The country reported in this report is Côte d'Ivoire (Ivory Coast), West Africa The country with the most populous population, is the center of the French-speaking region and is also a representative of the country with rapid growth in Africa. The report covers the national macro environment, local venture capital ecology, 6 tracks and representative companies. The report is about 7,500 words in total and takes 20 minutes to read.
1. Macroeconomic barometer
1. Overall political stability and strong confidence in foreign investment.
Côte d'Ivoire is the headquarters of the African Development Bank. In history, except for the civil war in 2002, it was generally stable. However, in March 2011, the second civil war broke out, causing 3,000 casualties due to the opposition's dissatisfaction with the results of the 2010 election. However, the subsequent intervention of the United Nations and French forces avoided further escalation of the civil war. In the end, Alassane Ouattara's presidential seat was recognized and won a second term in 2015, and the political process became normalized. A new general election will be held in 2020, and former President Laurent Gbagbo and his civilian opposition followers may pose a threat to the general election, and political risks will rise in the short term.
After taking office at Alassane Ouattara, it launched two five-year national development plans (National Development Plan 2011-2016; 2016-2020), to adjust the economic structure, rectify the financial industry, emphasize increasing agricultural output, and promote the development of manufacturing. It plans to become a country with a high degree of industrialization by the end of 2020. In addition to economic structural reform, the Ouattara government also improved the investment environment, improved tax incentives, and increased confidence in foreign investment. According to statistics from Oxford Business Group, the total amount of foreign direct investment doubled from 2011 to 2017.
2. The economic infrastructure is good and the industrial transformation is important. It is the locomotive for economic growth in the French-speaking area of West Africa.
Since the end of the civil war, the Ivorian economy has recovered significantly since 2012. Thanks to the export drive of cocoa and palm oil, the prosperity of manufacturing and the development of mining, its GDP growth rate has remained on the fast lane of growth at a rate of no less than 7% for seven consecutive years, making it the most active economy in the French-speaking region of West Africa. From an economic structure perspective, although the agricultural sector has absorbed more than half of the population, the service industry has become a pillar industry for GDP growth. Côte d'Ivoire is also a major exporter, with export trade volume ranking behind South Africa, Nigeria and Angola. The largest trading partners are Netherlands , the United States and Belgium .
In addition, Côte d'Ivoire's infrastructure level is also far ahead among the French-speaking countries in West Africa, with the second largest port in West Africa, modern airports and relatively complete road system. To accelerate industrialization, the government has decided to invest at least $7 billion in fiscal spending on infrastructure between 2018 and 2023.
However, in terms of per capita GDP, Côte d'Ivoire's advantage is not obvious. Currently, the per capita GDP is about US$1,700, slightly higher than Senegal , but lower than West African English-speaking countries Ghana and Nigeria, and belong to lower-middle-income countries. The World Bank predicts that it will take at least about 15 years to become a middle-income country. Moreover, among West African countries, Senegal and Ghana are catching up and may replace the growth locomotive status of Côte d'Ivoire's West African region.
(Data source: World Development Indicator; Deloitte)
Like Senegal, Côte d'Ivoire is one of the members of the West African Economic and Monetary Union. Monetary policy, trade and tariff policies are set by the Central Bank of West African countries and are uniformly used by West African franc (CFA Franc). The exchange rate is anchored to the euro, which can buffer external risks to a certain extent. Moreover, eight member states jointly established the regional stock exchange BRVM (Bourse Régionale des Valeurs Mobilières SA), and by the end of 2018 there were 45 listed companies with a total market value of approximately US$6.8 billion. Starting from March 2018, BRVM joined hands with London Stock Exchange and Casablanca Stock Exchange to launch the Elite BRVM Lounge Programme project, focusing on helping small and medium-sized enterprises in high-growth stages go public.
Judging from the performance of the private equity market, Côte d'Ivoire has gradually become the protagonist in the spotlight of the French-speaking region of West Africa. According to Oxford Business Group, there were only 2 private equity funds active in Côte d'Ivoire in 2008, and as of 2017, it has increased to 15.Among them, private equity investments from 2011 to 2016 were mainly concentrated in consumer goods (24%), industry (20%), medical (12%) and financial services industries (12%), and 14% of private equity investments successfully exited, second only to Nigeria and Ghana.
3. The degree of urbanization is high, but it is also accompanied by challenges such as the large gap between the rich and the poor and the high youth unemployment rate.
