Weekly Investor Update (September-WeekOne-2024)

17 min Read September 6, 2024 at 5:00 PM UTC

Monday

BOA Mali Leads Weekly Gains Amid Capital Increase Process

BRVM-listed Bank of Africa Mali (BOAM) share price surged by 22.68% to 1,650 FCFA, attracting renewed investor interest through a capital increase process.BOAM’s increase included the issuance of one new share for every two old ones, listed on the BRVM excluding allocation rights at 675 FCFA.BOA Burkina Faso (BOABF) experienced significant gains, with its share price rising by 17.65% to 4,000 FCFA, involving a capital increase through reserves at a ratio of one new share per old one, listed at 3,400 FCFA.

The week saw strong performances from several key stocks, led by BOA Mali and BOA Burkina Faso, both of which benefited from capital increase processes that boosted investor confidence. The strategic moves by these banks, involving the issuance of new shares through the incorporation of reserves, have positioned them at the forefront of market gains. Additionally, significant rises in the shares of Servair Abidjan (+16.46% to 2,795 FCFA), Unilever (+15.09% to 6,405 FCFA), and Bernabé (+14.83% to 1,355 FCFA) underscore a broader positive sentiment among investors, highlighting the resilience and potential for growth in the West African market despite recent volatility.

BRVM Sustains Positive Trend with 2nd Consecutive Week of Gains

The BRVM stock market continued its upward momentum, marking its second consecutive week of gains, primarily driven by the strong performances of Bank of Africa Burkina Faso (BOABF) and Total CI (TTLC), despite a significant capitalization loss of 41.43 billion FCFA by Orange CI (ORAC).BOA BF surged by 17.65% to 4,000 FCFA ($7), while Total CI increased by 7.22% to 2,600 FCFA. The BRVM Composite index rose by 0.30% to 253.67 points, supported by a favorable balance of 28 increases against 12 decreases.The BRVM 30 index edged up by 0.05% to 127.24 points, and the BRVM Prestige index increased by 0.83% to 114.04 points, both continuing their positive trajectories for the second week in a row. The trading volume reached 4.65 billion FCFA, the highest since mid-November 2023.

The BRVM’s sustained growth, highlighted by notable gains in key stocks like BOA BF and Total CI, reflects a strong market performance despite challenges such as Orange CI’s capitalization loss. The second consecutive week of increases across the BRVM Composite, BRVM 30, and BRVM Prestige indices, coupled with a significant trading volume, signals investor confidence in the West African market. Additionally, the ongoing capital increase program by the BOA group, leading to adjustments in share prices for BOA BF, BOA Mali, and BOA SN, underscores the region’s proactive measures to meet new regulatory banking requirements. This positive trend positions the BRVM well as it moves forward in the final quarter of the year.

African Vaccine Makers Prepare for Mpox Production Amid Outbreak

African vaccine manufacturers, including South Africa’s Biovac Institute, are preparing to produce mpox vaccines as a deadly outbreak spreads across the continent.BiovacCEO Morena Makhoana stated that the institute is ready to begin production and is awaiting discussions with companies likeBavarian Nordic A/S, which currently has an approvedmpoxvaccine.The Africa Centres for Disease Control and Prevention is working to avoid the delays experienced during the COVID-19 pandemic, where slow vaccine acquisition cost lives.

Despite mpox being endemic to Africa since the 1970s, the continent did not receive vaccines during the global spread of the virus in 2022. Biovac, equipped with cold storage capabilities from a previous Pfizer Covid-19 tech transfer, is prepared to produce the vaccine at its Cape Town facility. However, the sustainability of vaccine production remains a concern. African nations have struggled to build vaccine stockpiles due to a lack of local production and uncertainties in continuous demand. Vaccine makers like Biovac are hesitant to scale production without guaranteed markets.

Inflation in Francophone West Africa Eases at 4.4% on Lower Food Costs

Inflation in the francophone West African region remained steady at 4.4% in July 2024, maintaining the level observed in the previous month, according to the regional central bank BCEAO.The slowing inflation is mainly driven by a slight deceleration in food prices, with the overall contribution of food products to total inflation decreasing from 3.2 percentage points in June to 3.1 percentage points in July. This decrease was offset by a slight increase in the contribution from the housing sector, which added 0.1 percentage points to inflation.SeveralWAEMU(or UEMOA in French) countries, particularly Senegal and Benin, have made notable progress in controlling inflation through effective price-capping policies on essential food items. In July 2024,Senegaland Benin recorded inflation rates of -0.7% and 1% respectively, significantly below the Community standard of 3%.

