A Practical Guide To Capital Raising For African Companies And Entrepreneurs

The biggest challenge facing new businesses in Africa is financing and the dearth of practical guides to help those willing to engage financing sources do so with the benefit of practical experience.

 More importantly is the need to make what is perceived as a complex subject very simple to follow and understand.

 This most have occupied the thoughts of Mansur Nuruddin when he decided to write the book: “Get Money: A Practical Guide to Capital Raising for African Companies and Entrepreneurs“.

This guide book codifies the authors’ last seven years on the frontlines in Africa assisting African companies and entrepreneurs in raising capital.

 As the Managing Partner of MNCapital Africa Advisors (MNCAA), he has helped African companies and entrepreneurs raise hundreds of millions of dollars.  From a hydro-power plant in the Democratic Republic of the Congo to a leasing company in South Africa to relatively large banks in Nigeria. MNCAA has assisted a wide-array of companies in a multitude of industries raise capital in some of the most difficult jurisdictions on the African Continent.

 Based on this experience, in this guide, he

(1) outline the types of financing available to African entrepreneurs and explains where and when these types of capital may be accessible,

 (2) outline the process for raising capital – including a discussion of the documentation required and suggestions for drafting this documentation and

 (3) provides a brief discussion on Term Sheets (including a sample Term Sheet) and some advice on negotiating Term Sheets.

 This guide also lists six tips to assist African entrepreneurs in the capital raising process.

 This guide ends with a case study of a successful capital raise, which reinforces the importance of and demonstrates many of the tips listed therein.

 Finally, the Appendices include several on-going funding briefs outlining funding available from funding sources with which MNCAA works.

  About the Author 

Mr. Mansur M. Nuruddin is a co-founder and Managing Partner of MNCapital Africa Advisors

(MNCAA). He is an Ivy League educated, international deal maker with over 15 years of experience in complex corporate transactions. Mr. Nuruddin has had the unique experience of working on four continents, i.e., North America, Europe, Asia and now Africa. He began his legal career with the Wall Street law firm of Cravath, Swaine & Moore LLP, where he spent nearly seven years between Cravath’s New York and London offices. Mr. Nuruddin has also worked for Herbert Smith in Hong Kong and Bowman Gilfillan in South Africa. Prior to co-founding MNCAA, Mr. Nuruddin was the Managing Partner of Nuruddin & Associates — a boutique legal and financial advisory firm.

 Over the years, Mr. Nuruddin has had the opportunity to work on a broad range of corporate transactions, including leveraged buyouts, private equity transactions, public and private mergers and acquisitions, securitizations, initial public offerings, secondary offerings, public and private bond offerings, private placements and joint ventures. Mr. Nuruddin has worked on public and private placements in Europe, the US, Asia and Africa and has an in-depth understanding of the security law requirements for capital raising in numerous jurisdictions, which he uses for the benefit of MNCAA’s clients.

 Mr. Nuruddin also has extensive experience in the field of telecommunications. He holds a Masters Degree in Telecommunications from New York University, where he received the NSEP Graduate Enhancement Fellowship and the ITP Academic Excellence Award. In 1995, Mr. Nuruddin published “Models for the Development of Regional Telecommunications Networks in Africa” in Eli Noam (ed.) Telecommunications in Africa, London: Oxford University Press. Prior to law school, Mr. Nuruddin worked as a telecommunications analyst for Northern Business Information (NBI) where he researched and wrote reports on US telecommunications markets, e.g. “Competition in the Local Loop” and “US Long Distance Markets”. While at NBI, Mr. Nuruddin initiated NBI’s first report on the South African telecommunications market.

 Mr. Nuruddin has a BA with honors from Columbia University in New York City, where he was the recipient of the Kluge Fellowship. Mr. Nuruddin received his Juris Doctorate from New York University School Law, where he was the recipient of the Dean’s Scholarship. Mr.Nuruddin is admitted to the Bar in the State of New York, and is a member of the New York Bar Association; the American Bar Association; the Asia-Pacific Bar Association; and the International Bar Association. He can be contacted vide E-Mail: mansur@mncapital-africa.com

N-Hance Wood Refinishing Franchise Announces Master Franchise Agreement in South Africa

N-Hance Wood Refinishing has signed a Master Franchise agreement with South African entrepreneur Julian Peters, continuing an aggressive expansion that has produced continued growth in multiple international markets — alongside a thriving U.S. presence that now numbers more than 500 locations.

N-Hance Wood Refinishing is an innovative, affordable cabinet, floor and furniture refinishing service that offers wood refinishing without the inconvenience associated with traditional means, while also providing a much higher-quality and durable finish than painting methods..

