This week in Africa: Everything you need to know
15 min Read September 1, 2023 at 1:13 PM UTC
Network International invests $32m to expand Egypt operations
- Network International, an e-payment solutions provider across the Middle East and Africa (MEA), has pumped $32 million in investments to ramp up digital payment solutions in Egypt.
- A large part of the investment will be allocated to acquiring, installing, and maintaining about 100,000 advanced Point-of-Sale (POS) machines.
- The rest of the investment will be directed to the implementation and smooth operation of Network One, the company’s payments technology platform.
Fintechs —across several verticals—have enormous potential in Egypt, a country where 2 of every 3 individuals are partly or totally excluded from formal financial services but 50% of its 100 million people actively use smartphones. In addition to high mobile and internet penetration, the North African country boasts a young and tech-savvy population with 61% below 30. That explains why a huge financial services company like Network International, is doubling on investments in the North African nation, thereby helping to further drive the booming fintech sector.
Nigeria’s GDP records 11th consecutive quarter of growth
- Nigeria’s annual economic growth rate slowed to 2.51% in the second quarter, hurt by a fall in oil production amid a series of reforms by new president Bola Tinubu aimed at reviving Africa’s largest economy.
- The data, which marks the 11th consecutive quarter of growth, is the first release since Tinubu embarked on the country’s boldest reforms in decades.
- A popular but costly petrol subsidy is gone while foreign exchange trading restrictions have been lifted. But the action has worsened inflation currently in double-digits, fuelling anger and frustration among the population.
Nigeria, Africa’s top oil producer, recorded an average daily oil output of 1.22 million barrels per day (mbpd) in the second quarter, down from the daily average of 1.43 mbpd registered in the same quarter of 2022. The dominant oil sector which accounts for the bulk of government revenue and 90% of foreign-exchange reserves, contracted 13.43%. The NBS said second-quarter growth was driven by the services sector, which grew 4.42% year on year.
EGX stocks hit record high as investors seek to offset inflation
- Egypt’s benchmark stock index hit a record high last week, spurred by investors looking to hedge against surging inflation driven by a series of currency devaluations and the fallout from Russia’s invasion of Ukraine.
- The Egyptian Stock Exchange’s blue-chip index climbed 1.7%, as most of the stocks on the index were in positive territory.
- Egypt hopes its imminent inclusion in the BRICS bloc of developing nations will help ease its shortage of foreign currency and attract new investment, but analysts say it may take time before any benefits appear.
Most stock markets in the Gulf and by extension North Africa ended higher on Sunday after U.S. Fed Chair Jerome Powell said at the end of last week that the Federal Reserve does not think the inflation fight is over but that it will proceed “carefully” in its next move. Oil and gas exporting countries in the Gulf tend to follow the Fed’s rate moves, as most regional currencies are pegged to the U.S. dollar.
E-commerce users in Africa to exceed 500m by 2025
- By 2025 half a billion people in Africa will be e-commerce users, per data from the International Trade Administration.
- Also, UNCTAD expects digital commerce to add $180 billion to the region’s GDP by the same year. This growth is driven by the expansion of the mobile internet.
- GSMA expects 61% of connections in Africa to be on smartphones by 2025 (33% on 4G). The growing adoption of digital financial services, primarily mobile money, is also contributing to e-commerce growth.
Africa is steadily moving away from traditional retail models and becoming the fastest-growing and most sophisticated market in the world. This is thanks to the explosive growth of young, urban, and digitally savvy consumers; increasing mobile phone penetration; the creation of digital payment and shopping networks; favorable governmental regulations and spending initiatives; and significant investment by both foreign and domestic companies. More so, the Covid-19 pandemic served as a catalyst for the advancement of the e-commerce market and has given rise to a number of trends that impact individuals and businesses.
Kenya and Egypt top Africa in H1 startup funding
- Startups in Kenya and Egypt were the top recipients of equity funding from investors in Africa in the first half of 2023, per a report by Briter Bridges.
- Kenya came in first place with $520 million, Egypt second with 510 million, followed by South Africa at $400 million, Rwanda at $330 million, and Nigeria came fifth at $280 million.
- Regarding the deal volumes, the report indicated that Nigeria closed 100 deals, while Kenya has closed over 80 deals so far, followed by South Africa with over 60 deals, Ghana with over 35 deals, and Egypt with over 15 deals in H1 2023.
Source: Briter Bridges
Africa’s innovation industry is now worth more than $21 billion, Briter Bridges finds. But this milestone has come at a time when the change in the global macro environment is raising questions about the viability of investing in startups, let alone in Africa. The first six months of 2023 were particularly challenging for startups and investors alike looking to raise funding as funding volume dropped by 26% from H2 2022 to H1 2023 and has largely been on a downward trend in 2023 even when factoring in substantial mega deals (those exceeding $100m) such as MTN Halan and Planet42.
