growth Archives - African Financial & Economic Data

16 Jul

New private equity fund commitments to boost growth of African companies

African companies will benefit from several new private equity fund commitments and investment partnerships announced during June 2018, according to Africa Private Equity News, an industry information service. These funds focus on a variety of sectors – including agriculture, renewable energy and technology – and will help businesses on the continent accelerate their growth.

South African private equity firm Agile Capital has launched a third fund of R1 billion (about $75 million) and is aggressively targeting fresh investments. While Agile’s existing portfolio is concentrated on the services, manufacturing, automotive and infrastructure sectors, the firm’s criteria for investment doesn’t exclude other industries. “We favour acquiring a controlling stake in any sustainable company poised for growth,” says CEO Tshego Sefolo.

Specialist forestry investor Criterion Africa Partners has announced the first close of its Africa Sustainable Forestry Fund II, with several institutional investors – including the UK’s CDC Group, Dutch development bank FMO and the European Investment Bank – making commitments of $81 million. The fund has a total target of $150 million, and invests across the forestry value chain.

Renewable energy continues to be a popular theme for investors, and Climate Fund Managers was therefore able to attract additional capital of $75 million to its blended finance facility, Climate Investor One (CIO), bringing the total third-close fund size to $535 million. The CIO, launched in partnership between FMO and South Africa’s Sanlam Infraworks, provides funding for renewable energy projects in the wind, solar and run-of-river hydro sectors in developing countries across Africa, Asia and Latin America. The three new investors are IMAS Foundation (a sister foundation to the INGKA Foundation – the owner of INGKA Group, which in turn owns the majority of IKEA’s department stores globally); Swedfund, the development finance institution of Sweden; and the Nordic Development Fund.

Gulf Capital, the Abu Dhabi-based alternative asset manager, revealed that Egypt is one of its target geographies for over $350 million it plans to invest in private equity over the next two years. “We are encouraged by what’s happening in Egypt. Egypt is growing above 5%, they devalued the currency, restructured the economy, introduced new investment laws, and foreign reserves are [at an] all-time high. If you look at the IPO market, it is 10 to 15 times oversubscribed,” the firm’s CEO Karim El Solh, told Gulf News.

Read more here: How We Made It in Africa

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

02 May

African fintech and agribusiness companies attract interest from investors

African private equity and venture capital deal-making in April were dominated by investments in technology companies, particularly fintech and business-to-business platforms, together with encouraging activity in the agribusiness & food sector.

Fintech investments were mostly in mobile-enabled banking and financial services companies. These include: French development-finance institution Proparco’s US$3m backing of JUMO, which helps customers to access loans and savings products in East and West Africa; and a $70m round, led by US-based Trinity Ventures, into credit provider Branch International. Digital payments network MFS Africa also raised $4.5m in funding, led by LUN Partners Group, thereby becoming one of the first fintech players on the continent to receive funding from a China-based venture capital firm.

Business-to-business solutions remains an attractive theme, with TLcom Capital announcing two investments in the space – a $5m injection in Nigeria-based mobile marketing company Terragon, and a $3.5m series-A round for Kenyan consumer-feedback platform mSurvey, which plans to use the capital to scale and expand into more countries. Asoko Insight, a provider of data on African companies, attracted $3.6m in additional funding from its early shareholders and some new ones, while South Africa-based Giraffe – which enables businesses to recruit high volumes of medium-skilled staff – closed a second round of investment, supported by FirstRand’s Vumela Fund, with participation from Omidyar Network, the Brozin family’s Forever Young Capital and Catapult Trust.

The continent’s rapidly-growing food market could be worth more than $1tn annually by 2030 as imports are substituted with high-value locally-produced food, according to the Alliance for a Green Revolution in Africa. With 60% of the world’s unused arable land, Africa’s potential in the broader agribusiness sector is also enormous.

