Trump administration investing in African e-commerce startups focused on Rural Areas

As part of its recent quarterly expenditure of $3.6 billion, the United States’ International Development Finance Corporation (DFC) funded two new e-commerce companies in West Africa. Copia Global is an e-commerce and logistics company based in Kenya, which is focused on the poorly served customer in the rural areas, reported by DFC for an investment of 5 million dollars.

The four-month expenditure — the largest company ever to make — included $1 million equity investments in Kasha, a Kenya- and Uganda-based female e-commerce player.  Though e-commerce companies such as Jumia and Takealot from South Africa have raised hundreds of millions of dollars in a pledge to conquer urban centres and medium-sized customers in the largest cities in Africa, DFC seemed to aim at more linear-scale start-ups. 

Copia serves rural Kenya customers through a network of 5,000 agents primarily made up of small local shopkeepers who receive commissions by acting as ‘points of order aggregation and distribution’ for delivery. In essence, copies of customers enter into shopping centres of partner agencies who place orders on their behalf and are not online shopping through a web site or mobile app.

In a Series B round last year, the company raised $26 million. Kasha focuses exclusively on women’s health and personal care items through a web, offline open platform that also provides access to low- and middle-income women in Kenya and Uganda. The timing of DFC’s investment in digital services, including e-commerce, is updated following the pandemic of Covid-19 and lockout steps to reduce the spread of the virus. These restrictions have inadvertently been a catalyst for the continent’s e-commerce with more Africans migrating for need and protection. 

In 2018 the Trump administration formed the DFC to replace the 4-decade-old OPIC. One of DFC’s most important improvements was that equity investments could be made for the first time, as with Copia and Kasha. Many analysts agree that, although their respective approaches to development financing vary considerably, the primary objective of the DFC’s $60 billion budget was to tackle China’s hegemony on this continent.

The US approach is more aligned with countries, including the UK, whose CDC has been one of the world’s leading development finance investors, especially in Africa, for many decades, by enabling equity investments and not just aid or grants. Despite the ongoing confusion about Trump’s Africa policy, the expenditures and the continued expenses of the DFC in African countries arise, in particular, because the US assistance, trade and military activities were being challenged by Trump on the continent before it took up office.

The continent has, with visa limits and prohibitions on some of the largest economies on the continental continent, including Nigeria, Ghana, and Ethiopia, borne the brunt of Trump anti-immigration policy since taking office.

Data Source: QZ