This stability is a positive development in efforts to protect the purchasing power of the region’s populations and has significant implications for interest rates and asset classes. Lower inflation could lead central banks to maintain or even reduce interest rates, easing borrowing costs for consumers and businesses. This environment typically benefits fixed-income assets, as lower rates make bonds more attractive, potentially driving up their prices. Additionally, equities could see positive impacts, as lower interest rates can boost corporate profits by reducing financing costs. Stable inflation supports a favorable environment for various asset classes, promoting economic growth and investor confidence across the UEMOA region.

Chpter Raises $1.2M to Expand Social Commerce Platform in Africa

Kenyan social commerce platform Chpter has raised $1.2 million in a pre-seed funding round led by Ken Njoroge ofPANI, cofounder and former CEO ofCellulantto accelerate product development and boost sales and marketing efforts.The round also saw participation fromPlesion Capital,Techstars,Norrsken,Renew Capital,ViKtoria Ventures, and notable angel investors including Benjamin Fernandes ofNALAand Paul Kimani and Jackson Kibigo ofWorkpay.Founded in 2021, Chpter helps merchants increase sales on social platforms like WhatsApp and Instagram by automating conversations, marketing, and payments. Operational in Kenya and South Africa, Chpter plans to expand to Nigeria, Ghana, Egypt, and Morocco in the coming months.

This funding positions Chpter to tap into Africa’s rapidly growing E-commerce market, projected to reach $75 billion by 2025. As social commerce becomes a critical component of online retail, Chpter and other similar platforms hope to address inefficiencies in product discovery, selection, and payment processes, enabling businesses to shorten sales cycles on platforms like WhatsApp and Instagram. The rise of similar platforms, such as Sukhiba Connect, underscores the competitive landscape in Kenya and the broader African market, where social commerce is emerging as a major growth driver.

Nigeria’s Dangote Refinery Begins Gasoline Production After Delays

Nigeria’s new Dangote oil refinery has started filling tanks with gasoline, marking a significant milestone for the country. The refinery, located near Lagos, is reportedly set to begin distributing gasoline by the weekend.When fully operational, therefinerywill have the capacity to process 650,000 barrels of oil per day, with over half of that output being gasoline. The ramp-up comes at a critical time as Nigeria’s state oil company, the main importer of fuel, struggles with supply disruptions due to debt and rising prices.At full capacity, thefacilityis expected to produce 330,000 barrels per day of gasoline. Full production levels are not expected immediately, with output projected to start at around 90,000 barrels per day in the fourth quarter, increasing to 250,000 barrels by mid-2025.

The Dangote refinery’s initiation of gasoline production signals a transformative moment for Nigeria and the broader sub-Saharan African fuel market. The new refinery has the potential to reshape regional fuel markets and reduce Nigeria’s dependency on gasoline imports, which totaled around 250,000 barrels per day last year and have been crucial to meeting domestic demand. This shift is poised to alter established trade routes and impact global fuel markets, with millions of barrels of gasoline that would have been shipped to Nigeria now needing new destinations. The refinery’s progress comes after years of delays and skepticism, but with gasoline production now imminent, the project is positioned to meet and potentially exceed Nigeria’s fuel needs, as well as contribute to the broader sub-Saharan African market.

US-Backed Angola Rail Plan Gets $200M From Regional Development Bank

The Development Bank of Southern Africa (DBSA) has approved up to $200 million in financing for the Lobito corridor rail project, a US-backed initiative aimed at transporting critical minerals from Central Africa’s copper belt to Angola’s Atlantic port.The project, supported by the USInternational Development Finance Corpwith $553 million in funding, is integral to facilitating the export of essential minerals like copper and cobalt, crucial for renewable energy technologies.Mpho Mokwele,DBSAexecutive for transacting, stated that the railway is a key component of efforts to support the global energy transition by creating a more efficient and cost-effective route for exporting these minerals.

The Lobito corridor is expected to become the most competitive pathway, offering significant savings in both cost and time for exporters. The railway will be operated under a 30-year concession by a consortium that includes commodities trader Trafigura Group and Portuguese construction firm Mota Engil SGPS SA. The project aligns with US strategic interests in securing access to critical minerals while increasing its influence in a region where China has historically dominated. Concurrently, China is negotiating a deal to upgrade and take over the rail line connecting Zambia’s copper mines to the Indian Ocean port of Dar es Salaam.

South Africa GDP Returns to Growth But at Slower Than Expected Pace

South Africa’s economic growth picked up in the second quarter of 2024, driven by higher consumer spending and improved power availability. However, the country’s GDP expanded by 0.4% in quarter-on-quarter seasonally-adjusted terms, slightly below the 0.5% growth forecast by economists.This was animprovement over the first quarter’s flat outputbut was dampened by declines in the agriculture, mining, and transport sectors. Statistician-General Risenga Maluleke noted that it was too early to attribute the improved performance to the coalition government formed after the May elections, as President Cyril Ramaphosa wasonly sworn in for a second termin mid-June.Seven of the 10 sectors tracked by Statistics South Africa registered growth, supported by an uninterrupted power supply, a first in years. However, persistent bottlenecks in ports and the freight rail network, along with weak global demand, continue to weigh on the economy.