Tunisia’s SeekMake raises $539k to accelerate expansion
- Tunisia-based construction tech startup SeekMake has raised a $539,000 round led by European private equity firm, Lafayette Group.
- Founded in 2018, SeekMake connects users with manufacturers across 40 countries, enabling rapid prototyping and faster delivery of final products. It also offers an array of manufacturing options.
- The startup has so far amassed a user and manufacturer base of over 10,000, leveraging partnerships with 72 manufacturers. The new investment will be used to fuel SeekMake’s expansion plans, primarily into Germany and France.
Compared to other sectors like financial services or e-commerce, Africa’s construction industry has typically moved at a slower pace when it comes to embracing innovation or digitalization. But that’s not for the lack of exciting startups in the space working to tap opportunities in an industry expected to continue to grow sustained by mega infrastructure projects and efforts to address the continent’s housing deficit.
Airtel Uganda seeks over $200m in IPO
- Airtel Uganda aims to raise 800 billion Ugandan shillings ($216 million) by selling a 20% stake to drive its expansion plans, per the firm’s initial public offering (IPO) plan.
- When the listing is completed, Airtel will be the second listed telecoms operator on Uganda’s stock exchange after MTN Uganda, majority-owned by South Africa’s MTN Group, which was listed in December 2021.
- The company expects to pay dividends of 500 billion Ugandan shillings in 2023 and will target a dividend payout ratio of 95% of retained earnings or net profit after tax, whichever is higher.
In 2019, Uganda directed telcos to list at least 20% of their shares on the local bourse within two years, putting pressure on multinationals such as MTN, Airtel, and Lycamobile. MTN went public in 2021 through an IPO that attracted local and regional investors. While these developments encourage local ownership in some of the country’s most profitable companies and deepen the capital market, perhaps the most exciting bit is the prospect of Ugandans buying Airtel shares via mobile money—showing just how far mobile phones have revolutionized Africa.
BOV launches $20m fund for African startups
- Black Ostrich Ventures, a Los Angeles-based venture capital firm, has launched a $20 million pre-seed and seed stage fund to support African founders to grow their businesses.
- A statement issued by the newly created firm says it will support startups with check sizes ranging from $50,000 to $200,000 in the cleantech, supply chain, ag-tech, and edtech sectors.
- The fund—backed by LPs in New York and undisclosed high-net-worth individuals in Los Angeles—will focus on startups in Tanzania, Zambia, Morocco, and Uganda.
While there’s been a string of new $10-$50 million startup funds targeting Africa over the past few years, what makes Black Ostrich’s fund unique is its country and sector focus. The firm holds that VC capital inflows into Africa go to the Big Four countries—Nigeria, South Africa, Egypt, and Kenya—but most exits do not happen in these markets. A Briter Bridges report also finds that fintech, Africa’s top sector by deal value and volume since 2015, accounts for less than a third of exits on the continent. These imply investment opportunities lie elsewhere for investors, which BOV is looking to capture.
Gabon soldiers seize power in Africa’s latest coup
- Soldiers seized power in OPEC member Gabon, four days after the central African nation held disputed presidential elections. The nation’s dollar bonds sank.
- If the putsch holds in the former French colony, it would mark the ninth in sub-Saharan Africa in the past three years and follows a coup in Niger last month.
- The military takeovers have been rooted in the economic malaise and weak governance that have fed frustration among civilians and — in West Africa in particular — the spread of extremist violence.
Across Africa, coups in Mali, Guinea, Burkina Faso, Chad, and Niger have undermined democratic progress in recent years. Last month, the military snatched power in Niger, sending shockwaves across the Sahel and sucking in global powers with strategic interests at stake. Tensions were running high in Gabon amid fears of unrest after Saturday’s presidential, parliamentary, and legislative vote, which saw Bongo seeking to extend his family’s 56-year grip on power while the opposition pushed for change in the oil and cocoa-rich but poverty-stricken nation.
Egypt property market to draw $120bn from Mideast investors
- The Middle East sovereign wealth funds have plans to inject up to $120 billion into Egypt, thus indicating their strong confidence in the country’s market growth, according to a report by Knight Frank MENA, a global real estate consultancy.
- Amidst the post-pandemic landscape, a revitalized global interest in Africa has emerged, underscored by significant investment commitments from major players.
- The report spotlights Egypt’s real estate market, particularly Cairo, as an outstanding prospect for investment. The vibrant city of Cairo alone is home to over 20 million people, making it a bustling metropolis.
The unique combination of Egypt’s abundant heritage, advantageous geographical positioning, and rapidly growing economy position it as a prime choice among top investment locations. In general, this report reveals a renewed surge in global interest in Africa due to significant investment pledges from prominent global players, including the US, UK, South Korea, UAE, Saudi Arabia, Turkey, and China. The allocation of $2 billion by the UK towards sustainable initiatives across the continent, for instance, underscores the resurgent appeal of pivotal hub cities like Lagos, Nairobi, Cairo, Johannesburg, and Accra, as mentioned in the report.