Côte d'Ivoire has 26 million people, with more than half of the urban population, most of whom live in the economic and financial center Abidjan. The 2015 PwC report said Abidjan is the fastest growing city on the African continent. However, the existing transportation infrastructure cannot meet the commuting needs of dense urban populations. According to the World Bank's research, the average time spent in congestion is no less than 3 hours a day. In the future, as more people pour into cities, there is a huge gap in fast and convenient travel services.
Although the degree of urbanization is high, there is a huge gap between the rich and the poor in Côte d'Ivoire. The poverty population with an average daily income of less than 750 francs (about 1.3 US dollars/9 yuan) is as high as 46%, making it one of the highly inequality countries in West Africa.
In addition, although the population structure is very young, with more than 60% of the population under 24 years old, it is a large potential labor force, and the unemployment rate among young people between 15 and 35 years old is very high, about 36%, so there is a great demand for re-education and skills training in the market.
(Picture source: World Bank)
(local mall in Côte d'Ivoire)
4. Mobile payment has good endowment, but mobile Internet economy is still in its infancy.
Under the dual promotion of government and telecom operators, the Ivorian telecommunications industry and mobile Internet are progressing rapidly. In 2015, the government launched the "One Citizen, One Computer, One Internet Connection" project (One Citizen, One Computer, One Internet Connection), and cooperated with mainstream telecom operators to plan to include 500,000 households in this project within five years. In 2016, Orange and MTN began to implement 4G services, and the Telecommunications Regulatory Bureau Autorité de Régulation des Télé communications de Côte d’Ivoire (ARTCI) set a goal. By 2020, the ICT industry will contribute more than 15% to GDP, which is ambitious. Currently, the number of mobile Internet users accounts for about 24%. GSMA predicts that by 2020, the number of mobile Internet users will account for about half of the population.
However, there are still certain challenges in truly integrating mobile Internet into daily usage scenarios. According to a 2018 survey by Alliance for Affordable Internet, among West African countries, Côte d'Ivoire's data tariffs are more expensive, and their advantages are less than Ghana, Senegal and Nigeria.
(Data source: GSMA; Alliance for Affordable Internet)
Although the expensive data traffic limits the development of the mobile Internet, it provides space for mobile payments based on feature machines and relying on USSD technology. In 2008, two years after the launch of M-Pesa in Kenya, mobile wallets began to become well-known and accepted in Côte d'Ivoire. According to CGAP's research, in 2014, almost all secondary school tuition fees were remitted through electronic payments, of which 94% were paid through mobile wallets and 6% were paid online. Subsequently, the Bank of West African countries (BCEAO) introduced a new policy in 2015, encouraging non-bank financial institutions to independently provide digital currency and mobile payment services, which brought the competition between the three major mobile operators Orange, MTN and Moov into a fierce stage. They have established independent departments or operating entities to be responsible for mobile payment services, and the popularity of mobile wallets has also increased rapidly. According to Findex statistics, as of 2017, at least 34% of adults had mobile wallet accounts. The average daily mobile payment transaction volume reached 17 billion francs (25.8 million euros). However, the new mobile payment tax policy in 2019 increased the original 0.5% transaction tax rate to 7.2%, which has caused a certain blow to the extension of mobile payment and other financial services based on mobile payment. The explosion of overall mobile Internet innovation has not yet arrived.
(Data source: CGAP)
5. Climate change may bring systemic ecological risks.
According to IPCC report, global climate change poses a dual threat to the ecological economy of Côte d'Ivoire.On the one hand, Côte d'Ivoire, also known as the Ivory Coast, is because of its prosperity in the southern coastal areas and frequent floods in extreme climates, and southern cities have poor risk resistance. Once it occurs, they will suffer huge resource losses; on the other hand, rural areas dominated by agriculture in the north are affected by the drought climate, food safety is threatened, and the income and employment of rural populations have also become uncertain factors. Therefore, whether it is entrepreneurship or investment in Côte d'Ivoire, it is necessary to increase the attention to systemic risks such as climate change.
6. Open investment to the outside world, but key industries and fields require approval.
As a French-speaking country in West Africa, Côte d'Ivoire's legal system is greatly influenced by France. At the same time, its commercial laws comply with the "Organization for the Harmonization of Business Law in Africa" (OHADA code) and are set by the African Commercial Law Coordination Organization. 17 French-speaking countries in West Africa are their member states and share a unified judicial and arbitration court. Overall, Côte d'Ivoire is very welcome to foreign investment and the supervision is not strong, but it should be noted that investments in key areas such as transportation, commerce, and real estate need to submit applications to the investment promotion center CEPICI, while investment in banks and financial industries needs to apply to the Central Bank of West African countries.
