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Graphic of the Week

As traditional media falters, YouTube has become a vital platform for news in Africa, offering a path to financial viability for media startups and providing uncensored access to information in regions with unreliable press freedom (The Economist).

Too Long; Didn’t Read

• Finance: And finally…American Express (AmEx) ramps up its growth in Africa, just over four years after it gets approval to operate in China and takes on rivals Mastercard and VISA for the next great consumer market. AmEx is using a similar market entry strategy for Africa as it did in China, partnering with a fintech. In Africa, it’s Flutterwave (Bloomberg).

• Finance: Investors eyeing high-yield bonds from Nigeria, Gabon and Kenya, anticipating gains from potential U.S. Fed rate cut (Bloomberg).

• Infrastructure: Fascinating read on the role of seaports as tools for global powers. Africa is taking center stage (Bloomberg).

• Tech: U.S. Development Finance Corporation invests with internet giant Liquid Telecoms to extend fiber to 20 million Africans (Bloomberg). 

• Botswana: Second largest, 2,492-carat, diamond was found at Karowe mine (Bloomberg).

• DRC: Gov’t awaits Mpox vaccine aid from U.S. (Bloomberg) as Africa CDC coordinates with manufacturers for steady supply and local production of vaccines (Bloomberg).

• Egypt: Foreign debt decreased by $7.4B in the first quarter of 2024 amid major land sale (Reuters); household electricity prices by up to 50% as subsidies removed under IMF deal (Reuters).

• Ghana: Gov’t has begun construction of a $12B, 300,000 barrel-per-day oil refinery (Reuters); gov’t ends foreign cocoa loans (Bloomberg).

• Kenya: Supreme Court allows continued collection of taxes under the Finance Act 2023 (Citizen Digital); Kenya and Nigeria ride-hailing drivers are setting own fares amid protests (Wee Tracker); Uber raises ride charges by 10% in response to driver protests (NTV Kenya).

• Rwanda: Kigali to host Global AI Summit in Africa in October, gathering 1,000 global leaders at the Kigali Convention Centre (The New Times).

• South Africa: Inflation rate dropped to 4.6% in July, the lowest in three years (Reuters); economy rebounds post-election (Bloomberg).

• Tunisia: Spice up your meals with harissa, a fiery culinary pride and UNESCO treasure (FT).

Business & Finance in Africa 

And Here Comes American Express…Better Late than Never

• Africa has now officially become a battleground market for the world's major credit cards.

• Mastercard and VISA have been moving fast in the past 10 years, while American Express (AmEx) has been patiently waiting and watching for the right time to strike. And that time has come…

• According to a report by Worldpay, Africa is the last major region where cash dominates as a payment method. AmEx sees this as an opportunity. 

• The company is working to persuade hotels, restaurants and tourism destinations across the continent to accept its cards, driven by increasing leisure travel from the U.S. and Europe. 

• AmEx has made strategic partnerships with Ecobank and Flutterwave to expand card acceptance and aims to reach at least 75% of merchants in each country it enters (Bloomberg).

• Go deeper on how these cards are compared on a global scale. 

Sidebar: Staying Sharp on African Economics

We continue to cover the macroeconomic stories that are unfolding across Africa as many countries on the continent claw their way out of debt, hoping to emerge as middle-income nations. Here are some interesting points to ponder.

• African nations (and many of its people) feel like the global credit markets unfairly rate them. 

• “A report from the United Nations Development Program found that the region loses almost $75B each year on account of higher interest rates and opportunity costs related to foregone spending. Budget allocations to debt servicing in the region now rival important public services like education and health.” 

• So a number of nations want the establishment of an Africa-based credit ratings agency by 2025, which aims to address the so-called "Africa penalty." 

• Problem is, this alone won't solve the core issues. African nations must diversify their economies beyond commodities, enhance transparency in public finances and implement consistent pro-growth visions, strategies and policies. Without these structural reforms, credit ratings will continue to reflect existing vulnerabilities rather than driving meaningful change in the region’s economic trajectory. Go deeper on this with Ken Opalo (Bloomberg).

• But while many are complaining, some are just getting on with it. In early 2024, Egypt devalued its currency and reduced foreign debt by $7.4B, bringing the total to $160.6B in March, thanks in part to a $35B land deal with the UAE. This reduction came after years of debt accumulation for major projects and military acquisitions. Egypt's economy is now on a cautious recovery path, supported by an $8B IMF package, with foreign debt dropping from 43% of GDP in December 2023 to 39.8% in March 2024 (Reuters).

• South Africa, meanwhile, saw headline consumer inflation decrease to 4.6% year-on-year in July 2024 from 5.1% in June 2024, edging closer to the central bank's 4.5% target. The drop suggests potential for the South African Reserve Bank to lower its main interest rate at the upcoming September meeting (Reuters).

Ghana's Ambitious Refinery Gamble

• Ghana launched a $12B oil refinery project in Jomoro, aiming to transform the country into West Africa's leading petroleum hub by 2036. 

