Weekly Investor Update (July-WeekOne-2024)

15 min Read July 5, 2024 at 5:00 PM UTC

Monday

BRVM historic rally ends as profit-taking on bellwether stocks deepens

The BRVM closed last week negative on profit-taking by investors after a bullish rally that lasted nearly two months sent the market to its highest levels in the last six years.Société Générale CI, the 3rd largest stock by capitalization, led the general market decline, which occurred despite 24 stocks gaining compared to 11 decreases. Major telecom operatorSonatel(-0.62% at 19,380 FCFA) also posted a notable loss in value of 12 billion FCFA.The benchmark BRVM Compositeindexfell -0.15% to 229.70 points alongside the BRVM 30 (-0.19% at 114.62) and the BRVM Prestiges (-0.95% at 108.16) while overall market capitalization fell to 8.5 trillion FCFA (around $14 billion).

The best performance of the week was achieved by the Saph, which jumped 8.53% from 2,580 FCFA to 2,800 FCFA – its fourth consecutive weekly increase. In second place is Bernabé, whose price increased by 8.11% to reach 1,000 FCFA, driven by a renewed interest from investors as the share price approached a support level at the end of the previous week. The top five performances of the week were rounded out by Sitab (+7.07% to 7,495 FCFA), Sicable (+7.07% to 1,060 FCFA), and Oragroup (+6.52% to 1,960 FCFA). These stocks benefited from investors repositioning themselves, taking advantage of the low prices at which these shares were trading.

African startup funding down 56% in H1 2024 as winter continues

African tech startups raised $530 million in the first six months of 2024, a 56% decrease compared to the same period in 2023, according to Disrupt Africa data. This decline reflects the ongoing impact of theglobal economic climate on investmentin the sector.Hopes for an increase in investment in 2024 were dashed by a disappointing first quarter, with funding totaling just $310 million, down 52.3% from the $650 million raised in Q1 2023. This trend continued in the first half of 2024, with 117 startups receiving funding, slightly fewer than the 131 funded in the same period last year.The annual halving of total investment has now persisted for two consecutive years, as both Q1 and H1 2023 experienced similar declines of just over 50%.

The exuberant venture capital (VC) landscape of 2022 gave way to a stark reality in 2023, with global funding plummeting by approximately half in the first half of the year. This dramatic shift coincided with interest rate hikes, which had a chilling effect on fundraising. For every 1% increase in interest rates, there was an alarming 3.2% decline in VC capital. This tightening environment not only reduced the pool of VC money available to startups but also made debt financing less viable due to higher borrowing costs. According to Disrupt Africa, 406 startups raised a combined total of $2.4 billion in 2023. These figures indicate a reset for African tech, as the global capital shortage began to impact the sector. The number of funded ventures decreased by 35.9% from 633 in 2022, while the total amount raised fell by 27.8% from $3.33 billion in 2022.

Nigerian naira ranked worst performing currency in first half 2024

Nigeria’s naira weakened for the ninth consecutive day against the dollar, marking it as the worst-performing currency in the first half of the year due to a steep devaluation, insufficient dollar liquidity, and market volatility.By the close on Thursday, thenairahad weakened by 0.2% to 1,510 per dollar, according to FMDQ data compiled by Bloomberg. This decline represents the longest losing streak since July 2017 and brings the totaldepreciationto 40% since the beginning of the year.Among global currencies tracked by Bloomberg, thenaira’s performanceis the worst, except for the Lebanese pound, which is facing an economic crisis and widespread dollarization. Besides the naira, Egypt’s pound and Ghana’s cedi were the world’s other worst performers in the first six months of the year.

Nigeria has faced years of acute foreign exchange scarcity and instability due to lower crude production and a lack of economic diversification. Since June 2023, the local currency has lost about 70% of its value against the dollar following policy changes introduced by President Bola Tinubu’s government to attract inflows and revive the economy. The naira experienced significant volatility between mid-April and May due to an imbalance between dollar demand and supply, but fluctuations eased in June as dollar inflows improved. Central Bank believes the currency’s volatility may be over and is committed to promoting investor confidence. Since taking office in September, Governor Olayemi Cardoso has raised interest rates by 750 basis points to 26.25%, cleared a foreign exchange backlog, and negotiated multilateral dollar inflows to help stabilize the currency.

