🌽 Margins from 0.5% to 5%+…

New on the shelf? If you haven’t seen them yet, meet all of South Africa’s GNU cabinet members right here. For the first time in 28 years, it’s no longer an all-ANC show, and this extra mix of DA, PAC, IFP and even FF+ faces has already caused a rally in the Rand, shares and SA bonds.

Question: Will this new cabinet be good for business? Hit reply to this email and give us your take…

In this Open Letter:

• Nice market: Boosting agriculture profits in Africa.

• Certified Rolexes, WhatsApp money card & Cape Town’s Moody nod.

• Let’s scale: Tools and partners to help level up your startup.

• What you’d pay to watch: The results are in.

• Plug & play: The tools and services you need!

Together with

TRENDING NOW

Enabling African Food Production

Farming in SA is known for small margins. Data is limited (most are private companies) but a few people in the industry suggest it's typically only a 0.5% to 5% nett profit margin depending on crop type and buyer. 

But these small margins are in most cases systemic rather than intentional exploitation. Before the internet, the chain to get your potatoes to your local grocer involved:

• Distribution of inputs (fertiliser, services, equipment, packing materials etc.) to a farmer in a remote location.

• Growing the crops and then taking them to a government-owned market which takes a 5% share of transactions.

• At the market, there will be selling agents and buying representatives (after all, farmers aren’t always good negotiators) each taking roughly 6–8%.

What’s squeezing the farmer’s margin

1. At sale time, ±15% is gone to all the roleplayers facilitating the sale.

2. The farmer often has to take whatever price is offered – you know, ‘cos fresh goods can go off, leading to major losses.

3. Often farmers don’t know where the highest-yielding market is which results in them trucking produce to a market only to sell to a store in their area - lots of money wasted.

4. Inputs (fertiliser etc.) are hyper localised and this reduces the ability of of farmers to benchmark pricing and selection which could lead to higher costs.

5. Finally, farmers often need a lot of working capital and, with a lack of data, traditional financiers can’t always calculate the risk of lending them money, which pushes up the interest rates on loans unnecessarily.

In isolation, each of these might not be big enough a business but put them together and the soon-to-be R418 billion market locally offers a major opportunity.

Keeping the produce flowing

The answer to unlocking more margin for farmers (and making a good margin yourself) lies in 3 parts:

• Discovery: Enabling farmers to find buyers and vice versa before the produce leaves the farm, as well as helping them find the best and most affordable inputs (fertiliser, services, equipment, packing materials etc.).

• Distribution: Making sure the goods move efficiently.

• Data: Collecting better data (how much you produce, sell and your input costs) helps qualify a farmer for more working capital.

And that’s exactly what Nile.ag is doing. It’s Africa’s largest online agri-marketplace, connecting farmers directly to commercial buyers in 38 countries and 100 produce categories. It’s fast replacing the traditional government-owned markets which do upward of R20 billion per year.

What’s more, they also help farmers source the inputs they need at a better price — helping input providers deliver at lower costs by removing some of the need for expensive sales and distribution efforts.

But likely the most exciting play is how they are using data. Nile is leveraging data from the entire supply chain, both inputs provision and produce offtake, to offer data-driven financing solutions to farmers. These solutions would either not have been possible or not at the same interest rate (in the absence of data). And this credit extension provides a powerful lever to grow the ecosystem.

Will this work everywhere? Not really, developed markets’ supply chains are more mature. That’s why Nile is focusing on emerging markets.

And it makes sense, once the supply chain is established, it's hard for a newcomer to break into it at that scale.

A winner-takes-all market.

So far it seems like this South African startup is winning. We are watching this space…

IN SHORT

💳 WhatsApp Money Moves. Cross-border money transfer operator Mama Money is launching its Mama Money card which allows its customers to transfer payments internationally and manage their accounts using WhatsApp.

📋 Wining Record Keeping. A local medical records system CareOn (built by the Netcare hospital group) has beaten 87 entries from 19 countries to win the Digital Innovation Award at the 7th International Quality Awards in London.

📈 Soaring Tech Stocks. Tech stocks are leading global markets in the 1st half of the year, with Nvidia and the rest of the Magnificent 7 (Alphabet, Amazon, Apple, Meta, Microsoft & Tesla) adding $3.6 trillion in market value.

