Employment Archives - African Financial & Economic Data

22 May

Africa’s fintech industry has scored another big-ticket investment win

The streak of big-ticket investment in African fintech companies shows no signs of stopping.

Cellulant, the digital payments solutions company operating in 11 African countries has raised $47.5 million in its Series C round—one of the largest for a solely Africa-focused venture-funded company. The round was led by The Rise Fund, an impact investment fund run by TPG Growth, the US-based private equity group, with participation from Endeavor Catalyst, Satya Capital, Velocity Capital & Progression Africa.

First founded in Nigeria and Kenya in 2004, Cellulant has since expanded to nine other African countries and around 12% of Africa’s mobile consumers can make payments using its solutions. Its reach is down to partnerships with over 90 banks and several mobile payments platforms across the continent. The company says it will be expanding to two more countries following the investment.

The deal marks Rise Fund’s first investment in Africa since raising $2 billion last October. The fund’s backers include Andra AP-fonden, the Swedish pension fund and the Washington State Investment Board. It also lists music star Bono and billionaire Richard Branson on its board.

The investment in Cellulant is the latest endorsement of the key role African fintech companies are playing in bridging the crucial payments and financial inclusion gaps on the continent. Over the past three years, the sector has garnered momentum and has become the most attractive for investors on the continent.

Almost a third of funding raised by African startups in 2017 was in the fintech sector as investors bet on consumers turning to more formal financial services in a region where just 17% of the population have banking accounts. Venture funding for African startups jumped by 51% to $195 million in 2017.

Fintech was the biggest attraction for investors with 45 startups raising one-third of total funding. The success of mobile money technology like M-Pesa in Kenya and across East Africa has long shown the potential for other underserved markets. M-Pesa’s success is likely also behind for the increasing presence of mobile networks in the African financial sector and the convergence of the two sectors.

Read the full story at Quartz Africa

24 Nov

Global Chocolate Binge Has Olam Predicting Smaller Cocoa Surplus

The world just can’t get enough chocolate.

With “tremendous” demand in emerging markets looking set to continue this season, the world’s third-largest cocoa processor is projecting a sharply smaller global surplus. Excess cocoa supplies that reached a record last season will probably drop to about 50,000 metric tons, said Gerry Manley, head of cocoa at Olam International Ltd.

Demand has picked up in Asia particularly, where countries including the Philippines, Indonesia, India and China are consuming more cocoa powder used in products like cookies and ice-cream, Manley said. And while West African growers may reap a second year of bumper crops, top producer Ivory Coast is unlikely to repeat last season’s record harvest.

“We are very positive on demand,” Manley said in an interview at the company’s London offices Thursday. “We are seeing good demand for cocoa powder across the world, but mainly emerging markets are in a leading position there.”

Benchmark cocoa futures traded in London tumbled 23 percent last year, the biggest decline since 2011, as output climbed to a record in Ivory Coast, while Ghana, the No. 2 grower, also reaped a big crop. The large African harvests helped push the global surplus to 371,000 tons, according to estimates from the Abidjan-based International Cocoa Organisation.

This season, global cocoa processing will probably rise by more than 3 percent, Manley said, adding that the forecast is conservative. Processing exceeded 5 percent growth in 2016-17. About 8,000 new products were launched in the confectionery market last year, Manley said.

Lower costs are boosting demand, with the global chocolate confectionery market expanding 2.3 percent in the three months to June and 2.2 percent the following quarter, the world’s top cocoa processor Barry Callebaut AG said earlier this month, citing data from analytics firm Nielsen. The rebound came after at least six consecutive quarters of contractions.

Underestimating Growth

Changing consumer habits mean some traders may be underestimating growth. Trends including online shopping as well as the rise of artisan shops and bakeries are often missed by traditional data sources, Manley said.

Global cocoa powder demand is forecast to grow at 5 percent and Olam is looking to capitalize on that. The Singapore-based company is investing to increase its capacity to mill cocoa cake into powder in Asia and is also planning a new milling facility just outside Chicago, Manley said. The factory should be commissioned later this month.

