Uncategorized Archives - African Financial & Economic Data

15 Jun

Taxify, Uber’s biggest rival in Africa, is now worth $1 billion

Taxify battle to win the ride-hailing market in Africa and Europe has received a major shot in the arm.

The five-year old Estonian startup has raised $175 million in a funding round which values it at more than $1 billion—the coveted unicorn status. The round is led by German car giant Daimler, Europe-based Korelya Capital, and Taavet Hinrikus, co-founder of fintech company TransferWise. The round also saw participation from Didi Chuxing, the ride-hailing giant in China known for backing Uber’s rivals around the globe.

The investment is Daimler’s latest foray into the ride-hailing transport business after prior investments in European car transport companies, including Flinc, the German carpooling startup. As part of the deal, Daimler will join Taxify’s board and could also offer it access to Moovel, its transport-booking app, with a user base of 2.5 million.

Taxify currently operates in 40 cities—11 of which are in Africa—and is expected to use the new funding to power an expansion into more cities. Its expansion strategy will likely target only cities where the ride-hailing business has been “proven,” as CEO Markus Villing told Bloomberg last year.

Ethiopia’s tech startups are confident change is coming

Word that Ethiopia’s prime minister Abiy Ahmed is looking to loosen his country’s tight grip on strategic assets like its fast-growing airline and its long-term telecom monopoly has sparked interest from international investors and regional corporations.

It’s easy to see why: Ethiopia, with a population of 100 million, has had one of the world’s fastest-growing economies for the past decade. It’s also had a successful top-down implementation of various infrastructure initiatives in transportation and construction.

Still, Ethiopia’s also been called a “sleeping giant” because of its closed markets. Decades after last socialist government, it still has a heavily regulated business environment. Things were changing even before Abiy’s appointment and as the country’s tense politics led to a state of emergency after ethnic-led protests and fatal clashes with security forces.

At the Afrobytes tech conference in Paris, an Ethiopian delegation of 12 local startups attended to show off some the not-often-seen initiatives. Zekarias Amsalu, founder of investment advisory firm Ibex Frontier, who led the startup group, says he coined the moniker “Sheba Valley” to describe one of Addis Ababa main startup hubs.

Amsalu has long been a champion for Ethiopia’s potential, saying it’s not about “emotion, but logic.” The accountant, who splits his time between London, Washington DC and Addis, explains: “We just want our story to be told.

We have 250,000 university graduates every year, about 70% of them are in STEM subjects, there’s so much potential.” Sheba Valley is now recognized as a leading hub for AI technology on the continent led by Icog Labs, the Addis research team.

“You have to be smarter than the machines than you’re using,” says Betelhem Dessie, who at 18 is already a project manager for Icog, while still a student at the University of Addis Ababa.

There are several other hubs, including Ice Addis and Bluemoon and more established tech-led ventures including Gebeya, an online marketplace for talent.

To read the full article, click here.

30 Apr

Ethiopia Mulls Fertilizer Plant Tender as Army Deal Reviewed

Ethiopia’s government may cancel a contract for a fertilizer plant awarded to its military-industrial conglomerate and offer it to international tender, the Public Enterprises Ministry said.

The possible revision of the contract is the latest sign that Ethiopia’s new prime minister is fulfilling a pledge to purge “favoritism” toward the security forces.

The state awarded the Yayu project in Ethiopia’s restive Oromia region to state-owned Metals & Engineering Corp six years ago, but since then less than half the work on the complex has been completed, ministry spokesman Wondefrash Assefa said.

“It may be that we will cancel the agreement and we will continue with another contractor, but the decision is not reached at this time,” he said by phone Friday from the capital, Addis Ababa. “It may be that others will participate including foreign companies.”

Prime Minister Abiy Ahmed came to office April 2, succeeding Hailemariam Desalegn, who quit as prime minister in February after failing to end protests in the Amhara and Oromia regions that began in 2015 amid demands for greater economic inclusivity.

Abiy has vowed to ensure more even wealth distribution by reducing “favoritism” toward the security forces.

