Weekly Investor Update (October-WeekOne-2024)

9 min Read October 4, 2024 at 5:00 PM UTC

Monday

Zimbabwe Devalues Currency, Raises Interest Rates to Curb Inflation

Zimbabwe’s Reserve Bank has devalued its gold-backed currency, the ZiG, by 43% and raised the benchmark interest rate to 35% from 20% amid skepticism over the currency’s viability.The central bank’s websiteshowed theZiGtrading at 24.4 per U.S. dollar, down from 14 per dollar earlier in the day. While the central bank did not explicitly confirm the devaluation, Governor John Mushayavanhu announced measures to increase exchange rate flexibility and address inflation.Monthly inflation surged to 5.8% in September from 1.4% in August, reflecting pressures on the ZiG due to rising food import prices and declining dollar revenues from mineral exports.

The ZiG, introduced in April as a gold-backed currency to replace the Zimbabwean dollar, has faced skepticism due to the country’s history of failed local currencies. Previous experiments with local currencies led to hyperinflation and a shift to the U.S. dollar. The central bank has pledged not to print more ZiG than its reserves allow but analysts warn that the currency will struggle without addressing Zimbabwe’s deeper economic issues, including limited access to global capital markets and ongoing sanctions. Other measures announced include raising reserve requirements on deposits and capping foreign currency withdrawals.

Safaricom Explores Partnership with Elon Musk’s Starlink Amid Scrutiny

Safaricom Plc, Kenya’s largest telecommunications company, is in discussions with Elon Musk’s Starlink and other satellite providers for potential partnerships, according to CEO Peter Ndegwa.These talksare aimed at complementing Safaricom’s existing services with satellite technology. Starlink, a SpaceX unit, provides broadband via satellites in low-Earth orbit and has gained popularity globally.However, concerns have been raised by telecom operators and governments about the compliance of satellite services with local laws.

While Starlink has struck deals in remote areas worldwide and holds a license to operate in Kenya, an advocacy group, Kituo Cha Sheria, has taken Safaricom to court, alleging that the company is blocking Starlink’s operations. Ndegwa refuted these claims, stating that Safaricom isn’t hindering Starlink but is advocating for a level playing field, requesting that foreign satellite providers partner with local telecoms to ensure compliance with regulations and boost local investment. Safaricom’s concern is that independent satellite operations could create security risks and regulatory lapses due to their cross-border nature.

Ivorian Investment Fintech Daba Wins 2024 Ecobank Fintech Challenge

Daba, an Ivory Coast-based multi-asset investment infrastructure provider, won the Ecobank Fintech Challenge 2024 final held on September 27 in Lomé, Togo. It gets the top prize of $50,000 and a place in the Ecobank Fintech Fellowship program.The startup’sunified investment platform offers products for retail and institutional investors, capital seekers, and tech companies, reinforcing its role in bridging the capital-to-opportunity gap in Africa’s markets.Daba will nowexplorepartnership opportunities with Ecobank, including potential product integration and access to the bank’s extensive network across 35 sub-Saharan African countries.

The Ecobank Fintech Challenge has become a key platform for fintech innovation in Africa, with this year’s competition featuring over 5,500 contestants from 64 countries. The 7th edition of the challenge attracted fintech startups from across the continent, all aiming for a partnership with Ecobank. Daba’s innovative platform, which democratizes investing in Africa and emerging markets, stood out among the competitors.

Sinomine Plans $500M Lithium Refinery in Zimbabwe Despite Losses

Sinomine Resource Group’s Zimbabwean unit,Bikita Minerals, plans to invest $500 million in a lithium refinery over the next 3-5 years, despite current losses due to weak metal prices.Managing Director Xuedong Gong acknowledged the company will need to borrow from investors to fund the project, given its limited financial resources.Sinomineis among several Chinese companies that entered Zimbabwe during alithiumprice surge in 2021-2022, transforming the country into a significant producer of the metal. Zimbabwe’s government has encouraged investors to process lithium locally rather than export raw ore or concentrate.

While lithium spot prices have dropped nearly 90% in the past two years, Chinese companies are betting on future price recovery as production surpluses are expected to turn into deficits, driven by the demand for rechargeable batteries. The project aligns with Zimbabwe’s goals to boost domestic processing of its natural resources. However, Sinomine faces immediate financial challenges and will rely on external funding as it navigates the current market downturn. The future of the lithium market will depend on the balance between production surpluses and the growing demand for electric vehicle batteries.

Benin Grants Citizenship to Descendants of Slave Trade Victims

Benin, a key historical center of the transatlantic slave trade, has passed a law allowing descendants of those forcibly taken from the region to gain citizenship. The legislation, approved on September 2, offers Beninese citizenship to anyone who can trace their ancestry to victims of the slave trade and who does not hold another African nationality.Descendants may provide various forms of proof, such as a DNA test showing sub-Saharan African lineage, to acquire citizenship, which would be transferable to their descendants. Benin’s Foreign Minister, Olushegun Adjadi Bakari, underscored the importance of reconnecting with the African diaspora, saying during a UN address, “Our brothers and sisters of the Diaspora must find their place once again within the African community.”Benin’s move mirrors similar efforts in Ghana, which has granted citizenship to African Americans since 2019. Benin’s role in the slave trade, particularly through the port town of Ouidah, has been a difficult chapter in its history.