N-Hance is seeking Master Franchise owners who want to bring this successful American brand to their country. Master Franchise owners obtain the franchising rights to an entire region or country and have the right to develop as many franchise locations as they can in that region. In South Africa, that will immediately take the form of a head office in the Johannesburg area to oversee six or seven sub-franchises that will come online during the first year of operations, Peters said.

“We want to start close to home, so we can control the initial outgrowth and make sure our training and processes are sound,” he explained. “From there, we will begin to look at other provinces, where we would create a head office and sub-franchise model as well.”

Peters considered many concepts as he looked to grow his business holdings. N-Hance caught his eye because of friends and family members in the building and remodeling industry — and the problems they had with wood floors and cabinetry.

“Their main complaint is how difficult it is to refinish those due to poor workmanship and the lack of skilled labor,” Peters said. “When I began studying what N-Hance offers, I saw that they had solved the issue with very high-quality services, good products and innovations that got the job done professionally and quickly. I was also very pleased to see that granite was included, because granite renewal and restoration is a very big issue in South Africa.”

“We are very excited about entering the South African market and look forward to great results for Julian and his team,” said Joe Manuszak, Vice President of International Development. “N-Hance continues to prove itself in markets around the world, thanks to a Master Franchise model that connects those entrepreneurs with home and business owners who are looking to renovate without the expense of replacing their wood cabinets and surfaces. This creates opportunities for local business ownership.”

For Peters, N-Hance will connect a valued service with a strong need, enabling him to build business quickly and efficiently in multiple markets.

“What N-Hance offers is very much what is needed in South Africa at present,” he said. “This is a perfect opportunity to do something meaningful, provide a service that is required and give an opportunity to people who want to own a business as well as those who want to learn a new skill and work for a business that has strong growth potential.”

The SaaS African automotive marketplace available in 40 countries and 15 different local languages

After raising an undisclosed 6 digits US dollars amount in 2018, from international investors, Africar Group has almost finished its expansion in Africa, with platforms in 40 different countries, is monetising and improving its business model.

With 10 new platforms launched ( Liberia , Mauritania , Comoros , Mauritius , Nigeria , Djibouti , Sudan , Republic of Congo , Central African Republic and Angola ), Africar Group is by far the largest operator of automotive marketplaces in Sub Saharan Africa. Its platforms are available in more than 15 different local languages, going far more than just English, French and Arabic, with local languages such as Swahili, Amharic, Somali, Wolof, Yoruba, Hausa, Kinyarwanda, Oromo, Igbo and more.

More than just offering a car classifieds or marketplaces model, Africar Group is now beta testing its new version with a full SaaS platform aimed to better service local cars, trucks, bikes and spare parts sellers, ranging from individuals to semi professionals and professionals. Users are now able to manage their business online, including their inventory, as well as managing their leads, coming from various channels (websites, social medias, messaging apps and offline marketing campaigns. It will offer many paying services such as SMS campaigns and more.

Africar Group is also offering for its visitors, potential car, truck and bike buyers, in partnership with local companies, insurance and financing options, in order to complete the whole customer journey. Africar Group has generated amongst the best qualified leads for some insurance companies in Africa in terms of conversion rate.

MultiChoice moves to deepen Nigeria’s film industry

Nigeria’s entertainment industry which contributed 2.3 percent (about N239biliion) to Nigeria’s Gross Domestic Product (GDP) in 2016 is receiving further lift from MultiChoice Africa. The video entertainment services provider said it is investing in Talent Factory aimed at igniting and growing the industry into vibrant, economic centre.

The MultiChoice Talent Factory will involve academies and Masterclasses. The academy is a 12-month educational programme aimed at furnishing 20 deserving, young, talented Nigerians who want to work and innovate in film and television production. The applicants who must be below 25 years must demonstrate passion for any aspect of the industry. Those who are slightly above 25 years but have strong passion may be considered.

While Nigerian talent factory will also draw students from other West African countries, the factory will also be established in Kenya and Zambia with 20 students each for those regions, making a total of 60 students across Africa.

MultiChoice said that the MTF Academy students will be provided with skillsets to develop their talent, connect with industry professionals and tell authentic African stories through a comprehensive curriculum comprising theoretical knowledge and hands-on experience in cinematography, editing, audio production and storytelling.

The programme will be overseen by acclaimed local film & TV industry experts, Academy Directors:  Njoki Muhoho in the Eastern Hub; Femi Odugbemi in the Western Hub and Berry Lwando in the Southern Hub.

