21 Sep

Startup snapshot: Moroccan platform aiming to ‘Uberise’ healthcare

DabaDoc is a Morocco-based startup that allows users in the country, as well as Tunisia, Algeria, Nigeria and South Africa, to book appointments with medical professionals – from doctors to dentists. Patients can use DabaDoc for free, however, doctors pay a fee to be featured on the platform.

According to the founders, brother-and-sister team Zineb Drissi Kaitouni and Driss Drissi Kaitouni, their business has already facilitated over three million leads between patients and doctors. The duo briefed How we made it in Africa on how they financed their business and the biggest risks facing the company.

1. How did you finance your start-up?

The company has been bootstrapped.

2. If you were given US$1m to invest in your company now, where would it go?

Despite quadrupling or quintupling in size each year since launch, we still have lots of growth to do. We would continue hiring exceptionally talented people and expanding our footprint into exciting markets.

3. What risks does your business face?

We have established DabaDoc as a leading brand with over 5,000 active doctors and millions of patients. Our risks mainly lie in being able to execute our growth plan in our current markets and future markets we enter. We have substantially de-risked the business as it stands, as we are leading by far in our core markets and our repeat users are great promoters of the platform.

We always keep a very close eye on our market fundamentals to make sure we are proactive and not reactive to any important changes. It’s also very helpful for us to have raised capital from local strategic partners who help accelerate our growth with much more than just capital.

4. So far, what has proven to be the most successful form of marketing?

Our users are our best growth channel. Both doctors and patients love our product, we score very high on NPS.

Read more: Start-up snapshot: Moroccan platform aiming to ‘Uberise’ healthcare

 

20 Sep

Investment trip: Searching for opportunities in Morocco

Below is a trip note published by Old Mutual Investment Group after its Equities team visited Morocco.

Our first investment trip to the Kingdom of Morocco this year was right in the middle of the holy month of Ramadan.

Being mid-summer in the northern hemisphere meant that the daily fast is particularly long − as the sun rises early and sets very late. I was warned that activity levels slow during the fasting period, and it certainly was something we experienced during our scheduled meetings, particularly as the day drew on. I tried fasting on one of the days and really struggled. By 10 o’clock I was already getting desperate for food. So, while the timing was not ideal, it is important to meet with the companies we invest in ahead of them entering their mid-year “closed” period (from end of June until after their half-year results are released).

Since our last visit in October 2016, Morocco has been readmitted to the African Union (AU) after 33 years of isolation. Morocco exited the AU when the union recognised Western Sahara as an independent state, a region Morocco claims is part of the Kingdom.

Africa’s star

Morocco was one of the top performing African markets in 2016, surging 31% over the 12 months (in local currency terms). It has also had a quiet start in 2017, up 4.6% in local currency terms and 12.3% in US dollars. Despite this, our investment process showed that Morocco started the year ranking low down on our list of countries on an aggregate basis. However, the dividend yield of 4% is attractive for local investors, where the local rate on one-year government paper is 2.26%.

To put the overall market valuation in perspective, our local host’s “top buy” idea is a utility business that is not expected to show any earnings growth. This port operator, called Marsa Maroc, trades on a price-to-earnings (PE) ratio of 17x (relative to the market PE of 22x).

Read more: Investment trip: Searching for opportunities in Morocco

 

24 Aug

The African economy: Better than people think

African

Analysis of headline GDP figures in Africa would presuppose a region going through a period of prolonged stagnation, with growth slowing down to 2.2% in 2016 (1) off the back of falling commodity prices and tighter Chinese economic conditions – but this needs to be put into proper context. Nigeria and South Africa are the two biggest regional economies and the main bulwarks behind the continent’s growth, and both markets have contracted. Slowdowns in these two countries tend to have a disproportionate weighting on the overall region’s growth figures.

Nigeria has very specific problems related to the decline in oil price, and this has been exacerbated by various currency and policy decisions.(2) South Africa’s economy is under strain due to a combination of different factors including drought, declining political confidence, reduced business confidence and a commodity slowdown. Just because growth has been sluggish in these two markets though does not mean there is a universal slowdown(3) across the entire Africa region.  A number of other African markets have recorded strong growth presenting opportunities for foreign investors. Côte d’Ivoire’s economy is forecast to expand by 7.5% in 2019(4) while World Bank data stated Senegal was the second fastest growing West African market. East Africa is a strong performer too, with Kenya, Ethiopia, Uganda and Tanzania all forecast to grow 6% and above for the decade.(5)

