Unprecedented.
That’s the word that comes to mind when we think of 2022. The world expected a train ride but got a rollercoaster instead. After the covid-19 vaccine rollout and a gradual oil price rebound in late 2021, the expectation was for 2022 to kickstart a global economic boom. We were wrong. It’s been a bust.
A war started between Russia and Ukraine, rattling the whole world. Now, fears of a global recession are even higher than they were during the lockdowns.
At the peak of the covid pandemic, the technology industry was one of the best-performing sectors. But this time, the reverse is happening. Tech is the poster child of this economic downturn. From legal troubles to stock selloffs, mass layoffs and even shutdowns, we’ve seen many unexpected events this year. And some of these events have either happened in Africa or affected it. Here’s a rundown of some of the most controversial events that rocked Africa this year.
The Russia-Ukraine war
The first and arguably most crucial event of the year that shook Africa didn’t happen in Africa — it happened in faraway Ukraine. On February 24th, Russia invaded the Ukrainian borders at full scale from Belarus to the north, the Russian-annexed Crimea Peninsula to the south, and the territory to the east.
While both countries tussled, several countries, including Africans, debated whose side to take. Votes at the United Nations (UN) on the war revealed sharp divisions between countries from the continent.
However, the war became a moment of truth for African economies, as everyone saw how dependent the continent had been on these countries. For instance, before the war started, Africans made up over 20 per cent of Ukraine’s international students, including over 8,000 Moroccans, 4,000 Nigerians and over 3500 Egyptians. Since then, it has opened Africa to several other vulnerabilities, such as imported inflation and spiking interest rates. African countries have also had opportunities, some of which they didn’t properly exploit.
Bento and the #HorribleBosses trend
In March, Nigerian startup employees had a shocking #MeToo moment over workplace abuse on social media. It was “shocking” because before then, the only narrative around Nigeria’s startup ecosystem was its impressive growth.
But this time was different. The hashtag #HorribleBosses trended on Twitter for nearly a week, garnering over 100,000 tweets on the first day, as several workers called out employers for toxic work culture.
The conversation sparked because of a story published on March 21st by TechCabal that detailed allegations of workplace abuse at Bento, attributing the toxic culture at the Lagos-based payroll management startup to CEO Ebun Okubanjo.
That story triggered Nigerians so much that a Twitter Space on the topic lasted nearly eight hours, spilling into Tuesday morning with over 91,000 listeners. Many others came to give accounts of how many industry sweethearts, such as Kuda, GoKada, ULesson, Prospa, LifeBank, and WalletAfrica, had been underpaying and maltreating their staff. But somehow, this wasn’t the biggest startup controversy we witnessed this year.
Flutterwave in a storm
The biggest controversy out of Africa’s startup ecosystem came from fintech’s poster child. On April 4th, Clara Wanjiku Odero, a Nairobi-based former executive at the Nigerian fintech unicorn, Flutterwave, posted an explosive article on Medium, alleging that she had been bullied and harassed by the company’s current CEO, Olugbenga “GB” Agboola.
Then, on April 12th, David Hundeyin, a Nigerian investigative journalist, published a piece alleging that Agboola had a history of misconduct. According to Hundeyin, Agboola had created a phantom ‘co-founder’ identity to give himself more shares in the company’s early days and offered share prices below the company’s valuation to employees who wanted to cash in on their vested options. The story alleged that these employee stock sales went to an investment vehicle that Agboola controlled.
Flutterwave quickly became a hot topic, with many fearing that there might be ripple effects on the entire ecosystem. This was because Flutterwave had raised $250 million in February, pumping its valuation to over $3 billion and making it the industry’s most valuable unicorn.
Terra and the Luna eclipse
Over the past two years, cryptocurrency adoption has grown faster in Africa than in any other region. The need to hedge against inflation, create new wealth and make borderless payments has driven many Africans to store their money in cryptocurrencies and stablecoins.
However, 2022 wasn’t kind to the crypto markets. It was one of the most devastating bear markets that wiped out about $2 trillion in wealth across digital assets. One of the triggers of this massive selloff was the fall of Terra, one of the largest crypto networks.