2. Comprehensive interpretation of the venture capital ecology
Côte d'Ivoire's venture capital ecology is still very young and has a lot of room for growth.
Overall, the Ivorian venture capital ecosystem is still in its infancy. Although Côte d'Ivoire is one of the most active economies in Africa, according to Seedstars Index, the Ivorian venture capital ecosystem ranks sixth in sub-Saharan Africa in terms of strength, but due to language and prejudice, startups face many difficulties and increasingly frustration. On the one hand, investors seem to pay little attention to French-speaking countries due to lack of language knowledge for communication. On the other hand, entrepreneurs in French-speaking African countries need to rethink the way they communicate with investors and learn how to quickly assess potential opportunities.
There are no active, large-scale financing incidents in Côte d'Ivoire yet.
This is attributed to the Ivorian culture and mindset, as well as the lack of proper entrepreneurship training. According to Parttech, local tech startups only received about $2 million in funding in 2018, for several major reasons. First, Côte d'Ivoire lacks the appropriate policy and market infrastructure to cultivate entrepreneurs and innovators. On the other hand, as mentioned above, language is also an obstacle. Since the official language is French, it is difficult for local entrepreneurs to communicate efficiently with investors in non-French-speaking countries.
(Data source: Briter)
From the perspective of supporting the ecosystem, entrepreneurial incubators and accelerators have begun to enter the market.
In March 2016, the Digital Economy Department of Côte d'Ivoire released the Digital Youth Foundation, a startup incubator with 500 million West African francs (750,000 euros), which has trained 200 candidates. Seedstars, an international incubator, established an office in the capital Abidjan in 2019, has now partnered with the Youth Employment Bureau to set up an incubation program for tech entrepreneurs that will provide six months of training and assistance, personal guidance, office space, and receive a global network of mentors, experts, potential partners and investors.
MTN Côte d'Ivoire launched the Y'ello Startup program in 2017, aiming to support young local tech entrepreneurs and identify future business partners for MTN. The program is now in Phase 2, providing start-up capital, office space and technical support from some mentors and coaches, including MTN staff. In addition, startups can access the USSD, SMS and mobile currency APIs in Côte d'Ivoire.
However, the problem that needs to be solved between different incubators is to strengthen cooperation and coordination to further promote the development of the Côte d'Ivoire ecosystem.
3. Main track opportunities and interviews with representative companies
1. Fintech track:
According to data from consumer organizations, less than one-fifth of consumers in Côte d'Ivoire can use bank accounts. Between 2014 and 2017, mobile currencies almost single-handedly drove 20% of national financial account ownership.According to the Ivorian Telecommunications Regulatory Authority (ARTCI), as of June 30, 2017, operators Orange, MTN and Moov had a total of 30 million mobile network users in Côte d'Ivoire. In the third quarter of 2018, the number of mobile currency users increased by nearly 10%, with penetration reaching 49.45% of the total mobile phone user base. In 2017, more than 18 billion AFC francs (approximately 27 million euros) were made daily through mobile remittance services. By 2018, the number of active mobile currency agents (i.e., agents that have traded in the past 90 days) has increased from 16,000 four years ago to 93,000.
Ivorian operators have now raised the rate for mobile currency transfers to 7.2%, which they believe is consistent with the government's increase in mobile currency tax rates.
Representative companies include:
Panelys Cash: Like other African countries, the bank card holding rate is very low. Panellys Cash provides low-cost bank cards for transfer between users. Panellys Cash works with UBA Bank and does not require a license. It is just starting out, with a cumulative transaction amount of 550,000 euros and a commission income of 30,000 euros. No financing. The founder won the seedstars Entrepreneurship Challenge Championship in 2019. Operators in Côte d'Ivoire are currently not allowed to lend, they can only make small savings, but Panellys Cash can provide loans through cooperative banks.
Julaya: Côte d'Ivoire version of "Paystack", helping small and medium-sized business owners provide payment solutions. The service is independent of the mobile operator's wallet and allows users to transfer money between multiple wallets without paying any fees. The founder is a Frenchman and has raised $550,000.