Uber rolls out Africa-first electric bike fleet in Kenya
- Ride-hailing firm Uber has launched an electric motorbike service in Kenya, its first in Africa, as the company seeks to make its global platform emissions-free by 2040.
- The rollout in Kenya is expected to be followed later this year in Nigeria, Ivory Coast, Ghana, Uganda, Tanzania, and South Africa.
- Uber’s new green product in Kenya, dubbed Electric Boda in a nod to the Swahili term for motorbike taxis, will comprise 3,000 bikes within six months, or just under a fifth of its fleet.
The expansion of the electric vehicle market in Africa has been hindered by an insufficient electric charging infrastructure and the necessary supporting facilities. In Kenya, which derives over 90% of its energy from renewable sources, the government is actively establishing the country as a pivotal force in driving Africa’s transition to eco-friendly transportation. More so, domestic companies have begun establishing battery-swapping stations in prominent urban centers such as Nairobi, aiming to enhance drivers’ efficiency by saving them time.
SoftBank backs Africa-focused AMEA Power with $75m
- AMEA Power, one of the fastest growing renewable energy developers in Africa, has signed a $75 million equity funding round from Japanese investment holding company SoftBank Group Corp.
- Founded in 2016, AMEA Power has assembled a world-class team of industry experts to deliver projects across Africa, the Middle East, and other emerging markets.
- This represents AMEA Power’s first external equity funding following years of being privately funded by its founding shareholders. The funding will allow AMEA Power and SBG to explore a mutual partnership, which will lead to maximizing the value creation of AMEA Power mainly in the AMEA region.
As African economies grow, the demand for energy by companies, households, and industries increases by the day. This comes with challenges of climate change and energy depletion, however, many innovators and investors believe renewable energy can help Africa counter these challenges. Financiers mostly are skeptical about funding ventures in the renewable energy space, which has hindered growth in the sector, but AMEA’s successful raise—as well as recent huge rounds by Sun King particularly—suggests the perception towards the renewable energy opportunity in Africa could be changing.
India wants to expand its Unified Payments Interface to Africa
- The Indian government is planning to expand its Unified Payments Interface (UPI) in Africa through commercial partnerships between payment platforms.
- UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
- According to Mint, an Indian business publication, the government is in talks with “several African countries”, including Namibia, Mozambique, and Kenya.
The UPI is credited to have helped reduce cash transactions in India from 90% of the total volume in 2017 to less than 60% in 2021. The push into Africa comes as part of recent efforts by the Asian nation to expand its interests on the continent. For Africa, this is significant in the context of its own booming digital payment industry. UPI, a proven and efficient payment system, can improve cross-border transactions, and open doors for enhanced financial services and international trade between both parties, as well as further driving Africa’s digital financial ecosystem.
European VC names new partner to back climate startups in Africa
- Europe-based climate-tech VC Satgana has appointed Anil Maguru, formerly an investment director at the firm, as its newest partner. Satgana, which emerged out of stealth last year, invests in climate startups in Europe and Africa.
- Maguru joined the VC firm at inception three years ago and at 28, he becomes one of the youngest VC partners in Europe, and among the less than 10% Black fund managers in the world.
- He also previously worked at a Paris-based family office, where he was in charge of investing and managing a €20 million portfolio including private equity, venture capital, real assets, and philanthropy.
Satgana is part of the expanding roster of funds targeting the African climate tech sector, a movement gaining momentum amidst a slowdown in VC funding. In November, it launched a $33 million fund. Other noteworthy funds in this space include the Africa People + Planet Fund from Novastar Ventures, which is geared towards backing startups that are pioneering agriculture and climate solutions on the African continent. Equator’s fund has its sights set on nurturing seed and Series A startups within the energy, agriculture, and mobility sectors, while the Catalyst Fund has been established with the objective of fortifying climate innovation.
Gabon military junta to swear in transitional leader after coup
- Gabon will swear in General Brice Nguema as transitional president on September 4, as the country’s junta decided to re-establish the Constitutional Court on a temporary basis.
- The junta appointed the head of the republican guard as transitional president on Wednesday, hours after seizing power in the OPEC member.
- The process will lead to a gradual set-up of transitional institutions, a military spokesman said in the capital, Libreville, on Thursday evening.
Less than a month following Niger’s military coup that ousted its president, Gabon’s armed forces took control, marking the ninth military coup in sub-Saharan Africa since 2020. Just four days after Gabon’s contested presidential elections, in which the incumbent Ali Bongo was declared the winner, army officials made a televised announcement, declaring the nullification of the August 26th election and the dissolution of the nation’s institutions. Ali Bongo assumed the presidency in 2009, succeeding his late father, who had held power since 1967.
This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients. Daba is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.