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Continue with this week's theme on the iAfrikan Daily Brief of looking at government policies, regulations, and laws around technology and startups, today I will explore briefly (it's a Daily Brief newsletter 🙂) how government failures in delivering public services open up opportunities for startups.
This week a Nigerian transport startup, Plentywaka, announced that it had secured $300,000 in pre-seed funding from some venture capital firms. The startup has been operating its bus ride-hailing service in Lagos since September 2019 and has already had 40,000 customers to date. Which is probably why investors were happy to back them and their expansion into Abuja.
The success of Plentywaka, which is fueling its expansion, highlights a government failure.
In most relatively well-functioning countries, the majority of public transport is not only a public service provided by the state but it is also affordable so that even the poorer members of communities have access to transportation. When a government fails to do this, as we have seen across Africa, it opens up an opportunity for privately owned startups and companies to fulfill the function of what is supposed to be a public service.
This is not only limited to public transport, in recent years you see this with provisioning of Internet access, which is also supposed to be at a certain level, a public service.
As is the case with public transportation, startups, and other privately-owned companies such as Google and Facebook are stepping in to fulfill this. This is commendable but you have to wonder if it is sustainable as these startups and companies have a different mandate and mission to what a government would have. One of their aims is profit and providing a subsidized or cheaper service to poorer community members might not be in their interest. Or, it could come at a cost such as a collection of citizens' personal data.
What we are witnessing generally across Africa is the failure of some governments to fulfill some of their basic functions, thus leaving a gap for privately-owned companies to provide what are supposed to e public services. But, at what cost?
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Nigerian transport startup, Plentywaka, has secured a pre-seed investment of $300,000 and will also launch into Abuja. Plentywaka cites research that says that 70% of people in Nigeria’s capital city rely on public transport and that, in the absence of a robust transport system, they have identified a significant gap in Nigeria's transport market for a more reliable and efficient bus service in Abuja. Plentywaka is essentially performing a service that should be a public service delivery function by the government. This lack of public transportation by the government leaves a gap that can be filled by private companies. The startup aims to transform transport in Nigeria to provide safe, convenient, and comfortable travel for all. [Article]
Facebook has been investing millions of dollars into telecommunications infrastructure and partnerships to connect Africans to the Internet. However, it has not been clear what the impact of these investments has been. A recent study titled "The Impact of Facebook’s Connectivity Initiatives in Sub-Saharan Africa" highlights some of the economic benefits of Facebook's infrastructure investments and partnerships as the enhancement of telecommunication operators’ ability to extend the coverage of broad networks, thus enabling more people to go online. This is also another service that governments in Africa should be providing but are lagging behind on. [Article]
The COVID-19 pandemic is affecting businesses differently and startups are especially vulnerable. It is during a crisis that responsible management practices and fair stakeholder treatment is especially visible. Making decisions quickly, transparently and equitably will go a long way. Here are several tips for startups and their owners and managers to help them get through the crisis and stay in control of their companies. [Article]
Facebook-owned WhatsApp hopes this new feature that they are piloting in some countries will help in the fight against fake news. Would you use it? [Article]
South African based business accelerator Grindstone has launched a new venture capital fund, Grindstone Ventures, dedicated to provide early-stage equity funding to its cohorts of companies and alumni. [Press Release]
Quote of the day
Across Africa the failure of some governments to fulfill some of their basic functions is leaving a gap for privately-owned companies to provide what are supposed to e public services. But, at what cost? (Tweet this)
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