On Friday 9th of October, #EndSARS was trending worldwide on Twitter with millions of impressions, and across other social media platforms. Deciding today’s topic was easy.
Nigerian youths have gone from the timelines of Twitter into the streets of cities and towns across the country, in the multitude of their thousands, and themessage is clear and somewhat uncompromising; “No reforms, just end SARS!”
The menace disproportionately affecting Nigeria’s growing tech industry.
While taking a stroll one night on the Lekki-Ikoyi bridge in Lagos, West Africa’s largest city, Adegoke Olubusi was shot at by two SARS officers.
Olubusi is the co-founder of Helium Health; one of Nigeria’s innovative healthcare companies. Helium Health provides a suite of technologies to
healthcare organizations in Nigeria and other emerging markets to help them deliver services more efficiently.
The Special Anti-Robbery Squad (SARS) is notorious for harassing its young people. It is a Nigerian Police Force unit under the Force Criminal Investigation and Intelligence Department, originally tasked with fighting crime.
Police officers profile young people, including those in the country’s burgeoning tech industry. Laptops, dreadlocks, premium smartphones and or tattoos are a major bait for this group that originally was intended to protect the youths but has fully morphed into what some foreign observers have described as a “terrorist organisation”, and rightfully so.
In Olubusi’s case, the officers tried to get him into an unmarked van, as is their modus operandi.
“I was petrified, even confused by how intoxicated they were,” he narrated in his account. “I remember thinking about my mother’s reaction to finding my body lifeless on the streets of Lagos,” he added.
Olubisi’s story is similar to Yele Bademosi, another influential member of the tech industry who is a VC and CEO at fintech startup, Bundle. Bademosi was kidnapped and extorted by SARS officers while heading home in October 2019.
Across Nigeria on the 9th of October, 2020, young people took to the streets from Lagos to Delta in the country’s oil-rich region to protest police brutality, demanding that the government scrap the notorious group. The #EndSARS hashtag was trending on Twitter as young people online including members of the tech community supported those on the streets.
Apart from almost a decade of kidnap, robbery, and torture, their anger is understandable and also justified by data* gathered by TC Insights, TechCabal’s data and research unit.
Our dataset showed four major categories of SARS harassment including arrest/kidnapping, extortion, shooting and beating. While extortion is the most popular type of harassment, beating and arrest/kidnapping are also relatively common. Like in Olubisi’s case, the harassment could increase the desire of tech talent to leave the country.
Lagos is the startup capital of the country but that could change soon owing to unfriendly policies. Our dataset revealed that it had the most SARS incidents. Startups are increasingly avoiding the city and launching in quieter and more policy-friendly ones and a sustained threat to the lives of employees could cause startups to consider shutting down or seek safer states.
SARS harassment in the tech industry affects workers in several sub-sectors. Digital Media showed up the most in our dataset. Fintech was also relatively common. The fintech industry is Nigeria’s best-funded tech sub-sector. Police brutality threatens the investment in that sector.
Whether the government should #EndSARS is no longer the question. It’s now an indictment of its commitment to see its tech industry and its young population flourish. It has become an economic decision, and until their conditions are met, these protesters are not leaving the streets of Nigeria.
This data story was written with support from TC Insights’ interns Boluwatife Sanwo and Abdul-Quadri Odeshina.
Editor’s note: *Our dataset currently has far less than 50 SARS incidents, please help us enrich our dataset by sharing this form everywhere you can so we can provide a data-backed perspective of the menace. This will show further evidence that SARS needs to be banned.
Also, please fill in the form if you or anyone you know that works in Nigeria’s tech industry has been harassed by SARS. We will update this data story as we enrich our dataset.
THE CRYSTAL BALL
“Technology is playing a crucial role in improving inefficiencies in supply chains across Africa and will be vital to the continent’s development and growth post-pandemic.
