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Yahoo
4 days ago
- Business
- Yahoo
Self-Taught Ethiopian Developer Raises $5M For ‘The Best Authentication Tool' Better Auth
Ethiopian startup Better Auth is being labeled the 'best authentication tool' after its creator, Bereket Engida, raised roughly $5 million in seed funding from top investors, TechCrunch reports. Better Auth is an app providing an open-source framework, committed to simplifying how developers manage user authentication. Engida, a self-taught developer from the African nation, raised the hefty amount for his startup from Peak XV, formerly known as Sequoia India and Southeast Asia, Y Combinator, P1 Ventures, and Chapter One. The beauty behind Engida's genius is that the app was created in Ethiopia before he set foot in the U.S. It all started at 18, when he began programming after a friend declined to assist him in building an e-commerce search app. However, after landing numerous software jobs and building a web analytics platform that enables developers to monitor website user behavior, he continued to notice that authentication was a problem. In the world of apps, each one has to be able to manage how users sign in and out of the system and reset passwords. After realizing that existing tools had extensive limitations or were too expensive to scale, allowing administrators to handle permissions and user roles, Engida took matters into his own hands. 'I remember needing an organization feature. It's a very common use case for most SaaS applications, but it wasn't available from these providers,' the developer said. 'So I had to build it from scratch. It took me about two weeks, and I remember thinking, 'This is crazy; there has to be a better way to solve this.'' Engida and Co-Founder Kinfe Michael Tariku believed from the start that developers should be able to own their authentication systems rather than being committed to expensive platforms. It's one of the various reasons why investors are celebrating it. The Addis Ababa native started working on a TypeScript-based authentication framework, making it fool-proof for developers to build secure login, verification, and session management workflows without overthinking efforts, according to Addis Insight. Peak XV partner Arnav Sahu said the product is the 'next generation of AI startups.' With their investment, Better Auth is the firm's first direct investment from an African founder. 'We first heard about the product from numerous startups we've worked with,' Sahu, who is a former principal at Y Combinator, said. 'Their auth product has seen phenomenal adoption among the next generation of AI startups.' As a recent graduate of YC's spring batch of startups, Engida is still thinking of ways to improve the free app. With Better Auth being the third Ethiopian startup to pass through the accelerator, the developer is focusing on ways to improve its core features and implement a paid enterprise infrastructure to plug into the open-source base. He also wants to scale the startup without getting rid of the community-built feel of the product. Building a team is also on the radar, as Engida is currently writing most of the code himself. 'Building this feels important not just because people love the product, but because of what it represents,' he said. 'There aren't many Ethiopian founders building global products. For many, it feels almost impossible. So seeing that traction gives hope for other people to try to be more ambitious.' RELATED CONTENT:
Zawya
5 days ago
- Business
- Zawya
Ethiopia: Can securities exchange breathe new life in parastatals?
Ethiopia has finally lost its status as the most populous country in the world not to have a stock exchange. After years of prepa- ration, the Ethiopian Securities Exchange (ESX) was finally launched on 10 January 2025, but this is only the begin- ning of the story as just a single company was listed. Initial public offerings (IPOs) in many state-owned companies are expected, but Ethiopian Investment Holdings (EIH) hopes to improve the commercial perfor- mance of less efficient ones before seeking to sell stakes in them. (See page 20.) Investment of $11m was needed to launch the bourse and by April 2024, the ESX announced that the issue had been oversubscribed, with $26.6m offered by domestic and foreign investors. State- owned EIH and its offshoots Ethio Telecom and Commercial Bank of Ethiopia now hold 25% equity, with the remaining 75% held by private sector investors, including 16 of the country's commercial banks, 12 insurance firms and three foreign inves- tors – FSD Africa, Trade and Development Bank and the Nigeria Exchange Group. It was originally hoped that the ESX would begin operating in October but the launch was eventually pushed back to January. Wegagen Bank was the only company to list at launch but ESX chief executive Tilahun Kassahun expects 90 compa- nies to join within 10 years. Previously privately-owned, Wegagen is a mid-sized bank but one that has grown strongly in recent years. In the fiscal year 2023-24, it recorded a 40% increase in revenue to 9.8bn birr ($75.9m). The country's original stock exchange was closed down during the 1974 revolu- tion but creating a