The sector continues to attract interest from private equity firms such as DOB Equity, which last month backed Rwanda-based grain trader Sarura Commodities. Furthermore, Agri-Vie and Norfund announced a $7m co-investment in Marginpar Flower Group Holdings, which has floriculture interests in Kenya and Ethiopia. In addition, South African-based The Beverage Company, in which Ethos Private Equity and Nedbank Private Equity owns a stake, signed an agreement to acquire 100% of SoftBev, the sole licensed bottler for Pepsi and its related brands in South Africa, from Bowler Metcalf and the original founders.

Read more here: How We Made It in Africa

04 Apr

S.Africa mulling privatisation in Ramaphosa reform drive

South Africa will consider partially privatising struggling state-owned companies as part of wide-ranging reforms set in motion by President Cyril Ramaphosa since he came to power last month, the head of the National Treasury said on Saturday.

Dondo Mogajane said South Africa was at the end of a credit downgrade cycle after Moody’s held its investment-grade rating and raised its outlook on Friday, partly because of Ramaphosa’s plan to reform state companies.

“For me, I see it as the end,” Mogajane told Reuters in an interview.

“Moody’s are saying there are things we can do and these are the things we will be focused on,” he added, highlighting plans to stabilise debt, revamp state firms and boost growth in sectors such as agriculture and tourism.

A downgrade to a “junk” rating by Moody’s would have seen South Africa removed from Citi’s World Government Bond Index, and could have triggered up to 100 billion rand ($9 billion) in asset sales by foreign investors.

Investors have cheered Ramaphosa’s arrival and his choice of respected ministers in key roles, including former finance minister Pravin Gordhan as minister of public enterprises.

Gordhan is tasked with turning around state companies that have plunged public finances into crisis in recent years, including heavily indebted power utility Eskom and South African Airways (SAA), which is on the brink of bankruptcy.

“Why not?” Mogajane said when asked if it was possible parts of government-owned companies could be sold.

“There have to be new ways of looking at these things. Are we talking privatisation? Are we talking equity partnership? Let’s give an opportunity for new ministers to unpack what it means.”

Mogajane gave as theoretical examples the sale of 49 percent of SAA and of attracting private investors by splitting up the generation, transmission and distribution sections of Eskom, one the world’s biggest power utilities.

His comments are likely to go down badly with powerful trade unions, sections of the ruling African National Congress (ANC) and the Economic Freedom Fighters, a disruptive red-beret-wearing opposition party.

Nigeria’s Corn Output Expected to Fall 7% on Pests, Rising Imports

Nigeria’s corn output for the 2017-18 season will probably decline by as much as 750,000 metric tons due to the impact of pests and increased imports, the producers’ association said.

Africa’s most-populous country is estimated to produce 10 million tons of corn in the current season, 7 percent less than 10.75 million tons in the 2016-17 season, Tunji Adenola, president of the Maize Association of Nigeria, said in a Jan. 30 phone interview from the southwest city of Ibadan.

“Apart from imports, which is the major challenge to corn production in Nigeria, the two-year-old armyworm attacks ravaging farms has discouraged farmers from producing,” Adenola said. Those unable to compete with imported corn, which is cheaper, are being compelled to switch to other crops, he added.

Nigeria is Africa’s biggest corn producer after South Africa, whose 2017-18 output is estimated at 12 million tons, according to the U.S. Department of Agriculture’s Foreign Agricultural Service.

Most of Nigeria’s corn is consumed locally as a staple, in feed for livestock and raw material in the food industry. The West African nation saw corn imports jump 33 percent in the 2016-17 season to reach 400,000 tons, according to the USDA.

President Muhammadu Buhari’s government aims to boost farming output and reduce the economy’s dependence on oil, which contributes two-thirds of government revenue in the country of more than 180 million people.

Source: https://www.bloomberg.com/news/articles/2018-01-31/nigeria-s-corn-output-seen-falling-7-on-pests-rising-imports

25 Jan

Rand Cracks 12 per Dollar First Time Since ’15 as Optimism Grows

South Africa’s rand traded below 12 per dollar on Wednesday for the first time since May 2015, extending a rally sparked by an improving domestic political environment and supported by global risk-on sentiment and the greenback’s retreat.

The currency advanced as much as 0.9 percent to 11.9265 per dollar, and traded 0.7 percent stronger at 11.9462 by 11:52 a.m. in Johannesburg. That brings gains in the past three months to 15 percent, the most out of 31 major currencies tracked by Bloomberg.

