Weekly Investor Update (November-WeekFive-2024)

12 min Read November 29, 2024 at 5:00 PM UTC

Monday

Sylndr Secures $7.5M Asset-Backed Facility via EFG Hermes

EFG Hermes, part of EFG Holding, has advised Sylndr, Egypt’s online used car marketplace, on a $7.5 million working capital facility. The transaction marks Egypt’s first asset-backed working capital solution, tailored to Sylndr’s business model, reflecting innovation in startup financing.The facility will enable Sylndr to scale operations, improve efficiency, and expand its offerings in Egypt’s used car market. The structured transaction ensures ring-fenced financing to provide security for lenders while supporting Sylndr’s growth.EFG Hermes collaborated with EFG Corp-Solutions, Bank NXT, and EG Bank as lenders, with Adsero and Sarie-Eldin & Partners offering legal support. Maie Hamdy of EFG Hermes highlighted the transaction as a milestone for Egypt’s startup ecosystem.

With over 6 million cars on Egypt’s roads, the majority of which are passenger cars and second-hand vehicles, the northern African nation has one of Africa’s most extensive vehicle fleets. Like every populous developing country, the large market for used cars, which is dominated by unorganized dealers and classifieds, has attracted startups looking to digitize sourcing and distribution. Cairo-based Sylndr is one of those used-car sale platforms and its facility underscores Egypt’s push toward innovative financing for startups. The deal aligns with trends of structured, scalable funding to support SME growth. EFG Hermes leveraged synergies within its ecosystem to deliver this solution, setting a precedent for future asset-backed deals in Egypt’s expanding startup landscape.

Nigeria’s Economy Surpasses Expectations With 3.46% Growth in Q3

Nigeria’s economy grew at an annual rate of 3.46% in the third quarter of 2024, exceeding the 2.86% median estimate in a Bloomberg survey. The growth, up from 3.19% in the previous quarter, was driven by strong performances in the services and oil sectors, according to the National Bureau of Statistics.The oil sector grew 5.17%, aided by increased production of 1.47 million barrels per day and infrastructure improvements. The sector is poised for further expansion with the Dangote oil refinery ramping up production and new fields coming online. The 2025 budget, set to be presented by President Bola Tinubu on Nov. 27, anticipates crude output reaching 2.06 million barrels per day and an oil price of $75 per barrel.The non-oil sector grew 3.37%, led by a 5.19% expansion in services, which accounted for more than half of total GDP. Agriculture growth slowed to 1.1%, affected by recent floods that destroyed crops sufficient to feed 8.5 million people for six months.

Nigeria’s robust Q3 growth underscores the importance of its oil and services sectors in counterbalancing challenges in agriculture. The anticipated increases in oil production and refinery output could further bolster growth, while ongoing investment in infrastructure and security will be critical to sustaining momentum. Flood-related agricultural losses highlight the need for enhanced disaster resilience in the non-oil economy.

Nestlé Côte d’Ivoire H1 Net Profit Up 52.3% as Revenue Jumps

BRVM-listed Nestlé Côte d’Ivoire (NTLC) reported a 17.3% rise in revenue to 116.44 billion FCFA for the first half of 2024, driven by strong local and export sales, particularly to Sahel countries and Guinea.Operating profit increased by 37.1% to 20.91 billion FCFA due to effective cost management. Net profit grew significantly, up 52.3% year-over-year to 12.36 billion FCFA, reflecting improved operational efficiency and sales growth.Ordinary activities’ earnings reached 18.12 billion FCFA, a 43.74% rise compared to the same period last year. The company aims to sustain this growth trajectory in the second half of 2024 despite anticipated challenges.

Nestlé Côte d’Ivoire’s performance highlights the impact of strategic export markets like the Sahel region and Guinea. Cost control measures were pivotal in achieving a 52.3% profit surge. However, rising costs and economic volatility in export regions may test its resilience in H2 2024. The company’s future success may depend on maintaining efficient operations and leveraging export demand while navigating macroeconomic pressures.

OpenAI, Meta, and Orange Partner to Train AI on African Languages

OpenAI and Meta Platforms, in collaboration with Orange SA, will begin training AI models on African languages to address the lack of representation for the continent’s thousands of dialects. The initiative, set to launch in the first half of 2025, will initially focus on West African languages Wolof and Pulaar, spoken by 22 million people.Orange plans to extend the project to other AI firms and additional languages, including Lingala, Swahili, and Bambara. The models will enable customer engagement across Orange’s 18 markets in the Middle East and Africa and support public health, education, and local businesses.The company will use cloud capacity and data centers in Europe and Africa for the project but has not disclosed data sources. OpenAI will provide Orange with early access to its models and support data processing.

