Weekly Investor Update (July-WeekTwo-2024)

17 min Read July 12, 2024 at 5:00 PM UTC

Monday

BRVM stock market posts second straight weekly decline

The regional BRVM stock market posted its second straight weekly decline Friday despite positive turnout from large-cap stocksSociété Générale CI(+2.55% at 19,500 FCFA), Nestlé CI(+4.00% at 7,800 FCFA), Orange CI(+1.69% at 12,000 FCFA) andSonatel(+0.08% at 19,395 FCFA). Benchmark BRVM Composite index fell 0.10% to 229.48 points, while the BRVM 30(+0.21% to 114.86 points) and the BRVM Prestige (+0.51% to 108.71 points) both rose, erasing their declines from the previous week. The market contraction was mainly driven by investors taking profits with 24 stocks posting losses for the week, including TG, Bicici, and Oragroup. Market capitalization stands at 8.53 trillion FCFA ($14.083 billion), down from 8.54 trillion FCFA from a week earlier.

Notably, Saph shares (+6.96% at 2,995 FCFA) have been consolidating their momentum, achieving their fifth consecutive week of growth and accumulating a gain of 25.05%. The gradual recovery in the Chinese industry, a leading market, after the COVID-19 crisis has stimulated demand, leading to an increase in global natural rubber prices. Similarly, Uniwax shares (+6.02% at 440 FCFA) also closed the week on a positive note, marking their fifth consecutive increase. Investors took positions in Uniwax shares, observing that the share price had been fluctuating at relatively low levels. On Thursday, the market saw the highest daily transaction volume since the beginning of the year, with trading rising by 393.35% to 2.11 billion FCFA compared to 428.6 million FCFA the previous day. The telecom giant Sonatel captured three-quarters of these trades, amounting to 1.59 billion FCFA.

Niger Telecoms sets up 16 new sites to expand network coverage

Niger Telecoms, the national telephone and telecommunications provider of Niger, has launched a project to enhance connectivity across the country, with a focus on underserved rural areas. The state-owned telecom companyrecently completed 16 new sites in the Maradi region as part of its network expansion efforts. Only 38.2% of Niger’s considerable territory can access telecom coverage that serves 78% of the country’s population. Niger Telecoms covers barely half (51.8%) of the country’s geographical area and caters to about 59.9% of its population.The project will be implemented in phases, starting with the comprehensive deployment of advanced equipment. This includes the setup and fine-tuning of transmission hardware and communication devices to ensure improved connectivity and communication services nationwide.

Under its national network expansion program, Niger Telecoms aims to enhance its competitive advantage by connecting thousands more Nigeriens, with a particular emphasis on the mobile sector. As of 2023, official data ranked Niger Telecoms as the fourth-largest player in the mobile telephony market, trailing behind Airtel (46%), Zamani Telecom (30%), and Moov Africa (18%). With 1.02 million subscribers, Niger Telecoms holds a modest 6% market share. The company reaffirms its mission to provide comprehensive coverage across the country, including the most isolated areas, as part of its commitment to improving connectivity and expanding its reach in the national telecommunications landscape.

President Ruto proposes budget cuts after deadly protests in Kenya

President William Ruto has slashed Kenya’s 2024/2025 budget by KES 177 billion ($1.3 billion) in response to widespread protests against proposed tax hikes. The decision follows violent demonstrations that led to the deaths of 39 people and the eventual cancellation of the contentious tax increases.The unrest began aspeaceful protests against high taxesbut escalated when police fired at crowds storming parliament. Many Kenyans argue that while the government emphasizes the need for citizen sacrifices, the cost of governance remains excessively high.As a result, the 2024/2025 budget has been reduced to KES 3.67 trillion ($28.7 billion), a move seen as part of a series of compromises by the government amid growing calls for President Ruto’s resignation.

