Weekly Investor Update (December-WeekTwo-2024)

13 min Read December 13, 2024 at 5:00 PM UTC

Monday

Libya’s Oil Output Hits 11-Year High as Industry Recovers

Libya’s oil production reached 1.422 million barrels per day (bpd) on Thursday, surpassing the National Oil Corp. (NOC) target by 22,000 barrels.This marks the country’s highest daily output since 2013 and a sharp recovery following an August political crisis that halved production. The surge follows a resolution of disputes between Libya’s rival governments and signals renewed activity in the energy sector.Recent developments include Italy’s Eni Spa and BP Plc resuming drilling after a decade-long pause, and Libya preparing its first energy exploration tender since the 2011 civil war. November crude output stood at 1.14 million bpd, showcasing steady growth for Africa’s largest oil reserves.

The rebound in Libya’s oil production is poised to inject much-needed foreign currency into the economy, despite years of instability and neglected infrastructure. While Libya is exempt from OPEC+ production caps, its increased output adds to global supply, complicating the group’s efforts to stabilize prices amid weak Chinese demand and surging U.S. production. This recovery positions Libya as a key player in global energy markets.

CEC Issues $97M Green Bond for Solar Expansion in Zambia

Copperbelt Energy Corporation (CEC) Renewables, a subsidiary of Zambia’s CEC, has raised $97 million through its second green bond issuance. This follows the $53 million first tranche in 2023, which financed two solar plants producing 94 MW.The proceeds will fund the second phase of the Itimpi Solar PV Plant, adding 136 MW of capacity and bringing CEC’s total solar generation to 236 MW by 2025.The issuance, arranged by Cygnum Capital and underwritten by Stanbic Bank Zambia, saw participation from key stakeholders, including FMO, the ALCB Fund, ZCCM-IH, and EAAIF. Since commissioning, these plants have injected over 166,000 MWh into the grid, supplying power to Zambia and the DRC.

CEC’s green bond program is a template for mobilizing local and international investment in renewable energy. The Itimpi project aligns with Zambia’s sustainability goals, addressing energy shortages while supporting industrial and economic growth. With $150 million raised to date, CEC plans further tranches to reach its $200 million target, reinforcing its leadership in Zambia’s renewable energy transition.

Ghana’s Ex-President Poised to Win Election Amid Economic Discontent

Ghana’s opposition leader, John Mahama, has secured victory in the December 7 presidential election with 57.6% of the votes counted in three-quarters of the constituencies.His main opponent, Vice President Mahamudu Bawumia of the ruling New Patriotic Party (NPP), conceded early Sunday, acknowledging voter dissatisfaction with the government’s handling of the economy.Mahama, 65, who previously served as president from 2012 to 2017, ran on a platform promising economic recovery, job creation, tax cuts, and ease of doing business. His victory reflects public frustration over the country’s worst cost-of-living crisis in a generation and sets the stage for a new administration to address Ghana’s economic challenges.

Mahama’s win underscores a broader trend of opposition victories globally amid economic crises. Ghana’s election, held peacefully despite regional instability, signals a democratic transition shaped by voters’ demands for economic accountability. With his party also gaining a parliamentary majority, Mahama faces high expectations to stabilize one of West Africa’s key economies, tackling inflation and governance concerns while navigating a challenging global economic landscape.

United Bank Raises $94M Through Share Sale on Egyptian Exchange

The Egyptian Exchange (EGX) announced the successful completion of the public and private offerings of The United Bank (UBEE), raising a total of EGP 4.57 billion ($94 million) through the sale of 330 million shares, representing 30% of the bank’s issued capital.Shares were priced at EGP 13.85 each, with the private offering accounting for 95% of the total shares sold. This segment included 313.5 million shares, equivalent to 28.5% of the bank’s capital, generating EGP 4.341 billion. The public offering, comprising 16.5 million shares (1.5% of issued capital), raised EGP 228.5 million.Established in 2006, The United Bank was formed through the merger of the Islamic International Bank for Investment and Development, United Bank of Egypt, and Nile Bank. The IPO marks a significant milestone in the bank’s history, positioning it for further growth within Egypt’s financial sector.

Along with Arab African International Bank and Banque du Caire, United Bank was one of three state banks the government placed on a list in early 2023 for potential sale. Egypt in 2021 sold a 51% stake in Arab Investment Bank, its first privatization of a bank in more than a decade. United Bank made a net profit of 1.74 billion Egyptian pounds in the financial year to the end of June on assets of 106 billion Egyptian pounds, the central bank said in September.

Mauritius Stock Exchange Launches Segment to Attract High-Growth Firms

The Stock Exchange of Mauritius (SEM) has introduced SEMX, a dedicated segment for high-growth companies, aimed at supporting businesses with strong growth trajectories to raise capital and expand.The segment operates under specialized listing rules tailored for these companies, including provisions for market-making to ensure liquidity. Tuesday Markets has been named the inaugural market maker for SEMX.Eligibility for SEMX requires a compound annual growth rate of at least 25% over the past three financial years or a 100% growth rate over five years. Three companies — Africa Eats, Elite Meat Processors, and Ziweto Holdings — debut on SEMX on December 3, 2024.