Office Cherifien des Phosphates, a Morocco-based fertilizer producer, may be among companies that could be considered to take over the project, Wondefrash said. OCP has an interest “to produce fertilizer but we’ve not reached a conclusion on this issue,” he said.

Craig Atherfold, a spokesman for OCP, said he passed a request for comment to a colleague.

Metec is run by the Ethiopian military, one of Africa’s largest armies, and has been involved in projects including the $6.4 billion Grand Ethiopian Renaissance Dam and a series of sugar developments.

Officers connected with the rebel movement that overthrew Ethiopia’s junta in 1991 have dominated senior government positions for the past quarter century.

To read the full article, click here.

30 Apr

Congo’s Katumbi to Return Home When Vote Certain to Go Ahead

Democratic Republic of Congo presidential hopeful Moise Katumbi said he’ll return from exile once he’s convinced long-delayed presidential elections are going to take place.

The 53-year-old former governor of Congo’s copper-rich Katanga province would be the likeliest candidate to replace President Joseph Kabila if he’s allowed to compete in elections scheduled for December, according to a poll published last month.

“The election time isn’t clear yet,” Katumbi said in an interview at a conference in the Rwandan capital, Kigali. “When it becomes clear, I will definitely go back.”

Congo, which hasn’t had a peaceful transfer of power since independence in 1960, was supposed to hold elections in November 2016. The electoral commission postponed the vote, citing financial and logistical constraints.

Opposition leaders have long accused Kabila, head of state since 2001, of delaying the vote in order to retain power and change the constitution. “Our constitution is very clear,” Katumbi said. “He has no right to run.”

Security forces have killed more than 300 people in nationwide anti-government protests since January 2015 in the run up to and following the end of Kabila’s second mandate, according to New York-based Human Rights Watch.

Elections are now scheduled for Dec. 23. Last week, a spokesman for Kabila’s ruling coalition said “no other solution is possible” than elections happening this year.

Katumbi has been in self-imposed exiled since May 2016, soon after he split with Kabila and announced an intention to succeed his former ally. A month later he was convicted in absentia for illegally selling a property, while two other investigations remain open — including allegations he violated Congo’s ban on dual citizenship.

A month later he was convicted in absentia for illegally selling a property, while two other investigations remain open — including allegations he violated Congo’s ban on dual citizenship.

Katumbi denies the allegations and says the “fake, bogus” actions are politically motivated.

To read the full article, click here.

27 Apr

From Defaults to Poor Data, Cocoa Audit Shows Top Grower’s Woes

Ivory Coast’s cocoa regulator failed to prevent a crisis that sent prices plummeting last season, according to an audit of the world’s top producer by KPMG LLP.

Offering a rare glimpse into the workings of an opaque industry, KPMG shows how flaws in the West African nation’s sales system had a “catalyst effect” on the industry’s woes, according to a copy of the audit commissioned by the government and obtained by Bloomberg.

The crisis cost the country at least 185 billion CFA Francs ($333 million) in lost income, KPMG said. While reforms of the sector in 2012 were supposed to protect cocoa farmers from global swings, the last annual season that ended in September showed producers remained vulnerable.

Prices started tumbling amid forecasts for an oversupply, triggering a wave of defaults by local exporters which couldn’t fulfil their contracts because they had bet on higher prices.

A slow response from Ivory Coast deepened the rout and resulted in farmer pay being cut by more than a third.

KPMG and Yves Brahima Kone, head of the regulator known as Le Conseil du Cafe-Cacao, declined to comment.

These are the report’s main findings and recommendations:

1. Defaults

After prices reached a six-year high in July 2016, local shippers who speculated on further gains were caught wrong-footed.

The audit showed 32 exporters defaulted on 222,302 metric tons of cocoa, about a fifth of sales usually made ahead of the start of the season. Smaller exporters from groups known as Pmex and Coopex accounted for 68 percent of the unfulfilled contracts.

The defaults forced Ivory Coast to reauction beans, putting further pressure on prices. The CCC allowed some defaulting companies to continue making purchases, raising the risk for the current season, KPMG said.

The biggest defaulters during last season were Nocoacy with contracts for 35,975 tons, Saf Cacao with 15,000 tons and 2CICS SA with 14,900 tons, according to the report. Saf Cacao had also defaulted on 7,425 tons in the 2015-16 harvest, it said.