The yield on rand-denominated government bonds due December 2026 fell four basis points to 8.32 percent, the lowest since March.

The election of Cyril Ramaphosa as head of the ruling African National Congress in December, setting him on a path to take over from President Jacob Zuma, has fueled optimism South Africa may avert further credit-rating downgrades as the new leadership takes steps to root out corruption and stimulate the ailing economy. Inflows into the nation’s stocks market are running at record levels.

“Investors are loving us at the moment,” said Phillip Pearce, a trader at TreasuryOne Ltd. in Johannesburg. “The dollar is taking a pounding and global markets are still on the hunt for yield. There’s not a lot of risk going now. South Africa seems like a good bet.”

The rand could appreciate to as low as 11.50 per dollar if Zuma is removed from office, Pearce said. The probability of the rand reaching that level this quarter rose to 49 percent on Wednesday, from 19 percent a month ago, according to Bloomberg’s forecast model based on prices of options to buy or sell the currency.

‘Better Space’

South Africa is in a “much better space” now than when previous credit-rating actions took place, and can avert further downgrades this year as lawmakers assert their authority to hold the executive to account, South Africa’s central-bank governor, Lesetja Kganyago, said on Wednesday.

To read the full article, click here.

19 Jan

South Africa Holds Rate as Rand, Inflation Risks Persist

The South African Reserve Bank kept its benchmark lending rate unchanged for a third consecutive meeting as the risks of a credit-rating downgrade persist, muddying the outlook for the rand and inflation.

The central bank’s Monetary Policy Committee maintained the repurchase rate at 6.75 percent Thursday, in line with the estimates by all but seven of the 20 economists surveyed by Bloomberg.

The bank cut the rate for the first time in five years in July to support an economy that entered its second recession in almost a decade in the first quarter of 2017 and has struggled to mount a strong recovery.

Inflation has been inside the target band for eight months and the rand — among the world’s most-volatile currencies — has strengthened since the ruling party elected Deputy President Cyril Ramaphosa as its new leader in December, spurring hope that policy uncertainty and political turbulence will dissipate.

“We do see an improved inflation and growth outlook thanks to a stronger performance in the currency but a lot of risk factors still exist, both on the political front as well as on the credit-ratings front,” said Jeffrey Schultz, BNP Paribas’s senior economist.

S&P Global Ratings and Fitch Ratings Ltd. cut the country’s debt to junk in 2017, and a reduction of rand bonds by Moody’s Investors Service could trigger an exclusion of the country’s rand debt from Citigroup Inc.’s World Government Bond Index.

The effect of this on rand bond yields “could be significant, but the extent to which a universal downgrade is already priced in remains unclear,” Governor Lesetja Kganyago told reporters in the capital, Pretoria. The government’s challenge is to “find ways to finance the deficit in a growth-positive manner, and at the same time convey a credible commitment to structural reforms.”

The bank expects inflation to remain within the target band of 3 percent to 6 percent until at least the end of 2019, reaching a low of 4.4 percent in the first quarter of this year.

To read the full article, click here.

19 Jan

Nigeria Moves Closer to Energy Overhaul With New Oil Bill

Nigeria’s House of Representatives passed a bill governing the country’s energy sector after the Senate did so in May, taking Africa’s top oil producer one step closer to a much-awaited overhaul of the key industry.

The Petroleum Industry Governance Bill now awaits President Muhammadu Buhari’s signing to become law.

The bill will “promote openness and transparency in the industry by clarifying the rules, processes, and procedures that govern the oil and gas sector,” Senate President Bukola Saraki said in a statement Thursday.

“After nearly two decades of back-and-forth, near-misses and ‘near-passages’, the 8th National Assembly finally reached a milestone.”

Delays in passing the new laws created a climate of uncertainty that has cost the country as much as $15 billion a year in lost investment, the Petroleum Ministry has said.

Lawmakers still need to pass two more pieces of legislation to complete an overhaul that will replace current laws. One focuses on new oil taxes and the other seeks to address longstanding grievances by oil-producing communities in the Niger River delta.