At its peak, Terra was the fourth-largest blockchain network after Bitcoin, Ethereum and the Binance chain, and Luna, its native token, was trading for about $116.
Many of Terra’s users staked their UST holdings on the Anchor lending platform for a 20% annual yield. But on May 7th, over $2 billion worth of UST, Terra’s native stablecoin, was unstaked (taken off the Anchor Protocol), and hundreds of millions of it quickly liquidated. There’s debate as to whether this happened as a response to rising interest rates (no thanks, Putin) or if it was a malicious attack on the Terra blockchain. The massive sell-offs brought down the price of UST to $0.91 from $1. After this happened, traders started panic-selling Luna, Terra’s native token, and its value crashed below $1.
This streak of events wiped out billions of dollars from the entire crypto market, and everyone who staked on the Terra blockchain lost all their money. Today, there is an arrest warrant for Do Kwon, the founder of Terra.
Nigerian fintechs vs Kenya
In July, Nigeria’s fintech ecosystem came under the controversial spotlight again. Kenya’s Assets Recovery Agency (ARA) had been investigating transactions made by at least ten Nigerian firms, and in June, it froze many bank accounts linked to them.
One of these companies was Flutterwave, which was at the time still struggling to steady its ship from a previous storm. The Kenyan high court froze 52 bank accounts owned by Flutterwave with a total balance of $45 million and another ten bank accounts linked to the company but operated by other entities — named Boxtrip Travel and Tours, Bagtrip Travel, Elivalat Fintech, Adguru Technology, Hupesi Solutions, Cruz Ride Auto, and an individual, Simon Ngige.
Two other notable names that got tangled in the ARA’s net were Korapay and Kandon Technologies. Both are TechStars-backed fintechs, founded in 2017 and 2019, respectively. All three companies denied the allegations, claiming they had verifiable proof.
The FTX Scandal
The crypto space took its biggest hit in November this year when FTX, one of the largest exchanges declared bankruptcy. The firm was once heralded as the Goldman Sachs of crypto, and its CEO, Sam Bankman-Fried was seen as a heroic figure in the space. This was partly because the firm had so much mainstream presence that they purchased the rights to name the Miami Heat Arena the “FTX Arena” and had the endorsements of prominent figures like Tom Brady, Stephen Curry, Shaquille O’Neal and Larry David.
But all those dreamy eyes snapped back when people lost billions of dollars to the firm’s implosion. FTX went from being worth $32 billion to having nothing in the bank. However, the real scandal wasn’t that the company lost money, but that it misappropriated funds. Sam Bankman-Fried went from being called the Warren Buffet of crypto to being tagged as the “Jordan Belfort of the crypto era.”
Before its imminent collapse, Binance, the largest crypto exchange, offered to buy FTX to save the company. But Binance made a U-turn on that decision after finding out that FTX had mishandled customer funds.
Today, Sam Bankman-Fried has been arrested and will undergo trial. But the effects of his scandal led to several irreparable losses. In Africa, the platform had gained so much penetration that it was processing billions of dollars monthly on the continent. After it collapsed, several startups, including Nestcoin and Chipper Cash, had to lay off employees and cut salaries to stay afloat.
The Twitter takeover
This one was arguably the most dramatic event of the year. It’s definitely not as scandalous as FTX blowing away people’s life savings. But one could almost write a sitcom out of the whole series of events. Since Elon Musk bought Twitter for $44 billion, it’s been one episode of controversy after another. From firing thousands of employees, including the entire African team, to selling verified checkmarks, each episode had fresh drama.
But while people are getting entertained or disgusted by all the drama, many wonder what the future holds for Twitter. And it’s not just because of his move-fast-break-tings style of administration. Following his controversial release of the controversial Twitter files in collaboration with Matt Taibi and a few others, many have flagged Musk’s leadership of the social platform as politically motivated. Would this be the end of an empire or a new beginning for a dying social platform? We’ll just have to keep our fingers crossed.
