Kenya is one of the more pleasant countries to visit in Africa. It offers a mix of third-world buzz and opportunity along with first-world luxuries such as shopping malls, quality internet access, enough infrastructure to get things done and, more recently, craft beer.
Add to that Nairobi’s near-perfect climate (you know it is good when you’re undecided on whether to pack a business suit or not… it is just too warm for a suit, but tolerable nonetheless). It is not surprising then that so many NGOs and organisations, such as the UN, have a strong presence in Nairobi. It always interests me that there are so many large embassies in Africa: How many high-level political discussions are there between Austria and Kenya, for instance, or Iran and Kenya, or Canada and Kenya? I suppose if, as a Ukrainian, you get altitude sickness while climbing Mount Kenya, it will be comforting to know that the embassy in Nairobi has people who speak your language and can bring you some flowers before you fly out.
The stock market has been under considerable pressure since the beginning of 2015. It is not surprising then that Kenya was screening well on valuation. The Kenyan banks have come under pressure after the president passed a law capping the interest rates that banks can charge. Cellphone giant Safaricom is being investigated for market dominance and both the listed brewer and the listed tobacco businesses have been hurt by higher taxes as government needs revenue. With that in mind, we set off to see if conditions are likely to improve.
The Kenyan economic situation is worrying – the current account deficit is wide, the fiscal deficit is wide, there is a drought risk (agriculture accounts for 30% of the economy) and there are elections later in the year. In addition, the interest rate caps mean that lending has slowed, which will put the brakes on economic growth. All this means that there is risk to the currency. However, the shilling, which the Kenyan authorities insist is not managed, has been remarkably stable at around 100 KES/USD over the last 18 months.
WorldRemit Ltd., a British money-transfer operator founded by Somali entrepreneur Ismail Ahmed, sees revenue from transactions involving Africans doubling by 2020 as more people on the continent access mobile-payment platforms and expatriates send cash home.
The seven-year-old company, in which Facebook Inc.-backer Accel Partners LP invested $40 million in 2014, will this year open a regional office in South Africa, its largest market on the continent in terms of money-transfer value, founder and Chief Executive Officer Ismail Ahmed said in an interview. Another site will start operating in Kenya, where the London-based business sees Africa’s highest number of individual transactions.
“In the next two years we should be doubling our volume every year,” Ahmed said in Kenya’s capital, Nairobi.
Narrowing the gap between rich and poor is key to avoiding a destructive rise in populism, German Finance Minister Wolfgang Schaeuble said on Saturday as he laid out a plan to boost private investment in Africa.
“If we do nothing to change this, we can expect a rise in populist parties and demagogues, and a rise in instability around the world, with all its negative effects for sustainable growth”, he said in a speech in Washington.
“We are seeing it already in some parts of the world,” he said during the Global Infrastructure Forum at the Inter-American Development Bank. Schaeuble is among the officials attending the IMF and World Bank spring meetings this week.
He said Germany, which holds the presidency of the G20 group of nations, is pushing a plan to have African nations partner with certain G20 countries and international lenders, such as the World Bank, to attract outside investors to the continent.
ACCRA (Reuters) – Ghana’s cocoa industry regulator will stop supplying free fertiliser to the country’s cocoa farmers and instead subsidise the products in an effort to create a fairer market, a spokesman for Cocobod said on Friday.
Ghana, the world’s second-largest exporter of cocoa behind neighbouring Ivory Coast, is on track to exceed its 800,000 tonne target for the 2016/17 season.
“The farmers complained that not all of them were getting the quantities that they needed when it was free,” Cocobod spokesman Noah Kwasi Amenyah told Reuters.
Cocoa experts including non-governmental organisations say that Cocobod’s new executive is receptive to a policy document they have submitted that aims to stimulate an industry that is one of Ghana’s top earners of foreign exchange and accounts for about 7 percent of gross domestic product.
The World Bank cut its growth projection for sub-Saharan Africa this year because of weak expansion in the region’s three biggest economies.
The area’s gross domestic product will expand 2.6 percent in 2017, the bank said in an emailed copy of its Africa Pulse report Wednesday. That compares with a January projection of 2.9 percent and matches the International Monetary Fund’s prediction released this week.
The economy of South Africa, which vies with Nigeria’s to be the region’s biggest, expanded 0.3 percent last year, the slowest pace since a 2009 recession, due to a slump in commodity prices, weak demand for the country’s exports and a continuation of the worst drought since records started more than a century ago. Nigeria suffered its first economic contraction in 25 years in 2016 due to a drop in oil exports and foreign-currency shortages that raised inflation to a decade high.
The bank cut South Africa’s GDP growth forecast for this year to 0.6 percent from 1.1 percent earlier, and raised Nigeria’s to 1.2 percent from 1 percent.
Pravin Gordhan’s ouster as South Africa’s finance minister in a cabinet reshuffle prompted S&P Global Ratings and Fitch Ratings Ltd. to cut the nation’s credit rating to sub-investment grade. Moody’s Investors Service put its assessment of the nation’s debt, which is two levels above junk, on review for a downgrade on April 3.
Nigeria has re-opened the airport in the capital Abuja after it completed repairs on its airplane runway a day ahead of schedule, confounding pessimists who predicted overruns. Nigeria, like many economies on the continent, is notorious for poor timekeeping and inefficiency.
But as the runway’s completion shows, such problems need not be inevitable. Nigeria’s swift response to the Ebola outbreak in 2014-16 offers another example. When needs must, African countries can be surprisingly effective at tackling complex problems.
The real issue was allowing the Abuja runway to decay to a point where repairs were needed in the first place. This points to a deeper problem of institutional inertia, whereby progress is locked in a stop-start cycle dependent on exceptional circumstances or individuals for progress.
Building efficient institutions is far from simple, but if done successfully there is no reason African states cannot be as capable as their developed counterparts.
Private equity investment in Africa continues to go from strength to strength, evidenced by a new report from the African Private Equity and Venture Capital Association (AVCA). AVCA’s 2016 Annual African Private Equity (PE) Data Tracker shows a marked increase in the total deal value during 2016.
Enitan Obasanjo-Adeleye, Director and Head of Research at AVCA, added: “Africa’s PE potential is coming to fruition as illustrated here through another year of strong results. This is no flash in the pan; we now have seen strong and sustained PE investment in Africa over the past 10 years and AVCA will continue to play its role as a major enabler and champion for PE investment in Africa as the region becomes more widely recognized as the world’s most exciting and attractive frontier investment destination”.
The report has been published as AVCA prepares for its 14th annual global conference, which returns to francophone Africa for the first time in ten years as part of AVCA’s mission to showcase investment opportunities across the continent.