BD Insider 186: Why Nigerian telcos may increase tariffs

Were you able to read the last Weekend Brief?

We shared insights about India's plans to expand its Unified Payment Interface to Africa. We also mentioned the ₦1 trillion payouts within six years at Piggyvest and how Ghanaian fintech startup, Float reportedly lost ₦5 billion to FX crises in Nigeria and fraud.

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For today, we will look at:

• why Nigerian telcos may review tariffs
• the launch of Uber's first electric bikes in Africa
• Safaricom's plan to introduce standing orders on M-PESA

As usual, we will also share the state of funding in Africa, noteworthy stories about tech on the continent, and opportunities; including jobs and accelerators.

Today's letter was brought to you in partnership with AfriChange and Seerbit.

The big three

#1. Nigerian telcos’ energy costs hit ₦38 billion

The news: At the end of 2022, the Nigerian Communications Commission (NCC) disclosed that there were 127,294 base stations in the country.

According to local media, the Punch Newspaper, the cost of powering these base stations and the overall telecommunication services has hit an estimated ₦38 billion per month following a 55.16% year-on-year increase in the cost of diesel.

Each base station has two diesel-powered generators, according to experts. The country's diesel cost is now about ₦950 per litre; telcos use about 40 million litres of diesel per month to power their operations, the report disclosed.

Why it matters: “Power is key. It determines everything. Even though there is an increase in virtually the price of everything in the economy, telecom tariff remains the same. This means that there are a lot of difficulties. Revenue has reduced and prices of other inputs have changed, but tariffs are still the same,” says Gbolahan Awonuga, head of operations at the Association of Licensed Telecommunications Operators of Nigeria (ALTON).

This increase in operational cost may lead to a hike in tariff. Recall that last year, NCC asked Nigerian telcos to reverse a 10% tariff hike that was meant to cover rising costs.

“For our industry to remain sustainable, our prices have to reflect the cost of production. This goes without saying that we will also review rates at the appropriate time after consultation with all the stakeholders to reflect the current cost of inputs,” Awonuga added.

Zoom out: Earlier this year, the NCC urged telcos to adopt renewable energy to minimise cost. “Transitioning to renewable energy is predicted to result in a lower cost of operation as operators will be able to save on the cost of diesel, which accounts for a large chunk of the costs incurred by these licensees,” Umar Danbatta, the executive vice chairman of NCC, said.

#2. Uber launches electric bikes in Kenya, its first in Africa

The news: Global ride-hailing company, Uber has launched electric bikes in Kenya's capital city, Nairobi. This is its first e-mobility product in Africa, which forms part of the company's efforts to be a zero-emission company by 2040.

The bikes dubbed Electric Boda to associate with the Swahili term for motorbike taxis, will comprise 3,000 bikes within six months, according to reports.

“The launch of Electric Boda will provide Kenyans with one of the most affordable ways to move from one place to another, with prices 15-20% below the price of our existing product,” according to Imran Manji, Uber’s head of East Africa.

Why it matters: Until now, none of the over one billion trips recorded by Uber in Africa was done via an electric vehicle. The ride-hailing company made its debut arrival in Africa with South Africa as its first market in 2013. Currently, Uber is present in Nigeria, Ghana, Egypt, Kenya, Tanzania, Uganda and Ivory Coast.

According to Frans Hiemstra, GM for Uber in the Middle East and Africa region: “Now is the time to take solid steps that enhance sustainable practices and as a business, we are committed to being part of the collective efforts to reduce the carbon footprint. Through the launch of Electric Boda on our platform, we are proud to provide an option for emissions-free mobility in Kenya.”

Know more: The Electric Boda will be managed by Greenwheels Africa, an e-mobility company focused on electrifying motorbikes. The company will oversee all bike-related logistical matters, including maintenance and charging; according to reports Greenwheels Africa plans to increase its charging spots in Nairobi to ten by the end of the year.

#3. Safaricom is introducing standing orders on M-PESA

The news: Safaricom has disclosed its plan to introduce “standing orders” on its mobile money product, M-PESA.

“This is the first initiative, where you will have standing orders on a mobile platform; the first in the world, and not just the first in Africa. We will use it in other areas such as health because we understand this economy to increase accessibility and affordability,” according to George Njuguna, Safaricom's CIO.

Know more: With standing orders, M-PESA users will be able to automate recurring payments or transfers. In Kenya, several credit facilities, including M-Shwari, KCB M-PESA, and Fuliza run on M-PESA, a standing order feature will help these platforms to check loan repayments.  

However, Njuguna did not disclose when the standing orders will be unveiled.

💰 State of Funding in Africa

A few minutes ago, Anchor, a pan-African BaaS and embedded finance infrastructure provider announced its $2.4 million seed raise led by Goat Capital to launch new products, invest in its licensing and compliance infrastructure, and evaluate expansion markets.