new bourse was one of the main planks of the current govern- ment's economic reforms. Ethiopian Prime Minister Abiy Ahmed described the move as a 'major step toward modernising the country's financial sector'. Brokers and dealers are now able to apply for licences. The delay in launching the ESX may have been because the sale of a 10% stake in Ethio Telecom was scheduled to close on 3 January, which would have enabled it to join the exchange. The Ethio Telecom shares are being sold exclusively to Ethiopian citizens via the company's TeleBirr mobile money platform. However, the opening of the ESX came and went without any mention of the domestic telecoms giant, apparently because it had failed to secure sufficient interest in its 10% stake by that date, with the deadline extended until at least 14 February. In addition to the delayed listing, the government failed to attract a foreign investor for a 45% stake in Ethio Telecom last year, with potential suitors perhaps deterred because the deal would still have left the government with a controlling share. However, once the 10% IPO com- pletes, buying a 45% stake may seem more attractive to foreign operators because it would end the government's majority stake. Ethio Telecom is one of the coun- try's more profitable parastatals, record- ing a profit of 21.8bn birr ($184m) for the year to July 2024. In a statement, the ESX said that it would be 'a key component of Ethiopia's financial sector reform, aimed at foster- ing economic growth and development by enabling companies to raise capital and offering investment opportunities to the public'. The government hopes that the ESX will support privatisation plans and rebal- ance the economy more in favour of the private sector. Yet while Ethio Telecom is expected to join Wegagen Bank sooner or later, it must be joined by many more other companies before the new exchange is considered a success. Which companies will be listed? The big question is how many of the 27 state-owned companies that have been under the stewardship of EIH since De- cember 2021 will actually be listed. As the new EIH chief executive Brook Taye explains on page 20, his company is fo- cusing on reforming state-owned enter- prises in the short term to make more of them commercially viable. However, this is likely aimed at preparing many of them for listing, as the EIH has been tasked with attracting foreign investment. Officials have said that some companies will be wholly privatised, while minority stakes will be sold in others. Ethiopian Airlines is the jewel in the crown and would undoubtedly attract huge investor interest but it is already profitable and a national success story, so the government may decide to keep it entirely under state ownership. Even if it is partly privatised, the government will be keen to time the sale to secure the best price. Ethiopian Insurance Corporation, Ethi- opian Shipping and Logistics Services Enterprise and Berhanena Selam Printing were named as founding members of the exchange at its launch. Although they are not yet listed, they are expected to be among the first state-owned companies to seek a listing. Stakes could also be sold in loss-mak- ing companies in the power, transport and food sectors to help put them on a more commercial footing but they are likely to be of less interest to potential investors. The government sees many of them as providing a public service rather than solely as commercial enterprises, and may be reluctant to turn them over to the private sector. Their profitability is unknown but it seems likely that many are currently generating losses rather than profits, particularly while having to operate in subsidised sectors. Economic context The launch of the ESX has followed the pattern of general government economic policy since Prime Minister Abiy Ahmed came to power in 2018. There has been a gradual process of economic liberalisa- tion, including in the telecoms and finan- cial services sectors, with Kenya's Safa- ricom winning the country's first private telecoms licence in 2021. Yet the pace of change has been slow and subject to huge shocks, including the Covid-19 pandemic, the 2020-22 war in Tigray and armed conflict elsewhere in the country. These factors contributed towards a sovereign debt crisis that culminated in the suspension of debt repayments to China in August 2023 and then default on Ethiopia's $1bn Eurobond after it missed a $33m payment. However, Addis Ababa reached an agreement with the IMF to implement further economic reforms, including allowing the birr to float in July 2024, in return for $3.4bn of IMF financ- ing that allowed the country to begin re- structuring its debt. The four-year IMF programme will also require reforms in monetary policy, the management of state-owned en- terprises, tax structures and financial services' regulations. The sale of stakes in parastatals would further help Ad- dis Ababa strengthen its finances but it must time any IPOs carefully in order to secure the most revenue. Waiting until its economic position improves and putting more distance between the debt crisis and any sales could help increase valuations. Ethiopia's position as one of the world's fastest-growing