Mostly led by young Kenyans, the protests reflected widespread anger over an annual finance bill, which President Ruto eventually had to scrap, warning of a significant funding gap. Kenya’s public debt stands at around 10 trillion shillings ($78 billion), around 70 percent of the country’s GDP. Ruto acknowledged that borrowing would increase the fiscal deficit from 3.3% to 4.6%, but justified it as necessary to fund essential services. These services include hiring secondary school teachers and medical interns and continuing the milk stabilization and fertilizer programs that protect farmers. Several belt-tightening measures were also announced, including the absorption of 47 state-run organizations and companies into other departments. The offices of the first lady and the deputy president’s spouse will also cease to exist, and the number of government advisors will be reduced by half.

Two South African airports named in world’s best 10 for 2024

AirHelp Inc. today released its 2024 score report ranking the world’s best and worst airports. The company, which secures compensation for air travelers after delays and cancellations, bases the rankings partially on the claims it processes worldwide.This year, Hamad International Airport in Qatar claimed the top spot, moving up from fifth place in last year’s rankings. South Africa’sCape Town International Airport(CPT) secured the second position, whileJohannesburg-OR Tambo International Airport(JNB) ranked sixth.The data analysis for the rankings covers the period from May 1, 2023, to April 30, 2024, and includes 17,550 airport ratings collected by surveying passengers from 64 countries about their most recently used airports.

The company also uses data from outside sources tracking on-time performance, customer feedback, and the quality of food and shopping options at 239 airports globally. Punctual arrivals and departures represent 60% of each airport’s score.The 10 best airports in the world are Narita International Airport in Tokyo, Japan (NRT), Val-de-Cans/Júlio Cezar Ribeiro International Airport in Belém, Brazil (BEL), Salt Lake City International Airport in the US (SLC), Muscat International Airport in Oman (MCT), Johannesburg-OR Tambo International Airport in South Africa (JNB), Brasília-President Juscelino Kubitschek International Airport in Brazil (BSB), Osaka International Airport in Japan (ITM), Chubu Centrair International Airport in Nagoya, Japan (NGO), Cape Town International Airport in South Africa (CPT), and Hamad International Airport in Qatar (DOH).

Nigeria’s cement stocks post combined gain of $4.7bn in H1 2024

Three publicly traded cement companies listed on the Lagos-based Nigerian Exchange (NGX) achieved a combined gain of N7.344 trillion ($4.7 billion) by the end of the first half of 2024, according to data reported by Nairametrics.The companies,Dangote Cement,BUA Cement, andLafarge Africa, saw their market capitalization grow to N16.587 trillion at the close of trading on June 28, 2024, up from an opening figure of N9.243 trillion. This represents a growth of 79.45%, or N7.344 trillion.Leading this impressive performance, Dangote Cement gained around N5.739 trillion despite facing significant economic challenges such as elevated inflation, a depreciating exchange rate, and ongoing security concerns.

The prevailing optimism in the Nigerian equities market culminated in the All-Share Index closing the half year at 100,057.49 index points. The year-to-date (YTD) return of the NGX All-Share Index stands at an impressive 33.81%, showcasing its resilience despite recent bearish trends in Q2 of the year. Investor confidence has remained remarkably steadfast, even against the backdrop of escalating inflation, prospective interest rate adjustments, and volatile exchange rates. This unwavering assurance has spurred heightened market activity and intensified buying engagements, reflecting robust participation in the Nigerian equities market.

Asset manager CREI gets $25m to ‘green’ telecom towers in South Sudan

The Communication and Renewable Energy Infrastructure (CREI), an asset management company, has secured $25 million to finance its Telecom Energy Service Company (TESCO) in South Sudan.The funding includes $20 million from the Facility for Energy Inclusion (FEI) to allow CREI to offer “energy as a service” to a telecom stakeholder in South Sudan by developing, building, and managing energy assets.Finnfund, the Finnish development finance institution, has also contributed a $5 million mezzanine loan to support the project. This financing will enable the installation of 413 telecom site hybrid power solutions in South Sudan, enhancing the region’s telecom infrastructure and energy efficiency.

