Weekly Investor Update (May-WeekFive-2024)

13 min Read May 31, 2024 at 5:00 PM UTC

Monday

BRVM main index hits six-year high on Sonatel, Coris Bank rally

TheBRVMequity market continued its upward trend with the benchmark Composite index rising 1.96% to 224.44 points last week, a level not seen in six years.The surge was driven by gains inSonatel(+3.37% to 19,000 FCFA) andCoris Bank International(+7.07% to 10,600 FCFA), along with a positive balance of 27 increases against 11 decreases.The BRVM 30 index also increased by 2.16% to 112.50 points – the highest level since 2023 – and the BRVM Prestige index rose by 2.30% to 104.34 points. Market capitalization grew by 1.96% to 8.4 trillion FCFA (c.$14 billion), a historic high for the BRVM.

The BRVM has been on an upward trajectory for two weeks, with the market’s positive performance reflecting increased investor confidence and strong financial results from key companies. Across the rest of Africa, the Tanzania Stock Exchange led the best performances with a 15.37% increase, boosting its DSE ASI index to 2,050.99 points as of Friday’s close. It was followed by the Zimbabwe Stock Exchange, which rose by 5.09% to 99.47 points, and the Egyptian Stock Exchange, which gained 4.06% to reach 27,205.14 points. Conversely, the Mauritania Stock Exchange experienced the largest decline, dropping 1.23% to 1,982.04 points. The Nigerian Stock Exchange fell by 0.52% to 97,612.51 points, and the Johannesburg Stock Exchange decreased by 0.48% to 79,150.84 points, marking the biggest drops of the past week.

Investors focus on elections, rate call in big week for South Africa

South Africa’s rand remained stable early on Monday at the start of a busy week marked by the national election, an interest rate decision, and various economic data releases. At 07:15 GMT, the rand traded at 18.4325 against the dollar, close to its previous close of 18.425.South Africans willvote in national and provincial elections on May 29, with market participants watching to see if the African National Congress will lose its parliamentary majority for the first time since the end of apartheid in 1994.The South African Reserve Bank is also set to announce its latest monetary policy decision on Thursday, following the election. In addition, monthly producer inflation, trade, and budget balance data are expected this week.

Analysts believe the South African rand has managed to stay below the key 18.50 level, but with the national election on Wednesday, there could be volatility and a potential break above this threshold. The ruling African National Congress (ANC) faces an unprecedented electoral challenge, possibly losing its parliamentary majority for the first time since the end of apartheid in 1994. Despite struggling to attract voters, the ANC retains a crucial advantage due to a fragmented and disorganized opposition, which could bolster its electoral prospects. The election outcome, along with the South African Reserve Bank’s monetary policy decision on Thursday, may impact the rand’s performance.

Asia’s richest man set to enter Africa’s high-growth telecoms market

Asia’s richest man, Mukesh Ambani, is expanding his telecom empire into Africa with a new venture. Radisys, a subsidiary of Ambani’s Reliance Industries, will supply essential network infrastructure, applications, and smartphones for Ghana-basedNext-Gen InfraCo(NGIC).The plans were revealed ahead of NGIC’s launch announcement in Mumbai, India’s financial center, today, May 27. NGIC aims to commence operations by the year’s end, offering 5G broadband services to mobile operators and internet service providers in Ghana.This move signifies Ambani’s strategic entry into Africa’s high-growth telecom market, leveragingReliance Industries’ expertise to capture mobile broadband customers and expand its global footprint throughRadisys.

Ghana, a West African nation with a population exceeding 33 million, hosts three main telecom operators: MTN Ghana, Vodafone Ghana, and state-run AirtelTigo. NGIC’s strategic partnerships, technological capabilities, and ownership of Ghana’s sole 5G license are poised to facilitate the development of broadband services on a large scale, a significant expense for individual mobile carriers. The company aims to replicate the success of Ambani’s Jio Infocomm in India. Jio disrupted the Indian telecom market in late 2016 with affordable data and free voice calling, leading to closures and consolidations among competitors. Jio’s initiative is widely acknowledged for making mobile data accessible to hundreds of millions of Indians. Presently, Jio stands as India’s largest mobile operator, serving 470 million users.

Raxio launches Mozambique data center in $290m Africa push

Raxio Group, a data center company, is opening its first facility in Mozambique as part of its $290 million investment strategy in Africa’srapidly growing and attractive digital infrastructure market.The facility, located in Beluluane Industrial Park (MozParks) near the capital, is Mozambique’s first Tier III Uptime-certified data center.Raxio, backed byMeridiam Infrastructure PartnersSAS andRoha Group, broke ground on the project in September 2022.Chief Executive Officer Robert Mullins stated that their business plan includes a portfolio of 10 data center facilities, with current debt and equity funding covering this expansion. This year, Raxio is opening five new facilities across various African markets.

