20 Trends 🔥 Shaping SA Business this Week

Plus: We made a blockchain CEO sweat, BNPL wisdom in SA, new perspectives on tech layoffs and 17 more trends in tech & startups

Originally published 2 February 2023

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And, to show you we don’t play when it comes to prizes, we decided to give R500 bonus vouchers to Lesley Arenz and Louis van Wyk for being good sports (read: entering multiple times).

Your vouchers are already in your inbox, guys. Enjoy!

In this Open Letter:

• Tech layoffs: The global VS local view.

• TikTok for text, big energy buyouts & Shoprite’s diesel dilemma.

• Buy Now Pay Later: The doughnuts you couldn’t afford.

• Visual data: Africa tech redundancies in one image.

• Tokenisation: 10 Trends & highlights with Momint CEO.

TRENDING NOW

When Big Bets Don’t Quite Come Off

A few months ago we shared how Twitter’s lay-offs were probably just correcting a bit of overhiring. Now it seems that most big tech companies have followed suit.

Recent news of Alphabet (Google) and Microsoft laying off large amounts of employees was almost to be expected, as layoffs at tech companies being tracked have reached close to 80 000 in 2023 alone (and we’re barely 1 month in ).

But why does this happen?

Big tech made a bet.

By now everyone knows that Covid lockdowns change a lot of behaviour. Work from home, e-commerce boom and even Grandma having to learn how to Zoom.

For those in tech, it felt like the “finally everyone is on board” moment. And the numbers were showing. Now when a listed company sees a rise in revenue and free cash flow, it’s likely that shareholders would expect leadership to pounce on the opportunity. And capturing opportunity, means hires!

But fast forward to 2023 and the situation has changed. Did the bets come off? Hard to say when the layoffs are in the thousands. But considering the steep rise in staff counts over the last 2 years, the nett gain of employee count is still significant. Likely signs that some of the covid-era adoption became permanent.

Whilst it’s easier to hire and fire in the USA, labour laws in South Africa favour the worker so one would think that SA companies are more conservative. Yet with not-so-recent layoffs at Yoco and recent news of layoffs at Luno, SA tech workers seem to not be immune to this problem.

Which begs the question…

How much hiring has taken place at local tech companies?

We dug around on LinkedIn to monitor the rise of employee count (as per employees listing themselves as employed by said company, so yeah, not 100% accurate).

Interesting to note that not only have most local startups grown substantially in staff numbers but there also doesn’t seem to be a slowdown in hires, with most startups peaking in staff count as we speak. Testimony to all the action happening in the fintech space in Africa as of late or bets that are still to play out?

Will these bets pay off? We certainly hope so. Only time will tell, but for now, we are keeping an eye on this.

IN SHORT

Remember Ellies who installed your TV? (Way, way back when…) Well, now they’re going into alternative energy by buying Bundu for R203m.

Powerless: Stage 6 loadshedding costs Shoprite group over R3 million per day in diesel alone.

Let Siri wish ‘em: New app lets your iPhone automatically send happy birthday messages. Now just hook up ChatGPT for custom text and a life problem’s solved forever.

Warehouse robot: Boston Dynamics & DHL unpack a super-efficient new robot that can unload 350 boxes per hour.

Step aside Mike Ross: Just a week after passing a business exam, ChatGPT now also passed law school exams. (Complete with ultra-realistic “stupid” mistakes and all.)

The Instagram founders are back and building a TikTok for text.

Ghostly swirl over Hawaii: Is it a bird? Is it a plane? No, it’s probably just rocket fuel.

IN SHORT

The Donuts You Couldn’t Afford

If there’s one idea worse than buying doughnuts, it’s buying doughnuts with money you don’t have.

That’s what the world has come to with “Buy Now Pay Later” (BNPL). It used to be reserved exclusively for big banks, financial institutions, retailers and back alley loan sharks who like introducing kneecaps to cricket bats.

Whilst the BNPL concept isn’t novel or new, the lockdown e-commerce boom saw these repayment solutions being made more accessible.

In the US, the BNPL market could hit $76.20 billion in US payments volume. And some local players have caught on, with estimates suggesting it’ll reach R2bil per year soon.

Takealot offers not 1, but 2 BNPL solutions. Payflex for 4-month repayments, and Mobicred for 12.

And it’s not just them. Between Mobicred & Payflex they serve nearly 2’500 retailers, with countless other BNPL providers leveraging the explosion of online shopping during the pandemic.

And it goes beyond e-commerce

Advanced airtime has also been around for some time. Out of airtime? Dial a USSD code and get an advance of airtime. The premise is that if you’ve had the number for a while, and recharge often, you’ll probably repay the airtime to keep your number.

And after collecting vast amounts of user behavioural data, they’ve started extending it to other “vouchers” – technically not credit, but a voucher in advance that you’ll need to repay later. Like a doughnut voucher when you recharge.

The broader impact 

South Africans are already drowning in debt, with the average household debt-to-income ratio at 66.1% and credit rejection rates rising every year.

Introducing new credit types to already indebted consumers could push everything over the edge. Something that could see more loan defaults at institutions traditionally offering credit to lower-income markets (like Capitec and African Bank).

The verdict isn’t out yet on whether BNPL is good or bad for SA consumers. What is certain, though, is that machines used to better understand user behaviour enables creative risk modelling that will make more unique BNPL offerings possible.

So, we could see more of this pop up everywhere.

Exciting developments for fintech and e-commerce. Let’s just hope the NCA adapts fast enough to protect the consumers from binging on those debt-inducing doughnuts…

SHINY NEW GRAPHICS

Doing great infographics is an art. And, while we’ve come a long way with just Canva and Figma, alas we needed help! And who better than a company that does on-the-ground market research in Africa?

This team not only gets data, they really get how to present it. The infographic in today’s Open Letter is brought to you by Yazi.

This week we cover local VS global tech layoffs. Now let’s get a look at the tech layoffs in Africa thus far.

IN CASE YOU MISSED IT

Tokenisation Going Mainstream

10 highlights from our Open Conversation with Momint CEO Ahren Posthumous

1. Ahren reminisces about Project Kooda (relaunching as Now Now, soon) a savvier and cheaper South African alternative to Calendly and OnceHub.

2. First NFT Ahren bought was an Ethereum domain name – now invests in NFT art.

3. Watch Ahren sweat as Renier drops off at 8 minutes due to loadshedding – totally not a publicity stunt for Momint’s solar initiative…

4. Momint’s blockchain-based solar initiative SunCash, which allows you to buy shares in solar installations for schools, hospitals etc. and earn dividends is really taking off – “Like being strapped to a rocket”.

5. Ahren explains how even when the crypto bubble bursts (as it so often seems to do), the real long-term value we get out of the blockchain exercise is Smart Contracts – a smart digital holding space for all info around an asset.

6. Banks are using tokenisation already – we don’t know, but they use crypto-related tech for inter-bank settlements.

7. The next level in gaming is beyond just buying loot that are NFTs, but actually allowing the community to create and trade content as NFTs, like Roblox.

8. The only thing holding SA back from complete and wide-scale adoption of tokenisation, for example, for the title deed of a house, is regulators – they can’t tell who’s trustworthy or not, and are sadly just slowing the process down.

9. Although still small in total volume of transactions, Africa is one of the leading crypto adopters in the world – probably for the very reason that blockchain allows you to fund, trade and raise funds without all the cost and red tape (and slow regulators).

10. In case you didn’t know, Momint’s entire business journey is documented as a web series, and you can buy tokens for a share of their ad revenue on it – watch here.

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