Weekly Investor Update (October-WeekFour-2024)

16 min Read October 25, 2024 at 5:00 PM UTC

Monday

Dangote’s Wealth Doubles to $28B After Nigeria Refinery Launch

Aliko Dangote, Africa’s wealthiest man, has seen his fortune surge to $27.8 billion, thanks to the launch of his long-awaited oil refinery in Nigeria.The Dangote Refinery, located outside Lagos, is the largest single-train refinery globally and aims to make Nigeria self-reliant for fuel but faced difficulties during its construction.The project took 11 years and $20 billion to complete—far longer and more expensive than initially planned. Operational since January, the refinery has sparked disagreements with the government and Nigeria’s state oil company, as well as concerns over its environmental and local impacts.

The refinery is the most ambitious project in Dangote’s 46-year career, far surpassing his ventures in cement. Already operating at 60-70% capacity, the facility is expected to reach full production soon. As Nigeria’s state-owned energy firm, Nigerian National Petroleum Corporation has secured a deal to supply crude and distribute the refinery’s gasoline, the refinery could soon reduce Nigeria’s dependence on costly fuel imports.

Yellow Card Raises $33M to Boost Africa’s Crypto Business Solutions

Yellow Card, a U.S.-founded crypto platform operating in Africa, has raised $33 million in Series C funding. The crypto exchange, launched in Nigeria in 2019, has now secured a total of $88 million in funding, cementing its position as Africa’s most-funded cryptocurrency platform.Led byBlockchain Capital, the latest investment aims to expand Yellow Card’s focus on serving businesses rather than retail customers, marking a shift that began during its $40 million Series B round. Initially focused on providing retail customers with access to cryptocurrencies and stablecoins like USDT, USDC, and PYUSD in 20 African countries,Yellow Cardhas pivoted towards businesses.The platform now serves around 30,000 companies, helping them manage treasury functions and access stablecoins, which are particularly useful in regions with volatile currencies. Despite the pivot, the platform still supports a range of users, from small traders to large corporations, as stablecoins help businesses hedge against inflation and facilitate cross-border trade.

Yellow Card’s strategic pivot towards businesses has significantly boosted its transaction volumes, surging from $1.7 billion to over $3 billion in a year. Stablecoins are driving adoption, offering a practical solution for African businesses to store value and manage international payments in regions with volatile currencies. With the new funding, the company plans to develop new products, strengthen its team, and engage more with regulators across the continent. As stablecoins gain traction, Yellow Card is positioning itself as a leader in Africa’s evolving crypto ecosystem.

Ethiopia to Raise $255M in First IPO to Launch Stock Exchange

Ethiopia is set to raise 30 billion birr ($255 million) by selling 100 million shares in Ethio Telecom, marking the country’s first initial public offering (IPO) and paving the way for the launch of its stock exchange.Ethiopia Investment Holdings, which controls 27 state-run companies, announced the IPO as part of broader reforms under Prime Minister Abiy Ahmed’s administration, which aims to attract investment and rebuild the war-torn economy.Ethio Telecom, the nation’s largest mobile service provider with 78.3 million customers, willlist its shares on the Ethiopian Securities Exchange (ESX)after January 3, 2025, with the sale conducted via its mobile money platform, telebirr. The IPO will also kickstart Ethiopia’s long-awaited stock market, with the government planning to sell shares in six companies over the next five years.

Ethiopia’s debut IPO of Ethio Telecom represents a significant step in the country’s economic liberalization, opening its market to investors and launching its first stock exchange. With plans to privatize additional state-run companies, the government aims to attract new investment to support economic growth and recovery from the recent conflict. It recently unpegged its birr currency from the US dollar, unlocking $20 billion in financing, including a $3.4 billion loan from the IMF. This move, alongside the government’s restructuring of its $1 billion Eurobond, aims to stabilize the economy. The stock exchange is expected to provide a platform for local companies to raise capital and fuel expansion in East Africa’s biggest economy.

Kenya’s Octavia Carbon Gets $5M to Build Direct Air Capture Plant

Octavia Carbon, a Kenyan cleantech startup, has raised $5 million in seed funding to develop its Direct Air Capture (DAC) storage plant. DAC technology removes carbon dioxide (CO2) directly from the atmosphere, helping to mitigate climate change by reducing excess CO2 levels.The companycaptures CO2 and stores it underground, utilizing the porous basalt of Kenya’s Rift Valley, where the gas mineralizes into solid rock. Octavia generates revenue by selling carbon credits to companies and individuals seeking to offset their carbon emissions.It aims to lower the cost of capturing CO2 by leveraging Kenya’s geothermal energy, using waste heat to meet 80% of its electricity needs. This positions Octavia to capture CO2 more efficiently, with plans to reduce extraction costs from the current $680-$820 per ton to around $100.