Flows into Africa

Foreign Direct Investment (FDI) recovered in 2016 after a slight decline in 2015. Ernst & Young (EY) analysis indicates capital investment into Africa increased by 31.9% in 2016.(6) The continent’s share of capital flows grew from 9.4% in 2015 to 11.4% in 2016 while (7) EY added Africa was the second-fastest growing destination when measured by FDI capital.(8) Despite the recent economic uncertainty, South Africa, Egypt and Nigeria still account for significant FDI flows, but there has been a pivot to smaller markets in East and West Africa such as Ghana, Senegal and Côte d’Ivoire.(9) Much of this investment has been in infrastructure, energy, pharmaceuticals and technology and it has been driven by Asian investors, particularly out of China.(10)

Easing access and building infrastructures

African markets were often seen as frontier, and there are problems with investing in such jurisdictions, namely low levels of liquidity, regulatory opacity and a lack of market depth, but this is likely to change. This is because a number of countries in the region are introducing positive market reforms to advance the needs of institutional investors and meet their regulatory obligations and reporting requirements. (11) Institutions need guarantees that when they invest into a market, their money is recoverable in crises, and that the infrastructures are aligned with international standards and best practices. Major efforts have been made across Africa to bring markets in line with these expectations.  Ghana – through the Securities Industry Act – has introduced securities borrowing and lending, and Kenya will do so later in 2017.

Over-the-counter (OTC) derivative trading is gradually being adopted in countries beyond South Africa and Nigeria, namely Kenya. Ghana is also looking at setting up an OTC regime although the Ghana Stock Exchange (GSE) has yet to implement the operational processes.    hese OTC flows are small though, at least relative to US, European or developed Asian markets, and there is sharp industry disagreement as to whether CCPs need to be introduced in these markets.  In a market where OTC volumes are considerable, industry consensus, international best practice and regulation would infer protections in the form of a CCP are necessary.

There is less unanimity around inaugurating CCPs in emerging economies which do not have scalable OTC markets, as it introduces costs that could potentially restrain growth and development.  East Africa through the EAC (East African Community) and West Africa via the ECOWAS (Economic Community of West African States) have both sought to enact regional harmonization programmes of securities markets modelled somewhat on the EU. Efforts have been ongoing to standardize rules around cross-border brokerage activities and dual listings of securities.

A number of market infrastructures across Africa are involved in integration and standardization discussions. CSD linkages, for example, will make account openings and know your customer (KYC) checks simpler, although some markets are disinclined to consolidate into regional exchanges and CSDs, as they view such national infrastructures as a sovereign right. However, efforts around cooperation are making progress.  Securities settlement is one area where progress has been made, particularly through the accentuation of SWIFT connectivity and automation across East African CSDs including Uganda, Rwanda and Tanzania.

Efforts are being made at Kenya’s Central Depository & Settlement Corporation (CDSC) to enable Swift connectivity and this is likely to go live in the second half of 2017.   In Ghana, Swift communication between the CSD and its settlement bank – the Bank of Ghana – is in place but there is presently no MT54X series SWIFT communication for securities between market participants, the exchange and the CSD. Discussions on MT54X Swift connectivity between stakeholders began earlier in 2017, but implementation could take time, and the costs of setting up such a system may be off-putting to some brokers.

Harmonization efforts are also in motion at stock exchanges, where there are ambitious plans to enable connectivity between exchanges in South Africa, Kenya, Nigeria, Côte d’Ivoire, Mauritius and Morocco through the Africa Exchanges Linkage Project (AELP). (12) This initiative will help cement liquidity in these markets, although experts are conscious that divergent regulations across these disparate countries will present issues around governance and best practices.

A lot of work still to be done

Cross-border harmonization initiatives in Africa should be applauded, but there are limitations. Harmonization of settlement in the EU through the Central Securities Depository Regulation (CSDR) and Target2-Securities (T2S) was possible because many of the markets possess a shared currency and have broadly similar regulations, levels of economic development, and common regulators, namely the European Securities and Markets Authority (ESMA). This is not the case in Africa. An absence of a single currency and conflicting regulations and legal systems will make it difficult to drive an African T2S equivalent.  Regulation and change in Africa markets can also be unexpected, arriving without warning or consultation. The Uganda Securities Exchange (USE) switched to an Automated Trading System in July 2015 with a resultant trade settlement time-frame changing to T+3 from T+5.  This decision was executed precipitously and caught a lot of market participants by surprise. Experts have warned that it is essential that regulators give sufficient notice about when they intend to execute market change otherwise it can cause major disruption.  Asset safety is a key criterion for foreign investors, and it is reinforced through regulations such as the Alternative Investment Fund Managers Directive (AIFMD) and UCITS V, which impose sanctions on depositaries which fail to effectively monitor assets in custody. As such, the ability to repatriate funds out of a country is critical. Nigeria has imposed currency controls and restrictions around FX in reaction to its recent market volatility. The situation appears to be calming following the retraction of some of these FX controls and the introduction of Naira non-deliverable FX futures, enabling investors to hedge Naira futures against USD.(13)

Looking towards a bright future

Africa should not be viewed through the lens of South Africa or Nigeria by international investors. Both of these markets have underperformed, but the region – when observed holistically – has a positive growth story to tell. Economic stability – coupled with efforts to implement market infrastructure standardization projects – will help encourage investors and liquidity into the region.