The facility, Raxio MZ1, will support the country’s growing digital economy and advance the government’s digital transformation agenda. It enables customers to cross-connect with local and international carriers and other customers in specially designed meet-me rooms, attracting regional and international service and content providers. This is expected to improve the internet experience in Mozambique and the surrounding region. In addition, over 80% of Raxio MZ1’s electricity comes from renewable sources, combining hydro-generated grid power with local solar supply, aligning with sustainable energy practices.

Paystack-led consortium acquires Nigerian fintech startup Brass

Nigerian fintech startupBrasshas been acquired by an investment group led byPaystack, with participation fromPiggyVest,Ventures Platform,P1 Ventures, and angel investors Oo Nwoye and Olumide Soyombo, for an undisclosed amount.Launched in 2020, Brass provides SMEs with financial tools, including credit and payment processing, payroll and expense management, API access, cash flow analysis, team and client management features, and core business services such as point-of-sale systems, debit cards, and credit cards—all integrated within a dedicated business bank account.Post-acquisition, Brass will continue to serve its customers and expand under new leadership. The founding team, including CEO Sola Akindolu and CTO Emmanuel Okeke, will depart from the startup.

The acquisition comes two months after the fintech startup resolved transaction delays that had affected the platform since late 2023. CEO Sola Akindolu attributed the delays to a limited number of businesses (80) and challenging economic conditions. In March, Brass temporarily discharged some employees to restructure its operations to adapt to the current economic climate. Despite these challenges, Brass serves over 5,000 customers, ranging from educational institutions and shopping centers to restaurants and tech startups like Eden and Mono. The fintech startup has secured at least $2 million in funding, and beyond its challenges, the consolidation reflects the growing maturity of the Nigerian fintech ecosystem, as established players seek to expand their offerings and market reach through acquisitions.

Nigeria eyes Silicon Valley capital with startup hub in San Francisco

The Nigerian government is launching the “Nigeria Startup House” in San Francisco to enhance the visibility and positioning of the country’s startup ecosystem, aiming to attract more international funding and expertise from Silicon Valley and beyond.Although owned by the Nigerian government, the facility will be managed by a consortium of Nigerian digital technology companies, which will provide non-public funding for its operations.An existing government property in San Francisco will be repurposed for this project. Bosun Tijani, Nigerian minister, noted that the initiative aligns with the Ministry of Communications, Innovation, and Digital Economy’s goal to position Nigeria as a key player in the global technology landscape.

The concentration of capital and resources underscores the importance of the Bay Area for Nigerian startups seeking funding and support. Four in five Nigerian startups, including prominent names like Paystack, Flutterwave, Moniepoint, and ThriveAgric, are formally incorporated in the US. Additionally, 60% of the total venture funding for Nigerian startups originates from the US. The Bay Area, encompassing San Francisco and nearby metros like San Jose, is a significant hub for this venture capital. In 2022, over 40% of US venture funding went to Bay Area startups, according to Crunchbase. The Bay Area also houses a robust tech ecosystem, featuring the world’s leading startup accelerator, Y Combinator, headquartered in San Francisco.

Ether price rallies toward $4,000 as launch of spot ETFs nears

With the approval of spotEthereumexchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC), traders are optimistic about Ethereum’s price rallying above $4,000.The imminent launch of spot Ether ETFs within the next two months has strengthened the bullish sentiment. On May 27, Ethereum bulls pushed the price closer to $4,000, with the altcoin registering a 3.5% gain for the day.Data from Cointelegraph Markets Pro and TradingView shows that Ether performed strongly, rising from a low of $3,048 on May 20 and climbing 27% to reach a 10-week high of $3,964 on May 27. This significant price increase reflects the growing confidence in Ethereum’s market potential.

Crypto investors are anticipating significant institutional demand for ETH in the coming weeks following the approval of spot ETFs. Large Ethereum investors have made substantial purchases since the announcement and Ether’s performance over the last seven days has been driven by market anticipation. Following the news, ETH consolidated briefly before resuming its upward trend. Although ETH showed a lackluster performance immediately after the approval, the recent move toward $4,000 is seen as significant. Investors are optimistic that the launch of spot Ether ETFs will drive further price increases, indicating strong market confidence in its potential.

Zambia to exit sovereign default as bondholders back $3bn debt revamp

Zambia is nearing the end of nearly four years of default on its sovereign debt, with the majority of US dollar bondholders voting to approve a restructuring plan.As of last week, over 90% of holders of the$3 billionin outstanding international bonds had backedthe planahead of the May 30 deadline, according to Zambia’s finance ministry.This support paves the way for the restructuring to be implemented next month. Zambia’s 2020 bond default underscored issues with the international framework for resolving debt crises in low-income countries.

The restructuring is crucial for Zambia, Africa’s second-biggest copper producer, to stabilize its economy and regain financial stability. Zambia is reworking its debt under the G20’s Common Framework, designed to streamline debt restructuring for low-income countries by coordinating major creditors like China and the Paris Club. Zambia’s case, seen as a significant test for the framework, has faced prolonged delays. The proposed plan involves bondholders swapping three existing bonds maturing in 2022, 2024, and 2027 for two amortizing bonds, with one offering higher repayments contingent on an improved economic outlook. In 2022, the country secured a $1.3 billion loan from the IMF, contingent on restructuring its debt with other creditors.