Founded in 2022, Octavia is among 18 companies worldwide developing DAC technology. It has pre-sold 2,000 tons of CO2, potentially generating over $1 million in revenue. The company aims to capture 1,000 tons of CO2 annually and become an Original Equipment Manufacturer (OEM) for DAC machines.

African Currencies Face Mixed Prospects for Next Year

The outlook for major African currencies going into 2025 is mixed, with South Africa’s rand expected to outperform while Nigeria’s naira may face more depreciation before stabilizing, according to Ebury Partners.Of the seven African currencies monitored by the London-based firm, four are expected to either hold their value or gain, while the other three are projected to continue losing ground. The projections are based on each country’s economic fundamentals and anticipated movements in commodity prices, according to Ebury’s head of market strategy, Matthew Ryan.The Angolan kwanza is projected to weaken by about 8%, reaching 1,000 per dollar, while the Ghanaiancediis expected to fall by around 16% to 19 per dollar. The Nigeriannairais anticipated to depreciate by 2.4%, hitting 1,700 per dollar, whereas the South Africanrandis predicted to gain 5%, reaching 16.75 per dollar. Meanwhile, the Kenyanshillingand Zambiankwachaare expected to remain stable.

The wide-ranging idiosyncrasies in Africa ensure a diverse outlook for the region’s currencies with macroeconomic fundamentals and commodity prices as key determinants of currency strength. While the rand is predicted to continue this year’s rally, currencies like the naira, cedi, and kwanza may experience further losses due to weaker economic fundamentals. However, currencies like the Kenyan shilling and Zambian kwacha are seen as well-positioned to hold steady amid global economic challenges.

S&P Upgrades Ivory Coast Credit Rating on Higher Cocoa Prices

Ivory Coast has received a credit rating upgrade from S&P Global Ratings, which raised the country’s rating from BB- to BB with a stable outlook, bringing it a step closer to investment-grade status.The upgradereflects strong economic growth and shrinking budget deficits, driven by highercocoa pricesand rising exports in hydrocarbons and mining.S&P expects the West African nation’s budget deficit to reach 3% of GDP in 2024, coupled with a narrowing external deficit, drove the upgrade. The 2024-2025 cocoa harvest is forecasted to be up to 10% higher than earlier estimates, contributing to the country’s improved economic outlook.

With the upgrade, Ivory Coast, the world’s largest cocoa producer, is now rated on par with nations like the Dominican Republic and Brazil, with a stable outlook. Its dollar bonds maturing in 2033 traded around 91.8 cents on the dollar following the rating boost, indicating steady investor confidence in the nation’s financial future. Domestically, Côte d’Ivoire has multiplied structural reforms, aimed at diversifying an economy that has long been dependent on raw materials. These reforms, coupled with better mobilization of tax revenues, have strengthened the country’s economic fundamentals. This dynamic is supported by promising prospects, with real GDP growth expected at 6.6% between 2024 and 2027.

Rockefeller, Bezos-Backed Group Looks to Expand Solar Grids in Nigeria

The Global Energy Alliance for People and Planet (Geapp), backed by the Rockefeller Foundation and the Bezos Earth Fund, is piloting a solar mini-grid program in Nigeria to address the country’s unreliable electricity supply.The initiative, launched in 2021, seeks to address energy poverty and expand access to consistent power by scaling up solar solutions in Africa’s most populous nation, where an estimated 86 million people live without electricity.Geapp’s interconnected mini-grids supplement the limited supply from the national grid, enabling businesses and homes to operate around the clock. The organization aims to build 10 gigawatts of mini-grids across Nigeria, with pilots underway in various regions.

The solar mini-grid program piloted by Geapp in Nigeria offers a promising solution to the country’s chronic power shortages. By supplementing the national grid and providing consistent electricity, the initiative boosts productivity for underserved communities. Through the Demand Aggregation for Renewable Technology (Dart) program, Geapp pools the needs of developers to reduce solar equipment costs by up to 30%, while offering financing facilities to support development. The World Bank has pledged $130 million to scale similar projects, seeing the success of Geapp’s initiative.