economies, with average annual economic growth of almost 10% between 2004 and 2020, should make it an attractive investment destination. At the same time, its population of 130m is set to increase to 225m by 2050, providing a huge market for potential investors. Yet a change in corporate culture and regula- tory requirements would greatly help to attract investment and interest in the ESX, as some Ethiopian companies currently fail to offer the financial transparency common in other markets. It will be interesting to see how many other companies are listed over the course of this year but privatising state owned companies, even in part, is not a panacea for economic improvement. The govern- ment needs to instil more confidence in investors if it is to attract sufficient inter- est in Ethiopian companies. It is therefore understandable that the EIH is reluctant to sell off assets too quickly because a rushed process could undervalue them. Yet a stock exchange with a single component, or even just a handful of companies, will hardly be a ringing en- dorsement of Ethiopia's attractiveness as an investment destination. n The big question is which of the 27 state-owned companies under EIH's stewardship will be listed. EIH is likely preparing many for the process. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Zawya
5 days ago
- Business
- Zawya
Ethiopia: Financial sector opening up promises renewed dynamism
In December 2024, Ethiopia's parlia- ment passed legislation opening up the country's banking sector to com- petition from foreign companies, end- ing the decades-long domination of state-run entities. Ethiopia's banking sector is dominated by the state-owned Commercial Bank of Ethiopia, which in 2021, held two-thirds of the total bank deposits in the country and accounted for over half of all bank loans. Furthermore, all 29 banks which currently operate in Ethiopia are locally owned, with many under the direct con- trol of the government or state bodies. This is because Ethiopia has long con- sidered banking, along with other sectors such as telecommunications, a strategic industry to be protected from foreign influence or competition. However, since coming to power in 2018, Prime Minister Abiy Ahmed has sought to open up these strategic sectors with the hope of attracting greater levels of foreign direct investment into Ethiopia and boosting growth. Abiy has started to move Ethiopia away from the 'state-led growth model', partly because of the need to comply with con- ditions imposed by the World Bank and International Monetary Fund (IMF) in return for financial assistance. Since defaulting on a $33m Eurobond payment in 2023, Addis Ababa has been negotiating with these institutions for an external financing package of around $10.7bn to stabilise the Ethiopian economy – but they have required Ethiopia to take demonstrable steps towards liberalisa- tion in return. As a result, in July last year, the Ethio- pia central bank agreed to stop interven- ing in markets to protect the value of the Ethiopian birr, which depreciated by around 60% against the dollar within the first few months of trading. Fur- thermore, in January, the Ethiopian Securities Exchange resumed trading after a 50-year hiatus, with many of the country's state-owned enterprises set to be privatised and floated on the stock market. Now, the government has taken a fur- ther step towards liberalisation by al- lowing foreign companies to enter the Ethiopian financial services market for the first time, though it is expected that foreign ownership of banks will still be capped at 40%. The IMF publicly welcomed the move, with its deputy managing director Ni- gel Clarke commenting that 'continued implementation of financial sector re- forms, including modernising the bank regulation framework... will support financial sector stability.' Hilina Resom, founding partner at the Kazana Fund in Addis Ababa, is also optimistic that this liberalisation will 'open up a whole lot of opportu- nity' for both domestic and foreign financial services firms. On the domestic front, Resom notes that the recent legislation removes restrictions on foreign companies or individuals investing in Ethiopian fi- nancial services companies. 'We have spoken to venture capital investors across the Middle East and Africa that have been interested in Ethiopian com- panies within the finance space for some time but could not invest in them because they are foreigners,' she told African Banker. 'Local start-ups need financing, but money has so far been limited be- cause they had to just raise from angel investors,' Resom adds. 