To read the full article, click here.

26 Apr

Investec Money Manager Upbeat on Growth in South Africa

South Africa’s economy is under new management, and Investec’s Chris Freund is among equities investors who are expecting growth to surprise to the upside.

President Cyril Ramaphosa, in office since February, is spurring optimism among stock traders who are already noting changes in Africa’s most industrialized market.

The new leader has set a goal of attracting $100 billion in investment, overhauled his cabinet and installed new boards at troubled state-owned companies.

“People are going to be surprised how South African growth rates are revised upwards,” Freund, the Cape Town-based South African multi-asset head for Investec Asset Management Ltd., which oversees about $140 billion for clients globally, said in an interview. “We are bulls on South Africa’s economy.”

Freund is not alone. Morgan Stanley upgraded South African equities to overweight on Wednesday and said its forecasts for economic growth are above consensus for this year and next.

Business confidence is recovering and political risk has fallen since Ramaphosa replaced Jacob Zuma as president, with private investment and household consumption heading higher.

On top of that, valuations are attractive: stocks traded on the Johannesburg exchange are at their cheapest since February 2010 on a price-to-earnings basis, Morgan Stanley said.

The improving confidence and economic outlook are conditions Freund is looking to make the most of for the 23 billion-rand ($1.8 billion) Discovery Invest Balanced Fund, the flagship mutual fund he helps manage for Discovery Invest, a division of Discovery Ltd., owner of South Africa’s largest medical-insurance administrator.

“We think that equity markets around the world are mildly expensive, but the more important thing is that the growth cycle is still with us, and so it’s time to try and make clients money,” Freund said.

South African stocks make up 45 percent of the Balanced Fund, with Naspers Ltd. its biggest holding at 3.5 percent. The fund has returned 7.7 percent in the past year, better than the 5.1 percent achieved by its peers, data compiled by Bloomberg show.

To read the full article, click here.

21 Feb

Cash-Rich Pension Funds in Ghana Drive World-Beating Stock Gains

A flood of money from private pension funds has driven a 33 percent surge in Ghana’s benchmark stock index this year, giving the West African country the world’s best-performing equities.

The government in December transferred 3.1 billion cedis ($690 million) to the funds, money the state had held since 2012 while the industry put structures in place for new entrants.

Seven months earlier, Ghana doubled the proportion of assets that pension funds can invest in stocks to 20 percent.

“We are seeing more participation from local institutional investors, especially the pension funds,” said Sena Agbo, head of investment banking at SAS Finance Group, which runs the country’s second-best performing mutual fund. “The temporary pensions account now transferred to them is enabling them to increase their take of stocks.”

The value of stocks traded by local investors increased almost five-fold from a year earlier last month, according to the Accra-based Central Securities Depository Ltd.

As of Tuesday, the 36-member Ghana Stock Exchange Composite Index had risen more than the 95 other benchmarks tracked by Bloomberg in dollar terms since Jan. 1, boosted by a World Bank forecast that the economy will expand by 8.3 percent in 2018, the fastest pace on the continent.

“The economy is growing and a lot of incentives like tax cuts and utility price decreases are out there to make businesses competitive,” Sidney Koranteng, a stock trader at Databank Group in Accra, said by phone. “It shows we’re in a period of a boom. The market is not hot yet.”

Source: https://www.bloomberg.com/news/articles/2018-02-21/cash-rich-pension-funds-in-ghana-drive-world-beating-stock-gains

21 Feb

South Africa’s Inflation Rate Slows to 4.4% in January

South Africa’s inflation rate slowed in January, easing pressure on the central bank to maintain a tight monetary stance.

Inflation slowed to 4.4 percent from 4.7 percent in December, Pretoria-based Statistics South Africa said Wednesday in a report on its website.

The median of 14 economists’ estimates in a Bloomberg survey was for 4.4 percent. Prices rose 0.3 percent in the month.

Price growth has been within the Reserve Bank’s target range of between 3 percent to 6 percent for 10 months, the longest run since 2015.