Benin’s new law granting citizenship to descendants of transatlantic slave trade victims is part of a broader effort by West African nations to reconnect with the African diaspora. This recognition, which includes those of sub-Saharan African descent who lack other African nationalities, comes as Benin faces its complicated role in the slave trade. The move echoes Ghana’s similar initiative, which has welcomed African Americans seeking to reconnect with their ancestral roots. Through this legislation, Benin acknowledges the enduring ties between Africa and its diaspora, offering a path for descendants to reclaim their connection to the land their ancestors were forcibly taken from.

Mozambique Central Bank Cuts Rates Again, Signals Further Easing

Mozambique’s central bank lowered its benchmark interest rate for the fifth time this year, reducing the Mimo rate to 13.5% from 14.25%, Governor Rogerio Zandamela said. The move is part of the bank’s ongoing effort to ease borrowing costs, and further reductions are expected as inflation risks remain contained.Annual inflation cooled to 2.8% in August, down from 3% in July, aided by a stable currency and steady international commodity prices. Despite easing inflation, high borrowing costs persist due to the government’s reliance on local debt markets to fund the budget deficit.The central bank’s monetary policy committee signaled thatfurther rate cutswould depend on inflation forecasts and risks to the economic outlook. The rate cut comes as Mozambique prepares for general elections on October 9 and aims to support economic growth, which rose to 4.5% in the second quarter.

Mozambique stands out as the only African central bank consistently reducing interest rates in 2024. The central bank’s focus on maintaining a stable currency and containing inflation has allowed it to ease borrowing costs, offering relief to borrowers who have been grappling with high real interest rates. With inflation risks under control, further rate cuts are likely as the country aims to boost economic growth, which reached 4.5% in the second quarter. However, the government’s reliance on local debt markets continues to pressure borrowing costs, posing challenges to long-term fiscal stability. As the country heads into general elections, the central bank’s monetary easing may help support economic momentum.

Winich Farms Raises $3M to Expand Fulfillment Centers, Technology

Nigerian agritech company Winich Farms secures $3 million funding to expand order fulfillment centers and enhance technology, led by Acumen Resilient Agriculture Fund.Winich Farms plans to lease buildings as regional fulfillment centers, reducing customer delivery times, with support from Climate Resilient Africa Fund, Marula Square, and others.Founded in 2020, Winich Farms connects rural farmers with retailers, processing orders through a network of over 4,000 agents, charging ₦720 per kilogram of paddy rice.

Nigerian agritech company Winich Farms has secured $3 million in pre-series A funding to expand its order fulfillment centers and enhance its technology. With the new funding, it plans to lease buildings as regional fulfillment centers, reducing customer delivery times.The funding round was led by theAcumen Resilient Agriculture Fund(ARAF), contributing $2.5 million, with additional support from theClimate Resilient Africa Fund,Marula Square,Plug and Play Tech Centre, andTekedia Capital.Sahel Capitalprovided $590,000 in debt.Founded in 2020,Winich Farmsconnects rural farmers with retailers, processing orders via a network of over 4,000 agents. The company charges ₦720 ($0.43) per kilogram of paddy rice, excluding delivery fees, and has grown its gross merchandise value (GMV) by 300% to $30 million since 2022.

Starlink Doubles Subscription Prices in Nigeria Amid Inflation Surge

Starlink, SpaceX’s satellite internet service, has increased its subscription prices in Nigeria due to rising inflation.The standard residential plan, with a 1 TeraBytes fair usage policy, will now cost ₦75,000 ($48), up from ₦38,000 ($24). Customers using Starlink for local roaming will face an even steeper price hike, with monthly costs jumping from ₦49,000 to ₦167,000. International roaming is now priced at ₦717,000 per month.Existing customers will start paying the new rates on October 31, while new subscribers are immediately subject to the revised pricing. However, the cost of the Starlink kit remains unchanged at ₦440,000.

Starlink’s price increases in Nigeria highlight the challenges of maintaining affordability amid economic pressures. Unlike in Kenya, where customers can rent Starlink kits or opt for cheaper plans, Nigerian users face limited options. In Kenya, Starlink offers a more affordable 50GB plan and a Starlink Mini kit. These incentives likely aim to compete with local internet providers like Safaricom and Jamii Telecommunications. In contrast, Nigerian customers have fewer choices, making Starlink’s price hikes more burdensome.

African Startups Raise $306M in Third-Quarter as Downturn Persists

African tech startups secured $306.4 million in funding during Q3 2024, bringing the total for the year so far to $836.5 million, a 40% decline compared to the same period in 2023.This drop follows a broader funding slowdown, with the global capital shortage continuing to impact the tech ecosystem. Last year, $2.4 billion was raised across 406 startups, marking a significant reset in the sector.In 2024, Q1 and Q2 posted a 50% drop in funding compared to 2023, and while Q3 also saw a decrease, the rate of decline has slowed. Notable funding rounds fromNALA,MNT-Halan, andPaymobhave lifted the overall sentiment, signaling a potential recovery soon as new funds are launched.

African tech funding in 2024 remains significantly lower than in previous years, reflecting ongoing global capital challenges. However, the slower rate of decline in Q3 suggests the sector could be stabilizing, with major deals and new funds offering hope for recovery. Despite the downturn, there are positive signals indicating that investment in African tech startups may pick up as market conditions improve.

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