Investors update: South African inflation slows back within central bank target

South African inflation slows back within central bank target

Highlights

• South African inflation slowed more than projected to a 14-month-low in June, easing pressure on the central bank to continue raising interest rates.
• The annual inflation rate was 5.4%, down from 6.3% in May, according to a report released by the statistics office on Wednesday. 
• The slowdown was greater than forecast. Analysts polled by Bloomberg had expected a reading of 5.5%. On a month-on-month basis, consumer inflation was at 0.2% in June, the same as the previous month.

Source: Reuters

Our Takeaway

The latest figure puts South Africa’s inflation below the central bank’s target ceiling of between 3% and 6%, where inflation was last seen in April 2022, on lower food costs. The South African Reserve Bank (SARB) has raised its main lending rate at its last 10 monetary policy meetings to tame inflation, but the majority of analysts polled by Reuters expect it to leave the repo rate at 8.25%. Its next policy meeting is tomorrow and while inflation is beginning to show signs of abating in Africa’s most industrialized economy, risks remain linked to the country’s power crisis.

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MyCover.ai gets $1.25m to scale its insurance API platform

Highlights

• MyCover.ai, a startup offering an open insurance API that allows insurance companies to distribute their products, has closed a $1.25 million pre-seed funding round. 
• The pre-seed round was led by Ventures Platform and included participation from Founders Factory Africa and Techstars, who are making a follow-on investment after the startup’s participation in its 2022 Toronto Accelerator program.
• The startup says it will use the capital injection to bolster its in-house operations and tech talent, invest heavily in its proprietary technology and strategically expand its operations into other African markets.

Source: TechCrunch

Our Takeaway

Africa has an ever-growing need for innovative insurance solutions to address the significant lack of coverage on the continent. As of 2018, the insurance penetration rate in Africa stood at a meager 1.12% or 3% with South Africa. Several insurtech startups have launched in almost every corner of the continent over the past couple of years to address this, riding on the increasing adoption of mobile devices and with sufficient backing from venture investors. While they operate different business models or verticals—ranging from peer-to-peer and on-demand to infrastructure and index insurance—these startups are more customer-centric, allowing micro-payments, flexible sign-ups, and access to a wide range of services.

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IFC backs Amethis Partners to support African businesses

Highlights

• To support the development of medium-sized companies in Africa across a range of sectors, IFC has made an investment in the first close of Amethis Partners’ Amethis Fund III.
• IFC will make an equity investment of $45 million in the fund. In addition, the project includes a co-investment envelope of up to $34 million to enable IFC to co-invest in select companies alongside the Fund.
• Amethis Fund III will provide essential growth capital to 10-12 medium-sized enterprises working in industries vital to the development of African economies across countries such as Côte d’Ivoire, Egypt, Kenya, Morocco, Mozambique, Senegal, and Tanzania. 

Source: ABC

Our Takeaway

Private equity fundraising in Africa faces several challenges including high-risk perception, foreign exchange risk, and economic uncertainty. As a result, international investors have reduced investment allocation to the African market. IFC’s investment seeks to anchor the fund’s fundraising to help keep vital financing flowing to mid-cap companies in Africa. The new investment is IFC’s third commitment to funds managed by Amethis Partners. In 2017, it invested $17 million in Amethis Fund II, a pan-African growth equity fund, and in 2021 committed $14 million to Amethis MENA Fund II, an SME-focused fund targeting investments in the MENA region.