Weekly Investor Update (November-WeekTwo-2024)

13 min Read November 8, 2024 at 5:00 PM UTC

Monday

WAEMU’s Largest Bank Société Générale Sees 12% Profit Jump

Société Générale Côte d’Ivoire (SGBC), the largest bank in francophone West Africa by assets, reported a 12% increase in profit for the first nine months of 2024, totaling 74.5 billion FCFA. This growth is attributed to effective management of general expenses, driving pre-tax profit up by 14% to 92.9 billion FCFA year-on-year.The bank’s strong commercial performance is evident in a 9% increase in outstanding loans, reaching 2,481 billion FCFA, despite a 3% dip in customer deposits to 2,580 billion FCFA. SGBC’s net banking income also rose by 6% to 196 billion FCFA, showcasing the strength of its core activities.Bloomfield Investment Corporationrecently upgraded SGBC’s ratingfrom AA+ to AAA, the highest rating on the BRVM. Investor interest remains high, with SocGen’s stock price gaining over 23% in 2024, closing at 19,800 FCFA on October 30.

SGBC’s results reflect solid financial and operational strategies, emphasizing expense control and credit growth to drive profitability. The bank’s improved AAA rating by Bloomfield signals confidence in its financial health and management capabilities, making it the top-rated company on the BRVM. Its stock has shown steady appreciation, driven by investor confidence in its fundamentals. The stock’s consecutive yearly gains reflect a positive outlook, bolstered by the bank’s commitment to operational excellence and its role in regional economic development.

Botswana’s Opposition Wins Historic Election as 58-Year BDP Reign Ends

In a historic political shift, Botswana’s opposition candidate, Duma Boko of the Umbrella for Democratic Change (UDC) coalition, won the presidency, ending nearly six decades of Botswana Democratic Party (BDP) rule.President Mokgweetsi Masisi conceded defeat after the BDP suffered a significant loss, marking the first time the ruling party has lost power since Botswana’s independence in 1966.Economic grievances, especially among young voters, fueled support for Boko. Botswana’s economy, heavily reliant on diamond exports, has struggled amid a global diamond market downturn. Growth is projected to slump to 1% this year, with unemployment reaching 28%. Botswana’s GDP per capita was $7,250 in 2023, higher than sub-Saharan Africa’s average, yet recent challenges reveal growing discontent over economic stagnation.

Botswana’s economic dependency on diamonds has become a focal point for the new administration. As the world’s top diamond producer by value, Botswana holds a 15% stake in De Beers, with whom Masisi recently secured a greater share of raw diamonds. Boko pledged to engage De Beers promptly to maintain stability, emphasizing the need to “safeguard the goose that lays the golden egg.” This transition in leadership signals a potential shift in Botswana’s economic approach, as Boko balances short-term resource reliance with strategies for diversification to address mounting economic concerns.

Mukesh Ambani-Backed Firm to Launch First 5G Network in Ghana

Ghana is set to launch its first 5G network through Next-Gen InfraCo. (NGIC), supported by billionaire Mukesh Ambani’s infrastructure, in a move aimed at reducing data costs and spurring economic growth. NGIC began its 5G rollout Friday, targeting full national coverage by 2026, according to Communications Minister Ursula Owusu-Ekuful.NGIC aims to replicate the impact of Ambani’s Reliance Jio in India, which transformed mobile data affordability and gained 470 million users by offering low-cost services. Ghana hopes the project will boost business and economic zones outside major cities, creating opportunities for entrepreneurs across the country.NGIC secured a 10-year exclusive 5G license, with other operators, including MTN Ghana and Telecel Ghana, leasing access. Radisys, a Reliance unit, will supply infrastructure, joined by partners like Nokia, Tech Mahindra, and Microsoft.