South Sudan has one of the lowest rates of mobile access and connectivity in the world. According to reports, there were 1.36 million internet users in South Sudan in January 2024, with an internet penetration rate of 12.1% at that time. The project will significantly boost solar power production, benefiting over 2 million people by enhancing the reliability of mobile connections. More so, using renewable energy to power telecom towers will reduce carbon emissions from fossil fuels and improve the reliability of telecom operations. This initiative aims to address the country’s connectivity challenges while promoting sustainable energy solutions.

Moody’s acquires Mauritius-based GCR Ratings to deepen Africa presence

Moody’s Corporation has fully acquired Global Credit Rating (GCR), a leading credit rating in Africa, accounting for most of the ratings issued in the region. The terms of the transaction remained undisclosed and will not affect Moody’s 2024 financial results.In 2022,Moody’sacquired a majority 51% stake inGCRto expand its footprint in the African continent with anticipation of increased demand for credit rating services. Despite the acquisition, GCR will continue to use its rating methodologies, issue its credit ratings, and maintain a separate management team.With over three decades of practice, the Mauritius-based GCR focuses on rating companies and institutions that borrow local currencies in the continent and has operations across Kenya, South Africa, Mauritius, Nigeria, Zimbabwe, and Senegal.

Moody’s activities in Africa come at a time when there is increasing criticism of the assessments made by international rating agencies. In a report published in September 2023, the African Peer Review Mechanism (APRM), an arm of the African Union, highlighted the glaring shortcomings of these foreign agencies’ methods in Africa, suggesting that their perception of investment risk is consistently higher than the actual risk. In addition, the African Union plans to launch its rating agency this year to provide the continent with an “objective” tool for assessing investment risk. This initiative aims to help African states mobilize resources at more competitive rates.

African remittance app Nala raises $40m to expand global reach

Tanzania-born money transfer fintechNalahas raised $40 million in Series A funding to support its global expansion and enhance the reliability of payments to Africa by establishing its payment rails. Nala’s consumer money transfer app enables users to make secure and reliable payments from Europe, the UK, and the US to 11 African countries in seconds.The firm is also building its own B2B platform for fast payments to individuals and businesses globally on the African continent, hoping to emulate the success ofdLocalin Latin America andAirwallexin Asia.The funding round was led by Lauren Kolodny ofAcrew Capital, with participation fromDST Global,Amplo, and previous investors. In addition, the raise received backing from notable fintech founders, including Ryan King, co-founder ofChime, Vlad Tenev, co-founder ofRobinhood, and the founder ofKlarna.

Africans in the diaspora often send money back home to support loved ones. But traditional remittance options can be a total drag—slow, expensive, and lacking transparency. This has opened the door for many African fintechs to stake their claim in the remittance market, and Kuda is one of the fintechs joining this space, as we writehere. This is Nala’s second round of fundraising in 20 months, following a $10 million raise in 2022 through Accel, Amplo, and Bessemer Partners. This new cash injection comes after a transformative year for Nala, during which it reached profitability following a 10x increase in revenue and a 34x rise in transaction value. The company now serves 500,000 customers, and the Nala team has expanded from just seven members to over 100 staff.

Moody’s pushes Kenya’s rating deeper into junk after tax plan collapse

Moody’s downgraded Kenya’s sovereign rating further into junk territory on Monday, citing the country’s diminished capacity to implement a fiscal consolidation strategy to manage its debt burden.Thecredit ratings agencylowered Kenya’s local- and foreign-currency long-term issuer ratings and foreign-currency senior unsecured debt ratings to “Caa1” from “B3”. This downgrade follows Kenyan President William Ruto’swithdrawal of planned tax hikesin June, in response to mass protests that resulted in at least 24 deaths.The scrapped finance bill had included measures to help the government raise $2.7 billion in additional taxes to reduce the budget deficit and state borrowing. To compensate for the withdrawn finance bill, Ruto’s administration hasproposed spending cuts.

