A Confession, Kuda Bank goes into overdraft, and we're all moving to Zanzibar 🏝

Happy Friday!

Confession time.

Last Thursday I wrote this newsletter at a pub in London.

The cafe I was working from closed while I was writing.

Instead of spending an hour taking public transport to get home, I found the nearest place I could put my laptop down (a pub) and kept going.

Clearly I had one too many. Today I found this email in drafts and realised I didn't hit send 🤦🏾‍♂️

So, you're getting African Tech news one week late. Sorry about that

But a few cool things have happened in the last two weeks:

1) 117 new readers have joined us - welcome to all of you 👋🏾

In case you missed it, Prox Weekly is your 5 minute rundown on Africa’s tech scene. 7 minutes if you’re a slow reader 🐢 

If someone sent you this, make sure to sign up below and join 470 others who want to learn more and get involved in Africa's Tech ecosystem.

2) We're on Beehiiv! 🐝 

Beehive lets me do cool things like referrals and polls. Let's test it out with a quick question:

We're also testing out a Referral Program:

• If you share this with a friend and they subscribe, I'll give you a shout out next edition.

• If you invite five, I'll write an article of your choice 👀  

Your referral code is at the bottom of this email 👇🏾

3) We've held two epic community meetups 🙌🏾

I've managed to meet about ~80 of you in real life and it's been incredible. 

Shout out to Draper Startup House for partnering with us in Singapore, and Alquity for partnering in London and sharing your spaces with us.

Here are some pics and videos.

In the next two months I'll be hosting events across Kenya, Rwanda, Nigeria and Ghana.

If you want to partner for one, flick me a message. And if you want to come along, stay tuned for more info.

Alrighty! Here are the African headlines you shouldn't miss. 

Are they a week old? Maybe. Are they juicy? Definitely. Here's what to expect:

• Silicon Zanzibar and the Beach Life 🏖

• Stellantis, the $40B car company, makes its first African bet 🚘

• Kuda Bank’s losses 6x to $14m 🥲

Let’s go 👇🏾

Beach Breaks and Tax Breaks in Silicon Zanzibar

Earlier this month Zanzibar announced its campaign to become Africa’s next tech hub, ‘Silicon Zanzibar.’

Zanzibar is banking on its crystal clear waters, sandy beaches and balmy weather to lure tech companies to its shores. 

But it’s not just the beautiful beaches - Silicon Zanzibar is offering a suite of regulations and initiatives to bring startups over to the island. 

Here is the case for Silicon Zanzibar:

1) A tax holiday 🏖️

Zanzibar will offer a tax holiday for tech companies that set up in the country for ten years. Like living in Zanzibar isnt enough of a holiday.

2) Good Company 🫂

Leading the migration to Silicon Zanzibar is Wasoko, one of Africa’s fastest growing companies. Wasoko is relocating 40 of their staff and senior leaders, including the CEO, Daniel Yu. 

3) Easy Living 🛩

Zanzibar is set up for ease of access, with direct flights from over 20 destinations across the world. Fumba Town, the focal point of Silicon Zanzibar, is an easy 15 minute drive from the airport, and Zanzibar will offer Working Visas for any relocating tech workers.

So, will African Big Tech trade the hustle of Lagos and Nairobi for the waves of Zanzibar? 

With the pressures of tech culture and more emphasis being placed on mental health in the tech world, I really hope so. 

I’d love to see Zanzibar become the next haven for tech workers and companies looking to reawaken their creativity, rejuvenate their bodies and get some more soul sun in them.  

Brb moving my HQ to Zanzibar

Stellantis bets on Africa’s Car Market 🚘 

Last week was a big one for Africar Group, the African Used Car Marketplace. They announced a funding round from Stellantis, and the launch of a new car marketplace, Auto24, in the Ivory Coast. 

Stellantis is the automotive giant behind Peugeot, Chrysler, Dodge and Maserati with a whopping $40B market cap. Their investment in Africar Group is their first on the continent, and their bet on the potential Africa's used-car market.

Africar Group lets users reliably buy used cars online. In Africa, demand for used cars is high but the user experience is poor, with customers experiencing a lack of transparency and pricing instability.

For a deeper dive on why used cars are such a huge opportunity, check out my crash course below (get it? 😉)

Stellantis’ investment is another instance of global companies betting on local companies to win markets, rather than launching themselves - similar to Stripe acquiring Paystack, and Coinbase investing in Mara.

Axel Peyriere is the CEO of Africa Group. He's also a serial investor on the continent, and a friend and reader of the newsletter. If you’re reading this, congrats 👏 

Kuda Bank takes a $14M loss, pushes users to go into overdraft

Nigerian neobank, Kuda Bank, copped an eye-watering loss of $14,214,681 in 2021.

Kuda raised a $55 million Series B from Target Global and Valar Ventures in August 2021, four months after their $25 million Series A.

This valued Kuda at $500 million - a fintech darling.

Kuda Bank positioned itself as ‘The Bank of the Free’ - with free bank transfers and no card maintenance fees.

This is hurting them right in the profit margins, with a 602% increase in losses from 2020.

Gameplan or Getting Wrecked?

Kuda Bank’s dramatic increase in losses were driven by staff costs (which 5x’ed), operating expenses (which 6x’ed), and increased marketing. These are generally the right things to pour money on when you’re scaling. 

But Kuda’s losses could also be attributed to their ‘growth at all costs’ approach, and obsessive focus on overdraft as a product.

This push to get users into overdraft has dropped their loan repayment rate to 69%, estimated to have lost them $5.2m.

Some say Kuda is playing the long game here, growing their users quickly with their free offering to monetise them later. Others say they’re tempting users into debt, and paying for it.

Given the size of Kuda’s war chest, they can still turn this around and find healthier, less exploitative ways to grow. Lets see if they do when their '22 revenue comes out 👀 

And that’s a wrap!

Did you learn something new? If you did, reply to this email to let me know.

And because we love polls, here's another one:

Next week, we'll look over the pond to see what Africa can learn from India's explosive tech growth.

I'll be partnering up with Aryaansh from Market Munch, one of my favourite newsletters for a special collab.

And remember, if you share this with a friend I'll shout you out next edition. If you invite five, I'll write an article of your choice 👀  

Catch you next week!

Caleb