Ghana’s 5G initiative aligns with its broader economic recovery efforts. Amid rising debt, the government introduced an 8.2 billion cedi ($503 million) loan program for SMEs, which constitute 70% of the GDP, to stimulate economic activity. Enhanced digital infrastructure could further drive growth, expanding beyond urban centers to rural areas where economic zones are anticipated. The country’s economic growth reached 6.9% in Q2, led by the mining sector, though overall annual growth remains below pre-pandemic levels. Internet penetration in Ghana, currently at 70%, is targeted to reach universal access within six years.

Egypt’s $14B Export Potential Fuels Agritech Growth Push

Egypt’s agritech sector is gaining momentum as Entlaq’s inaugural report reveals a path toward $14 billion in agricultural exports by 2030.The reportdetails a strategic vision to leverage technology for growth, tackling critical challenges like water scarcity and informal labor while driving agricultural productivity and food security.Entlaq’s report also projects over 50,000 new agritech jobs by 2030 as Egypt seeks to increase wheat self-sufficiency to 70% from 47% in 2021. This focus on digital transformation and sustainability is expected to attract further venture capital, enhancing Egypt’s standing as a regional leader in agritech innovation.

Agriculture remains a cornerstone of Egypt’s economy, contributing 11.6% to GDP and employing nearly a fifth of the workforce. With government investment in the sector set to exceed EGP 116.6 billion this fiscal year, Egypt is targeting a 20% increase in agricultural output, driven by innovative solutions like precision irrigation, IoT, and AI-powered platforms. Startups such as Mahaseel Masr are leading efforts, with tools like theQamhaweyapp enabling farmers to monitor crops and directly access markets.

MENA Digital Commerce Booms as E-Payments Grow 658% Since 2020

Checkout.com’s latest report,The State of Digital Commerce in MENA 2024, highlights the region’s rapid digital shift, revealing a 658% surge in digital payment volumes since 2020. The report underscores that as consumer demand for faster, more secure payment methods rose, businesses adapted, increasing reliance on digital payments to meet evolving needs.MENA’s digital commerce landscape reflects growth in e-commerce, fintech, and regulatory support, with a significant increase in online shopping frequency and innovative payment solutions reshaping the consumer experience. Data shows daily online shopping has risen 80% since 2020, reflecting a consumer shift toward digital convenience and efficiency.Insights from regional leaders emphasize the critical role of government policies in fostering digital adoption. Contributors advocate for continued regional collaboration to enhance connectivity, improve fraud prevention, and create standardized regulatory frameworks across MENA.

The transformation of MENA’s digital economy illustrates a shift from cash to digital-first, driven by innovation, regulatory advances, and strategic collaborations. Governments have been instrumental in this evolution, investing in modern payment systems and policies to support a digital economy, with a focus on cross-border transactions and financial inclusion. High adoption rates of Apple Pay and Google Pay further indicate consumer preference for streamlined digital solutions. While MENA has achieved 91% digital payment adoption, contributors point to challenges including infrastructure gaps and cultural cash biases. Yet, stakeholders believe that regional integration—potentially a unified regulatory framework—could enhance interconnectivity, boost investment, and broaden financial access, positioning MENA as a competitive digital commerce hub in the global economy.

Sawari Ventures to Launch $200M Fund Expanding Focus Across Africa

Egypt-based Sawari Ventures announced its second fund,Sawari Ventures II, set for launch in early 2025 with a $200 million target.Expanding beyond North Africa, the fund will invest in Kenya and West Africa, focusing on high-growth sectors. Sawari’s new fund comprises two parts: a local capital-focused Egypt fund and an international fund for foreign investors, with 70% ($140 million) aimed at Egyptian startups in Series A or B stages.Sawari has partnered with Bpifrance, France’s largest VC firm, to foster collaboration between African and French markets. This initiative builds on Sawari’s February 2024 launch of a $150 million fund for Egyptian startups, supporting innovation across the continent.

Sawari Ventures II reflects the rising appeal of Africa’s startup ecosystem, with Egypt positioned as a regional tech hub. By expanding its geographical focus, Sawari is aligning with the continent’s growing tech investment momentum. The collaboration with Bpifrance highlights a trend towards cross-border partnerships, facilitating knowledge sharing and access to larger markets. The fund’s sector focus aligns with Africa’s needs for fintech, agri-tech, and climate resilience, potentially unlocking solutions for economic and environmental challenges.

