This week in Africa: Nigeria’s crypto deals hit $56bn
11 min Read September 22, 2023 at 11:46 AM UTC
Nigeria close to getting new central bank governor
- President Bola Tinubu has nominated the former head of Citibank in Nigeria Olayemi Cardoso to serve as the country’s new central bank governor, days before its next interest rate meeting.
- Cardoso would replace Godwin Emefiele who was suspended by Tinubu in June and later detained by the country’s state security agency. It is not clear whether Emefiele has resigned.
- Tinubu sent Cardoso’s nomination to the Senate for confirmation alongside four new deputy governors, presidential spokesperson Ajuri Ngelale said.
Source: CNBC Africa
The central bank raised rates by a smaller-than-expected 25 basis points in July, contrary to analysts’ expectations, under acting Governor Folashondun Shonubi, one of Emefiele’s deputies. The bank is due to set rates again on September 26 and some analysts expect a more hawkish stance as inflationary pressures persist. Nigeria’s inflation rate has stayed above 20% all year and data from the Bureau of Statistics showed that headline inflation for August hit 25.80%. This is a 1.72% increase from July’s inflation figure, which was 24%, an 18-year high.
Zambia’s Lupiya raises $8.25m to grow neobank business
- Zambian neobank Lupiya has successfully secured $8.25 million in a Series A funding round led by Alitheia IDF Fund, with substantial participation from INOKS Capital SA and the German Investment Bank KfW DEG.
- Founded in 2016, Lupiya works to bridge the financial inclusion gap by offering easy-to-use, technology-driven financial solutions to the unbanked and underbanked populations in Zambia.
- The funding will be channeled into enhancing Lupiya’s technological infrastructure, expanding its range of financial products, and scaling its operations to reach more customers.
Source: Disrupt Africa
Neobanks, also known as digital-only banks, have gained popularity in Africa in recent years. They offer a range of banking services through a mobile app or website, without the need for physical branches and notable names include Kuda, Carbon, and Fairmoney in Nigeria, as well as TymeBank in South Africa. These banks have attracted a significant number of customers, especially among the younger generation, due to their ease of use, lower fees, and innovative features such as savings goals and budget tracking. With the increasing adoption of smartphones and mobile technology, they have the potential to reach previously even more underserved populations.
Intra-African passenger traffic to pass global average
- US aero maker giant Boeing projects that intra-African passenger traffic will more than quadruple in the next twenty years, placing the continent’s growth among the highest globally. To support this, 1,025 new airplanes will be needed over the next two decades.
- Overall African air traffic growth is forecast at 7.4%, the third highest region and above the global average growth of 6.1%.
- Boeing included the data as part of its 2023 Commercial Market Outlook (CMO), the company’s long-term assessment of global demand for commercial airplanes and services.
Source: Boeing CMO
African aviation traffic has witnessed a robust resurgence, driven by growing demand and bolstered by the economic upturn fueled by rising global commodity prices. Presently, African airline operations are operating 8% higher than their pre-pandemic levels. The continent’s economic growth rate of 3.4%, surpassing the global average, coupled with the escalating rates of urbanization and a burgeoning middle-class populace, are expected to remain key drivers for sustained long-term demand for aviation in Africa. Moreover, initiatives like the African Continental Free Trade Area and the Single African Air Transport Market are anticipated to further boost trade and enhance intra-regional connectivity.
Morocco to host IMF, World Bank annual meetings after quake
- The International Monetary Fund and World Bank will stick with plans to hold their annual meetings in Morocco in October despite a devastating earthquake earlier this month that claimed about 3,000 lives.
- Both organizations said an assessment concluded that the meetings, scheduled for October 9-15 in Marrakech, wouldn’t disrupt relief and reconstruction.
- Rather, it would “provide an opportunity for the international community to stand by Morocco and its people, who have once again shown resilience in the face of tragedy.”