Moody’s does not expect Kenya to introduce new revenue-raising measures following the recent protests on June 25, which resulted in at least 41 deaths. The scrapped 2024 Finance Bill had aimed to generate an additional $2.7 billion to help manage the country’s growing debt and fund development programs.Although the spending cuts announced by President Ruto are expected to improve Kenya’s liquidity, Moody’s maintains that the fiscal deficit will decrease more gradually than previously projected. The credit rating agency also anticipates that East Africa’s largest economy will experience prolonged weakness in debt affordability.

African startups get $1bn boost as Timbuktoo launches Lagos hub

The United Nations Development Programme (UNDP), along with African governments and the private sector, plans to raise $1 billion and establish a series of technology hubs across the continent to boost start-up innovation.The first of 10 hubs under theTimbuktooprogram, which will be part of the world’s largest initiative supporting Africa’s technology startups, will open this week at UNDP’s innovation center in Lagos, Nigeria.“This is a key milestone in the journey towards sparking a startup revolution on the continent,” said Ahunna Eziakonwa, assistant secretary-general and director of theUNDPAfrica Bureau. Additional tech hubs will launch across the continent later in 2024, including an agritech hub in Accra, Ghana; a healthtech hub in Kigali, Rwanda; and a minetech hub in Lusaka, Zambia.

Africa currently holds a mere 0.2% share of global startup value, contrasting sharply with its 2% share of global trade value. The landscape further reveals that 89% of venture capital entering Africa is foreign, with 83% concentrated in just four countries: Nigeria, Kenya, South Africa, and Egypt. Additionally, over 60% of this capital flows into the fintech sector. The Timbuktoo initiative, launched by the UNDP in collaboration with eight African countries, aims to address these disparities. The initiative adopts a pan-African approach to support startups while also focusing on the entire ecosystem. This involves fostering connections between government policy, universities, corporates, development partners, catalytic partners, and commercial investors, thereby promoting a comprehensive and collaborative strategy for sustainable economic development across the continent.

Innovate Africa launches with $2.5m fund to back early-stage startups

Innovate Africa, an angel investment fund dedicated to supporting early-stage founders has launched with an initial $2.5 million rollout.Co-founded by Kristin Wilson and Christian Idiodi, this sector-agnostic fund aims to support up to 20 startups in its first year. The goal is to address complex and recognized problems such as insecurity, unemployment, and poverty through purpose-driven technology.With an average investment of $50,000 per startup, Innovate Africa offers a comprehensive support package designed to propel promising ventures toward success. This package includes advisory resources, providing expert guidance in finance, governance, public relations, and strategy, ensuring a solid foundation for growth.

Since 2019, the African funding landscape has experienced positive growth, with disclosed exits surpassing $2.3 billion, representing a notable 13.4% of the total $17.2 billion raised by African startups. Despite this growth, early-stage founders still face significant challenges in navigating the path from ideation to market fit. The persistent lack of early-stage funding exacerbates these difficulties, preventing many startups from reaching their full potential and contributing to the continent’s economic growth. With a mission to empower startups in Africa’s dynamic tech landscape, the Innovate Africa Fund aims to provide insight-driven capital. This support will help founders accelerate their journey from Minimum Viable Product (MVP) to Product-Market Fit (PMF), addressing the critical funding gap and fostering innovation and growth across the continent.

Rally in Orange, SocGen shares propel BRVM market to new peak

The benchmark BRVM Composite index rose by 0.87% on Wednesday, reaching 231.73 points, its highest in six years mainly driven byOrange CI.The telco saw its share price jump by 2.89% to a historical high of 12,100 FCFA. Closely behind wasSociété Générale CI, which rose by 2.79% to 19,740 FCFA.Similarly, the BRVM 30 and BRVM Prestige indices appreciated, recording increases of 0.91% to 116.03 points and 0.30% to 109.01 points respectively.