Mara Group, Startupbootcamp Plan $250M Fund for African Tech Startups

Tech accelerator Startupbootcamp, Ashish Thakkar’s Mara Group, and Blend Financial Services have announced plans to establish a $250 million fund aimed at investing in African technology startups. The fund, signed at the Future Investment Initiative in Saudi Arabia, will focus on supporting startup hubs in South Africa, Nigeria, Kenya, Ivory Coast, and Egypt.Thakkar, a British-East African tycoon and co-founder of Atlas Mara Ltd., stated that the fund, targeting startup funding rounds and pre-IPO stages, expects to secure additional support from development institutions and begin investments within the next six months.Africa’s fast-growing, young population is increasingly leveraging technology to address infrastructure gaps, fueling the rise of tech hubs in cities like Cape Town, Johannesburg, and Nairobi. Startupbootcamp, a global accelerator network, brings a €5.6 billion portfolio to the partnership.

This $250 million fund highlights growing investor interest in African tech ecosystems, as the continent’s youthful population and digital adoption rates drive demand for innovative solutions. Thakkar, who has actively invested as an angel investor, noted that the scale of this fund will help create a structured platform for African tech funding. In addition to startup rounds, the venture aims to extend its scope to early and late-stage investments over time. Thakkar’s Mara Group, with its deep roots in African markets, along with Startupbootcamp’s global accelerator network, provides African entrepreneurs with critical capital and support.

Ghana’s Inflation at Four-Month High Reduces Rate-Cut Prospects

Ghana’s annual inflation rate rose to 22.1% in October, up from 21.5% in September, marking a four-month high. The increase dampens the likelihood of an anticipated interest-rate cut later in November.Government Statistician Samuel Kobina Annim, speaking in Accra, highlighted that inflation in both food and non-food sectors had accelerated, with key contributors including food, housing, water, fuel, and transport, which together accounted for about two-thirds of October’s inflation.This marks the second consecutive monthly increase in consumer inflation for Ghana, a country rich in cocoa, gold, and oil, which is working to recover from a severe economic crisis. October’s inflation rate is the highest since June, underscoring persistent inflationary pressures.

Ghana’s inflation spike comes amid economic recovery efforts, including a nearing conclusion of its debt restructuring, with $13 billion in international bonds recently restructured. In addition, Ghana reached a third-review agreement with the International Monetary Fund on its $3 billion loan program. The inflation uptick, driven by rising prices in essential sectors, may prompt the central bank to maintain or raise interest rates in November to counter further price pressures. The government’s fiscal reforms and IMF support underscore efforts to stabilize Ghana’s economy amid challenging conditions. However, rising inflation may hinder recovery momentum, potentially affecting consumption and investment.

Emerging Markets Hit by Trump Victory With Widespread Currency Selloff

Emerging markets faced significant pressure as Donald Trump’s reelection spurred a “Trump Trade” revival, causing widespread currency and equity declines. The MSCI EM Currency Index declined by 0.8%, nearing a loss of its 2024 gains.Mexico’s peso, viewed as highly sensitive to Trump’s trade policies, dropped as much as 3.5%, pushing the emerging-market currency index toward its worst day since February 2023. Chinese equities in Hong Kong slid over 2.5%, as investors anticipated heightened tariffs.Trump’s “America First” approach, including trade restrictions, has left emerging markets vulnerable. During his first term, Trump’s trade war with China triggered EM underperformance, a trend that persists. This time, his proposed expansionary fiscal policy is expected to drive up US bond yields, exacerbating EM challenges by strengthening the dollar and raising borrowing costs.