Article from EuroMoney

22 Aug

West Africa: Morocco’s Controversial Plan to Strengthen Ties With West Africa

ECOWAS

Morocco is launching a charm offensive as the kingdom seeks to expand its influence in West Africa by joining the economic union ECOWAS. But Nigeria is reluctant to see Morocco join as it stands to lose power.

Morocco’s King Mohammed VI is making his country’s membership application to the Economic Community of West African States (ECOWAS) a top priority. Earlier this year, he visited Ghana, Ivory Coast, Guinea and Mali to promote his cause.

At its June summit in Monrovia, ECOWAS confirmed that Morocco’s membership was possible, at least in principle.

Back in January, Morocco had rejoined the African Union after 33 years. Since then, the king has been busy signing dozens of bilateral trade agreements with other African countries.

In recent years, at least 85 percent of Morocco’s direct foreign investment went to African countries. In 2016, it was the largest African investor on the continent, to the tune of $8 billion (6.8 billion euros). Of this, $2.7 million went to Ivory Coast alone.

However, trade with Africa overall is stagnating: In 2015, just 1.4 percent of Morocco’s imports and 7 percent of its exports were traded with sub-Saharan Africa. If Morocco were to join ECOWAS as a full member, it would have access to the 15-member free market.

A ‘win-win’ situation

From an economic standpoint, there is nothing preventing Morocco from achieving ECOWAS membership – the country is far better off than most other members in this regard. According to the economic community’s constitution, geography is also not a criterion to exclude the North African country.

Christoph Kannengießer, the chief executive officer of the German-African Business Association, says it’s a win-win situation: “ECOWAS will not be weakened by an economically strong country such as Morocco, and as an ECOWAS member, Morocco would be better able to fulfill its desired role as a bridge between Africa and Europe.”

However, before Morocco can formally join ECOWAS, the organization says the political, economic and social implications should be thoroughly considered. Although it is primarily considered an economic-based group, members of ECOWAS also aim for political integration. Morocco and ECOWAS already have opposing views on important issues: ECOWAS recognizes Western Sahara as an autonomous state, while Morocco believes the annexed region is a legitimate province of its kingdom. Although the June summit openly discussed the possible membership of Morocco, King Mohammed VI did not attend due to the presence of Israel’s Prime Minister, Benjamin Netanyahu. The Moroccan government explained the monarch’s absence by saying that Morocco had no official diplomatic relations with Israel.

Searching for new allies

Morocco is currently a member of the Arab Maghreb Union (AMU). However, economic and political disagreements – especially between Morocco and Algeria – have prevented the group from making any real progress. No major meetings have taken place since 2008.

In addition, the economy of Morocco’s most important trading partner, the European Union (EU), is faltering. New allies and new markets for Moroccan products are needed – and with a combined population of 350 million, ECOWAS could turn out to be the perfect partner.

“The Moroccans are pursuing a double-edged political strategy,” Kannengießer told DW. On the one hand, the country is seeking a privileged relationship with Europe. On the other hand, it is also trying to strengthen its integration with other countries on the African continent.

“The Moroccans know that the African continent, especially West Africa, is an important region of growth, not only from an economic perspective, but in terms of political influence as well,” he says. He says it is necessary to discuss whether economic intergration necessarily leads to political integration.

‘An attack on Nigeria’

However Nigeria, the strongest economic player in ECOWAS, is reluctant to see Morocco receive membership. A number of interest groups have already lobbied the government in Abuja, calling on it to try and stop the North African country’s admission.

Nigeria currently makes up more than two-thirds of ECOWAS’ economic power. If Morocco were to join, it would become the second-strongest member, with more economic clout than Ghana, Ivory Coast, Senegal and Mali combined.

“Morocco’s accession to ECOWAS is clearly an attack on Nigeria and its strategic position in West Africa,” says former Nigerian Foreign Minister Bolaji Akinyemi. He argues that supporters of Morocco’s candidacy want to weaken Nigeria’s influence in the region and that in the event of its accession, Nigeria should leave ECOWAS.

“I don’t think ECOWAS would survive that,” says Akinyemi. In order not to jeopardize economic cooperation, he instead recommends the development of bilateral agreements between Nigeria and Morocco.

“I think that economic pragmatism will play an important role in Nigeria as well,” says Kannengießer.

He says he can imagine several possible outcomes of Morocco’s application to ECOWAS, including full membership, privileged integration status or even simply observer status as an interim solution.

“But perhaps the whole thing could fail in the event of Nigeria’s veto,” he added.

Source from allAfrica

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