Zhaojin wins control of Ivory Coast’s Abujar gold mine in $475m deal

China’s Zhaojin Capital has secured control of Australia’s Tietto Minerals after a six-month takeover battle valuing the gold producer at $474.62 million, according to a recent regulatory filing.Zhaojin Capital, a subsidiary of Hong Kong-listedZhaojin Mining, increased its voting power to 52.8% from 42.5%.Tietto Minerals, listed and headquartered in Australia, operates the Abujar gold project in Ivory Coast.TheAbujar minehas an estimated potential of 1.69 million ounces ofgold, or nearly 48 tons, based on exploration of less than 10% of its 1,114 km² concession area, indicating the potential for further discoveries. Operational since January 2023, the mine produced 37,111 ounces of gold in the first quarter of 2024, equating to just over a ton.

Ivory Coast is a significant gold producer, ranking as the sixth-largest in Africa, alongside its production of manganese, oil, and gas. Recently, Canada’s Montage announced the discovery of the largest gold deposit in the country, following the commencement of production at a major oil and gas deposit. Although agriculture remains the primary sector, the extractive industry contributed approximately 13% to total export values and 6% to government revenues in 2022. Over the past decade, there has been a notable increase in gold production, highlighting the growing importance of the mining sector in Côte d’Ivoire’s economy.

Mozambique becomes first in Africa to cut rates third time in row

Mozambique’s central bank became the first in Africa to cut interest rates for a third consecutive time this year, signaling its commitment to continued easing measures. The MIMOinterest ratewas reduced by 75 basis points to 15.00%.The Monetary Policy Committee cited favorable forecasts as the basis for its decision, aiming to maintain inflation in single digits in the medium term.Despite a slight increase ininflationto 3.26% year-on-year in April, significantly lower than its post-pandemic peak of 13% in 2022, the bank remains focused on supporting economic stability and growth through its monetary policy actions.

Mozambique’s decision to lower interest rates sets it apart from other African central banks, as most have either maintained or raised rates this year due to concerns about inflationary pressures. The move was supported by expectations of continued single-digit inflation in the medium term, thanks to stability in themeticalcurrency and less severe effects of geopolitical tensions on international prices. Despite the rate cut, Mozambique’s overall monetary policy stance remains relatively tight due to high reserve requirements, as noted by the International Monetary Fund. The decision reflects a delicate balancing act aimed at supporting economic growth while ensuring price stability and financial resilience.

South Africans vote in ‘most competitive election’ since 1994

South Africans vote on Wednesday in a highly competitive election, with opinion polls suggesting that the African National Congress (ANC) might lose its parliamentary majority for the first time in 30 years.Votingbegan at 7 a.m. (0500 GMT) and saw long queues forming in major cities like Johannesburg, Cape Town, and Durban, as well as in townships and rural areas, Reuters reported.Voters cited high unemployment, rampant crime, frequent power outages, and corruption within ANC ranks as motivations for supporting opposition parties. Over 27 million South Africans are registered to vote across more than 23,000 polling stations, withthe processcontinuing until 9 p.m. (1900 GMT).

The ANC, under Nelson Mandela, achieved a historic victory in South Africa’s first multi-racial election in 1994 and has maintained a majority in national elections every five years since. However, its share of the vote has steadily declined over the years. If the ANC fails to secure over 50% of the vote this time, it will need to form a coalition with smaller parties to govern, a new and potentially turbulent scenario for the nation’s young democracy, which has been dominated by a single-party so far. Voters are selecting members of provincial assemblies in each of the nine provinces and a new national parliament, which will then choose the next president. Despite the challenges, the ANC is still expected to win the largest share of the vote, likely keeping President Cyril Ramaphosa in office.

Starlink gets license in Botswana, Zimbabwe after initial troubles

Botswana has granted a license to SpaceX’s Starlink to operate in the country, just four months after its initial application was rejected for incomplete documentation.The approval was expedited following a meeting between Botswana’s President Mokgweetsi Masisi and SpaceX executives at a business summit in the United States, where SpaceX expressed renewed interest in securing the license.Last week,Starlinkalso received a license in Zimbabwe shortly after the arrest of Neville Mutsvangwa, a politician’s son, for illegally possessing aStarlinkterminal violating the Postal and Telecommunications Act.

Licensing Starlink is a significant step towards improving digital infrastructure and reducing the digital divide in both Botswana and Zimbabwe. In Botswana, this move aims to bridge the connectivity gap for the 2.6 million population. Despite having an internet penetration rate above 70% and some of the fastest internet speeds in Africa, Botswana suffers from some of the highest data prices on the continent. By enabling Starlink’s satellite internet service, the country hopes to lower these costs and enhance internet access, particularly in remote and underserved areas. Similarly, in Zimbabwe, licensing Starlink can provide reliable internet service in regions with limited connectivity, fostering greater digital inclusion and economic opportunities.

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.