Demand for cocoa butter and cocoa liquor, used to make chocolate bars, is also growing and the market is tight despite last season’s record surplus, Manley said. That has helped boost cocoa-processing margins, with the so-called combined ratio — the price of cocoa products relative to beans — reaching the highest in more than a decade this year, according to KnowledgeCharts.

To read the full article, click here.

10 Nov

Exporting to Nigeria: Tips and insights

Nigeria is still, by a slim margin, the biggest economy in Africa, despite the economic woes of the past two years. A population of anything between 180 million to 200 million people makes its consumer market in particular of great interest to investors, manufacturers and exporters around the world. The country manufactures relatively few of the products it consumes and despite efforts to increase local industry, it remains largely import dependent.

However, despite the multitude of opportunities that Nigeria presents to exporters, getting a product into the market can be a challenging exercise.

Nigeria’s main port complex is in the commercial capital of Lagos, a city of an estimated 20 million people – a major market in itself – but also the shipping gateway for imports and exports for the whole nation.

The facility, comprising the Lagos Port Complex and Tin Can Island Port in the Apapa area of Lagos city, is one of the busiest in Africa. It is also by far the main portal for trade into and out of this large country, processing 97% of containers. The only other port of size, Onne, is focused on the oil and gas industry around Port Harcourt, and there are a few other, smaller, ports.

As a result, there is usually serious congestion at Lagos. The high volumes are just part of the problem. Other challenges include poor infrastructure, inadequate and often poorly functioning equipment, the demands of different agencies located there, onerous bureaucracy and general issues related to officialdom.

Clearance time in Lagos port is between seven and 14 days. Once clearance is complete, it takes, in a best-case scenario, 48 hours to get the product out of the port. However, this can take longer depending on other factors, as currently being experienced with the rebuilding of the access road to the port, and any problems in the manifest or other documents.

Having a competent cargo clearing and forwarding company is vital to navigate the process. Exporting to Nigeria requires detailed knowledge of requirements. A simple mistake in documentation or process can lead to cargo sitting in port for weeks or even months, with hefty demurrage charges.

It is important for an exporter to be on top of any changes in documentation and import requirements. Do not wait for the importer in Nigeria to alert you to what is needed; rather do your own homework.

Investment: Silicon Valley Loses Out on Africa Startups

Silicon Valley is ignoring Africa’s startup scene, passing up an opportunity to invest in creating innovative technology-based businesses on the continent, according to TechCrunch Inc.

“Silicon Valley does not understand the context of Africa, so we see it as an opportunity to fill the gap,” Edward Desmond, chief operating officer at the Verizon Communications Inc. unit, said in an interview Wednesday in the Kenyan capital, Nairobi. “The outside world that is very powerful does not know the innovation and possibilities available.”

African startups raised an estimated $129 million in 2016, according to Disrupt Africa, an African startup information portal. China alone attracted $31 billion in venture capital last year, while the U.S. received $69.1 billion, according to KPMG International’s Venture Pulse report.

Desmond was in Kenya for TechCrunch Battlefield Africa, its first startup pitching event on the continent in the competition’s decade-long history. Competitions by the San Francisco-based technology media property company help early stage enterprises with exposure and to find financing from global investors.

“We are here to connect the money guys around the world with opportunities here,” Desmond said.

Companies that have participated, including Dropbox Inc., have gone on to raise $7 billion in funding since 2007, according to Desmond.

‘Endless Opportunities’

At TechCrunch’s Facebook Inc.-backed Africa event this week, 15 companies shortlisted from an initial 700 that sought funding were in the running for $25,000 prize money. The winner was Lori Systems, which also got the chance to compete at TechCrunch’s Disrupt SF in San Francisco next year.