The idea of the programme is to develop talents to produce quality and international standard films and tell African narratives. In Nigeria, MultiChoice is partnering with Pan Atlantic University to deliver content and ensure the success of the programme.

“The African development story has long been defined by investment in the vast mineral wealth on the continent, leaving our creative industries to fend for themselves on the fringes of economic development for far too long. As a result, the film and television industries have not developed at the same rate as other industries on the continent, and not for a lack of talent, passion or imagination,” says John Ugbe, Managing Director, MultiChoice Nigeria.

“We are abundantly blessed in these areas, however, the space given for this expression has at best been limited and at worst, been relegated to the fringes of the mainstream economy, leaving in its wake, unfulfilled dreams, unexplored talent and unwritten stories. As an African business, MultiChoice, together with our valued partners and stakeholders across the continent, have collaborated to make a positive socio-economic impact in the communities in which we live and work through the MultiChoice Talent Factory initiative.”

He further states, “There is no better time than now; this being MultiChoice’s 25th year of operations in Nigeria, for a project of this scope to concretize what we stand for as an organisation, as it lays a foundation that will foster economic growth for tomorrow’s leaders, and by extension our continent.

“Professional training is key to success in any occupation. We need interventions like the MTF so that emerging filmmakers are better equipped in the creative processes that has scholarship and technology at its foundation,” says Femi Odugbemi, MTF Academy Director for West Africa. He adds: “We must consciously build capacity so that our next-generation filmmakers and producers can also create wealth and create employment by being entrepreneurs as well.”

City fintech firm to pitch for funding in Africa contest

Nairobi-based fintech firm Data Integrated, specialising in developing customised end-to-end enterprise payment solutions for SMEs, is set to pitch to global investors with a chance for clinching Sh5 million ($50,000) equity investment.

Data Integrated is among four finalists from Ghana, Nigeria and South Africa declared regional winners in the Meltwater Entrepreneurial School of Technology (MEST) Africa challenge 2018.

They will face off at the finals in Cape Town, South Africa on June 20, during the MEST Africa summit.

MEST is a pan-African training programme, seed fund and incubator for technology entrepreneurs in Africa, providing critical skills training in software development, business and communications.

It was launched in 2008 by Meltwater Foundation, headquartered in Accra, with presence in Nigeria, Kenya, South Africa and Ivory Coast.

GHL Bank, one of the MEST Africa summit sponsors through its CEO Dominic Adu said technology, innovation and global competition the world over are disrupting traditional businesses.

“As more traditional jobs are eroded, innovative start-ups will be the key contributing factor to curbing unemployment and protecting our lifestyles and livelihoods as a nation and continent,” said Mr Adu in a statement.

Rising costs in China make entrepreneurs look to Vietnam

‘People are starting to wonder if doing business in China is worth it.’ African nations have been turning to Vietnam as the business environment in China becomes increasingly more difficult. African businesses started flooding to Guangzhou City after China joined the World Trade Organization in 2001.

Migration from Africa has risen as China “has stepped up its diplomatic links and investments with the continent,” the newspaper explained.

In 2009, local media put the African population in Guangzhou at 100,000, including those who had overstayed their visas, it said.

Guangzhou draws merchants who come to buy goods such as jewelry and electronics in bulk, which they ship back to their homelands.

A part of the city has even been given the name “Little Africa.”

But things have changed.

The city’s African population had dropped to 10,344 in February last year, citing the municipal bureau of public security as saying, though Liang Yucheng, a professor of social sciences and humanities at Sun Yat-sen University, told the newspaper that there were still nearly 20,000 African traders in Guangzhou.

Felly Mwamba, a leader of the Congolese community in Guangzhou, said one of the main reasons for this was rising costs, listing visa fees air tickets and other living expenses.

“Most African trade with China is basic goods, like clothes, shoes, electrical appliances and low-end smartphones. Prices, logistics and living costs are all soaring in China,” a Kenyan trader identified as Don said.

“Every day among the African community in Guangzhou, more and more have people started talking about going home or exploring new markets like India, Vietnam and Cambodia,” he said.

The other reason for the falling African population in Guangzhou, as pointed out by Xinhua news agency in January, is that “police have tightened enforcement on illegal immigration.”

Long-time African residents told that they have seen their compatriots lapse into “illegal” status after struggling with visa renewal requirements.

Nigerians must submit criminal record checks for all work and student visas, and no African countries are eligible for 72-hour or 144-hour transit visa exemptions, unlike visitors from many other nations.

