The Africa B2B Tech Report

Issue No. 86. Africa-Middle East B2B tech news & insights for 18 September 2024.

Charles Laughlin

Sep 19, 2024

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The Africa B2B Tech News Digest

B2B Tech News & Insights for 19th September 2024

Happy Pay’s Unique Spin on BNPL

South African buy now, pay later platform Happy Pay has raised R32 million in pre-seed funding (approx US$1.8 million). What’s the plan with the money? The usual. Accelerate growth and build out the product, per Tech Financials.

E4E Africa and 4Di capital led the pre-seed round. Also joining were DotExe Ventures, Launch Africa Ventures, Equitable Ventures, Felix Strategic Investments, and others. Fin Africa is also backing a debt facility for Happy Pay.

Cape Town-based Happy Pay was formed in 2021 by Wesley Billet, Boitumedo Thulo, David Torr, and Maps Maponyane. The company launched its product last year. Happy Pay offers consumers the chance to pay off purchases in two payments with no interest or deposit. The company says it has 150,000 active users.

Happy Pay also claims to be South Africa’s only independent BNPL platform. This appears to be a reference to the fact that rival BNPLs in the country have been acquired in recent years. For example, PayJustNow was acquired by Weaver Fintech in February 2022. How this independence benefits consumers is unclear.

The company has also reportedly built its platform to use AI for fast credit scoring. And the platform is said to be built to comply with future regulatory standards. We presume this means restrictions designed to prevent consumers from becoming over-extended with BNPL loans.

While very popular, particularly among younger consumers around the world, BNPL is also controversial. Regulators around the world, most notably in BNPL’s birthplace Australia, have imposed restrictions designed to keep consumers from taking on too many BNPL loans.

The irony of BNPL is that it came into existence to serve consumers (GenZ and millennials) who were averse to using revolving credit or taking on long-term debt. Yet a consensus has emerged that BNPL loans are themselves a form of debt. The ease with which consumers can acquire goods they cannot afford at the time of purchase using BNPL has arguably fueled consumer indebtedness rather than serving as an antidote to it.

In fact, this apparent abuse of BNPL helped to fuel the creation of an alternate universe of savings-based platforms like Accrue Savings in the U.S. and LayUp Technologies in South Africa.

Happy Pay does try to make the case that it is a responsible presence in South Africa’s payments ecosystem by offering zero-interest installment loans and providing a safer alternative to payday or street loans. The latter point is notable given we have covered other startups that are attempting to provide a safe alternative to the mashonisa.

One such company is Jem (formerly Smart Wage), an HR tech that also provides earned wage access, which lets workers access wages already earned before payday for a small fee.

Are SMEs Leading the Way in AI Adoption?

On the most recent episode of the BIG5D Podcast, we had a chat with Neal Polachek, who is the co-founder of Dialog, a U.S. startup measuring SMEs’ use of AI in the day-to-day running of their businesses. This can be anything from writing marketing copy to handling customer support and much more.

Neal said Dialog has discovered something interesting, and perhaps unprecedented, about small businesses and AI. From a combination of survey research (two surveys completed thus far) and direct interviews with SMEs about their AI usage, Dialog has concluded that small businesses are at the leading edge of AI adoption.

“Our big takeaway is that these smaller businesses are going to use these tools faster, sooner, and in more substantive ways than the 800-person marketing organization at a big enterprise company,” Neal said on the BIG5D Podcast. “Because there's such a premium on time with smaller businesses.”

If Neal is right, this runs contrary to the typical pattern we see when a new technology emerges. A good example of this is SaaS (software as a service). The SaaS model essentially democratized software by packaging powerful enterprise-level software into monthly subscriptions so that SMEs could affordably gain access to these same solutions — for digital marketing, accounting, CRM, and so on.

So far Dialog has only measured AI adoption among U.S. SMEs and digital agencies, which are predominately SMEs themselves.

The obvious next question for this audience is whether this pattern reversal — with SMEs leading the way in AI adoption — is repeating itself in the Middle East, Africa, or in other emerging markets.

While we cannot answer this question right now, we do have research from GeoPoll and Africa 118 (which was presented at the 2024 BigFive Summit) showing some early interest in AI among SMEs in four African markets (South Africa, Nigeria, Kenya, and Ethiopia). In this survey, for example, AI came in second behind websites on the list of technologies that SMEs in those markets said they plan to invest in this year.

Dialog is currently looking for partners to launch its SME AI survey in Europe, Asia, Africa, and the Middle East.

Recommended Reading

The following is a curation of content from around Africa, the Middle East, and the world related to big tech, digital marketing, small business, startup life, venture funding, M&A, and more. Please vote with your clicks to tell us what we should curate for you in future editions.

A Look at Nigerian Fintech Unicorn Flutterwave’s Evolution

Francophone SuperApp Gozem Taking on Mobile Money Powerhouses

Abu Dhabi’s Hub71 Welcomes 21 Startups to Latest Cohort

Uber-Backed Mobility Fintech Moove Plans Move into U.S. Market

SweepSouth Rolls Out Brand Refresh

Beyon Money Earns ‘Best Mobile Payments App’ MEA Finance Award

Found on LinkedIn

Thanks again to Axel Peyriere for sharing this chart, which shows Kenya’s recent performance in the never-ending race for startup funding in Africa. In 2023, Kenyan startups raised $792 million. Through eight months of 2024, the figure was $426 million, which is below the 2023 pace. But there is still time to catch up.

The Big5D Podcast

The BIG5D Podcast features in-depth conversations with the leaders building, investing in, and taking to market the digital products and services designed to make businesses more successful in Africa, the Middle East, and emerging markets.

Check out these recent BIG5D Podcast episodes

Episode 50: This milestone episode features a conversation on how AI is revolutionizing small business operations with Neal Polachek, the co-founder of Dialog, a new company measuring small-business AI adoption.

Episode 49: University professor Steven Boykey Sidley fears no controversy. In this conversation, Sidley shares his deep knowledge and strong opinions on how AI and blockchain will impact business and society.

Episode 48: Houssam Kayal is the CRO of B2B SaaS company FOO. Kayal helps us understand the big trends in fintech and gives us a better understanding of concepts from embedded finance to banking-as-a-service.

The very popular BigFive Summit will return to Cape Town in March 2025. Details about this event will be announced in October.

Do you want to get involved with our next Summit? Write to us at info@bigfivedigtial.org.

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