Lori provides a technology platform that connects truck owners to customers needing haulage, much like Uber Inc.’s system links passengers with taxi drivers. Logistics and infrastructure development offer “endless” opportunities for startups, Desmond said.

Opportunities also lie in agriculture and fintech, sectors in which Village Capital has made 14 investments in sub-Saharan Africa, investing between $25,000 and $50,000 in either debt, equity or convertible debt, according to Adedana Ashebir, Africa regional manager at the Washington-based venture capital company.

19 Oct

Shaping the investment attractiveness of Africa’s hotel sector

According to a United Nations population report, it is anticipated that by 2050, more than half of the world’s population growth will be in Africa. The African Development Bank (AfDB) anticipates that Africa’s middle class will reach 1.1 billion by 2060.

This rise of a substantial middle class across Africa brings at the same time an insatiable taste for modern infrastructure and consumption. The increase in consumer spending power from the younger, modern and more middle-class consumer, means a broad appetite for services from the entertainment, leisure and hospitality industry. With it will come the demand for the types of hotels that you may expect to find only in more developed economies such as the United States, Europe or Asia. Whether it is exquisite room, spa facilities, excellent cuisines – or meetings, wedding venues and other special events, Africa’s growing urban populations are pursuing places to entertain, work and socialise. But how are Africa’s private-equity hotel investors benefiting from the continent’s growing and evolving demographic?

Strong local demand

As the commodity price downturn continues to claim casualties across the continent, countries such as Zambia are benefiting from a combination of a growing tourism sector and rising urban population.

According to the United Nations World Populations Prospects, Zambia’s population is estimated to be over 17 million with an annual growth rate of 3.3%. Much of Zambia’s population is concentrated around Lusaka in the south and the Copperbelt Province in the northwest. With 44% of the population concentrated in a few urban areas, this marks Zambia one of the most urbanised countries in sub-Saharan Africa. The country offers competitive operational costs as well as a motivated English-speaking labour force, making it an attractive investment destination – particularly for private equity investors such as Quantum Global Group.

Through its US$500m investment vehicle which capitalises on emerging opportunities and prime assets in Africa’s hospitality sector, Quantum Global acquired the city landmark InterContinental Hotel Lusaka, which is situated at a prime location in Zambia’s capital.

18 Oct

Andela: Africa’s Engineering Talent With Global Technology Companies

Andela, the company that builds high-performing engineering teams with Africa’s most talented software developers, announced on Tuesday that the company has secured $40M in Series C funding. The investment was led by pan-African venture firm CRE Venture Capital with participation from DBL Partners, Amplo, Salesforce Ventures, and Africa-focused TLcom Capital. Existing investors, including Chan Zuckerberg Initiative, GV, and Spark Capital, also participated. The round, which marks one of the largest investments ever led by an African venture firm into an Africa-based company, brings Andela’s total venture funding to just over $80M.

Andela was launched in 2014 to combat the global technical talent shortage by investing in Africa’s most talented software developers. With an estimated 1.3M software jobs unfilled in 2016 in the U.S. alone, it’s clear that the growth of today’s major technology ecosystems is inhibited by a severe lack of talent. To solve this, Andela invests in high potential pools of brainpower across the African continent to help more than 100 partner companies build distributed engineering teams. These partners range from industry leaders like Viacom and Mastercard Labs to high-growth technology companies such as Gusto and GitHub.

With offices in Lagos, Nigeria; Nairobi, Kenya; and Kampala, Uganda; Andela has hired 500 developers to date — the top 0.7% of more than 70,000 applicants from across the continent. Selected developers spend six months in a rigorous on boarding program before being matched with one of Andela’s partner companies as full-time engineering team members. Beyond recruiting elite development talent, Andela is catalyzing the growth of tech ecosystems across the continent by open-sourcing its content and partnering with organizations including Google and Pluralsight to provide resources and mentorship to developers.

“Over the past three years, we’ve helped prove to the world that brilliance is evenly distributed. It’s now time to prove that our model of investing in extraordinary people isn’t just viable, but revolutionary,” says Jeremy Johnson, Co-Founder and CEO of Andela.

