Weekly Investor Update (June-WeekThree-2024)

10 min Read June 21, 2024 at 5:00 PM UTC

Tuesday

Benin exports first locally produced clothes to Europe

Benin, a leading cotton supplier in West Africa alongside Mali and Burkina Faso, has made strides in industrializing its textile sector to boost local production.On June 14, theGlo-Djigbé Industrial Zone(GDIZ) shipped 80,000 locally-made children’s leggings to the French ready-to-wear chainKIABI. This milestone marks the first shipment of “made in Benin” clothing to Europe.Létondji Beheton, director of the Investment and Promotion Company of Industry (SIPI-BENIN SA), which oversees GDIZ development, confirmed that this shipment is part of a supply agreement with KIABI.

In recent years, Benin has emerged as Africa’s leading cotton producer, with an annual production of 728,000 tonnes in 2020-2021, according to government figures. Traditionally, most of this raw cotton was exported, primarily to Bangladesh.An initiative between the Republic of Benin and Arise Integrated Industrial Platforms, a pan-African venture partly owned by the Africa Finance Corporation, seeks to change this pattern by creating jobs and generating revenue locally. This initiative aims to process the cotton and other agricultural products within Benin, transforming them into finished goods such as T-shirts and underwear for export to Europe, Asia, Africa, and the US. The GDIZ houses the textile factories and expects to increase exports by $5 billion to $10 billion within 10 years, GDP by $4 billion to $ 7 billion by 2030, and Benin’s manufacturing output fivefold.

Africa Data Centres gets over $100m to expand capacity in South Africa

Africa Data Centres, which owns and operates Africa’s largest network of interconnected, carrier, and cloud-neutraldata centerfacilities, has secured $109.5 million to expand capacity and meet the growing demand for cloud computing services in South Africa.This funding was facilitated through a solution arranged byRand Merchant Bank(RMB) Private Bank, a division ofFirstRand, a fully integrated financial services group in South Africa. RMB acted as the coordinator, initial mandated lead arranger, and book runner on the facility.The partners in the deal say the financing agreement demonstrates the strong financial position of Africa Data Centres and its commitment to investing in the digital transformation of South Africa

Across Africa, the data center space presents a significant digital infrastructure opportunity, as there is currently a large deficit of supply versus demand. Africa is positioned to be the next frontier of the data center industry as large numbers of data centers along with large power capacities are coming up. Thedata center demandin the region is fuelled by the rise in the adoption of 5G, artificial intelligence, government incentives, and smart city initiatives.More than $5 billionis expected to be invested in the market, per available forecasts.

Ivory Coast expects GDP growth of around 7% between 2024-2027

Ivory Coast’s GDP growth is projected to be around 7% between 2024 and 2027, President Alassane Ouattara announced on Tuesday.He informed a joint session of parliament that around $15 billion is expected to be invested in the country’s upstream oil sector, with production anticipated to reach around 200,000 barrels per day (bpd) by 2027. The world’s leading cocoa producer is aiming to become a significantregional oil and gas producer.In line with this goal, Italy’sEniannounced last year an investment of $10 billion in developing the offshore Baleine field. In March, Eni reported a major discovery in the field, with preliminary assessments indicating potential resources of 1 billion to 1.5 billion barrels of oil.

Economies in the West African Economic and Monetary Union (WAEMU) averaged 6% GDP growth between 2013-2018 and above 5% each year since – except in 2020 (COVID-19). These economies are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. In 2024, four feature among the world’s ten fastest-growing economies projected by the IMF. The region also has a more conducive policy environment offering companies a relatively easy regional expansion route due to shared culture, language, regulations, and currency. With this, francophone West Africa offers some of the best investment prospects on the continent. However, it is often overlooked due to language barriers and a lack of local context on the part of investors.

Cyril Ramaphosa sworn in for another term as South Africa’s president

Cyril Ramaphosa was sworn in for another term as South Africa’s president, three weeks after elections led to his partylosing its parliamentary majorityand entering a power-sharing alliance with long-time rivals.Ramaphosa took the oath of office before Chief Justice Raymond Zondo at the Union Buildings in Pretoria on Wednesday. Five political parties have joined the African National Congress (ANC) ina unity government.Nigerian President Bola Tinubu, Democratic Republic of Congo leader Felix Tshisekedi, and Zimbabwe’s Emmerson Mnangagwa were among the dignitaries in attendance. The ceremony included a 21-gun salute and an air force flyover.

Markets have been reassured by the formation of a unity government that includes the pro-business Democratic Alliance and excludes the more radical Economic Freedom Fighters and uMkhonto we Sizwe, led by former president Jacob Zuma. In response, the stock benchmark rallied, marking its highest surge this year and indicating renewed investor confidence in the nation’s equities after the longest streak of daily outflows in three years. The rand and government bonds also surged. Additionally, the inflation rate remained steady in May at an annual 5.2%, the same as in April, increasing the likelihood that the central bank will maintain current borrowing costs.

Eni plans stake sale in Ivory Coast operation for over $1bn

Eni SpA plans to sell a stake in its Ivory Coast exploration operations, potentially worth about €1 billion ($1.1 billion), according to Bloomberg. The Italian oil company is working with advisers, includingStandard Chartered Plc, on the potential sale and may sell up to 30% of the business.The sale is attracting interest from other energy companies, including those from Asia. Deliberations are at an early stage, andEniis still evaluating the stake size to be sold. This move aligns with Eni’s broader four-year strategy to raise about €8 billion from asset disposals.Chief Executive Officer Claudio Descalzi is implementing a satellite model, splitting off divisions and partnering with external investors, to eventually list them. Eni has already applied this model with its renewable unitPlenitudeand plans to do the same with its biorefining and mobility arm,Enilive.