BOA CI gained the most on the day with a rise of 6.31% to 8,000 FCFA, reaching a peak not seen in seven years. It is followed by Bernabé (+4.74% to 995 FCFA), AGL CI (+4.00% to 1,300 FCFA), and BOA SN (+3.77% to 3,995 FCFA). Sonatel also posted a notable performance, with a slight increase of 0.28% to 19,750 FCFA, its highest level in five years. On the other hand, the shares of Sicable (-4.81% at 990 FCFA), Uniwax (-4.65% at 410 FCFA), and Total SN (-4.55% at 2,100 FCFA) recorded the worst performances of the session.

Ethiopia generates record $1.4bn from coffee as exports soar

Coffee exports brought Ethiopia $1.43 billion in revenue during the just-concluded Ethiopian fiscal year, the government said.The country exported 298,500 tonnes of coffee during the 2023/24 fiscal year, which ended on July 7, according to a statement from the Ethiopian Coffee and Tea Authority (ECTA). In June alone, Ethiopia exported 46,000 tonnes of coffee, generating a record $218 million in revenue, the ECTA reported.In the previous fiscal year,Ethiopiaearned $1.3 billion from the export of about 240,000 tonnes of coffee. ECTA data show that the volume of coffee exported in the 2023/24 fiscal year rose about 20% compared to the previous fiscal year.

Ethiopia, regarded as the origin of Arabica coffee, is one of Africa’s largest producers and exporters of the commodity. Coffee production is seen as the backbone of the country’s agriculture-led economy. Widely recognized for its quality and rich flavors, ranging from winy to fruity and chocolatey, Ethiopian coffee has been in great demand across the globe. However, experts often cite the lack of value-addition in Ethiopia’s coffee sector as a major bottleneck, preventing the country from fully benefiting from its rich coffee resources. Ethiopia mainly exports raw coffee beans to the international market, missing out on potential profits from processed coffee products.

Nigeria’s oil production rises to 1.27m bpd in signs of recovery

Nigeria’s oil production for June was at 1.276 million barrels per day (mbpd), according to the Monthly Oil Market Report for June by the Organization of the Petroleum Exporting Countries (OPEC), quoting direct sources.The country’s oil production had fallen from 1.28 mbpd in April to 1.25 mbpd in May. However, secondary sources from OPEC present a different figure, stating that production dropped from 1.37 mbpd in May to 1.36 mbpd in June.Mele Kyari, the Group Chief Executive Officer of theNigeria National Petroleum Company Limited, previously noted that crude production was inching closer to 1.7 mbpd in May, according to local media reports.

The 1.27 million barrels per day (bpd) average crude oil production in June means that for the first half of 2024, Nigeria has consistently failed to meet its OPEC production quota of 1.5 million bpd and its budget target of 1.78 million bpd. This persistent shortfall hampers the revenue mobilization efforts of President Tinubu’s administration. The oil sector continues to be plagued by issues such as insecurity and low investment, compounded by the exits of international oil companies (IOCs) and ongoing issues related to the approval of the transfer of oil assets.

South Africa probes unlicensed crypto operations in industry crackdown

South Africa’s regulator, the Financial Sector Conduct Authority (FSCA), is investigating 30 cases involving individuals or entities offeringcryptoservices without the required legal authorization.This action follows an earlier warning from the FSCA that “any entity that did not apply for a license and continues activities will be investigated, and there will be consequences for such actions.”This development comes as the country’scrypto regulatory frameworkbegins to take concrete shape, with the first licenses recently issued to compliant firms. On July 2, the FSCA announced that it had granted 63 additional licenses, bringing the total number of crypto licenses in South Africa to 138.

In October 2022, the Financial Sector Conduct Authority (FSCA) declared that crypto assets are financial products, requiring crypto providers to apply for a Financial Service Provider (FSP) license. This declaration mandated licensing for crypto exchanges and marked a pivotal moment in South Africa’s crypto regulation journey. The FSCA granted a grace period until November 30, 2023, for submitting license applications, with the first set of licenses issued in the first quarter of 2024. Crypto exchanges Luno and Valr are among the first to receive this crucial authorization. The FSCA’s enforcement division has now established an investigation team to address cases involving entities offering crypto financial services without proper licensing.

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.