(non-client innovation VP Li Xiafei Laura and Julaya founding team)
CinetPay: payment gateway, is a Nigerian payment gateway unicorn Flutterwave partner in Côte d'Ivoire and French-speaking regions. Other corporate customers also include Julaya, 1Xbet (online gambling), AXA (auto insurance). The products and services provided include online payment, money transfer (can be cross-network), customer points, and offline payment solutions (POS machines). Currently operating in four countries, Côte d'Ivoire, Mali , Cameroon and Senegal, is an example of regional expansion of startups in Côte d'Ivoire. Revenue comes from subscription fee of $16 + transaction commission of 2-5%. Breakeven has been achieved in 2019. It plans to raise US$2 million. Competitors include Intouch (raising $10 million in financing, investor is the famous French oil company Total Total).
In addition, currently, micro-loans in Côte d'Ivoire are mainly issued through micro-credit institutions (MFIs), and financial technology companies are not involved in many. According to the Ministry of Economic and Finance, deposits in MFI increased by 347% over the five-year period, from 72 billion FAFs in 2012 to 250 billion FAFs at the end of September 2017. According to a study by Oxford Business Group, the microfinance agency’s client base more than doubled between 2014 and 2016 to 1.17 million accounts, aligned with the economic growth in Côte d’Ivoire in recent years, the microfinance sector has been revitalized. As of March 2017, there were 53 microfinance institutions in Côte d'Ivoire.
2. Education Technology Track:
Seedstars estimates that the market in the field of education technology in Côte d'Ivoire (including campus technology, online learning and career development) is between about US$210 million and US$308 million. The most valuable market is the online learning market for 150,000 to 200,000 college students, which may be worth between $90 million and $120 million. However, this nascent ecosystem still needs support. Currently, the capital Abidjan has about 25 educational technology startups, most of which are in the angel wheel or the initiation of entrepreneurship.
Active companies include:
Edudesk: is a cloud-based e-learning platform technology provider. It does not produce content itself, but cooperates with content producers and also provides open source solutions. The B2B model has 20 corporate users, customized the e-learning training platform for the enterprise and integrates the corresponding training content. The total reached 12,000 users, of which 40% were in Côte d'Ivoire, and the remaining users were in other French-speaking countries.Customer acquisition is mainly through mutual recommendations from multinational companies, including Jumia, Orange, etc. The fee is through the subscription model, with annual fees of US$500/850/1600 respectively. Seed round financing is currently underway.
(Free Innovation VP Li Xiafei Laura and Etudesk founding team)
3. Travel track:
As mentioned above, Côte d'Ivoire has 26 million people, with more than half of the urban population. The capital Abidjan is the fastest growing city on the African continent. However, the existing transportation infrastructure cannot meet the commuting needs of dense urban populations, and more than 3 hours of congestion are wasted every day. As more people pour into cities in the future, there is a huge gap in fast and convenient travel services.
Currently, the travel methods of Côte d'Ivoire mainly include buses, taxis, motorcycles, etc. The bus costs 200 FAF (0.3 euros), taxis can be bargained, and the price is between 500-1500 FAFF. The number of cars in Côte d'Ivoire is about 600,000, with about 20,000 new vehicles added annually, which has a relatively large demand gap. International players of online car-hailing in Côte d'Ivoire include Yango (Yandex.taxi, Russian online car-hailing service, currently operates in more than 1,000 cities around the world, and operates under the "Yango" brand in Israel, Côte d'Ivoire, Finland, Ghana and Romania ). Moja Ride and TaxiJet are both local players, with a small size and are generally recognized by Yango among the middle class. In addition, Uber launched its services in Abidjan (4.5 million people) at the end of 2019. This is Uber's first landing in a French-speaking country in Africa.
4. Logistics track:
Overall, the logistics market in Côte d'Ivoire is not mature enough at present, and the main problem is the lack of integration.
mainly represents the company Kamtar, which is the Ivorian version of Kobo360 (Nigerian celebrity logistics company). The platform integrates transportation tools such as trucks and caravans, and is a logistics company focusing on medium and long distances. The overall scale of West Africa's logistics market is 5 billion euros, and the track has great potential. Since the beginning of the launch, the team has focused on regional expansion after gaining a foothold. Currently, in addition to Côte d'Ivoire, it has operated in Senegal and will expand to Togo, Benin , Burkina Faso, Mali and other places in the future. Currently, a total of 10,000 orders have been completed. Among them, 85% are corporate customers, including Jumia, Unilever, etc.; the rest are C-end customers, mainly farmers. The platform integrates 4,000 drivers to pay through Julaya's payment solution, with an average shipping time of 2-4 days. It plans to raise 3 million euros.
5. E-commerce track:
Although Jumia started operating in Côte d'Ivoire in 2014, the e-commerce market is still in its early stages in Côte d'Ivoire. Some e-commerce pioneers have closed down on the eve of industry growth due to insufficient funds.