18 Oct

Four trend-driven franchising opportunities in South Africa

The resilience and vitality of the franchising industry in South Africa is more apparent than ever, and increasingly becoming a notable asset to the country.

Jeremy Lang, regional general manager at Business Partners, says that the franchising sector continues to grow on all fronts, and is increasingly offering business opportunities for local entrepreneurs and enabling the creation of jobs – something that the country desperately requires as the economy continues to shed jobs.

He points to recent Franchise Association of South Africa’s (FASA’s) statistics which show that, in a year of low overall economic growth, the franchising sector’s share of the country’s GDP in 2017 is reported at R587bn (about US$44bn) and accounts for 13.3% – an increase from the 11.6% of GDP recorded in 2016. The number of outlets (franchisees) reportedly increased from 31,111 to 40,528, and the number of franchise groups (franchisors) also grew from 757 to 845 in 2017.

The sector now also employs 343,319 people – an increase of 14,074 jobs when compared to 2016.

While franchise businesses aren’t entirely immune to the struggles of the economy, Lang says that the sector’s apparent ability to shrug off the economic malaise can be linked to their ‘tried-and tested’ business approach. “The fact that a franchised business has a proven business model gives it a relative advantage over independent businesses which may still be finding their feet through trial and error.

“Similarly, while an independent business has to double down on marketing to draw in reluctant customers, franchised outlets have the added advantage of brand strength and market acceptance.”

He adds that the continued entry into South Africa of overseas franchise systems looking for global expansion, is also driving the sectors growth and creating opportunities for local franchisees.

Commenting on the Business Partners R150m ($11m) Brands and Franchise Fund, Lang says since the Fund’s launch in 2014 the company has noticed increased interest from local existing and aspiring entrepreneurs seeking to own and expand their franchises through finance and mentorship in order to capitalise on franchising’s remarkable ability to grow in tough market conditions.

11 Oct

Swedish firm moves Sh253bn Malindi power plan to Tanzania

A Swedish firm that wanted to construct Africa’s largest wind power plant in Malindi at a cost of Sh253 billion has relocated the investment to Tanzania, citing frustration by Kenyan authorities.

VR Holding AB had last year expressed interest in building a 600-megawatt (MW) wind farm in the Indian Ocean waters bordering Ras Ngomeni in Malindi, but Ministry of Energy officials turned down the request citing lack of a framework for renewable energy projects of that scale besides low demand for electricity in the country.

The firm’s executives said they have now switched their focus to Tanzania, which shares the Indian Ocean coastline.
“We have opted to look at offshore solutions for Tanzania,” Victoria Rikede, an executive at the company said.

“Kenya is proving to be a very difficult place and besides the grid is too weak to absorb all the power produced and therefore mini-grids is the solution for now,” she added.
Kenya, East Africa’s largest economy, has recently been losing mega investments to Tanzania, including a crude pipeline deal with Uganda.

Tuesday, Ministry of Energy officials reckoned that a huge power plant would leave the country with excess power that will only force consumers to pay billions of shillings annually for electricity not used.
This would dim the government’s quest to deliver cheaper power through renewable sources.

Documents seen by the Business Daily show that Kenyan authorities, upon receiving the application, had directed the Swedish company to construct a smaller capacity project. “The company was to give us a proposal for a smaller capacity plant of 50 megawatts. They are yet to do so,” said Isaac Kiva, the director of renewable energy at the ministry.
The Malindi offshore location was identified by the World Bank, according to the Swedish firm’s executives.

They put the cost of generating electricity from the offshore wind farm at €3.5 million (Sh423 million) per megawatt.

This means the 600 megawatt offshore wind park would cost a total of Sh253.8 billion, in what would be the single most expensive private-funded project in East Africa.