The Monetary Policy Committee left its benchmark lending rate unchanged for the third straight meeting last month as the risk of a credit-ratings downgrade persists.

While the central bank has highlighted the rand as a key risk to price growth, it expects inflation to remain within the target band.

South Africa’s currency was one of the most volatile tracked by Bloomberg last year and has gained 8.6 percent against the dollar since Cyril Ramaphosa was elected to lead the ruling African National Congress in December.

Ramaphosa has since replaced Jacob Zuma as president of the country.

Core inflation, which excludes the prices of food, non-alcoholic beverages, energy and gasoline, slowed to 4.1 percent in January, from 4.2 percent.

Source: https://www.bloomberg.com/news/articles/2018-02-21/south-africa-s-inflation-rate-slows-to-4-4-in-january

14 Feb

Zuma Has Next Move in ANC Power Battle as Gupta Home Raided

The noose tightened on South African President Jacob Zuma as the police went after key allies while leaders of the ruling African National Congress vowed to force him from office.

Police raided the Johannesburg home of the Gupta family, who are in business with Zuma’s son, Duduzane, early Wednesday as the nation awaited the president’s next move in his struggle for power with Cyril Ramaphosa.

Time is against Zuma, South Africa’s ultimate political street fighter, as Ramaphosa has relentlessly grabbed political space since he won the presidency of the party by a razor-thin majority in December.

The ANC expects Zuma to respond to its decision to replace him Wednesday, its spokesman Pule Mabe told Johannesburg-based state broadcaster SAFM. The presidency said no media event was scheduled.

Zuma succeeded in delaying the inevitable last week when his apparent willingness to negotiate prompted Ramaphosa and the rest of the ANC leadership to postpone a meeting of their top body, the National Executive Committee, to decide his future.

But as the talks dragged on, the NEC decided late Monday that his time was up. When he countered by asking to remain in office for up to six months, the party bosses said enough is enough.

“It’s not up to Zuma now; he no longer has any option,” said Mpumelelo Mkhabela, a political analyst at the University of Pretoria’s Center of Governance Innovation. “They gave him the option to take control of his own resignation, and when that didn’t work the party took control. The idea of trying not to humiliate him didn’t work.”

While ANC Secretary-General Ace Magashule was at pains to show respect for the president on Tuesday, saying Zuma had done nothing, critics say his tenure will be remembered as a time when South Africa went from being known as a “rainbow nation” to one colored by corruption.

To read the full article, click here.

08 Feb

Zuma Exit Appears Step Closer as ANC Holds Transition Talks

South African President Jacob Zuma appeared a step closer to resigning as he held crunch negotiations on the terms of his exit with the new leader of the ruling African National Congress, Cyril Ramaphosa.

The talks prompted the ANC’s National Executive Committee, its top decision-making body, to postpone a special meeting called for Wednesday to decide whether to force Zuma from office.

Ramaphosa said the talks about the transition of power would be concluded “within coming days” and that the “uncertainty” over Zuma’s position is a cause of concern. Zuma is seeking immunity from prosecution after he leaves office, according to an official with knowledge of the talks.

“I am certain that the process we have now embarked on will achieve an outcome that not only addresses these concerns, but also unites our people around the tasks that all of us must necessarily undertake to build our country,” Ramaphosa said in an emailed statement.

“Both President Zuma and myself are aware that our people want and deserve closure.” Zuma’s expected departure has been cheered by many investors who welcome Ramaphosa’s pledges to bolster growth and clamp down on graft.

Business confidence rose to its highest level since October 2015 last month amid expectation that the new leadership will implement more pragmatic and predictable policies, the South African Chamber of Commerce and Industry said on Tuesday.

The rand has been the best performer in the world against the dollar since Ramaphosa’s Dec. 18 election as ANC leader. It was 0.4 percent weaker at 11.9720 per dollar at 3:12 p.m. in Johannesburg Wednesday.

“The worst-case outcome is a drawn-out multi-month saga in which Zuma refuses to go and the ANC fails to commit to an impeachment or vote of no confidence, but we are not there yet and we judge the probability of this to be low at this time,” said Frans Cronje, chief executive officer of the South African Institute of Race Relations.

To read the full article, click here.