The launch of SEMX aligns with SEM’s strategy to diversify and internationalize its platform. Since 2009, SEM has expanded its listings from 100 to 180 securities and facilitated $6.5 billion in capital raising, $4.6 billion of which came from international issuers. This initiative underscores SEM’s role in advancing innovation and funding access within Africa’s capital markets.

Seedstars Raises $42M in First Close of Africa Fund

Seedstars Africa Ventures I, a venture capital fund targeting scalable African startups, has raised $42 million in its first close.The fund, created by Maxime Bouan, Tamim El Zein, and Bruce Nsereko Lule, operates in partnership with Seedstars and LBO France, with notable investors including EIB Global and the African Development Bank.The fund addresses a critical gap in early-stage financing across Africa by investing up to $2 million in seed and Series A rounds, with a follow-on capacity of up to $5 million. It aims to catalyze co-investments and provide operational support for startups in key sectors like climate, energy access, and financial inclusion.

With $10 million already deployed to startups in Nigeria, Kenya, Uganda, and Ivory Coast, Seedstars Africa Ventures I is a pivotal player in nurturing early-stage innovation in Africa. By focusing on scalable startups, the fund bridges capital gaps while driving development in vital sectors, positioning itself as a catalyst for Africa’s entrepreneurial ecosystem.

Zambia, France Sign Landmark Debt Restructuring Deal

Zambia and France have signed a bilateral debt restructuring agreement, a significant step in Zambia’s effort to revamp its $13 billion external debt. The deal marks progress in a process that began after Zambia became the first African nation to default during the COVID-19 pandemic in 2020.This agreement, the first Zambia has reached with official bilateral creditors like China, Saudi Arabia, and India, is also the first under the G20’s Common Framework for debt restructuring. The framework aims to coordinate diverse creditor groups but has faced criticism for its slow implementation.Under the agreement, Zambia will extend the maturity of its debt by an average of 12 years, with repayments stretching beyond 2040. Interest rates are set at 1% for the next 14 years, rising to a maximum of 2.5% after that.

The agreement underscores Zambia’s commitment to tackling its debt crisis while showcasing the potential and pitfalls of the G20’s Common Framework. By securing favorable terms, including low interest rates, Zambia creates breathing room for economic recovery. However, the protracted process highlights the challenges of coordinating diverse creditor groups, an issue that could impact other nations seeking similar relief.

Ivorian Cable Maker Sicable Sees Credit Rating Boost

Sicable (CABC), Côte d’Ivoire’s leading cable manufacturer, received a credit rating upgrade from GCR Ratings. The BRVM-listed company’s long-term issuer rating improved to AA-(WU) from A(WU), while its short-term issuer rating advanced to A1+(WU). The outlook remains stable.The rating upgrade reflects Sicable’s strong financial position with zero debt and robust liquidity. The company’s liquidity coverage exceeds 200%, backed by solid cash flows and prudent financial management. Revenue rose 8% to 17.7 billion CFA ($28.2 million) in 2023, driven by increased copper cable sales and trading products, despite narrower profit margins due to rising costs.The company has diversified its client base, reducing dependency on top customers, while leveraging its affiliation with Prysmian Group to strengthen operational and governance structures. SICABLE’s leadership in Côte d’Ivoire’s cable market is expected to persist, and a competitive edge and significant market share support it.

The Ivorian cable market is strategically significant due to the increasing demand for infrastructure development across West Africa. SICABLE’s focus on local manufacturing and robust export channels reinforces its competitive edge. The upgrade also signals broader confidence in regional industrial players’ ability to adapt to economic pressures and pursue sustainable growth strategies. Sicable’s continued financial health and market leadership depend on sustained cash flow, managing customer concentration risks, and navigating commodity price volatility, which is critical for maintaining its upgraded status.

Ghana’s Economy Records Fastest Growth in Nearly Five Years

Ghana’s economy grew 7.2% in the third quarter of 2024, its fastest pace since late 2019, driven by a robust performance in the industrial sector. This growth, up from a revised 7% in the second quarter, exceeded economists’ forecasts of 5.4%. Government Statistician Samuel Kobina Annim announced the data on Wednesday in Accra.The industrial sector led the surge with a 10.4% annual growth, boosted by a 17.1% increase in mining and quarrying, which expanded for the fourth consecutive quarter. Services grew 6.4%, driven by a 17.1% rise in the information and communications sector. However, agriculture slowed to 3.2%, impacted by a 26% contraction in cocoa production, which faced challenges including bad weather, crop disease, and smuggling.The strong economic performance coincides with John Mahama’s recent election victory, as Ghana emerges from a debt restructuring process and continues its IMF program, which includes austerity measures.