This initiative addresses Africa’s underrepresentation in AI by targeting languages with millions of speakers but little digital presence. By building large-scale language models, the partnership aims to improve access to AI for underserved populations, particularly those excluded by literacy barriers. Success could establish a framework for expanding AI’s impact in diverse and resource-limited regions globally.

Nigeria Central Bank Raises Rates to 27.5% as Inflation Nears 34%

The Central Bank of Nigeria (CBN) raised its benchmark interest rate by 25 basis points to 27.5%, marking its sixth hike this year to combat surging inflation and stabilize the naira. The decision by the 12-member monetary policy committee was unanimous, according to Governor Olayemi Cardoso.Nigeria’s inflation hit 33.9% in October, driven by rising fuel and food prices, as well as the naira’s depreciation—down 46% against the dollar this year due to a shift to a floating exchange rate. Cardoso expressed optimism that inflationary pressures from fuel price hikes and currency devaluations would ease by early 2025.The CBN’s efforts come amid foreign exchange reforms and subsidy rollbacks under President Bola Tinubu’s administration, aiming to attract international investment. Despite a cost-of-living crisis, Nigeria recorded a surprising 3.5% economic growth in Q3, led by the services sector.

The rate hike underscores Nigeria’s focus on price stability amid record inflation and currency challenges. While reforms to liberalize the naira and cut subsidies have strained domestic households, they are part of a long-term strategy to boost investor confidence and economic efficiency. The country’s better-than-expected growth highlights resilience, but sustained stability will depend on managing inflation and addressing foreign exchange liquidity.

Egyptian-Founded Watercycle Technologies Closes $5.6M Series A Round

Watercycle Technologies has secured $5.6 million in a Series A funding round led by Par Equity, with participation from Greater Manchester Combined Authority (GMCA), Aer Ventures, and the University of Manchester Innovation Factory.Co-founded by Egyptian scientist and entrepreneur, Dr. Ahmed Abdelkarim, the company aims to scale its sustainable, low-cost mineral recovery systems for applications in brine mining and battery recycling.Watercycle’s technology addresses critical mineral supply risks and promotes a circular economy by turning waste into valuable materials, key for the green energy transition. Since its 2020 spin-out from the University of Manchester, the company has produced over 100 kg of battery-grade lithium carbonate. The new funding, including a grant from Innovate UK, will support product development, expand the team, and foster new commercial partnerships.

This investment round positions Watercycle to scale its operations in response to growing demand for critical minerals, vital for the energy transition. The company’s innovation offers potential solutions for global supply challenges, especially in sectors such as battery recycling and seawater desalination. Their technology could reshape the circular economy, ensuring a sustainable future while addressing environmental concerns. The strong backing from investors highlights the importance of supporting deep-tech ventures in addressing climate challenges.

African Fintech M-KOPA Racing Toward $400M Revenue Mark

M-KOPA, the African fintech that offers pay-as-you-go asset financing, is on track to surpass a $400 million annual revenue rate by the end of 2024, TechCrunch reports. The platform, which serves 5 million underbanked Africans, has grown rapidly despite economic challenges like currency devaluation and inflation.Founded in 2010, M-KOPA provides smartphones, solar products, and other assets through flexible daily micropayments. The company reached profitability in Kenya, Uganda, Nigeria, and Ghana and is seeing significant growth in South Africa. It credits its success to a 30,000-strong direct sales force, which has expanded rapidly from just 3,000 agents four years ago.M-KOPA’s model allows customers to build credit histories through daily payments, with products like smartphones costing $25-$30 upfront and daily payments of 50 to 60 cents. With plans to expand into electric vehicles and a smartphone assembly plant in Nairobi, M-KOPA is solidifying its position in Africa’s growing credit market.

M-KOPA’s success showcases how fintechs can thrive by addressing the unique financial needs of Africa’s low-income earners. Its innovative financing model has helped millions of people build credit and access essential products. As the company scales, its strong distribution network and local assembly operations give it a competitive edge, positioning M-KOPA as a major player in Africa’s fintech and credit markets.

Weak Maritime, Logistics Operations Sees AGL Income Dip 260%

Africa Global Logistics Côte d’Ivoire (SDSC) posted a 1% decline in revenue for H1 2024, totaling CFA 42.65 billion. Operating income plunged 260% to a loss of CFA 1.29 billion. Net profit, however, rose by 37% to CFA 18.6 billion, supported by a 47% increase in dividend income.The dip in operating income was attributed to weaker maritime and logistics operations, including intramural handling, export/import transit, and air freight. Improved performance in logistics base management and value-added warehousing partially offset these declines.AGL maintained stability in overall revenue and leveraged dividend growth to sustain profitability. The company’s leadership emphasized ongoing efforts to mitigate operational challenges in key segments.