Saraki promised to pass those “very soon.” He said in June that the two related bills would be enacted by last month.

Nigeria holds an average 55 percent stake in joint ventures run by Royal Dutch Shell Plc, Exxon Mobil Corp, Chevron Corp., Total SA and Eni SpA. These account for more than 80 percent of total oil production, which generates at least two-thirds of government revenue.

The West African country pumped 1.68 million barrels of crude per day in December, according to its oil ministry, and is yet to reach full capacity of 2.2 million daily following disruptions caused by militant attacks from 2016.

Source: https://www.bloomberg.com/news/articles/2018-01-18/south-africa-holds-rate-as-downgrade-inflation-risks-persist

18 Jan

Lourenco Proves He’s No One’s Puppet in Angola

Shortly after becoming president of Angola in September, Joao Lourenco did something completely unexpected: he stopped at a red light.

The incident prompted thousands of social-media users to praise the 63-year-old former army general for abiding by the law.

In October, Lourenco waited in line at a KFC restaurant to buy a burger, and then this month, photos surfaced of him and his wife Ana Dias strolling on a beach in the capital, Luanda.

Few predicted the sharp contrast in leadership style with his predecessor, Jose Eduardo dos Santos, who rarely left the pink presidential palace from where he ruled Africa’s second-biggest oil producer for almost four decades.

When he did emerge, hundreds of soldiers swarmed the city center to allow his convoy to move swiftly through the pot-holed streets, leaving traffic paralyzed for hours.

“He’s been a very positive surprise,” said Soren Kirk Jensen, an independent Angola expert. “There’s been a profound change of style, from a completely closed style to a completely open one.

More importantly, he’s initiated much-needed economic reforms by addressing dysfunctionalities in the way the market works due to unnatural monopolies that happened to be controlled by certain families.”

When Lourenco won nomination as the candidate of the ruling Popular Movement for the Liberation of Angola last year, analysts discounted a policy shift, saying his power would be limited by the party and the Dos Santos family and its allies.

Lourenco’s decision to reappoint 13 out of 18 provincial governors he had inherited from Dos Santos just two days into his new job seemed to confirm that suspicion.

Corruption Fight

But in a state of the union speech on Oct. 16, Lourenco stressed that he was serious about campaign promises to fight corruption and end state-run monopolies in a country that ranks among the world’s 20 most corrupt, according to Berlin-based Transparency International.

The first high-profile official to be removed was central bank Governor Valter Filipe, a lawyer Dos Santos appointed the previous year.

To read the full article, click here.

17 Jan

Cape Town’s day zero moves forward again, less than 100 days until taps shut off

Patricia de Lille confirmed that day zero will now happen earlier than predicted, on April 21 2018. This means that just 95 days remain until the taps are shut off.

The news comes after a spike in water usage hit the municipality. After a positive week previously, consumption has jumped from an average of 578 million litres per day to 618 million litres per day.

A heatwave doesn’t exactly help the situation (nor does fighting with your own government), but de Lille also pointed out that less residents are meeting the usage targets of 87 litres per day, per person. Just 39% of citizens kept within their limits, a slump of 15% from seven days ago.

The Mayor issued a rallying call for the City, and assured inhabitants that everything possible is being to help avert the taps being turned off. However, Capetonians must keep saving water:

“Today I want to call on all Capetonians to do more to save water. There are only 95 days left before we reach Day Zero.”

“Day Zero has moved a day closer this week to 21 April 2018. Day Zero is when the City will be forced to turn off most of the taps and every resident will have to queue for 25 litres of water per day.”

The only way Cape Town can avoid Day Zero is if every single resident saves water. But this is not the case. For each day that Cape Town uses more than 500 million litres, the city moves closer to Day Zero.

“Dam levels have dipped to 28,7% percent this past week – down by one percentage point. Only about 18,7% of this water is usable as the last 10% is difficult to abstract from the dams.”

“The City has ramped up pressure management to drive down consumption – aiming to stretch our water supply past the winter rainy season.”

To read the full article, click here.