South Africa’s modest GDP growth in Q2 reflects improvements in power availability but also highlights ongoing challenges in key sectors. While the absence of power cuts contributed positively, bottlenecks in logistics and weak global demand continue to hinder stronger economic performance. Looking ahead, growth may accelerate in the fourth quarter, buoyed by new government pension policy reforms that could boost consumer spending and anticipated interest rate cuts by the central bank. The Bureau for Economic Research (BER) forecasts 2.2% growth in 2025, contingent on the success of reforms aimed at enhancing South Africa’s growth potential. Despite recent gains, the economy remains vulnerable to internal inefficiencies and external market conditions.

Kredete Gets $2.25M to Scale Financial Platform for African Immigrants

Nigeria’sKredete, a fintech platform aiding African immigrants in building credit scores and sending remittances, has secured $2.25 million in seed funding. Founded in 2023, Kredete enables users to remit funds to over 20 African nations, with each transaction boosting their credit score in their new country.The round was led byBlockchain Founders Fund, with participation fromTechstars,Tezos Foundation,Polymorphic Capital,Launch Africa,Neer Venture Partners, andDNA Fund, alongside angel investors from payment giants likeWiseandWestern Union.Kredete plans to extend its services across all African countries and introduce new financial products, including credit cards, auto loans, and mortgages, specifically tailored for African immigrants.

With the African diaspora sending around $100 billion back home annually, Kredete’s platform leverages blockchain to reduce remittance costs and enhance financial access for African immigrants. Kredete’s approach could disrupt traditional remittance models and offer a comprehensive solution to the financial challenges faced by African immigrants, potentially increasing economic participation and stability in their new environments. On average, users’ credit scores increased by 23 points within six months. The platform claims to have grown rapidly, attracting 300,000 users and processing over $100 million in transactions.

FMO, BlueOrchard Back Ghanaian Digital Bank Fido in $30M Round

Ghanaian fintech company Fido has raised $30 million in Series B funding to fuel its expansion across East and Southern Africa. The funding round, led by global impact investorBlueOrchardand Dutch development bankFMO, includes $20 million in equity.Fidoprovides individuals and small businesses across Africa with financial services via its digital platform. It began as a mobile loan provider and has since diversified into savings, bill payments, and smartphone financing.The fintech’s use of mobile technology and alternative data sources allows it to provide instant micro-loans without collateral, filling a gap left by traditional financial institutions. Its loans range from $20 to $500 for individuals, with larger amounts available for businesses, at interest rates between 7% and 12%. Fido claims its credit scoring system has kept its default rate below 4%.

Online credit services have emerged as a quick and accessible funding option for small businesses and individuals typically neglected by conventional banks. These digital platforms have become crucial for millions lacking full banking access, and their popularity is expected to continue rising. As a result, the digital lending sector in the Middle East and Africa is projected to expand to $2 billion within five years, quadrupling its size since 2021. Recognizing this potential, Fido, a financial technology company from Ghana, aims to capitalize on this trend. The fintech is planning to venture into new territories in East and Southern Africa, seeking to tap into this growing market opportunity.

EU Commits $41M to Support Namibia’s Green Hydrogen Projects

The European Union, along with other partners, has pledged €36.9 million ($41 million) to support Namibia’s transition to cleaner fuels, including green hydrogen. The funding will primarily back green-hydrogen projects in Namibia, which aims to become a hub for this emerging technology.A €25 million commitment from theEUleads the effort, to leverage public- and private-sector investments estimated to reach €1 billion across the hydrogen value chain, encompassing production, transportation, and storage.Green hydrogen is proving to be the latest energy commodity scramble among a few African countries, includingSouth AfricaandMorocco. With its vast resources, Africa has the potential to become one of the main global renewable energy hubs. But it remains to be seen whether its nations can deliver a cost-competitive product in an emerging global hydrogen sector.

Namibia is pursuing several ambitious projects, including the $10 billion Hyphen project, which has seen investment from Germany’s Enertrag SE. In addition, Compagnie Maritime Belge SA plans to raise $3.5 billion to build an ammonia plant, which will connect to a new storage and export facility at the Port of Antwerp-Bruges. The funding is expected to bolster commercial ties between Namibia and the EU in green hydrogen and critical raw materials while increasing employment opportunities and facilitating both regions’ green transitions.

China Seeks to Expand Trade, Investment, and Military Ties with Africa

China is intensifying its engagement with Africa, offering improved trade terms, increased investment, and military training as part of its broader strategy to compete with the US on the global economic stage. President Xi Jinping outlined this vision in a speech to leaders from 50 African nations at theForum on China-Africa Cooperationin Beijing.During the opening ceremony, Xi announced several key initiatives, including the unilateral exemption of import tariffs on products from 33 African countries classified as least developed economies. In addition, China will expand market access for African exports to its economy, the world’s second-largest.The outreach to Africa comes amid heightened competition with the US, as both countries seek to expand their influence on the resource-rich continent, which is pivotal to global trade and geopolitical positioning.

