Weekly Investor Update (June-WeekFour-2024)

14 min Read June 28, 2024 at 5:00 PM UTC

Tuesday

Egypt’s Connect Money gets $8m to enable businesses issue cards

Egyptian Banking-as-a-Service startupConnect Moneyhas closed an $8 million seed funding round led byDisruptech VenturesandAlgebra Venturesto launch five new business verticals in North African markets.Connect Money offers a white-label card issuing platform that enables businesses to provide their customers with debit and credit cards without the need to develop fintech infrastructure or obtain regulatory licensing.The embedded finance package encompasses digital payments, instant financing, and access to a network of over 20,000 marketplace partners. Support services include white-labeled card issuance, distribution, KYC, customer support, and mobile banking app development.

Banking-as-a-service (BaaS) platforms are instrumental in expanding access to digital financial services by enabling non-bank businesses to integrate fintech capabilities without building their own tech infrastructure or navigating the complex regulatory approval processes. Many businesses are leveraging these platforms to offer financial services such as card payments and lending more efficiently. Globally, businesses are projected to continue utilizing BaaS platforms over the next decade to launch new financial services, enhance revenues, and improve customer experience and retention. This trend is expected to drive the BaaS market value to $22.6 billion by 2032, sustained by a 19.3% compound annual growth rate (CAGR). As BaaS becomes more ubiquitous, Egyptian fintech Connect Money aims to capitalize on its popularity to explore emerging business opportunities in African markets.

Sonatel stock hits 5-year high as BRVM posts another weekly gain

The BRVM stock market continued its upward momentum last week, posting its seventh consecutive weekly gain, driven by Sonatel. This follows an increase in the market capitalization of the telecom giant from 17 billion FCFA to 1.95 trillion FCFA ($3.2 billion) and a 0.88% gain in its share price to 19,500 FCFA.That represents thestock’s highest levelsince April 1, 2019, sendingSonatel’sshare of the overall BRVM market capitalization to 23%. The main BRVM Composite (230.05 points) index increased by 0.51% to cross the 230-point mark, a level that the Composite had not reached since 2018.The BRVM 30 and the BRVM Prestigeindexesalso increased by 0.52% (to 114.84 points) and 1.37% (to 109.20 points), respectively. In total, the BRVM share market garnered 43.22 billion FCFA, increasing its overall capitalization to 8,558.28 billion FCFA.

The telecom industry in francophone West Africa is rapidly evolving, presenting numerous opportunities for investors.SonatelGroup’s Q1 2024 (January to March) financial report highlights several compelling reasons this sector is worth considering, which weanalyze in this blog. Meanwhile, Oragroup shares led the week’s gains, rising by 5.14% to 1,840 FCFA. This rebound is attributed to the share price trading at extremely low levels, offering a buying opportunity for investors. Vivo Energy (+4.52% to 810 FCFA) maintained its positive momentum for the second consecutive time, driven by strong company performance. Rounding out the top five for the week were BOA Bénin (+4.37% to 6,575 FCFA), Tractafric Motors CI (+4.32% to 2,295 FCFA), and SOGB (+4.05% to 3,725 FCFA).

Uganda signs deal with UAE to build third international airport

Uganda has signed an agreement with a business association from the United Arab Emirates to construct a new international airport, according to a statement from President Yoweri Museveni’s office.The UAE’s Sharjah Chamber of Commerce and Industry will oversee the construction of theairport, which will be located just outsideKidepo National Parkin the northeast, near Uganda’s border with Kenya.Construction is set to begin in August, as announced by Abdallah Sultan Al Owais, chairman of the Sharjah business body. The statement from Museveni’s office did not disclose the project’s cost.

This will be Uganda’s third international airport and signifies the UAE’s expanding economic influence in the region, extending beyond its existing interests in renewable energy and oil and gas industries. The new airport is anticipated to boost tourism by attracting visitors to the 1,442-square-kilometer (557-square-mile) Kidepo National Park, renowned for its lions, giraffes, buffaloes, and other big game. President Yoweri Museveni, who witnessed the signing, described the agreement as “a sign of the deepening relations with our Gulf partners and another opportunity to cooperate in investment and trade” in a post on X.