The ongoing pandemic has highlighted more than ever that businesses need to build resilience into their supply chain, as well as the key role informal retailers play in the African economy. While more shoppers are going online, informal retailers continue to play a vital role in supplying essential household goods to neighbourhoods and they must not be forgotten in the innovation conversation. Leveraging technology to connect them directly to leading manufacturers is essential. The sector also needs innovative access to credit.
With most informal retailers lacking the collateral that banks demand, many are often unable to access the funds they need to scale their business and generate more revenue. With more small retailers using technology to access the funds they need to grow their business, they will be better equipped to take advantage of the opportunities that will become available in the new normal.“
– Karen Adie, Director of Merchant Services, TradeDepot
Paypal to allow users to buy, hold and sell four cryptocurrencies
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said Dan Schulman, president and CEO, PayPal.“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange. We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
This is great news for crypto but I’m told it shouldn’t have been entirely unexpected In June, there was a report that Paypal was working on direct crypto sales.
Nokia awarded contract to build 4G network on the moon
Nokia has been awarded a contract to establish a 4G network on the moon. The contract is one of several that NASA is awarding to companies as it plans a return to the moon.
The $14.1 million contract was given to Nokia’s US subsidiary and is a small part of the $370 million total awarded to companies such as SpaceX. The cellular service will allow astronauts, rovers, lunar landers, and habitats to communicate with one another according to Jim Reuter, the Associate Administrator for NASA’s Space.
The 4G network that Nokia will build will be miles superior to the form of communication that was used during the early missions to the moon.
This is not Nokia’s first attempt to launch an LTE network on the moon. It planned to do so in 2018 in collaboration with PTScientists, a German space firm, and Vodafone UK to launch an LTE network at the site of the Apollo 17 landing but the plan never came to fruition.
Stripe acquires Nigeria’s Paystack for $200M+ to expand into the African continent
When Stripe announced earlier this year that it had picked up another $600 million in funding, it said one big reason for the funding was to expand its API-based payments services into more geographies. Today the company is coming good on that plan in the form of some M&A.
Stripe is acquiring Paystack, a startup out of Lagos, Nigeria that, like Stripe, provides a quick way to integrate payments services into an online or offline transaction by way of an API. (We and others have referred to it in the past as “the Stripe of Africa.”)
Paystack currently has around 60,000 customers, including small businesses, larger corporates, fintechs, educational institutions and online betting companies, and the plan will be for it to continue operating independently, the companies said.
Terms of the deal are not being disclosed, but sources close to it confirm that it’s over $200 million. That makes this the biggest startup acquisition to date to come out of Nigeria, as well as Stripe’s biggest acquisition to date anywhere. (Sendwave, acquired by WorldRemit in a $500 million deal in August, is based out of Kenya.)
It’s also a notable shift in Stripe’s strategy as it continues to mature: Typically, it has only acquired smaller companies to expand its technology stack, rather than its global footprint.
The deal underscores two interesting points about Stripe, now valued at $36 billion and regularly tipped as an IPO candidate. (Note: It has never commented on those plans up to now.) First is how it is doubling down on geographic expansion: Even before this news, it had added 17 countries to its platform in the last 18 months, along with progressive feature expansion. And second is how Stripe is putting a bet on the emerging markets of Africa specifically in the future of its own growth.
“There is enormous opportunity,” said Patrick Collison, Stripe’s co-founder and CEO, in an interview with TechCrunch. “In absolute numbers, Africa may be smaller right now than other regions, but online commerce will grow about 30% every year. And even with wider global declines, online shoppers are growing twice as fast. Stripe thinks on a longer time horizon than others because we are an infrastructure company. We are thinking of what the world will look like in 2040-2050.”
For Paystack, the deal will give the company a lot more fuel (that is, investment) to build out further in Nigeria and expand to other markets, CEO Shola Akinlade said in an interview.
“Paystack was not for sale when Stripe approached us,” said Akinlade, who co-founded the company with Ezra Olubi (who is the CTO). “For us, it’s about the mission. I’m driven by the mission to accelerate payments on the continent, and I am convinced that Stripe will help us get there faster. It is a very natural move.”