China’s financial support sparked a widespread construction surge across Africa in the last ten years, aligning with President Xi’s signature global infrastructure project. This momentum decelerated during the COVID-19 crisis but regained speed in the previous year. African countries appear receptive to China’s renewed engagement and capital influx. However, they’re also seeking debt relief and a more equitable commercial partnership. China’s trade advantage over Africa reached an unprecedented $64 billion in the past year, with Chinese goods sent to Africa hitting a record $173 billion. Meanwhile, Africa’s exports to China decreased slightly compared to the previous year.

Telkom’s $355M Sale of Tower Business Approved by Competition Tribunal

Telkom’s sale of its masts and towers business Swiftnet to Towerco Bidco, a company owned by Actis and Royal Bafokeng Holdings, has been approved by the Competition Tribunal of South Africa.The sale, valued at over $350 million, follows the Competition Commission’s recommendation that the deal would not harm competition but highlighted the need to address certain public interest concerns, which have been accepted by the buyer.Swiftnet, which owns nearly 4,000 masts and leases spectrum to various customers, is a key player in providing wireless in-building solutions across South Africa. The sale marks Telkom’s shift to focus on its core business, joining rivalsMTN South AfricaandCell Cin selling off tower infrastructure, leaving Vodacom as the only major mobile operator that still owns its towers.

The telecoms infrastructure sector is experiencing a surge in mergers and acquisitions, reflecting heightened activity and interest from investment firms. Mobile operators are also divesting assets, presenting lucrative opportunities for investment firms eager to capitalize on this trend. Actis, boasting a portfolio spanning investments across 17 countries, has emerged as a key player in financing infrastructure projects throughout Africa. Notable ventures include the Accra Mall, Ikeja City Mall, Rack Centre, and the Azura Energy Project. This deal positions Actis to tap into a rapidly expanding sector buoyed by robust secular trends. The increasing demand for tower densification, fueled by rising internet penetration and the transition from 3G and 4G to 5G networks, underscores the sector’s growth potential. Actis’ involvement underscores its commitment to investing in infrastructure projects poised for substantial growth and impact across the African continent.

China Pledges $50B, 1M Jobs in Push to Expand Africa Ties

Chinese President Xi Jinping pledged nearly $51 billion in financial assistance to Africa over the next three years, targeting debt relief, infrastructure projects, and the creation of at least one million jobs.Speaking at theForum on China-Africa Cooperationin Beijing, Xi outlined China’s commitment to deepening cooperation with the continent in sectors such as industry, agriculture, and trade. He also emphasized Africa’s role in global modernization, noting that China and Africa together represent one-third of the world’s population.China, the largest bilateral lender globally, will triple its infrastructure projects in Africa, despite Xi’s shift toward “small and beautiful” projects centered on advanced and green technologies. Of the $50.7 billion commitment, $30 billion will be distributed through credit lines, while $10 billion will be invested directly by Chinese companies. Smaller portions will go toward military aid and other initiatives.

China is intensifying its efforts to bolster its presence in Africa, a continent abundant in natural resources, while also addressing concerns about African nations’ debts. The newly announced financial support will be provided in yuan, showcasing China’s push to expand the global use of its currency. The gathering concluded with participants agreeing to the Beijing Declaration and outlining a plan of action for 2025-2027, aimed at enhancing Sino-African relations. This triennial meeting, which has taken place since 2000, plays a crucial role in China’s diplomatic strategy towards nations often referred to as the Global South. A significant portion of this initiative is designed to reconfigure international commerce and geopolitical dynamics, to enhance Beijing’s global influence in comparison to Washington and its partners.

Cercli Closes $4M Seed Round to Tap $2B MENA Payroll Market

Cercli, a MENA-based platform for managing and paying global workforces, has raised $4 million in a seed round led byAfore Capital, marking the venture firm’s debut in the region.The startup enables businesses to manage payroll, contractors, HR, and compliance through a single interface, reducing the errors and inefficiencies common in legacy systems.Other participants in the round includeCOTU Ventures,Y Combinator, andRebel Fund, along with prominent entrepreneurs fromRamp,Rappi,Rippling, andOyster.

Since its launch in 2024, Cercli claims to have experienced 25% monthly growth and processed over $23 million in employee salaries across 31 countries. The platform’s rapid expansion highlights the increasing demand for streamlined workforce solutions in the region. The funding will support Cercli’s mission to streamline payroll and compliance across the MENA region, addressing a $2 billion market opportunity.

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.