Biniam Girmay becomes first black African to win Tour de France stage

Biniam Girmay, the Eritrean cyclist, made history on Monday by becoming the first Black African rider to claim victory in a Tour de France stage. Girmay crossed the finish line with Colombia’s Fernando Gaviria and Belgium’s Arnaud de Lie in second and third, completing the stage in 5 hours, 26 minutes, and 48 seconds.The victory occurred on the third day and the longest stage of this year’s race, spanning 230.8 kilometers (approximately 143 miles) between Piacenza and Turin. Girmay triumphed in stage three of the 2024 Tour in Turin, following a crash in the peloton three kilometers from the finish, which dashed Mark Cavendish’s hopes of becoming the Tour’s record-breaking stage winner for yet another day.This achievement follows Girmay’s milestone victory in Italy two years ago when he won a stage at theGiro d’Italia, making him the first Black African to secure a victory in a Grand Tour, which includes the Giro, theTour de France, and theSpanish Vuelta.

All the pre-race speculation centered on whether Cavendish could secure a record 35th stage win. However, a crash just over 2km from the finish on the 230.8km route from Piacenza left many riders, including the Manxman, out of position. Meanwhile, Richard Carapaz became the first Ecuadorian to wear the yellow jersey, based on accumulated finishing positions over the first three stages. Tadej Pogacar, Remco Evenepoel, and Jonas Vingegaard are also at the same time as the EF Education-EasyPost rider in the general classification.

Gabon launches electronic ID cards after 11-year delay

Gabon has launched its National Electronic Identity Card (CNIE) after an 11-year hiatus since its last ID card issuance. Citizens can now apply for and obtain a nationaldigital ID card, currently issued only in Libreville, with plans to expand issuance to all police stations across the country.This initiative follows a recently concluded $68.5 million loan agreement between Gabon and the World Bank for the “Digital Gabon” project, aimed at enhancing access to legal identity and specific digital government services within the country.The government also announced plans to make the national ID card a travel document within the Economic and Monetary Community of Central Africa (CEMAC), an economic and political bloc comprising six Central African countries.

Since 2008, a policy has allowed visa-free travel within the CEMAC region for holders of the CEMAC biometric passport, but its implementation has faced significant challenges. Additionally, the digital identity card is valid for essential daily transactions, including banking services and administrative procedures. In 2012, the Gabonese government initiated efforts to establish a biometric national registry to issue secure national ID cards, awarding the project to Thales Digital Identity Security, a French firm. The first national ID cards were issued in 2013, but subsequent delays occurred. A Belgian firm, Semlex, was later contracted to issue the ID cards, but this contract was reportedly terminated. In May 2024, Gabon launched a civil registry issuance campaign in the Libreville region, establishing registration centers for Gabonese citizens to obtain their Numéro d’Identification Personnel (NIP).

Tiger Global-backed fintech Minka launches in east, southern Africa

Colombian payments infrastructure startup Minka has launched operations in Eastern and South Africa. The company plans to expand to Kenya, Tanzania, Ethiopia, Malawi, Zambia, Burundi, Uganda, and Mozambique in the first phase.Minka is a cloud-based programmable solution that can be customized by its partners to fit within a variety of regulatory frameworks. Founded in Bogota, Colombia, in 2016, the fintech raised $24 million in 2022 in a Series A funding round which saw participation fromTiger Global Management,Kaszec Ventures, and theFinTech Collective.“Low levels of financial inclusion, a heavy reliance on cash, and non-interoperable legacy payment systems are just a few of the issues our team in Latin America have overcome and we believe we must continue creating solutions that benefit society,”Minka’s CEO Domagoj Rozic.