South Africa’s Naspers profit doubles on Tencent, e-commerce unit

South Africa’s Naspers reported that its full-year earnings more than doubled, driven by the improved performance of its e-commerce businesses and contributions from China’sTencent, which accounts for most of its earnings and revenues.Thetechnology investorannounced that its core headline earnings per share, a key indicator of operating performance in South Africa, from continuing operations rose to 1,148 U.S. cents for the year ended March 31, up from a restated 546 cents the previous year.With global investments housed in Amsterdam-listedProsus,Naspersnoted that its consolidated e-commerce business achieved profitability in the second half of the year, ahead of its forecast for the first half of 2025. The company posted an annual consolidated e-commerce trading profit of $24 million, compared to a loss of $435 million the previous year.

Naspers controls Amsterdam-listed Prosus, where it houses its international investments. These investments include food delivery companies such as Brazil’s iFood, Delivery Hero, and India’s Swiggy, as well as educational software firms like SkillSoft and Stack Overflow, and payments companies like India-focused PayU. Prosus also holds a stake in Chinese software and gaming giant Tencent, which it reduced from 26.2% to 25% last year to fund a rolling share buyback program. Naspers and Prosus argue that these buybacks benefit shareholders because Prosus is valued at 30% less than the worth of its Tencent stake, which is approximately $98 billion at current prices.

Internet disruptions reported in Kenya as anti-tax protests escalate

London-based internet rights monitoring group NetBlocks has reported a major internet disruption in Kenya following widespreaddemonstrationsagainst a government bill to hike taxes amid tough economic times and widespread corruption.The police response to the protests has been violent, intensifying the public outcry. Users have reported interrupted or slow internet connections, andNetBlocksconfirmed that the outage has also affected neighboring countries Uganda and Burundi.This disruption comes despite a statement from Kenya’s ICT regulator, the Communications Authority, on Monday, asserting that it had no plans to shut down or interfere with the internet.

Kenya has a history of internet shutdowns. In December 2023, Telegram was periodically blocked for over a week due to an alleged leak of secondary school exam papers on the platform. This social media shutdown lasted 192 hours and cost $27m in internet restrictions. Currently, nationwide anti-government protests have left at least 17 people dead amid a brutal police crackdown. These demonstrations were sparked by President Ruto’s plan to implement a series of unpopular taxes to generate an additional $2.3bn for the budget year starting July 1. Protesters are demanding that lawmakers scrap the entire plan, despite some contentious levies, such as a 16% tax on bread, being dropped. In light of these events, Kenya’s sovereign dollar bonds are sinking. The nation’s 2031 debt security fell on Wednesday to its lowest price since issuance in February, making Kenyan bonds among the worst performers in emerging and frontier markets since June 18, when the demonstrations began.

Downforce secures $4.2m for soil fertility assessment tools in Africa

Downforce Technologies, a London-based climate tech startup focused on soil fertility measurement technology for farmers, has raised $4.2 million to develop new products targeting Africa and expand into additional markets.The funding round was led byEquator VC, an African early-stage venture firm focused on climate tech. Existing shareholders includeTiverton Agriculture Impact Fund,Dragonfly Enviro Capital,Perivoli Innovations, and theClean Energy Finance Corporation(CEFC), with its investment managed byVirescent Ventures.Founded in 2020 and led by Professor Jacquie McGlade, Downforce provides cost-effective remote sensing software that enables farmers to assess soil health quickly. The company also offers tools for planning and executing verified carbon projects, collecting and reporting farm emissions data, and implementing soil health improvement initiatives.

Africa contributes only a small fraction of global food production. In 2021, the continent’s total food exports amounted to just over $60 billion, compared to the U.S.’s $177 billion. Despite having substantial uncultivated arable land, Africa faces challenges in measuring soil fertility, which is often costly, time-consuming, and prone to errors.Downforce is among a rising group of climate tech startups—alongside AgroCares, SoilSense, Regen Technologies, and EcoPeanut—providing innovative solutions for soil carbon measurement, farm management, and climate sustainability for African farmers. These companies aim to improve agricultural productivity and sustainability by offering accessible and accurate soil health assessments.