'Even when raising from angel investors, they had to make sure that the investors were Ethiopians; if they were living abroad those investors would need to have 'yellow cards' allowing them to invest in protected industries. Given this, the recent legislation is game-changing in terms of mobilising more capital into the country and catalysing investment into the fintech space in particular. We are very excited about the opportunity.' Attractive fundamentals Banks and fintechs operating in other parts of East Africa, and across the con- tinent are also likely to see this move as an opportunity for expansion. After all, despite facing a difficult macroeco- nomic situation for the last few years, Ethiopia's fundamentals remain at-tractive in many ways. Ethiopia is Africa's second largest country by population size, offering a market of over 125m people – a population that is likely to continue rapidly growing given that the average Ethiopian is aged just 19. With the IMF projecting GDP growth of 6.5% this year, Ethiopia is also one of Africa's fastest-growing economies. Resom told African Banker that 'this is an opportunity that most players in the region's finance space are excited about – this is the second largest market in Africa, and there is obviously a huge opportu- nity for them to increase their revenues. I would expect that banks in Kenya and other parts of East Africa will see this as an opportunity they cannot ignore.' While it is still too early for foreign banks to have made firm plans to enter the Ethiopian market – the legislation was only passed in late December – there have already been signs that some major players are already taking the opportunity seriously. FirstBank of Nigeria, which is based in Lagos and has over 40m retail banking clients across West Africa, has suggested that it will be looking to expand into Ethiopia. FirstBank's deputy managing director Ini Ebong has said that 'there are a number of large economies with large banking pools that are of interest to us because their financial markets are open- ing up. You look at countries like Ethiopia and Angola... the market opportunity is there, and we seek to exploit it.' Chinese interest Mirkarim Yakubov, an asset manager based in Addis Ababa, previously told Af- rican Banker that regional African banks, including multinationals from Kenya and South Africa, could be among the first foreign banks to enter the Ethiopian market, but also predicted strong interest from Chinese institutions. There have also been rumours of banks in Morocco and the United Arab Emirates considering their options in Ethiopia, although this will become clearer in the coming months. While it is hoped that the move to lib- eralise Ethiopia's financial services sector will be successful in attracting greater amounts of foreign capital, Resom also hopes that the move will lead to much higher levels of competition within the domestic banking space and therefore drive up outcomes for consumers. 'We have seen it before in other markets – whenever players become comfortable in maintaining a certain amount of market share, it is positive to see disruption so that consumers can be the beneficiaries in terms of improved services,' she says. 'Ethio- pians will soon have more options to shift to new banks if existing institu- tions do not offer better services – I am sure the local banks are well aware of this.' Mamo Mihretu, the governor of the National Bank of Ethiopia (NBE), has similarly suggested that increased competition will help local lenders by encouraging them to improve their services and standards. While this recent legislation is a significant step towards liberalising the Ethiopian economy, Resom ex- pects that we will see similarly large strides this year – including in the re- tail and logistics industries, which have also traditionally been protected by the government. 'The retail sector is currently closed in Ethiopia, but I expect that it will be opened up soon – indeed the govern- ment has indicated it is interested in doing that,' Resom says. 'This gives us as VCs a huge opportunity to not only invest in the retail and the fintech space individually, but to invest in companies that provide the infrastructure for other companies in those sectors to build on. 'If we see both the financial sector and the retail space open – as I think we will – we are going to see a huge number of start-ups emerge in these sectors. That will be a huge opportunity to tap into.' n Mamo Mihretu, the central bank governor (above), has suggested that increased competition in the finance sector will help local lenders by encouraging them to improve their services and standards. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Zawya
5 days ago
- Business
- Zawya
Ethiopia: Tesfaye succeeds Kebede at Hibret Bank
Hibret Bank, one of Ethiopia's most profitable private banks, with a national footprint across the country and close to 500 branches, has appointed Tsigereda Tesfaye as its sixth president, subject to regulatory approval. Tesfaye will become the third woman to head an Ethiopian bank, following on from Dr Emebet Melese at the Development Bank of Ethiopia (DBE) and Melika Bedri at ZamZam Bank. She is set to replace Melaku Kebede, who stepped down recently after nearly 20 years with Hibret Bank. During his tenure, Kebede oversaw the launch of multi-channel banking services, introduced interest-free banking, and implemented a broadband- based Local Money Transfer system. He also guided the bank's early push into technology, championing ambitious systems upgrades to boost effifficiency. The bank's Acting President since August 2024, Tesfaye possesses three decades of banking experience. Beginning her career at the Construction & Business Bank (CBE) in 1995, she rose to lead its general accounts division in 2003. She moved to Dashen Bank as head of credit analysis before joining Hibret Bank in 2004. She has a BA in Business Management and an MBA in Finance, both from Addis Ababa University. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Zawya