South Africa Set for Increased IPOs, Fundraising in 2025

South Africa is expected to experience a surge in initial public offerings (IPOs) and fundraising activities next year, driven by optimism over the economy’s potential recovery, according to JPMorgan Chase & Co.TheMay 29 electionresulted in the African National Congress losing its parliamentary majority for the first time since 1994, leading to a business-friendly governing coalition. This political shift has attracted multinational investments,strengthened the rand, and boosted bond markets, with the benchmark stock index rising over 20% since June.The Johannesburg Stock Exchange is preparing for majorIPOs, including Pick n Pay’s Boxer unit and Anglo American’s platinum and diamond spinoffs. JPMorgan expects primary market activity to increase as equity valuations improve, making IPOs a viable option.

South Africa’s transition to a business-friendly coalition following the May elections is revitalizing market confidence and attracting significant investment. The Johannesburg Stock Exchange is poised for increased IPO and fundraising activities, supported by improved equity valuations and strong domestic investor interest. Major banks such as FirstRand, Standard Bank, and Capitec have seen their shares rise over 25% since June, indicating robust market performance. In addition, emerging market debt investors are eyeing sub-Saharan Africa for attractive yields and stable economic prospects. JPMorgan’s positive economic forecasts and the anticipation of high-profile IPOs, including potential listings from companies like Coca-Cola, underscore the region’s growing appeal.

Nigeria Approves Exxon’s $1.3B Onshore Oil Asset Sale to Seplat

Nigeria has approved Exxon Mobil Corp.’s $1.3 billion sale of its onshore oil and gas assets to Seplat Energy Plc, ending a two-year delay in concluding the deal. However, the Nigerian government rejected a similar transaction by Shell Plc to sell its onshore assets to a local consortium for the same amount.The approval, announced by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), allowsExxon Mobilto focus on expanding its offshore operations in Nigeria, where it plans to invest up to $10 billion. Seplat’s acquisition will nearly quadruple its oil output to more than 130,000 barrels per day.Meanwhile, Shell’s deal to sell its onshore assets to the consortium known as Renaissance was rejected. The consortium comprises Nigerian companies including ND Western, Aradel Energy, and Waltersmith.

Nigeria’s approval of Exxon Mobil’s sale to Seplat marks a significant shift in the nation’s energy landscape, boosting Seplat’s production capacity. In contrast, Shell’s stalled deal highlights the challenges foreign companies face in divesting from Nigeria’s onshore oil sector. Shell has been seeking to exit its onshore operations for over three years due to challenges, including environmental disputes and oil theft, but is still in discussions with the government to finalize the transaction.

Africa’s Financial Markets See Fastest Growth in Seven Years

Africa’s financial markets are expanding at their fastest pace in seven years, driven by a recovery in economic growth and easing inflation, according to Absa Group’s latest Africa Financial Markets Index.Out of the 29 countriescovered in the report, 23 improved their scores from last year, bolstered by growing pension fund assets, enhanced foreign exchange reserves, and selective restoration of access to global capital markets. The top five performers remained South Africa, Mauritius, Nigeria, Uganda, and Namibia.Botswana moved up to sixth place, while Ghana dropped to seventh, and Kenya, Morocco, and Zambia closed out the top 10. Egypt held its position at number 11, with Ethiopia ranked last. “This is a welcome respite after several difficult years during which the continent faced challenges from the global Covid-19 pandemic, followed by higher inflation and financing costs,” said Absa’s interim Chief Executive Officer, Charles Russon.

Last year, African markets struggled under high interest rates, weakened regional currencies, and the ongoing impact of Russia’s invasion of Ukraine. However, the International Monetary Fund (IMF) forecasts sub-Saharan African economies to grow at 3.6% in 2024 and accelerate to 4.2% in 2025. The report highlights improved securities market activity and greater transparency in Egypt, Ethiopia, and Nigeria as they transitioned to freely floating exchange rate regimes.

South Africa Inflation Dips Below 4% First Time in Over Three Years

South Africa’s inflation rate fell to 3.8% in September, marking the first time it has dipped below 4% in more than three years, according to Statistics South Africa.This inflation drop, from 4.4% in August, aligns with economists’ forecasts and strengthens the case for further interest rate cuts by the South African Reserve Bank (SARB).The inflation rate is now at the lower end of the SARB’s 3% to 6% target range, driven by softer transport inflation due to lower fuel prices and a favorable food harvest. However, the SARB remains cautious amid lingering uncertainty about the broader economic outlook.

Analysts expect the central bank to cut rates by 25 basis points in its next meeting on November 21, following a similar move in September. The rand weakened by 0.5% against the dollar following the news, while yields on bonds maturing in 2035 rose to 10.66%. Economists forecast inflation to remain below the SARB’s midpoint target in the coming quarters, supporting further rate reductions in early 2024.

