Africa graduates seek success abroad
Egypt’s universities produce thousands of talented computer scientists and engineers every year. But the lack of job opportunities in the country have driven many tech-savvy graduates to seek success abroad in places like Dubai. The World Bank says the youth unemployment rate in Egypt is 34%.
This loss of local talent is slowing as the region’s start-up ecosystem grows. Ten percent of the Sawari North Africa fund will go to Flat6Labs, a regional start-up accelerator created by Sawari Ventures that offers entrepreneurs training and access to wide network of mentors.
The European Investment Bank’s contribution to Sawari Ventures’ new fund is the first operation supported by the EIB’s Economic Resilience Initiative Risk Capital Facility. The facility blends the Bank’s own funds with money from outside donors. Eight EU country donors – Croatia, Poland, Lithuania, Luxembourg, Italy, Slovakia, Slovenia and the United Kingdom – gave a total of €25 million for the facility.
Felix Knidlberger, an equity investment officer at the Bank, says the investment in the fund would not have been possible without the donors. “Due to the high-risk nature of venture capital and limitations on how much of the Bank’s own resources we could use, it was important to bring in donor funds to finance the deal,” he says.
One might ask why start-ups don’t simply take out a loan to grow their businesses. Amin says this extra debt dissuades entrepreneurs from innovating. “If entrepreneurs are saddled with large debts, they are less willing to take risks and will instead stick to what they know works,” he says.
The Uber of buses
Sawari Ventures’ first investment under the North Africa I fund supported the expansion of an Egyptian bus start-up called Swvl (pronounced swivel). The company operates more than 650 bus lines in the country’s two largest cities, Alexandria and Cairo, and is addressing a glaring problem in Egyptian cities: too many cars and not enough reliable public transport.
Swvl likes to call itself the “Uber of buses.” It connects passengers with bus drivers in real-time by using a mobile app, allowing people to identify pickup points and alerting bus drivers of nearby passengers. Payments are made using the app, so drivers don’t have to worry about collecting fares while navigating busy streets. Swvl added buses in Kenya earlier this year and plans to enter other African markets.
Even Knidlberger, the European Investment Bank investment officer, says he plans to download the Swvl app before his next trip to the region.