Weekly Investor Update (May-WeekThree-2024)

7 min Read May 17, 2024 at 5:00 PM UTC

Monday

Pan-African lender Ecobank tops $2bn revenue mark

Ecobank Transnational Incorporated’s release of the 2023 results marked the first time since 2015 that the group has surpassed $2 billion in net income, representing an impressive 11% increase.Profit after tax surged by 11% year-on-year, reaching $407 million in 2023 compared to $367 million in the previous year. In addition, theTogo-based and BRVM-listedgroup’s profit before tax experienced an 8% growth in 2023, or 34% when adjusted for foreign currency translation effects, reaching $581 million.The pan-African banking group said that the growth was primarily due to revenue growth outpacing expense growth, which resulted in positive operating leverage. These financial outcomes highlightEcobank’ssuccessful execution of its strategic vision and its ability to capitalize on diverse market opportunities across Africa.

Ecobank’s strategic focus on geographic and sectoral diversification is yielding significant results, positioning the Lomé-based group as a financial leader across the continent. With a presence spanning from Dakar to Maputo, Ecobank continues to solidify its position as a pan-African banking powerhouse. Recently, the group repaid its $500 million 5-year Eurobond that matured on April 18, 2024. The Eurobond, which was issued in April 2019 was listed on the London Stock Exchange with a coupon rate of 9.5%. The bond garnered support from a diverse group of global investors, including development banks, FMO, and Proparco, who served as anchor investors.

South Africans set to vote in national, provincial elections on May 29

South Africais gearing up for national and provincial elections scheduled for May 29, a crucial event that may serve as a litmus test for the ruling African National Congress (ANC), which has been in power for the past 30 years.During these elections, held every five years, voters will elect representatives to the National Assembly and provincial legislatures. Subsequently, the newly constituted National Assembly will select the country’s next president from among its members.According to the Independent Electoral Commission (IEC), a total of 27.79 million individuals are registered to vote in this year’s elections, marking an increase from the 26.74 million registered voters in 2019.

South Africa’s ANC is confronting an electoral challenge of unprecedented magnitude as it braces for the possibility of a significant decline in support and the potential loss of its parliamentary majority in the upcoming election this month. Despite its struggle to attract voters, the ANC, which has held power since the end of apartheid in 1994, maintains a crucial advantage that could bolster its electoral prospects, analysts argue: a fragmented and disorganized opposition. With 70 political parties and 11 independent candidates vying in the national and provincial elections scheduled for May 29, the opposition landscape appears deeply fractured. This fragmentation poses a significant hurdle for opposition parties aiming to mount a cohesive challenge to the ANC’s dominance.

Airtel sets 2025 date for planned $4bn mobile money IPO

Airtel Africais set to take its mobile money unit, Airtel Money, public in 2025 amid ambitions for expansion beyond its current presence in 14 countries. The potential IPO could exceed $4 billion in value. However, the specific stock exchange for listing remains undisclosed at this time.Airtel Money is the company’s fastest-growing segment, demonstrating robust performance, particularly in Zambia, Uganda, Tanzania, Malawi, Gabon, and the Democratic Republic of Congo.Although plans for the initial public offering (IPO) were initiallyannounced in March 2024, CEO Olusegun Ogunsanya recently remarked that the IPO is still about a year away.

Airtel Africa’s financial report for the fiscal year ending March 31, 2024, revealed a $89 million loss after tax, primarily attributed to the instability of the Naira, Nigeria’s currency. The devaluation of the Naira resulted in $770 million in foreign exchange losses, significantly impacting the company’s financial performance. Additionally, the depreciation of the Naira adversely affected the company’s revenue, which amounted to $4.98 billion in FY ’23/24, down from $5.26 billion in FY ’22/23. Specifically, Airtel Nigeria, a key subsidiary, reported a revenue of $1.50 billion, marking a notable decline from the $2.13 billion reported in the previous fiscal year. In response to these challenges, Airtel Africa announced a$100 million share buyback programin February, slated to commence in March 2024 and extend over the year.