Ghana’s industrial sector, particularly mining and communications, highlights the growing importance of non-agricultural sectors in the economy. However, the continued contraction in cocoa production underscores vulnerabilities in the agricultural sector, which employs 40% of the workforce. Addressing these challenges, particularly in cocoa, will be key to ensuring inclusive growth. The growth coincides with Ghana’s debt restructuring and IMF-backed reforms, which have aimed to stabilize the economy amid a cost-of-living crisis. While GDP growth is promising, sustained progress will depend on balancing fiscal discipline with measures to address agricultural challenges and maintain social stability.

Kenya’s Shilling Faces Pressure Amid Slowing Economic Growth

Kenya’s shilling, the world’s best-performing currency earlier this year, risks losing its stability as economic growth falters. The currency rallied 21% in the year’s first seven months but has since hovered around 129 per dollar, supported by central bank interventions, high interest rates, and foreign-exchange trading rules.However, economic challenges, including flooding in April and ongoing anti-government protests since June, have slowed growth. The World Bank has revised Kenya’s growth estimates down to 4.7% in 2023 and 5% in 2024, from earlier projections of 5% and 5.3%.Kenya’s dependence on external factors like remittances and commodity exports, combined with sluggish manufacturing growth and high taxes, points to a lack of structural reforms. Analysts warn that without intervention, the shilling could weaken, potentially trading between 150 and 200 per dollar. The Central Bank of Kenya has pledged to defend the currency using its $8.97 billion in foreign reserves, but declining reserves raise concerns about long-term sustainability.

The shilling’s stability highlights Kenya’s reliance on external financial flows rather than robust domestic economic activity. Factors such as slowing growth, inadequate structural reforms, and global volatility pose significant risks. While the Central Bank of Kenya continues to intervene, its ability to maintain the currency’s strength could be limited if reserves dwindle further. Kenya’s economic challenges also mirror broader trends in developing economies grappling with external shocks and insufficient domestic reforms. For Kenya to maintain currency stability and sustainable growth, structural adjustments in manufacturing, tax policy, and export diversification will be essential. Without these, the shilling’s short-term strength may not hold, leading to potential inflationary pressures on imports and broader economic instability.

Slower South Africa Inflation Paves Way for Rate Cuts in January

South Africa’s inflation edged up slightly in November but remained below expectations, providing scope for the central bank to continue easing monetary policy. Consumer prices rose 2.9% year-on-year, compared with October’s 2.8%, Statistics South Africa reported on Wednesday.Food and non-alcoholic beverage inflation slowed to 2.3% in November from 3.6% in October, its lowest level since 2010, helping keep overall inflation in check. Despite the uptick in the headline rate, inflation remains below the South African Reserve Bank’s (SARB) target band of 3% to 6%.The SARB has cut interest rates by 50 basis points to 7.75% since September and is expected to lower rates further at its January 30 meeting. Governor Lesetja Kganyago has signaled caution amid global economic uncertainty, including volatile fuel prices, a weaker rand, and potential shifts in US trade policies under President-elect Donald Trump.

South Africa’s subdued inflation creates room for SARB to lower rates further, but global uncertainties present risks. Forward-rate agreements suggest another 75 basis points of cuts over the next year. Slowing inflation, particularly in food prices, has supported the SARB’s easing cycle. However, risks from a weaker rand, rising fuel prices, and global uncertainties—such as potential US trade shifts under Trump—complicate the outlook. Bloomberg Economics forecasts inflation will hover near 3% for six months before rising to the midpoint of the SARB’s target range by late 2025. This backdrop suggests scope for two more rate cuts in early 2025, though the SARB remains cautious about its next moves.

Nigerian Fintech Billboxx Raises $1.6M to Provide CashFlow to SMEs

Nigerian fintech startup Billboxx has raised $1.6 million in pre-seed funding to help small and medium enterprises (SMEs) address cash flow challenges. The funding round, a mix of debt and equity, saw participation from Norrsken Accelerator, Kaleo Ventures, 54 Collective, P2Vest, and Afrinovation Ventures. The funds will be used to expand operations, enhance its team, and launch new features.Founded in 2023i, Billboxx offers invoice financing to SMEs, enabling early payments while waiting for their clients to settle bills. The service, which requires enterprise client approval, charges up to 5% in financing fees and 1.5% for payment processing. Currently processing ₦1 billion monthly without defaults, the platform has become a key financial tool for businesses reliant on manual methods like Excel.Billboxx serves SMEs through partnerships with large enterprises such as Monument Distillers and the International Institute of Tropical Agriculture (IITA). Its focus remains on providing tailored financial solutions for small businesses, differentiating it from competitors targeting larger mid-market firms.

Billboxx’s focus on solving cash flow issues for SMEs highlights a critical gap in Africa’s business ecosystem, where delayed payments often hinder growth. By integrating invoice financing with enterprise partnerships, the startup offers a scalable approach to bridging financial gaps for small businesses. Its model of acquiring SMEs via enterprise collaborations aligns with the growing demand for tailored solutions in Africa’s fragmented SME market. With plans to expand across the continent, Billboxx aims to position itself as the financial backbone for Africa’s SMEs, leveraging partnerships to create a network effect. The pre-seed funding signals investor confidence in Billboxx’s potential to scale its offerings while addressing the cash flow challenges that are endemic to small businesses across Africa.

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.