Read more: Swedish firm moves Sh253bn Malindi power plan to Tanzania

06 Oct

DHL and MallforAfrica team up to further cross-border e-commerce

World’s international express services provider DHL Express has announced its partnership with MallforAfrica, the award-winning global e-commerce company, which will facilitate selling of made-in-Africa products to customers in the United States.

Businesses can do so via the eBay platform powered by MallforAfrica. Through this partnership, DHL locations will serve as drop-off points for products destined for consumers in the United States. This will be the first time businesses in Africa can sell their locally manufactured products directly on eBay.

DHL Express currently handles inbound express delivery for MallforAfrica and has enabled its customers importing from the US to receive their packages seamlessly in Nigeria, Kenya, Rwanda and Ghana. This is a watershed partnership for African businesses as it allows them an avenue to trade on the global stage.

“We have been partners with DHL Express for many years and have tremendous trust in their ability to ship to our customers,” said Chris Folayan, CEO, MallforAfrica. “Both companies have a common goal of seeing African e-commerce businesses thrive on the global stage. We want to contribute to the future of e-commerce growth, African cross-border sales and most importantly, improve the lives of African artisanal arts, designs, crafts and more.”

MallforAfrica is Africa’s largest e-commerce enabler, providing Africans with a platform through which they can purchase items directly from over 200 international online retailers, such as Macy’s, eBay, Ralph Lauren, Net-a-Porter, Carters, GAP, and FarFetch – brands that, would otherwise be inaccessible to the African consumers.

By managing every aspect of the order and return cycle, the MallforAfrica app offers its customers a simple, secure and convenient solution to online shopping directly from the best brands in the world.

“We are proud to be playing a crucial role in connecting African artists with American customers through MallforAfrica,” said Randy Buday, Regional Director West and Central Africa, DHL Express. “We look forward to supporting local artisans across Africa sell into America.”

06 Oct

Hyatt to double its Africa presence and open six hotels by 2020

Hyatt Hotels & Resorts announced on Tuesday that Hyatt expects to double the number of Hyatt hotels in Africa, with six new hotels expected to open by 2020. The developments are expected to see the Hyatt brand enter four new countries on the African continent and are expected to create approximately 2,100 new jobs once open.

East Africa is one of Hyatt’s primary focus areas in the near term, with the region benefiting from continued government investment in infrastructure, an expanding middle class and a growing international recognition of the region’s stability, all contributing to an 11% growth in Sub-Saharan African tourism in the past year alone. According to the UNWTO World Tourism Barometer, the first half of 2017 saw a 14% increase in international arrivals in East Africa over the same period in 2016, with intra-Africa travel up nearly 13% for the same period.

“The development opportunities for Hyatt in Africa are significant, and we see enormous potential in the region. This expansion reinforces our commitment to developing our pipeline in Africa,” said Peter Penev, Hyatt’s Vice President of Acquisitions and Development. “With the introduction of a Pan-African, visa-free passport next year alongside the continued improvement in the connectivity and growth of the region’s airlines, we expect tourist and business travel will only continue to increase. We look forward to working with our local developers and partners to further deliver on our ambitious plan to help grow the hotel industry in East Africa.”

Of Hyatt’s expected six new hotels, four are market entries: Hyatt Regency Algiers Airport, Algeria (late 2018); Hyatt Regency Douala, Cameroon (late 2020); Hyatt Regency Addis Ababa, Ethiopia (summer 2018) and Hyatt Centric Dakar, Senegal (summer 2018). In its established markets, Hyatt is expanding its footprint with Park Hyatt Marrakech, Morocco (early 2019) and Hyatt Regency Arusha, Tanzania (early 2019), each becoming the third Hyatt-branded hotel in each country, respectively. As part of a long-term plan to expand in Sub-Saharan Africa, Hyatt will continue to look for further opportunities across countries like Rwanda, Kenya, Uganda, Mozambique, Ghana and Côte d’Ivoire.

[Via] Hyatt to double its Africa presence and open six hotels by 2020