Minka’s expansion into East Africa follows a growing trend of Latin American fintech companies entering the African market. In 2022,EBANXlaunched operations in 11 African countries, and in 2020, Uruguay’s dLocal expanded into West Africa and Kenya. This expansion is logical given the similar challenges faced by both regions—over 350 million African adults lack access to financial institutions and rely solely on cash transactions. Fintechs like Minka, EBANX, and dLocal provide platforms for Africans who wish to purchase global products but are hindered by the fact that some global merchants do not accept their preferred payment methods, such as mobile money or cash. These fintechs offer solutions by enabling global merchants to accept local African payments, thus bridging the gap between local payment preferences and global commerce.

Kenya’s NCBA Group acquires insurer AIG for undisclosed amount

NCBA Group, a leading financial services provider and one of Kenya’s largest banks, has completed the acquisition ofAIG Kenya, making it a wholly-owned subsidiary of the Group.The acquisition, for an undisclosed amount, was made fromAmerican International Group Inc.and has received necessary approvals from theCompetition Authority of Kenya, theInsurance Regulatory Authority of Kenya, and theCentral Bank of Kenya.This acquisition follows NCBA Group’s impressive financial performance, with a 4.6% growth in net profit for Q1 2024 and a 55.7% growth in net profit for the year ended December 2023.

In September 2023, NCBA announced its plans to buy out AIG Kenya, with the board approving the transaction. Following this announcement, NCBA’s subsidiary, Bancassurance Intermediary Ltd, launched a digital insurance portal in October 2023. Now, NCBA has fully acquired the insurance company, having previously held a minority stake in AIG Kenya for up to 18 years. This acquisition includes the purchase of the remaining 66.7% stake in the firm. AIG Kenya, which has been operating in the country since 1972, provides insurance services to corporates, SMEs, and individuals. With this acquisition, NCBA will leverage AIG’s established customer base and market reputation to expand its financial services reach, offering its customers more options and tapping into a broader audience.

Anti-govt protests rages on in Kenya despite finance bill reversal

Riot police fired tear gas grenades and clashed with stone-throwing protesters in downtown Nairobi and across Kenya on Tuesday, marking the most widespread unrest since at least two dozen protesters died in clashes a week ago.The nationwide demonstrationsindicate that President William Ruto has failed to quell a spontaneous youth protest movement, despiteabandoning plans for tax increasesthat triggered last week’s unrest. The protests have evolved into demands for his resignation and outrage over police brutality, presenting the most serious crisis of his presidency.Tuesday’s demonstrations began with a jubilant atmosphere but turned violent as the day progressed. In Nairobi’s downtown business district, police in helmets, carrying shields and wielding wooden clubs charged at protesters, while tear gas bombs exploded in the crowds.

President Ruto, facing the most severe crisis of his nearly two-year presidency, is caught between the demands of lenders like the International Monetary Fund to reduce deficits and a population struggling with the soaring cost of living. The protest movement, which lacks official leaders and largely organizes via social media, has rejected Ruto’s calls for dialogue—even after he abandoned his proposed tax increases.Human rights groups report that 39 people have been killed by security forces since protests against a controversial finance bill began two weeks ago. While the scale of demonstrations is smaller than last week’s, chaotic scenes have erupted in Mombasa, where cars were seen burning as protesters clashed with police.

Egypt’s EdVentures invests $400k in education platform El Kheta

Alexandria-based edtech startup ElKheta has raised $400,000 in seed round from EdVentures. Founded in 2018,El Khetais an educational platform that provides supplementary lessons to support Egyptian school students in their studies.The startup offers exercises and exams based on the new Egyptian curricula aiming to help students enhance their academic performance. The platform’s services include reinforcement lessons, exams from Egyptian curricula, interactive educational videos, homework, and direct communication with teachers.EdVenturesis the investment arm of Nahdet Misr Group and the first venture capital company specializing in the educational technology sector in the Middle East. Earlier this year, EdVentures had alsoparticipatedin the bridge round of other Egyptian edtechsSprintsandCrafty.

Venture capital investors are increasingly backing education-focused technology startups in Africa, as they move to capitalize on an obvious market and economic opportunity while driving tangible educational impact in the fast-growing region. The past few years have seen a rise in the adoption of edtech innovation in Africa. Available projections indicate that the market will grow into a multibillion-dollar industry, driven by increasing demand for online learning solutions, e-books, and educational apps. However, significant challenges remain for players in the space, such as access to funding and route-to-market which VC firms like EdVentures can help address.