Source: CNBC Africa
The IMF and World Bank’s planned Marrakech meetings mark a return to Africa for the first time in 50 years. Amidst the region’s many problems—from rising inflation and surging government debt levels to stagnating incomes and military coups—the summit presents an opportunity for global leaders to refocus on Africa. On the bright side, however, Africa is regaining major attention of leading nations, from North America and Europe to the Middle East. Just recently, the AU was granted permanent membership in the G20 bloc right after the new BRICS group invited Ethiopia and Egypt.
IFC leads $5m extension round in Ivorian e-commerce ANKA
- ANKA, an Ivorian SaaS e-commerce platform for African businesses, has raised $5 million from the International Finance Corporation (IFC), Proparco, and BPI France.
- The pre-Series A extension round is a mix of equity and debt; last January, ANKA, formerly Afrikrea, raised $6.2 million.
- The seven-year-old startup has secured $13.5 million from investors since its inception and will use the fresh investment to strengthen product development and expand services in its key markets Nigeria, Kenya, and the US.
Globally, the African diaspora is spread out across several countries. An estimated 36 million Africans live outside the country of their birth, with just over 50% residing within the continent. The sheer size of the African Diaspora means there’s a large potential market for African cultural items outside the continent. This is an opportunity for local retailers to boost African exports with the help of e-commerce platforms and solutions like ANKA, which handle all the resource-intensive components, including marketing, cross-border shipping, and payments.
Oil rally gathers momentum as Brent rises above $95 a barrel
- Oil surged to a 10-month high on Tuesday as supply cuts from OPEC+ tightened the market, with Saudi Arabia’s energy minister shying away from any change in course.
- Global benchmark Brent topped $95 a barrel for the first time since November before paring gains. The tighter market has ignited a flurry of predictions that $100 oil could soon return.
- While this comes as good news for energy commodities-dependent economies in Africa like Nigeria, the extended powerful rally may rekindle inflation, according to analysts.
Nigeria’s economy relies heavily on the oil sector, contributing around 80% of the Federal Government’s revenue and 90% of export earnings. While increasing oil prices bring positive outcomes, such as elevated revenue and economic growth, they also come with a downside: exacerbating inflation. Africa’s largest economy and most populous nation benefits from these price hikes despite declining production levels. Nevertheless, the nation’s overreliance on this volatile commodity raises concerns about its economic stability in the face of fluctuating global oil prices.
Ghana’s Complete Farmer raises $10m to scale
- Agritech Complete Farmer has raised a recently concluded $10.4 million pre-Series A funding round ($7 million equity and $3.4 million debt).
- The Ghanaian startup provides an end-to-end agricultural marketplace that connects African producers and global industries to competitive markets, resources, data, and each other.
- The funding, involving names like Acumen, Alitheia, Goodwell Proparco, and more, will be used to scale its products, forge strategic partnerships with key stakeholders, bolster its team, and expand domestic operations.
Sub-Saharan Africa has the potential to increase its agricultural output and overall contribution to the economy, however, the sector still needs to be tapped largely due to a lack of access to quality farm inputs and infrastructures like warehousing and market access. Startups like Complete Farmer address some of these issues while also contributing to Africa’s rise as a global leader in agritech. Between 2016 and 2019, the industry grew by 44% year-on-year, and the continent has registered the highest number of agritech services in the developing world reaching more than 30 million smallholder farmers as of 2021.
Fixit45 raises $1.9m for East Africa expansion
- Fixit45, a Nigerian startup that provides automotive spare parts, vehicle repairs, and maintenance services has secured $1.9 million in pre-seed funding,
- A mix of equity and working capital, the round was backed by Launch Africa Ventures and saw participation from a diverse group of angel investors.
- The startup plans to use the investment to scale its business in Nigeria and expand into East Africa, particularly, Kenya and Uganda.
In Nigeria, a country with an approximate population of 200 million, there are more than 12 million registered vehicles—a motorization rate of just 0.06 vehicles per person. Remarkably, nearly 90% of these vehicles are imported. Given the considerable expenses associated with buying new or foreign-made vehicles, vehicle owners are increasingly looking to improve and refurbish their existing vehicles to enhance their mobility assets and trade-in value. In this market, FixIt45 operates by offering repair and maintenance services and competes with Mecho Autotech, which recently secured $2.4 million.