“My friend had to go home to give fingerprints for a criminal record check. A return flight costs USD2,000. By the time he got all his documents in order, his visa had expired,” said Akubakarr Sajor Barrie, director of an import-export company.

“For a small business owner, this is really hard. People are starting to wonder if doing business in China is worth it and they’re going to countries like Turkey and Vietnam instead,” he was quoted as saying.

Official data from the labor ministry showed the number of foreign workers in Vietnam grew by more than 12,600 in 2004 to 83,500 in 2015, and 93 percent of them are legal.

Those foreigners come from 110 different markets, and most of them are from China, South Korea, and Taiwan.

Vietnam was named among the top 10 destinations for expats in a ranking released in March to aim at guiding the world’s rising number of modern nomads.

The country was placed ninth on the InterNations’ 2018 Expat Insider survey, climbing three spots from last year.

More than four in five expats, or 81 percent, described the Vietnamese people as welcoming, and 73 percent said it was easy to settle down in the country, the survey found.

Of the expats questioned, 56 percent said they had found it easy to make friends with locals, and 16 percent said they planned to stay forever.

Kenya tech company gets USD2.6m funding

Technology investment fund Orange Digital Ventures has invested KES260 million (USD2.6 million) in Kenya’s mobile tech company Africa’s Talking alongside California-based venture capital firm Social Capital.

Founded in 2010, Africa’s Talking provides platform for businesses and developers who want to integrate mobile communication and payment services to their applications.

The new funding brings the total investment received by Africa’s Talking to KES860 million (USD8.6 million), in addition to KES600 million (USD6 million) by International Finance Corporation (IFC).

Orange Digital Ventures, which is backed by France’s telecoms operator Orange, is an early-stage technological investment fund for international projects and has a bias for products that create innovative digital services for the African continent.

The fund was launched last June.

“We are delighted that the first beneficiary of our African initiative is a recognised player providing access to operators’ APIs. We believe that it is essential to support every initiative that aims to make these APIs more accessible to entrepreneurs in Africa,” chairman of Orange Digital Ventures, Marc Rennard, said in a statement.

Samuel Gikandi, CEO and co-founder of Africa’s Talking, said the new capital injection will help the firm to scale up its operations on the continent.

“We intend to leverage this relationship to accelerate our expansion in countries where Orange is present and launch new products that deepen the engagement of Orange with software developers,” Mr Gikandi said.

A business that wants to send bulk SMS to customers, provide services via USSD or set up a mobile payment system for clients can use Africa’s Talking platform.

MC III takes stake in Groupe COFINA

Mediterrania Capital Partners has acquired a minority stake in Groupe COFINA, a meso-finance institution in West and Central Africa, through its third fund MC III.

Along with technical assistance, Mediterrania Capital Partners’ funding will enable Groupe COFINA to raise up to €50m in capital and debt over the next three years.

With the support of Mediterrania Capital Partners, COFINA plans to increase its ability to finance its clients and accelerate its regional growth, with four new operations scheduled for launch in West and Central Africa by 2021.

Albert Alsina, Founder and CEO of Mediterrania Capital Partners, said: “We are proud to contribute to the success story of Groupe COFINA. This African group has managed to establish itself in a key business sector and lead the market in five African countries. We expect that the new expansion phase will both increase COFINA’s profitability and position itself as a model for all the other players in the sector.”

In joining the COFINA financing round, Mediterrania Capital Partners guarantees the group’s consolidation as well as increasing the amount of financing available for entrepreneurs.

With more than 1,000 employees and managing 90,000 clients across its six subsidiaries, COFINA has positioned itself as the “missing middle”, particularly for entrepreneurs and SMEs who have difficulty in obtaining medium- or long-term financing (more than 70% of all businesses in Africa, according to the African Development Bank).

Many existing financial institutions have neither sufficient knowledge nor suitable systems for evaluating and monitoring the projects of SMEs, and they compensate for this by demanding highly costly guarantees.

Meso-finance assists entrepreneurs or SMEs whose financing needs have outgrown microfinance institutions but whose entrepreneurial structure is still considered insufficiently formal for traditional commercial banks.

Only 6.4% of all SMEs in Sub-Saharan Africa say they have had access to financing, compared with 27% in South-East Asia.

Jean-Luc Konan, Founder and CEO of Groupe COFINA, said: “Following our initial expansion phase, the signing of this partnership with Mediterrania Capital Partners marks a new stage in COFINA’s growth within its still-promising market. In Africa, lending to the private sector represents less than 20% of GDP, compared with 30% in South Asia and 40% in Latin America. In spite of their immense potential, the markets in which we operate are very poorly served by traditional banks despite their very many entrepreneurs.”

