increase in digital payment use under India's Unified Payments Interface (UPI) and a reduction in corruption. The program grew rapidly even though before Aadhaar was launched, 40% of Indians lacked official birth certificates, and 60% lacked bank accounts, underscoring Aadhaar's relevance to emerging and developing markets (<a href="https://www.forbes.com/sites/tylerroush/2023/11/02/what-is-aadhaar-indias-id-system-sam-altman-is-reportedly-modeling-his-eye-scanning-crypto-project-worldcoin-after/">Forbes</a>). An Indian non-profit launched MOSIP in 2018 with funding from the Bill and Melinda Gates Foundation. It is derived from the Indian Aadhaar digital ID system, which achieved almost 90% enrollment in less than a decade and facilitated a boom in digital payments and consumer spending in the country. As of 2023, 90% of Indian adults had an account at a formal financial institution.<figure class="image"><img src="/uploads/Linkedin_Templates_25_8f6d3e5560.png" alt="Graph illustrating the rapid enrollment of nearly 90% of India's population in Aadhar digital ID in under a decade, with billions linked to bank accounts."></figure><figure class="image"><img src="/uploads/Linkedin_Templates_26_696ce93979.png" alt="Rising retail payments through digital wallets, showcasing the rapid expansion of the Unified Payment Interface in India."></figure>Source:&nbsp;<a href="https://www.imf.org/external/pubs/ft/fandd/2021/07/india-stack-financial-access-and-digital-inclusion.htm">International Monetary Fund</a>

Emerging economies could unlock economic value equivalent to between 3% and 13% of GDP if governments implemented digital ID systems.