Ghana’s economic growth slows to 1-year low
- Ghana’s economy expanded at the slowest pace in almost a year in the second quarter as fiscal tightening and high inflation crimped output.
- Gross domestic product grew 3.2% in the three months through June from a year earlier, compared with a downwardly revised expansion of 3.3% in the previous quarter, per official figures.
- Growth in the quarter was driven by the mining, agriculture, health, transport, and information technology sectors.
Ghana, known for its gold, oil, and cocoa production, is currently facing its most severe economic crisis in decades, primarily caused by a soaring level of public debt. In May, it finalized a three-year, $3 billion loan agreement with the International Monetary Fund. The government has projected that economic growth will decelerate to 1.5% this year, down from the 3.1% recorded in 2022. Additionally, the growth rate for the first quarter has been adjusted downwards to 3.3%, revising the previous estimate of 4.2%.
Nigeria’s crypto deals volume hit $56bn
- Nigeria’s volume of crypto transactions experienced a 9% year-over-year growth, surging to a total of $56.7 billion during the period spanning July 2022 to June 2023.
- That’s according to a report by the New York-based blockchain research firm Chainalysis, which finds that the adoption of cryptocurrencies in Nigeria is on the rise.
- This trend is occurring amidst the challenges faced by Africa’s largest economy, which include a depreciating currency and soaring inflation.
In Nigeria, the adoption of bitcoin and stablecoins, which are digital currencies linked to stable assets to counteract drastic price swings, surged notably as the value of the naira underwent substantial drops. These declines became especially evident during the tumultuous market upheavals observed in June and July of 2023. The devaluation of the currency was instigated by President Bola Tinubu’s implementation of far-reaching reforms, among the most ambitious witnessed in Nigeria in recent years. These reforms encompassed the discontinuation of a widely used but financially burdensome petrol subsidy and the elimination of specific exchange rate restrictions.
i3 Program backs 29 African healthcare startups
- Investing in Innovation Africa (i3), a pan-African initiative for startups building the future of healthcare supply chains has announced its second cohort of 29 companies.
- Funded by the Bill & Melinda Gates Foundation and sponsored by Cencora, Merck Sharpe & Dohme (MSD), Microsoft, and Chemonics, i3 helps commercialize promising early- and growth-stage companies.
- Selected startups receive introductions to leading potential customers in industry, donor agencies and governments, a $50,000 grant, and tailored investment readiness support from leading accelerators Villgro Africa, IMPACT Lab, Startupbootcamp Afritech, and CcHUB.
In Africa, pharmacies often struggle to stock life-saving medicines due to their cost and drugs fail to get to those who need them most. As such, there is an increasing number of health tech startups looking to tackle what’s mostly a supply chain challenge with solutions built around different models. With the Middle East and Africa’s pharma market said to be worth around $100 billion, the market opportunity is significant. But most importantly, such solutions balance commercial and social impact.
East Africa sees 51 PE exits in a decade
- In the last 10 years, there have been 51 private equity exits out of 427 investments (and 478 private equity deals worth $8.6 billion) in East Africa, per the region’s venture capital association (EAVCA).
- There was a jump in exit activity during FY 2022, marking the highest numbers in a decade. The financial services sector saw 14 exits, followed by healthcare and energy, with nine and seven exits, respectively.
- Kenya led the pack with 36 exits per country, followed by Uganda at eight and Rwanda with three. Tanzania and Ethiopia recorded two and one exit, respectively.
Africa generally is seeing an increasing number of successful exits in the PE and VC market, providing liquidity for investors and demonstrating the potential for successful investments in the continent. Private capital exit activity in Africa soared to unprecedented levels in 2022, reaching an impressive 82 full exits—the highest number of exits ever recorded in a single year on the continent. This record-breaking number of exits marks a 2.3x year-over-year growth and an 86% increase when compared to the pre-pandemic average (44 from 2012 to 2019).
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