Paystack had been on Stripe’s radar for some time prior to acquiring it. Like its U.S. counterpart, the Nigerian startup went through Y Combinator — that was in 2016, and it was actually the first-ever startup out of Nigeria to get into the world-famous incubator. Then, in 2018, Stripe led an $8 million funding round for Paystack, with others participating, including Visa and Tencent. (And for the record, Akinlade said that Visa and Tencent had not approached it for acquisition. Both have been regular investors in startups on the continent.)
In the last several years, Stripe has made a number of investments into startups building technology or businesses in areas where Stripe has yet to move. This year, those investments have included backing an investment in universal checkout service Fast, and backing the Philippines-based payment platform PayMongo.
Collison said that while acquiring Paystack after investing in it was a big move for the company, people also shouldn’t read too much into it in terms of Stripe’s bigger acquisition policy.
“When we invest in startups we’re not trying to tie them up with complicated strategic investments,” Collison said. “We try to understand the broader ecosystem, and keep our eyes pointed outwards and see where we can help.”
That is to say, there are no plans to acquire other regional companies or other operations simply to expand Stripe’s footprint, with the interest in Paystack being about how well they’d built the company, not just where they are located.
“A lot of companies have been, let’s say, heavily influenced by Stripe,” Collison said, raising his eyebrows a little. “But with Paystack, clearly they’ve put a lot of original thinking into how to do things better. There are some details of Stripe that we consider mistakes, but we can see that Paystack ‘gets it,’ it’s clear from the site and from the product sensibilities, and that has nothing to do with them being in Africa or African.”
Stripe, with its business firmly in the world of digital transactions, already has a strong line in the detection and prevention of fraud and other financial crimes. It has developed an extensive platform of fraud protection tools, but even with that, incidents can slip through the cracks. Just last month, Stripe was ordered to pay $120,000 in a case in Massachusetts after failing to protect users in a $15 million cryptocurrency scam.
Now, bringing on a business from Nigeria could give the company a different kind of risk exposure. Nigeria is the biggest economy in Africa, but it is also one of the more corrupt on the continent, according to research from Transparency International.
And related to that, it also has a very contentious approach to law and order. Nigeria has been embroiled in protests in the last week with demonstrators calling for the disbanding of the country’s Special Anti-Robbery Squad, after multiple accusations of brutality, including extrajudicial killings, extortion and torture. In fact, Stripe and Paystack postponed the original announcement in part because of the current situation in the country.
But while those troubles continue to be worked through (and hopefully eventually resolved, by way of government reform in response to demonstrators’ demands), Paystack’s acquisition is a notable foil to those themes. It points to how talented people in the region are identifying problems in the market and building technology to help fix them, as a way of improving how people can transact, and in turn, economic outcomes more generally.
The company got its start back when Akinlade, for fun (!) built a quick way of integrating a card transaction into a web page, and it was the simplicity of how it worked that spurred him and his co-founder to think of how to develop that into something others could use. That became the germination of the idea that eventually landed them at YC and in the scope of Stripe.
“We’re still very early in the Paystack payments ecosystem, which is super broken,” said Akinlade. The company today provides a payments API, and it makes revenue every time a transaction is made using it. He wouldn’t talk about what else is on Paystack’s radar, but when you consider Stripe’s own product trajectory as a template, there is a wide range of accounting, fraud, card, cash advance and other services to meet business needs that could be built around that to expand the business. “Most of what we will be building in Africa has not been built yet.”
Last month, at Disrupt, we interviewed another successful entrepreneur in the country, Tunde Kehinde, who wisely noted that more exits of promising startups — either by going public or getting acquired — will help lift up the whole ecosystem. In that regard, Stripe’s move is a vote of confidence not just for the potential of the region, but for those putting in the efforts to build tech and continue improving outcomes for everyone.
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