After six years of e-commerce in West Africa and having nearly 500,000 customers, Paris-based startup Afrimarkettml6 has applied to the Paris Commercial Court for compulsory liquidation, which once operated in Côte d'Ivoire, Senegal, Cameroon, Mali, Benin, West Africa, and failed because it was unable to continue financing to support its expansion. Afrimarket mainly covers food, beauty, household appliances, etc. It also won the exclusive online distribution of L'Oreal's three brands in the French-speaking region of Africa and established its own transportation and logistics services.
In addition, Afrikrea received $1 million in financing in early 2020, with investors including Saviu and Id4 Ventures. Founded in 2016, Afrikrea is a platform that integrates fashion, arts, handicrafts and other African manufacturing, with 5,000 designers and a cumulative order amount of US$5 million. In 2019, he participated in Africa Netpreneur Prize initiated by the Jack Ma Foundation.
6. Local life service track:
Côte d'Ivoire's local service track is still in its early stages, but it has attracted the attention of foreign players and has begun to enter the venue. Spain on demand delivery service provider Glovo has entered Côte d'Ivoire with a delivery fee of 500 FCF and no minimum consumption.
(Glovo leaflet)
7. Recycling and clean energy track:
Côte d'Ivoire's government is gradually relying on renewable energy to provide electricity to its population.As part of its policy, the country wants to attract investment in renewable energy. Credit Bank of Germany has just signed an agreement with the Ivorian government to allocate nearly 6 million euros. According to the government, the installed power capacity of Côte d'Ivoire in 2019 was 2,200 MW. Mainly thermal and hydropower generation. By 2030, the government hopes that the country’s electricity production will double to meet the needs of its population, focusing on using renewable energy to generate electricity, especially solar energy.
The e-waste project established by telecom giant Orange in 2014 has begun operating the country's first mobile phone recycling and collection center. Suppliers can receive reimbursement after delivering e-waste, which is sorted, repackaged and sent to France for recycling. Another example is the e-waste treatment campaign launched by Ericsson and MTN in 2015. With the support of Ministry of Environment , the program aims to increase awareness and recycling of e-waste, establish a public collection station, and finally transport the collected e-waste to the recycling partner.
startup Coliba aims to solve and convert solutions for Ivorian plastic waste. Coliba collects plastic waste from home and businesses through mobile applications, and has a strong team of more than 40 collectors responsible for sorting and cleaning plastics in Coliba’s factories. The team transforms clean plastic into pellets and resells these pellets to local or international buyers. Coliba now recycles up to 2 tons of plastic every day, with over 3,000 active users per month. Recently, it has received a seed round financing from GreenTec Capital.
4. Non-process conclusion
As the most mature and fastest growing economy in the French-speaking region of West Africa, Côte d'Ivoire has a lot of room for development in its local innovation and entrepreneurship economy. Good infrastructure, growing urbanization, a young workforce and relatively popular mobile payments are all cornerstones of its digital economy prosperity. More importantly, through the implementation of the business in Côte d'Ivoire, it can be more easily and smoothly extended to other countries in the French-speaking region, reaching the 120 million French-speaking population of eight countries that belong to the West African Economic and Monetary Organization Alliance. At present, there have been cases of startups in the fields of financial technology and logistics technology successfully expanding to many countries.
For entrepreneurs, entering the French-speaking area of West Africa is another choice to continue to expand their business after going global to the English-speaking countries of East and West Africa. As the market entrance to the French-speaking region of West Africa, Côte d'Ivoire is very attractive. Due to the homogeneity and regulatory unity of the French-speaking region of West Africa, it is expected to gradually radiate from Côte d'Ivoire to surrounding countries. In addition to language, the challenges in the implementation process are more of a clear distinction between the French-speaking areas and the English-speaking areas. For investors, the local venture capital ecosystem in Côte d'Ivoire is more dependent on France than the United Kingdom and the United States. When inspecting projects, in addition to focusing on the team's regional expansion capabilities, they can also pay attention to projects favored by French capital and French multinational corporations.
African-process innovation believes that the development of various regions and tracks in Africa is gradually being started. We currently believe that Africa’s key areas are Nigeria, East African countries and Egypt . However, outside of the main markets, we will continue to pay attention to the development trends of venture capital markets in the leading countries in the French-speaking regions of West Africa, and prepare for the next wave of regional Internet development.
(This article only represents the author's personal opinion)
Edited by: Luo Wei
Reviewed by: Zhou Yisheng