AGL’s H1 2024 results highlight resilience despite declines in core operational segments. The strategic focus on dividends and value-added logistics underscores the importance of diversification. While maritime and logistics pressures remain a concern, strong net income growth reflects effective financial management. Future performance will hinge on addressing underperforming segments while capitalizing on growth areas.

LeapFrog Closes $1B Fund Targeting Companies in Emerging Markets

LeapFrog Investments has closed its fourth fund (Fund IV) with commitments and designated co-investments totaling $1.02 billion, surpassing its $1 billion target.The fund includes $808 million in primary commitments and $210 million for co-investments aimed at scaling high-impact healthcare and financial services companies in global growth markets.Key investors include Temasek, AIA, Prudential Financial, the European Investment Bank, the U.S. International Development Finance Corporation, and others. Global asset managers like Sumitomo Mitsui Trust Bank, strategic healthcare investor Eli Lilly, and foundations such as the Ford Foundation also contributed.

LeapFrog’s Fund IV reflects growing investor confidence in impact-driven private equity. By targeting healthcare and financial services in high-growth markets, the fund aims to generate competitive returns while improving millions of lives. Its success underscores the rising demand for sustainable, purpose-driven investments in emerging economies.

Hackers Steal $17M from Uganda’s Central Bank

Hackers breached the Bank of Uganda’s systems, stealing 62 billion shillings ($17 million), according to reports fromNew Vision. The attack, carried out by a group known as “Waste” based in Southeast Asia, took place in September.The bank has recovered approximately 37 billion shillings, but 47.8 billion shillings were reportedly stolen, with the funds transferred to accounts in Japan and the UK.Uganda’s police and auditor general’s office are investigating the incident. Reports suggest that the fraud may have involved inside help, with several employees at the Bank of Uganda and the Ministry of Finance questioned.

The breach at Uganda’s central bank highlights growing cybersecurity vulnerabilities in financial institutions. Despite the recovery of a portion of the stolen funds, the theft raises serious concerns about internal security and the risk of financial crimes targeting national banks. This incident may lead to greater scrutiny of cybersecurity practices across central banks in Africa and globally.

South Africa Emerges Top Pick for Emerging Market Investors

South Africa is becoming a preferred destination for investors in emerging markets, with Goldman Sachs and Societe Generale projecting its currency, stocks, and bonds could outperform peers in 2025. The country offers a combination of high yields, stable inflation, and a recovering economy amidst global uncertainty.Inflation has dropped from a high of 7.8% post-COVID to 2.8%, enabling the Reserve Bank to cut interest rates while maintaining attractive real returns. The 10-year sovereign bond yields about 10%, offering a real return of over 7 percentage points, drawing inflows to local bonds. The rand has delivered top carry returns among emerging market currencies this year, aside from the Argentine peso and Turkish lira.Economic reforms and improved fiscal credibility under a government of national unity are boosting confidence. Credit-rating upgrades and stabilized power supplies have also enhanced the outlook. Despite potential risks tied to global commodity demand, South Africa’s idiosyncratic growth story positions it favorably among emerging markets.

South Africa’s appeal stems from a blend of improved macroeconomic stability, policy reforms, and high-yield opportunities. With global uncertainties weighing on peers, the country’s local strengths—stabilized power supply, declining inflation, and competitive returns—make it a standout among emerging markets. Investors are betting on continued growth and fiscal improvements into 2025, underpinned by relatively limited exposure to US trade risks.

Zambia Inflation Hits Three-Year High Amid Drought, Kwacha Weakness

Zambia’s annual inflation rate rose to 16.5% in November, up from 15.7% in October, reaching its highest level in three years. The increase is driven by the country’s worst drought in over a century and a weakening kwacha, which have pushed up electricity and food prices, according to Acting Statistician-General Sheila Mudenda.The kwacha has fallen 3.5% against the dollar this quarter, as Zambia relies heavily on costly food and electricity imports to address shortages caused by the drought. With hydropower accounting for 85% of the nation’s electricity, reduced water supplies have significantly impacted energy production. In response, electricity tariffs for high-demand users rose by 115% from November 1 to fund imports.To address inflation, the central bank raised its key interest rate to 14% this month, the highest in seven years. Governor Denny Kalyalya indicated readiness to take further action if inflation remains above the 6%-8% target band.

Zambia’s inflation surge underscores its vulnerability to climate-driven energy disruptions and currency fluctuations. While the central bank’s rate hikes aim to stabilize inflation and the kwacha, long-term solutions may require diversifying energy sources and improving food supply resilience to mitigate future shocks.

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.