The Africa SMME Tech Report

Issue No. 25. Africa-Middle East local and small business tech news for 31 January 2022. This issue features OZÉ, Kenya Yellow Pages, Africa 118, Leaf Global Fintech & more...

Jan 31

This issue of The Africa SMME Tech Report is brought to you by Duda

OZÉ Raises $3M Pre-Series to Continue Digitizing MSME Operations

Ghanaian fintech startup OZÉ has raised a $3 million pre-Series A funding round. The new funding will fuel the SaaS startup’s efforts to convince Africa’s micro and small enterprises to ditch pen and paper and use OZÉ’s digital recordkeeping and embedded finance tools.

Since launching its beta product in 2018, OZÉ has grown its customer base to 125,000 MSMEs. It has also expanded from its home market Ghana into Nigeria.

The pre-Series A round comes almost exactly one year after OZÉ announced a $700,000 seed round designed to help OZÉ expand its team, promote its product, and expand into Nigeria.

The seed round was supported by Anorak Ventures, Matuca Sarl, and Rising Tide Africa (a Nigerian angle investing group). These players joined existing OZÉ investors Ingressive Capital and MEST.

The new $3 million round is led by Speedinvest, with Cathay AfricInvest Innovation Fund, Savannah Fund, and several Angels experienced in operating and investing in global fintech also participating. OZÉ says the pre-Series A round was oversubscribed.

In its announcement, OZÉ said it will use the funds “to expand the capabilities of its platform and increase access to affordable finance in Ghana and Nigeria through its partnerships with well-known commercial banks.”

The company believes that trends in the African SMME Tech market offer a strong tailwind for solutions like OZÉ.

“The last decade has seen a huge transformation in the digitization of business,” said OZÉ Co-founder Dave Emnett. “Accelerated by the pandemic, we are now seeing an even greater demand for solutions to financial challenges like accepting payments, understanding cash positions, and securing loans to increase stock for busy periods.”

The OZÉ platform offers a comprehensive suite of tools to help small businesses manage their finances.

It allows business owners to understand and improve their performance as well as access to capital. Business owners use OZÉ to record transactions, manage receivables, and collect payments. The platform also offers access to business coaching. Small businesses can apply for loans within the app as well.

OZÉ says it grew the number of monthly active users on its platform last year by 1200%. It also saw a 200% increase quarter-on-quarter in the number of loans granted from Q3 to Q4 of 2021.

One of the keys to OZÉ’s growth has been the relationships it has formed with banks, which have traditionally been wary of extending financing to Africa’s very small businesses. Using technology like OZÉ helps MSMEs operate more efficiently, making them better credit risks for lenders.

“The synergy OZÉ creates between business owners and banks creates real confidence in the West African economy; business owners are able to access the finance they need,” OZÉ said in the funding announcement. “And banks have seen stability in repayment rates thanks to more accurate digital recordkeeping.”

We asked OZÉ CEO and co-founder Meghan McCormick via email and asked her if OZÉ’s growth is exclusively from businesses that do not use any digital tools to run their businesses. And we wanted to know how challenging it is to get MSMEs to dump pen and paper in favor of a SaaS tool like OZÉ.

“I would say the majority of our users are transitioning from pen-and-paper or no records at all. If they are using a digital solution, it's typically something like Excel,” Meghan told us.

“We get MSMEs to start recordkeeping through OZÉ with a blend of information and incentives. Most entrepreneurs know that they should be using a tool like OZÉ to manage their business. But like any good habit, it can take time for it to become second nature. We educate the entrepreneur on why they should keep records, how to do so using OZÉ, and provide small rewards along each step of the way.”

One new feature added this month allows its customers in Ghana and Nigeria to accept payments from their customers on OZÉ. This automates recordkeeping and helps businesses build up their credit scores, Meghan said.

We see OZÉ’s opportunity as becoming a full-service solution for MSMEs to transition from analog to digital operations. Use whatever grandiose business cliche you want to use to describe the opportunity. Maybe it’s an operating system for MSMEs? Or a financial super app? Whichever it is, OZÉ is going to need a lot more funding to realize the vision, in particular, if its vision is to move beyond West Africa and serve MSMEs across the continent.

Check out Meghan McCormick’s appearance on the BIG5D Podcast last year.