6 days ago
- Business
- Zawya
eQUB brings Ethiopia's traditional saving system into the digital age
Fintech company eQUB is digitizing Ethiopia's traditional savings culture through its mobile app. With support from the NTF V Tech project in Ethiopia, the business is bringing a trusted community system online to improve financial access, transparency and inclusion. In Ethiopia, informal saving groups known as 'equb' have long helped people access money when formal credit options are limited. It's a system built on trust, and used by friends, neighbours, and families who pool funds and take turns receiving the total contribution. Now, that familiar tradition is being transformed into a digital platform with global potential. With support from the Netherlands Trust Fund V (NTF V) Programme at the International Trade Centre (ITC), Ethiopian fintech company eQUB has developed an app that digitises this centuries-old savings model. Users can create and join groups online, manage contributions, automate payments and record-keeping, and access features such as digital withdrawals and customer support. Where the idea came from In 2018, eQUB co-founder and CEO Alexander Abay Hizikias struggled to access funding for his business. 'Banks want collateral that most early-stage entrepreneurs don't have, and microfinance loans are expensive,' he says. 'I ended up joining a traditional equb to get the money I needed, and it made me realize this system could work better if it was digital.' After nearly two years of development, eQUB was officially registered in 2020. The first version of the app was based on assumptions, but user feedback quickly showed the team what needed to change. That led to a much-improved second version, shaped by real user input and behaviour. The eQUB App is now available in English and four local languages. It offers two main options. In private groups, people who already know each other can manage their equb through the app, using features like automatic record-keeping and secure payments. In public groups, individuals can join others with similar savings goals. The app helps match members and handles the draw system fairly. Backed by global support and exposure eQUB's growth has picked up speed since joining the NTF V Ethiopia Tech project. The programme has provided technical training, mentoring, and financial support to help the company take part in international trade shows and startup events. Since then, the number of users has grown from 25,000 to over 110,000. Monthly savings through the platform now exceed eight figures in Ethiopian birr, and eQUB is on track to surpass 100 million birr ($720,000) in total savings processed by 2026. eQUB gained further recognition at the Mobile World Congress (MWC) and 4YFN (Four Years From Now) in Barcelona, two of the world's leading platforms for mobile innovation and startups, where it won the Best FinTech Pitch award in 2024. The company also topped the FinTech category at AfricArena Johannesburg, standing out among strong competitors from across the African continent. These wins attracted interest from global investors, some of whom have since visited eQUB's headquarters in Addis Ababa. At the AfricArise Scale Programme, which included mentorship from experienced founders, cloud infrastructure specialists, and finance professionals, eQUB won $50,000 in Amazon Web Services credits at events in Johannesburg and London. These resources have helped reduce the costs of scaling the platform's technical infrastructure. Local impact, global relevance The company has already identified similar saving systems in other African countries that follow the same model, such as 'susu' in Ghana, 'esusu' in Nigeria and 'stokvels' in South Africa. 'People in these countries are already familiar with community savings,' says Hizikias. 'Instead of introducing unfamiliar digital banking products, we're building on what people already trust and making it more secure and trackable.' To support this, the eQUB App is developing a credit scoring system based on users' savings and payout history. 'Right now, if someone has participated in an equb for 10 years, they have no proof of financial reliability. Our platform creates a digital trail that could help them access formal credit down the line,' he says. Hizikias also has advice for other fintech founders. 'Before you raise money, prove your product works. Start small, find early users, and focus on solving real problems. Then use international platforms to test your idea against global standards. That's where you'll really learn and grow.' As eQUB enters its next phase of growth, the company is actively raising its first seed funding round, which it aims to close by the end of 2025. With a growing user base, international recognition, and deep cultural relevance, eQUB is showing how local innovation, when supported and scaled well, can compete and succeed globally. Distributed by APO Group on behalf of International Trade Centre.