Africa agrees to a giant trade bloc, South Africa and Nigeria sit it out

The African Union started talks in 2015 to establish a 55-nation bloc that would be the biggest in the world by member states, in a bid to increase intra-regional trade, which sits at a measly 15 percent of Africa’s total commerce.

Rwandan president Paul Kagame, host of an AU summit called to conclude the initial negotiations, declared the meeting a success after 44 African nations signed up to establish the free trade bloc within 18 months.

It was not immediately clear why South Africa and Nigeria stayed on the sidelines. Others staying out of the bloc were Botswana, Lesotho, Namibia, Zambia, Burundi, Eritrea, Benin, Sierra Leone and Guinea Bissau.

“It would have been great if the two biggest economies on the continent, Nigeria and South Africa, had signed, but the most important is that the rest of the continent is sending a right message to these two biggest economies that we are moving ahead without you,” said Michael Kottoh, an analyst at Confidential Strategies in Ghana.

The project needed a minimum of 22 countries signing up to get off the ground and Kagame hailed the effort so far.

“What is at stake is the dignity and well-being of Africa’s farmers, workers and entrepreneurs,” he said.

According to the business community, African countries agreeing on the
highly anticipated intra-Africa trade regime will go a long way in positioning
Africa as one of the biggest markets, consequently inspiring innovation, industrialisation and growth.

Ali Mufuruki, Tanzanian businessman and founder of Infotech Investment Group,  said one of the reasons he is excited about the Continental Free Trade Area is that it will not only open trade borders for Africans making mobility less expensive, but it will also restore African “dignity.”

“As a businessperson, there is nothing that frustrates me like traveling across Africa. It is extremely expensive and difficult; it takes a long time, you need visas and when you get to the border you are told to wait and you see people from Europe and Asia being waived through like they live there. It is so sad.

‘‘But to get into the country and I am being valued and I am appreciated simply because I am African, makes my life happier. I think that is one reason I am very happy about this single market framework,” Mufuruki said.

Linda Ndungutse, the founder of Haute Baso, a local clothing brand, said that the reduction of trade barriers within the African market will lessen the cost of doing business for young entrepreneurs while widening their consumer market.

Patrick Nsenga Buchana, the Chief Executive Officer of AC Group – the brains behind the smart technology in public transport payment model (Tap and Go) that operates in Rwanda and Cameroon – said that the need to grow opportunities across borders and give young African companies the scale to compete on the global market is also a unique opportunity  that the continental free trade market presents.

Embrace technology to grow, experts urge African entrepreneurs

Experts in the business and technology industries have advised small and medium-scale business owners to embrace technology for them to grow and remain relevant in business.

The experts made the call at the Social Media Week in Lagos, where Microsoft hosted a panel session on ‘Digital transformation: Does your business have what it takes to survive in the digital age?’

The Business Development Manager, Microsoft4Afrika, Soromfe Uzomah, said that modern technology was the most vital business partner for any enterprise.

He stated that for business enterprises to survive in the digital age, “they must understand that today’s modern market expects technology-driven services.”

According to him, many of today’s consumers have grown using technology and the Internet.

Uzomah said that millennials accounted for over one-third of Africa’s population, adding that the impact they were having on businesses was beginning to be felt.

He stated that businesses that wished to be relevant and desired to appeal to today’s audience must adopt technology as a key part of business.

He said small business enterprises often battled to compete with larger firms, which have large servers and expensive Information Technology infrastructure that enable them to do more.

“Therefore, entrepreneurs should adopt modern technology to better understand their consumers and improve their products to give them a competitive edge,” Uzomah noted.

He also said that businesses looking to thrive in the digital age “should have employees who are digitally literate.”

Uzomah stated, “Employees need to possess the skills to make the most out of technology, as lack of skills is unlikely to derive the benefits of its investments. The development of these skills will move businesses to have increased access to the talent they need to make the most of their technology investments.

“Businesses which hope to lead in the digital age need to implement modern technologies and skills that will make them relevant and give them a competitive edge.

“With the intelligent tools to uncover new insights, address future problems, adapt to changing business environments, better serve customers and make more informed business decisions, your business can be unstoppable.”

The Country Manager, Microsoft Nigeria, Akin Banuso, said digital technology was changing every industry people knew, from manufacturing to health, retail, banking, agriculture and education.

“It provides African entrepreneurs exciting opportunities for innovation and new business models,” he added.