Africa 118, YP Kenya Partner to Digitize Tanzania’s SMEs

Two Nairobi-based local search companies have teamed up to launch a new platform in Tanzania designed to solve a key pain point for African consumers. Finding accurate information about local businesses.

According to a study from Africa 118, “85% of mobile customers in a major African city reported difficulty in finding accurate and up to date information on local businesses, particularly Small and Medium Enterprises, owing to the fact that less than 5% of businesses had any online presence.”

To address this gap and to give local SMEs more tools to grow their businesses, Africa 118 and Yellow Pages Kenya have formed a partnership to create YP Tanzania.

The new venture is already underway in offering Tanzanian small businesses print and online directory listings, Google geo-location, website design and development, social media marketing and management, email marketing, among other digital solutions.

Yellow Pages Kenya CEO Pedro Gomes says the two companies spotted a gap between growing consumer Internet adoption and SME digitization.

“We are seeing internet usage growing rapidly due to the proliferation of mobile devices and improving telecommunications infrastructure, yet businesses are not adapting to the change at a commensurate rate,” Gomes said.

“This is the gap that we aim to fill by helping businesses, especially SMEs, get online and connect with a growing marketplace. Essentially, what we are offering businesses is a clear route to growth at a significantly lower cost than the alternative.”

Africa 118’s CEO describes the venture as having an impact-driven mission.

“The impact that we expect to have is more than simply economic. The downstream effects of supercharging Tanzania’s digital economy will result in better livelihoods for communities, increased access to opportunities, and bring us closer to achieving national socio-economic goals. YP Tanzania not only connects businesses but is aims at improving lives,” said Africa 118 Founder & CEO Ezana Raswork.

Leaf Global Wins U.S. Grant to Further Its Mission Using Blockchain. to Unlock Financial Inclusion

Leaf Global Fintech has a mission to help Africa’s refugees and cross-border traders access mobile money and other financial services, which makes them far less vulnerable to robbery and corruption. And the company is building this in a future-proof manner, using the Stellar blockchain.

The company’s combination of mission and innovation has earned Leaf some accolades. For example, last October the company was named to the Inclusive Fintech 50 by the Center for Financial Inclusion.

Now the company has earned a Phase II SBIR grant from the U.S. National Science Foundation for $855,394.

The award will help Leaf continue its mission to facilitate financial services using blockchain and distributed ledger technology. One of Leaf’s priorities has been building a platform that works for users with limited or even no internet access.

“The NSF award will enable Leaf to deploy innovative ways of including unbanked people in the formal financial system through new technology. SBIR funds the commercialization of cutting-edge technologies and projects that advance the frontiers of their industries,” says Tori Samples, Co-Founder and CTO and Principal Investigator on the SBIR award.

“The grant will allow us to build out our algorithmic credit-scoring and lending product for low and no-bandwidth environments. It will also fund the development of a decentralized identity protocol that allows people to verify their identities without exposing personally identifiable information. With this grant, we will be able to push the bounds of sophisticated financial tools and use technology to deliver them to the people who usually receive them last.”

Leaf has already fully developed its Leaf Wallet product and demonstrated how blockchain can be used to process financial transactions in a low-connectivity environment.

When we spoke with Samples last year for the BIG5D Podcast, she described the opportunity that she and Co-founder and CEO Nat Robinson identified.

“We estimate the banks are missing out on about 40% of the bankable markets in the countries that we operate in. And so a lot of those people are refugees or migrants or cross-border traders, people that fall into our target customer segments,” Tori explained.

“We've done a lot of work in finding out what the financial needs of refugees actually are. And we are not just relying on academic and NGO research that sometimes doesn't apply the commercial sector lens. We really dug into it on our own. And then we built a product around this idea of offering affordable, accessible, convenient cross-border financial services to people who may or may not be device enabled with a smartphone.”

Check out Samples’ appearance on the BIG5D Podcast last year.

Found on LinkedIn…

We found this graphic on LinkedIn, courtesy of investor Axel Peyriere. In his post, Peyriere says, “2022 will definitely see new unicorns out of Africa, and most of them are certainly in the list below!” Do you agree? Or do you believe too much is being made of whether or not a company is a current or soon-to-be unicorn?

This Issue of the SMME Tech Report is sponsored by…

Duda is the leading web design platform for companies that offer web design services to small businesses. We serve all types of customers, from freelance web professionals and digital agencies, all the way up to the largest hosting companies and online publishers in the world.

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