Trump’s re-election introduces renewed headwinds for emerging markets, amplifying existing macroeconomic challenges. Higher US bond yields and a strengthened dollar would make it tougher for EM countries to reduce borrowing costs, particularly as Trump’s trade policies target major economies like Mexico and China. Trump’s stance on the Russia-Ukraine conflict and proposed fiscal policies indicate potential geopolitical and economic shifts, which could heighten volatility in EM currencies and equities. Asian markets remain especially vulnerable due to China’s economic slowdown, compounded by deflationary pressures and waning consumer demand despite heavy monetary stimulus.

Pan-African Payment System Could Save Africa $5B in Fees

Africa’s reliance on the dollar for cross-border transactions may soon diminish as the Pan-African Payments and Settlements System (PAPSS) under the African Continental Free Trade Area (AfCFTA) gains traction.This payment system, launched in 2022, is set to reduce the need for transaction clearance through U.S. and European banks, a process that costs African businesses up to $5 billion annually in processing fees, according to Tunde Macaulay of Standard Bank Group.Currently, more than 80% of cross-border payments from African banks are routed offshore. PAPSS aims to address this by facilitating intra-African trade in local currencies, potentially bringing an additional $50 billion of informal trade into the official economy.

Currently, intra-African trade constitutes only 16% of the continent’s commerce, compared to over 60% in the EU. With 47 countries ratified and a market potential of 1.3 billion people, AfCFTA could become the world’s largest free-trade area by 2030. However, the system could face resistance from the U.S., as President Donald Trump has pledged penalties for countries moving away from the dollar in trade.

Chevron Expands African Exploration as Oil Majors Exit Nigeria, Angola

Chevron Corp. is expanding its oil exploration in West Africa, adding new acreage in Nigeria, Angola, and Equatorial Guinea, where it sees opportunities for a production rebound despite years of declining output.The region, considered “hydrocarbon-rich and under-explored,” offers untapped potential, said Liz Schwarze, Chevron’s vice president of global exploration. While some oil majors are reducing their presence, Chevron is increasing its investment, acquiring multiple blocks. In Nigeria, where production has fallen by about 500,000 barrels per day over five years, Chevron recently acquired a stake in a new block and made a separate discovery.The company also expanded into two deep-water licenses in Equatorial Guinea and plans new exploration efforts in Egypt and Namibia by year-end. Angola, which left OPEC last year after a production slump, has granted Chevron access to deepwater blocks 49 and 50.

Chevron’s expansion in Africa highlights its commitment to frontier exploration, even as other oil majors shift focus or exit the continent after decades. West Africa’s hydrocarbon resources remain under-explored, offering it a strategic advantage in potentially revitalizing production in regions like Nigeria and Angola. As global oil companies increasingly prioritize investments in other regions, Chevron’s approach underscores the importance of Africa’s untapped reserves in its long-term strategy.

South Africa Experiences First November Snow in 85 Years

South Africa recorded its first significant snowfall in November in 85 years, surprising residents as the country heads into summer. The unseasonal snow blanketed parts of the Eastern Cape province, following severe September snowfalls in neighboring KwaZulu-Natal that disrupted transport and led to a fatality.The rare November snowfall resulted from a “cut-off low” — a low-pressure system bringing cold air, heavy rainfall, and snow, according to Lehlohonolo Thobela of the South African Weather Service. Authorities considered closing mountain passes due to hazardous conditions.The frequency of cut-off lows has been rising, particularly in spring, leading to speculation about links to climate change. Thobela noted that while such weather events are not new, their increasing occurrence raises questions about shifting climate patterns in South Africa.

South Africa’s unusual November snowfall highlights the growing unpredictability of weather patterns in the region. While cut-off low-pressure systems occasionally occur, their frequency in spring may suggest broader climate changes, a trend being observed globally. Unseasonal weather events, including cold spells and heavy rains, increasingly affect infrastructure, agriculture, and daily life in South Africa. The recent weather disruptions come as the country grapples with other climate-related challenges, such as droughts and extreme heat. This rare snowfall underscores the need for climate resilience strategies to better prepare for the potential impacts of both extreme cold and heat, which can strain resources and affect critical sectors.

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.