French-Algerian Isack Hadjar to make FP1 appearance for Red Bull

F2 racer Isack Hadjar will drive forRed Bullin FP1 at theBritish Grand Prixweekend, taking over Sergio Perez’sRB20. Under F1’s current regulations, each team must run a rookie – defined as a driver who has started two or fewer Grands Prix – in two FP1 sessions each season.Hadjar, a Red Bull junior, currently sits second in the 2024 F2 standings, showcasing an impressive campaign for the 19-year-old, with notable feature race victories in Melbourne and Imola.The French racer’s upcoming appearance in the first practice session at Silverstone marks his latest outing in F1 machinery. He previously made two FP1 appearances in 2023 – one for AlphaTauri (now RB) in Mexico and one for Red Bull in Abu Dhabi.

French-Algerian prospect Isack Hadjar has been making waves with Campos Racing in this season’s Formula 2 championship, securing two victories and currently sitting second overall. The leaderboard is led by Estonian Paul Aron, a former member of Mercedes’ junior program and a Formula E contender.During the British Grand Prix weekend, Hadjar will have a busy schedule as he balances his FP1 duties with Red Bull alongside his F2 commitments for Campos Racing. Despite the packed agenda, it’s an opportunity he will undoubtedly relish.

Major stock market index BRVM 30 revised for third quarter of year

The Bourse Régionale des Valeurs Mobilières (BRVM) has revealed the new composition of the BRVM-30 index, the second largest index on the market after the BRVM Composite, for the third quarter of 2024.Theindexundergoes a quarterly revision to reflect the most actively traded securities.Nestlé CI,SAPH CI,Servair Abidjan CI,Sitab CI, andSode CIhave been included in the BRVM-30 index, indicating a growing interest among investors in these stocks.Conversely,Air Liquide CI,Bank Of Africa ML,Nei-Ceda CI,Oragroup TG, andSafca CIhave been removed from the index. This reshuffling highlights the dynamic nature of the market and the shifting interests of investors.

Indexes are some of the mostcommon and important conceptsin the world of finance and investing. But what do they mean? An index is a way to measure and track the performance of a group ofstocksor other assets. It’s like a thermometer for the market, showing how well certain parts of the market are doing.By looking at an index, investors can see if their investments are growing, staying the same, or shrinking. On theBRVM—the Bourse Régionale des Valeurs Mobilières, which is the regional stock exchange for the eight West African countries that share the CFA franc as their currency—several indexes track different sectors and aspects of the market.

Telecom Egypt signs $600m AiG deal to upgrade infrastructure

Telecom Egypt has signed an agreement with Hungarian telecoms firm 4iG Group to modernize the country’s digital infrastructure. The two companies will form a joint venture to build, operate, and commercialize fiber-to-the-home (FTTH) and fiber-to-the-site (FTTS) access infrastructure on a wholesale basis.The partners will invest $600 million over the next ten years to develop a modern fiber network, aiming to provide at least six million households with access to high-speed internet.While4iG GroupandTelecom Egypthave yet to finalize the business model, ownership structure, governance processes, and technological details of the joint venture, the project represents a significant step towards enhancing Egypt’s digital landscape.

The fibre-to-the-site (FTTS) portion of the network will significantly enhance Egypt’s mobile network capacity, facilitating a faster rollout of 5G technology. Over the past six years, Egypt has experienced substantial investment in its internet infrastructure by Telecom Egypt and other players, resulting in a tenfold increase in internet speeds. This move aligns with 4iG’s strategy of expanding its telecoms expertise internationally. Earlier this year, 4iG signed a separate Memorandum of Understanding (MoU) with Telecom Egypt to deploy a subsea cable between Egypt and Albania, marking its first venture into the subsea cable industry. By enhancing mobile network capacity and accelerating 5G deployment, the project will contribute to Egypt’s ongoing digital transformation efforts and the goals outlined in the Digital Egypt and Egypt Vision 2030 strategies.

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients. Daba is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.