Kenya president withdraws controversial finance bill after protests

On Wednesday, Kenyan President William Ruto withdrew proposed tax increases from the controversial Finance Bill 2024 in response to widespread protests.President Ruto had introduced the new taxes to strengthen state finances and secure additional funding from the International Monetary Fund (IMF). On Tuesday, legislators from his ruling coalition managed to pass the bill afterremoving some of the more contentious taxes, including a 16% levy on bread.While these fiscal reforms have been positively received by the markets, they havesparked protests among citizensfacing rising food prices and a youth unemployment rate estimated to be as high as 67% by the Federation of Kenya Employers.

The Ruto administration has raised tax rates and implemented strategies to reduce Kenya’s dependency on borrowing, aligning with fiscal reforms agreed upon with the IMF in 2021. The Finance Bill aimed to generate an additional 302 billion shillings ($2.3 billion) to help cover a budget deficit of 3.3% of GDP. On Tuesday, after lawmakers approved the new tax measures, police fired on crowds around the parliament, and protesters entered the senate chamber and national assembly. The Kenya Medical Association reported at least 23 deaths and 30 people treated for bullet wounds. Most demonstrators, young Kenyans in their 20s and 30s, coordinated through social media. Following President Ruto’s statement, Kenya’s 2031-dollar bonds recovered from earlier losses, trading slightly stronger with a yield of 10.67%, according to Bloomberg data.

Senegal’s economy seen growing 6.4% between 2025-2027

Senegal’s economy is projected to grow by 6.4% between 2025 and 2027, according to the Multi-year Budgetary and Economic Programming Document (DPBEP), published at the end of June.The Ministry of Finance and Budget anticipates that thefrancophone West African economywill consolidate in the medium term, benefiting from a more resilient international environment and the ongoing implementation of key projects.In 2024, economic growth is expected to be primarily driven by the production ofoilandgasand their positive effects on other sectors. The growth rate is forecasted to peak at 9.7% in 2025, the second year of oil and gas exploitation.

The document further highlights that this robust economic trajectory will be supported by strong performances in the secondary sector (+10.3%), the tertiary sector (+5.1%), and the primary sector (+5.2%). Francophone Africa is home to some of the fastest-growing economies on the continent. Economies in the West African Economic and Monetary Union (WAEMU) averaged 6% GDP growth between 2013-2018 and above 5% each year since – except in 2020 (COVID-19). These economies are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. In 2024, four feature among the world’s ten fastest-growing economies projected by the IMF. The region also has a more conducive policy environment offering companies a relatively easy regional expansion route due to shared culture, language, regulations, and currency. With this, francophone West Africa offers some of the best investment prospects on the continent.

Orange CI share price jumps to highest level since 2022 IPO

The BRVM stock market rebounded on Tuesday after its Monday slump, driven by the strong performance of Orange CI, which increased by 2.08% to reach 12,000 FCFA, marking the stock’s all-time high.As a result, the second-largest market capitalization saw its overall valuation increase by 36.91 billion FCFA, reaching 1,807.86 billion FCFA, despite a slight decline in Sonatel (-0.05% to 19,420 FCFA).Orange CIshares werefirst listed at the end of 2022, at a unit price of 9,500 FCFA.Meanwhile, the main marketindicesall posted gains: the BRVM Composite rose by 0.32% to 230.21 points, the BRVM 30 increased by 0.50% to 114.95 points, and the BRVM Prestige went up by 0.16% to 108.76 points.

Orange Côte d’Ivoire is currently the second most valuable stock on the BRVM with a market capitalization of XOF 1.81 trillion ($2.9 billion), which is about 21.1% of the entire BRVM equity market. It began the year with a share price of 10,900 XOF and has since gained 10.1% on that price valuation, ranking it 18th on the BRVM in terms of year-to-date performance. During Tuesday’s session, investors accumulated transactions amounting to 463.26 million FCFA, indicating an increase in activity compared to the previous day (222.4 million FCFA). The majority of these exchanges were recorded on Sonatel and Palmci securities, with 81.01 million FCFA and 66.63 million FCFA, respectively.