Eni SpA, which has been active in Ivory Coast since the 1960s and reentered the country in 2015, has operations that include the Baleine offshore oil and gas field, the largest hydrocarbon discovery in Ivory Coast. Production at Baleine started last August, less than two years after its discovery, boosting Ivory Coast’s status as a regional energy hub. The initial production phase outputs 15,000 barrels of oil and 25 million cubic feet of natural gas per day. Baleine is estimated to contain 2.5 billion barrels of oil in place. This stake sale aligns with Eni’s strategy to raise about €8 billion from asset disposals over four years, following a model of partnering with external investors and listing split-off divisions.

MultiChoice to sell 60% stake in insurance business to Sanlam

South African insurerSanlamwill buy a 60% stake in MultiChoice’s insurance business for 1.2 billion rand ($66 million) in cash upfront and a potential performance-based earn-out of up to 1.5 billion rand.MultiChoice, Africa’s biggest pay-TV company, said that while its insurance business has demonstrated substantial growth in South Africa, its ambition to expand locally and across Africa “requires a step-up in resources, expertise and technology”.The potential cash earn-out payment is contingent upon the total gross written premium generated by the insurance business for the year ending December 31, 2026. A pre-acquisition dividend of 59 million rand will also be declared by MultiChoice’s insurance business.

MultiChoice will retain a 40% interest in the insurance business and 40% in the broader commercial venture with Sanlam. The deal allows Sanlam to further expand its insurance and financial services business across Africa, the companies said. Opportunities outside South Africa will be facilitated through its SanlamAllianz business. MultiChoice has a subscriber base of 21 million households across 50 African countries, while Sanlam operates in 31 countries, including eight of the top ten largest African economies.

WIOCC gets $41m from IFC, Proparco for Africa’s digital infrastructure

TheIFC, a World Bank Group member, andProparcohave provided a $41 million financing package toWIOCCGroup to support its expansion in three African countries.The package includes $10 million and $11 million loans from IFC and $20 million from Proparco, a development finance institution and subsidiary of the Agence Française de Développement Group. WIOCC expects to secure an additional $10 million loan from another bank soon.The funding will help WIOCC Group expand its core and edge data centres in the DRC, Nigeria, and South Africa to meet increasing demand for colocation and data centre services. It will also expand its fibre networks, aiding in bridging the digital divide and promoting economic growth across Africa.

Since its inception in 2008, WIOCC has invested in Africa’s digital backbone, providing open-access infrastructure to address the rising demand for reliable connectivity across the continent. The latest financing package arrives amid heightened investments in scaling digital infrastructure in Africa, which has the fastest-growing adoption of smartphones and internet usage. This funding will further enhance WIOCC’s efforts to expand its data centres and fibre networks, supporting economic growth and bridging the digital divide.

Breega hits first close of $75m Africa fund for early-stage startups

Breega, an Anglo-French venture capital firm, has reached the first close of a $75 million fund aimed at investing in early-stage startups across Africa. This marks Breega’s first fund dedicated to the continent since its inaugural fund in 2015 and establishes itspresence with new officesin Nigeria and Cape Town, in addition to its existing bases in London, Paris, and Barcelona.Named “Breega Africa Seed I,” the fund will target early-stage startups located in key African markets such as Nigeria, Egypt, South Africa, Kenya, Morocco, Senegal, Ivory Coast, Cameroon, and the Democratic Republic of Congo.Leading this venture are entrepreneur and angel investor Melvyn Lubega, co-founder of African digital education unicorn Go1, andTosin Faniro-Dada, former CEO of Endeavor in Nigeria and founding executive of Lagos Innovates startup incubator.

Africa’s tech ecosystem has undergone significant growth, transitioning from receiving less than a billion dollars in venture capital annually to reaching a record-high of $6 billion. During this period, the continent has seen a notable rise in high-growth companies, with the number of unicorns increasing from one to seven within just three years. The newly launched Breega fund has already started making investments in key startups such as Numida, Socium, Klasha, Kwara, Coachbit, and Sava. The fund intends to make initial investments ranging from $100,000 to $2 million, positioning itself as a pivotal investor in Africa’s burgeoning tech landscape.

Large-cap Nestlé, NSIA Banque CI lead second straight BRVM decline

Despite gains by large capitalizations likeOrange CI(+0.83% to 11,600 FCFA) andSonatel(+0.52% to 19,400 FCFA), theBRVMstock market fell for the second consecutive session.That was due to significant declines inNestlé CI(-6.19% to 7,500 FCFA) andNSIA Banque CI(-5.36% to 5,915 FCFA). Meanwhile, top performers includedSicable(+6.50% to 1,065 FCFA),Tractafric Motors(+4.55% to 2,300 FCFA), andCIE(+4.21% to 1,980 FCFA).The BRVM Composite and BRVM Prestige indices dropped by 0.04% to 228.27 points and 0.91% to 108.08 points, respectively, while the BRVM 30 increased by 0.11% to 113.94 points.

Leading the declines was Sicor (-7.50% to 3,145 FCFA), which has been on a downward trend for six consecutive sessions, accumulating a loss of 13.84%. Oragroup (-7.32% to 1,710 FCFA) and Air Liquide (-6.25% to 525 FCFA) also saw significant drops. The most traded securities of the session were Sonatel and BOA BF, with trading volumes of 140.91 million FCFA and 137.38 million FCFA, respectively. Overall, the total trading volume increased by 18.22%, reaching 537.84 million FCFA compared to 454.95 million FCFA the previous day.