Ghana launches market to provide short-term financing for businesses

Ghana Stock Exchange(GSE) recently launched a market for trading short-term debt, expanding on the fixed-income market established over eight years ago. This development coincides with the country’sefforts to restructure debt, aiming for sustainability under an International Monetary Fund program.The newly introduced market facilitates the buying and selling of commercial paper, offering companies and organizations the opportunity to issue debt within a short timeframe. It also provides investors with access to enhanced creditworthiness, with maturities ranging from 15 days to 270 days.The launch of the commercial paper market broadens investors’ access to short-term debt instruments, enabling portfolio diversification and capital generation through various avenues.

For years, domestic investors in Ghana have faced limited options, hampering their ability to diversify investment portfolios and effectively manage risk. However, the introduction of the commercial paper market offers a fresh avenue for investors to deploy funds into short-term debt instruments. This development is particularly attractive to investors seeking relatively low-risk opportunities to generate returns while maintaining liquidity. The formal framework of the CP market establishes clear rules for issuance and trading. According to guidelines, commercial papers must hold an investment-grade rating from a credit rating agency. Issuers with ratings below investment grade must provide acceptable credit enhancement. Additionally, commercial papers can be issued as securitized debt, such as asset-backed or mortgage-backed securities. This structured approach enhances transparency and credibility within the market, fostering investor confidence and facilitating efficient capital allocation.

Governments, DFIs, firms pledge $2.2bn to clean cooking in Africa

At a conference in Paris, governments, multilateral lenders, and oil and gas companies collectively pledged $2.2 billion in financing to advance clean cookinginitiativesin Africa. This aims to address the detrimental effects of traditionalcookingmethods, which contribute to respiratory diseases, carbon emissions, and deforestation.Key contributors to the pledges include theAfrican Development Bank, theEuropean Union, andVitol SA, among others. Per estimates by theInternational Energy Agency(IEA), Africa requires $4 billion in annual investments to phase out the use of inefficient wood and charcoal fires and stoves by 2030.In a separate initiative, theWorld Liquid Gas Associationannounced thatEquinor ASAandTotalEnergies SE, alongsidePetredec Ltd.,Oryx Energies SA, andS&P Global Inc., will collaborate on a task force. This task force aims to promote access to liquefied petroleum gas for cooking in Africa and will present its plan at the COP29 international climate summit later this year.

In Africa, over 900 million people rely on primitive cooking methods, leading to 600,000 annual deaths, mainly among women and children. Progress in adopting clean-cooking technology lags, contrasting with advancements in Asia. The World Bank estimates inaction’s annual cost in sub-Saharan Africa at $330 billion due to health and climate impacts. The IEA urges $4 billion yearly investments to eliminate inefficient wood and charcoal stoves by 2030, proposingcarbon credit salesas a financing solution. This endeavor could annually reduce CO2 emissions by 800 million tons, exceeding South Africa’s emissions, the 15th-largest global emitter. Urgent action and investment are imperative to transition Africa towards cleaner cooking solutions.

Egypt-based Glint reaches initial close of second fund at $3m

Glint, a boutique consulting and investment firm in Egypt, has reached the first close of its second venture fund. With an initial close of $3 million, supported byWadi Degla Group, Glint’s new fund will concentrate on startups through its proprietary venture studio model.The fund aims to aid innovative entrepreneurs in developing disruptive, technology-based Egyptian companies capable of expanding into regional and international markets. It targets investments between the Seed and Series A stages, with ticket sizes ranging from $250K to $500K.Having launched six years ago, Glint has played a pivotal role in supporting numerous successful businesses, includingDarwinz.ai,Iqraaly,Wasla,Kashier, andFilkhedma.

Egypt’s startup ecosystem stands out as one of the most robust in North Africa, achieving a position among the top 100 globally. This success is attributed to a surge in venture capital funding and the implementation of startup-friendly policies in recent years. The proliferation of tech incubators and global accelerators has played a pivotal role in fostering the growth of the technology sector. Several venture capital firms and government-backed initiatives are instrumental in providing funding and support to startups in the country. Noteworthy among these is Egypt Ventures, a government-backed entity aimed at fostering innovation by supporting technology-based startups. Additionally, Nclude, a fintech fund supported by Egypt’s major banks, and Global Ventures are contributing further investments to Egypt’s technology sector.

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.