Nigeria Drops Charges Against Detained Binance Executive

The Nigerian government has dropped charges against Tigran Gambaryan, Binance’s head of financial crime compliance, who had beenon trial since Februaryon allegations of money laundering and currency manipulation.The case was discontinued due to Gambaryan’s deteriorating health, though his lawyer’s request for an acquittal was denied, according to sources familiar with the decision cited by Bloomberg.Gambaryan, an American citizen and former U.S. Internal Revenue Service agent, has been held at the Kuje correctional center in Abuja since April. His bail appeal, citing health issues related to a herniated disk, was rejected earlier in October.

Nigerian authorities detained Gambaryan and a colleague—who later escaped—during a visit in February, sparking a public conflict between Nigeria and Binance, the world’s largest cryptocurrency exchange. Binance has defended Gambaryan, asserting that his visit to Nigeria was not in a decision-making capacity. The company’s CEO, Richard Teng, further alleged that Nigerian authorities had requested a secret payment to resolve the matter, a claim Nigeria denies, calling it an attempt to divert attention from Binance’s activities.

Mozambique’s Ruling-Party Candidate Chapo Wins Presidential Election

Mozambique’s ruling-party candidate, Daniel Chapo, won the presidential election with 70.67% of the vote, while his party secured 195 of the 250 parliamentary seats, according to the National Electoral Commission.Opposition candidate Venâncio Mondlane, who received 20.32%, rejected the results as fraudulent and called for a national shutdown. Protests erupted in Maputo, with reports of burning tires, road blockages, and casualties.The election results highlight potential continuity in Mozambique’s politics as TotalEnergies SE plans torestart its $20 billion liquefied natural gas project, paused since 2021 due to insurgent threats. Yet, Mondlane’s claims of rigging and his supporters’ discontent raise concerns of escalating unrest, which could delay key infrastructure projects.

With Chapo’s win contested, Mozambique faces heightened risks of civil unrest, potentially delaying economic projects, including the TotalEnergies LNG initiative. International observers, including EU monitors, reported irregularities, such as ballot-box stuffing and restricted access to vote tallying. Mozambique’s Catholic bishops labeled the process as “grand fraud,” underscoring a loss of public faith amid low voter turnout. The international community’s scrutiny of the electoral process underscores Mozambique’s struggle with governance challenges, as economic hardship remains severe for its young, low-income population.

Zimbabwe’s Inflation Rate Jumps After ZiG Currency Devaluation

Zimbabwe’s monthly inflation rate soared to 37.2% in October, up from 5.8% the previous month, driven by a steep devaluation of the gold-backed currency, the ZiG (Zimbabwe Gold).The devaluation on September 27, which reduced the ZiG’s value by 43% against the dollar, exacerbated price pressures, according to the Zimbabwe National Statistics Agency.This marks the third consecutive month of rising prices since the ZiG wasintroduced in April. The currency’s devaluation widened the gap between official and street market exchange rates, partly due to dollar shortages following increased food imports amid a severe drought in southern Africa.

The price hikes echo past periods of hyperinflation in Zimbabwe when rampant money printing erased savings and led to the issuance of a 100 trillion Zimbabwe dollar note. In response to the recent devaluation, public utilities and mobile network operators raised tariffs, and the government granted state workers a $40 local currency pay hike, which quickly lost value as the parallel market rate climbed to 40–50 per dollar, significantly higher than the official rate of 27.69. The inflationary surge highlights ongoing challenges in stabilizing the ZiG as Zimbabwe navigates economic pressures linked to currency volatility and import reliance.

Burundi to Expand Power Grid with $1.4B International Support

Burundi is set to expand its power grid next year with $1.4 billion in funding from international agencies, aiming to bring electricity to 300,000 people in rural areas by 2024 and reach 9 million by 2030.The government partnered withWeza Power, a subsidiary ofAnzana Electric Group, to extend the national grid in the East African nation, where only 10% of the population currently has electricity access.Anzana CEO Brian Kelly confirmed plans to build over 1,800 kilometers of power lines next year, expanding to 20,000 kilometers by 2030. Most new power generation will come from hydroelectric projects, with 200 megawatts expected by 2027. The project has support from major organizations, including the World Bank, US government’s Power Africa, and the UK’s Gridworks Development Partners.

Burundi’s power grid expansion addresses urgent energy needs in one of Africa’s most densely populated and low-electrification countries. The initiative underscores a push to attract private and international support, enabling access for millions and providing resilience against climate impacts that have displaced tens of thousands.

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