BRVM stock market crosses 19trn XOF ($31bn) capitalization mark

The regional BRVM stock exchange reached a new symbolic milestone on Wednesday, June 26, 2024, bringing its overall capitalization to 19 trillion FCFA ($31 billion).This 4.22% increase since the start of 2024 highlights the remarkable performance of the regional stock market and reflects investor confidence in the future of theUEMOA zone’s economies.With this achievement, the BRVM solidifies its position as thefifth-largest African stock exchangein terms of market capitalization. It now represents approximately 15.81% of the GDP of the UEMOA zone, underscoring its significant role in financing the region’s economies.

This new record continues the upward trend that the BRVM has experienced since 2021, demonstrating the market’s resilience amid successive international and regional crises. The robustness of listed companies, along with attractive returns, continues to draw investors.Beyond equities, with notable growth in the bond market as well. On June 26, three new bond listings were added, bringing the total number of listed bonds to 148. This represents an 11.28% increase since the beginning of 2024, illustrating the growing attractiveness of this market segment.

Profit taking on Orange, Sonatel stocks sees BRVM close negative

In Thursday’s trading session, profit-taking onOrangeandSonatelstocks led to a negative close for the BRVM. The market saw a predominance of declines, with 20 stocks falling against only 9 rising, dragging it into negative territory for the second consecutive day.Themain indicesof the regional stock exchange all recorded losses: the BRVM Composite fell by 0.38% to 229.19 points, the BRVM 30 dropped by 0.21% to 114.52 points, and the BRVM Prestige decreased by 0.18% to 107.62 points.Orange Group shares significantly influenced this market decline, with Orange CI losing 7.5 billion FCFA (-0.42% to 11,950 FCFA) and Sonatel shedding 5.5 billion FCFA (-0.28% to 19,250 FCFA). Meanwhile,Bicici(-6.54% to 10,005 FCFA),Safca(-6.15% to 915 FCFA), andServair Abidjan(-5.44% to 2,000 FCFA) recorded the biggest declines.

Orange CI increased by 2.08% last week to reach 12,000 FCFA, marking the stock’s all-time high since its 2022 IPO. As a result, the second-largest market capitalization saw its overall valuation increase by 36.91 billion FCFA, reaching 1,807.86 billion FCFA. Similarly, Sonatel saw an increase in its market capitalization from 17 billion FCFA to 1.95 trillion FCFA ($3.2 billion) and a 0.88% gain in its share price to 19,500 FCFA.That represents thestock’s highest levelsince April 1, 2019, sendingSonatel’sshare of the overall BRVM market capitalization to 23%.

Central Bank of Kenya issues licences to more digital lenders

The Central Bank of Kenya (CBK) has issued licenses to seven new Digital Credit Providers (DCPs), increasing the total number of licensed DCPs to 58. This follows an earlier batch of 19 DCPs licensed in March 2024.The newly licensed loan operators are UbaPesa, Stride Credit, Senti Capital, Progressive Credit, Payablu Credit, Mogo Auto, and Mint Credit. Since March 2022, Kenya’s apex bank has received 550 applications for DCP licenses, up from 480 as of March 2024.The CBK has collaborated closely with applicants throughout the review process, engaging with other regulators such as the Office of the Data Protection Commissioner to ensure thorough vetting and compliance.

The licensing and oversight of Digital Credit Providers (DCPs) by the Central Bank of Kenya (CBK) emerged in response to public concerns about unregulated DCPs, which included high costs, unethical debt collection practices, and the misuse of personal information. Similar issues, such as customer harassment, defamation, and unethical recovery methods, have led regulators in Tanzania and Nigeria to tighten controls on loan app operators. In Nigeria, up to 47 unregistered loan apps have been delisted from app stores to clean up the industry. Beyond regulating DCPs, Kenya’s central bank plans to issue payment licenses to fintech startups, revising regulations to expand the country’s payment market. This development has reportedly encouraged fintech companies like Flutterwave and Chipper Cash to consider obtaining licenses in Kenya.

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.