👍 Mother City Moods. Cape Town has received a revised outlook from stable to positive from rating agency Moody’s. And the city could be upgraded even further if its operating and financial performances continue to strengthen.

⌚️Pre-Loved Guarantee. Rolex will start offering an authentication service for its pre-owned watches in South Africa to help prevent buyers from getting scammed by fakes. The Rolex-certified pre-owned (RCPO) programme has been in a few select markets since late 2022.

Save Time and Money on Routine Doctor’s Visits

Doctors are super expensive — SA healthcare costs have shot up by 105% in the last 10 years alone.

Not only that, but the whole process takes so long… You need to phone to book an appointment. Drive all the way out there. Then sit in the waiting room, then drive over to the pharmacy, then, then, then…

Or, you can just jump onto Udok and see the doctor on your phone in less than a minute and pay up to 40% less.

What’s cool is you can pay with a card or medical aid, with no co-payments.

And they’ll send your prescription to any pharmacy you like.

So next time someone’s unwell, just Udok instead.

BUILDER’S CORNER

The Tools You Need to Level-Up Your Startup (Pt 1)

Building a business is tough, but using the right tools and partners might just make it a little easier.

We’ve been in the game for a while, and we often get asked: “Who can I speak to, to help with X, Y and Z”. 

So we assembled the best of the best: A selection of tools and some unique South African service providers that can help you get the job done better and faster. We call it our Founder’s Stack. Today we will be featuring 5 of those, but to check out the full list, head on over to the brand-new section on our website.

Here are your first 5…

1. Planning your moves and keeping track of it all: Notion

We’d be lost without it. Notion is a flexible documentation, project management and task management hybrid tool. Use it to store your research and easily cross-reference it to a project or task list. It’s the only tool that has managed to keep us organised and that is quite a feat.

2. Get your website up: Webflow

Building beautiful websites has never been this easy. Choose from over 5k+ templates as a start and tweak your site without any coding experience. With Webflow you can get up and going within days.

3. Design with ease: Figma

When it comes to design, Figma is a game-changer. This collaborative interface design tool allows your team to work together in real time, whether you're creating wireframes, prototypes, or final mockups. Its cloud-based platform means you can access your designs from anywhere, and its intuitive features make the design process smooth and efficient.

4. Get paid: WigWag

All credit card payment switches offer the same right? Wrong! WigWag is not only extremely simple to set up and start receiving payments but also offers highly competitive rates and great customer service —they’re a local SA provider with local support. It’s simply the fastest most convenient way to get paid in SA.

5. Getting the house in order: Dommisse Attorneys

At some point or another, you are likely going to need legal support. Be it a shareholder agreement, memorandum of incorporation or term sheet for new investors. Dommisse offers all this and more and with a 10+ year track record of working with the top startups in South Africa, these guys know what they are doing.

And if you need any more connections to stellar suppliers we’ve used and recommend, check out our new preferred startup supplier stack.

YOUR VOICE

We asked what content you’d pay-per-view for, and coaches take note…

🟨⬜️⬜️⬜️⬜️⬜️ 🎯 Startup how-to podcasts (7%)

🟨🟨🟨⬜️⬜️⬜️ 🎸 Live shows/concerts (18%)

🟩🟩🟩🟩🟩🟩 📊 Business coaching/consulting (32%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🏋 Health and fitness-related (4%)

🟨🟨🟨🟨⬜️⬜️ ⚽ Sports Events (incl. school sports) (21%)

🟨⬜️⬜️⬜️⬜️⬜️ 🎨 Craft masterclasses (making cool stuff) (11%)

🟨⬜️⬜️⬜️⬜️⬜️ 💡 Other (oh, please tell us in the comments…) (7%)

Your 2 cents…

Hey, there’s a use case we didn’t think of, Madelein, amateur and semi-pro sports clubs! They can upload matches and content here and people can buy and watch. Nice.

Yes, Liesl, and it also allows you to record and upload more to make more concerts available for viewing later on. We’d get on that and tell the school immediately. This is perfect for that kind of thing.