• President Nana Akufo-Addo hailed the refinery, which will produce 300,000 barrels per day, as a major development milestone. 

• However, critics question the project's viability.

• Additionally, local communities are protesting the 20,000-acre land acquisition, fearing the project will disrupt their livelihoods and overlook environmental impacts (Reuters).

Is Off-Grid Solar Africa’s Next Opportunity to Leapfrog? 

• Off-grid solar is seen as a critical solution and massive investment opportunity to address Africa’s dearth of on-grid energy. Currently, 685 million Africans are without power. 

• In 2023, the industry attracted $425M in global investments, highlighting a trend towards innovative financing like securitization to meet growing needs. 

• For example, d.light, an off-grid solar company, secured $176M last month to securitize receivables.

• Others are flocking in. The World Bank and African Development Bank have set an aggressive target to extend electricity access to 300 million Africans. 

• Despite the positive momentum, the sector still faces a $300B funding gap to achieve universal electricity access by 2030 (Africa: The Big Deal).

Health in Africa 

Mpox Outbreak Spreads in DRC

Keeping an eye on this…

• The Democratic Republic of Congo is combating an outbreak of Mpox that has already infected 17,794 people and resulted in 535 deaths this year. 

• This surge is driven by a mutated strain. It is predominantly affecting children under five and is spreading through close contact, often before symptoms appear. 

• The situation is exacerbated by ongoing conflicts and overcrowded conditions. 

• Meanwhile, neighboring Burundi has reported 100 cases. This cross-border spread highlights the growing concern over the outbreak's potential to escalate into a larger regional crisis.

Tech & Society in Africa

Africa’s $1.5T AI Opportunity

We continue to track the growing AI industry - and sub-industries - in Africa.

• Reports indicate that AI could boost Africa’s economy by $1.5T, which is nearly 50% of its current GDP if the continent captures just 10% of the global AI market that’s projected to reach $15.7T by 2030.

• The African Union has launched its Continental AI Strategy. 

• Nigeria recently unveiled its first draft of the National Artificial Intelligence Strategy (NAIS).

• In the last Africa Brief, we explored how AI is already driving innovation in key sectors like agribusiness, finance and transportation. With this new strategy, Africa could accelerate these advancements to create jobs and fuel growth across the continent.

Everyone Wants to Play in the Sandbox

• Sandboxes are hot! On August 13, 2024, the Bank of Tanzania introduced a sandbox regulation framework for fintech startups, aiming to reduce regulatory burdens and promote innovation after a lengthy preparation that began in 2023. The Fintech Regulatory Sandbox Regulations 2024 will outline eligibility criteria, application procedures and a nine-month testing period. The Tanzania Startup Association supports this initiative, urging other sector regulators to establish sector-specific regulatory sandboxes (The Kenyan Wall Street).

• What is a regulatory sandbox? It’s a framework set up by financial regulators that allows FinTech startups and other innovators to conduct live experiments in a controlled environment under regulatory supervision. The primary purpose of a regulatory sandbox is to enable companies to test new products, services or business models without immediately facing the full set of regulatory requirements. And so regulators are confident it won’t accidentally hurt consumers!

• Other African countries with regulatory fintech sandboxes include Sierra Leone, Kenya, Rwanda, Mozambique, Mauritius, Ghana, Zambia, Zimbabwe, Angola, Egypt, Uganda, Morocco, South Africa, Nigeria and Ethiopia. 

DFI Boosts Africa’s Broadband

• The U.S. Development Finance Corporation (USDFC) is set to invest $90M in Liquid Telecommunications Holdings Ltd., which aims to raise $225M by the end of the year. 

• Collaborating with Microsoft and Google, Liquid will enhance digital connectivity in East Africa, extending fiber networks through multiple countries and offering a reliable alternative to existing subsea cables. 

• Already the company has laid more than 110,000 kilometers (68,000 miles) of fiber on the continent.

• The initiative supports Africa's growing demand for high-speed internet and data storage, positioning Liquid as a key player in bridging the continent’s connectivity gaps (Bloomberg).

Explorations in Africa

Food for Thought: Harissa is Tunisia's Fiery Culinary Pride…and a UNESCO Treasure?

• Harissa, a fiery pepper paste, is not just a staple in Tunisian cuisine but a symbol of the nation’s cultural identity. 

• Deeply ingrained in the daily lives of Tunisians, harissa is a beloved condiment, its significance recognized globally with its inclusion on UNESCO’s Cultural Heritage list. If you are a foodie, you’ll want to read this FT article and fill up your suitcase next time you are in Tunis.

This week’s Africa Brief team included Shaynerose, Antony and Mary Ann in Nairobi and Ruth in Addis Ababa who combed for content with strategic direction from Andrew, just back to Kigali from a bagpipe festival in Scotland. Thanks for reading. We hope you enjoyed the Brief! Reach out anytime ([email protected]).