Dear Friends,

Conferencing season has arrived with various trade shows and investment conferences kicking off across the African continent. My latest piece in South Africa’s Business Day considers how venture capitalists use these events to spy opportunities and markets where others see risk and governance failures.

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• Africa’s Cloud. BCX, the multinational ICTS company, thinks there is an opportunity to take a share of the African cloud market given its recently announced partnership with Chinese tech giant Alibaba (BusinessDay).

• Credit Ratings. The Africa Union is actively pursuing the creation of its own credit rating agency, providing fairer assessments of African sovereign risk and reducing inappropriately high risk premiums (WEF).

• Debt Troubles. Oxfam International warns that some of the world’s lowest-income nations are set to endure budget cuts exceeding US$220 billion over the next five years amid a debt crisis (Reuters).

• DRC. A government spokesperson announced this Tuesday (10 October) that the UN’s DRC peacekeeping mission must end by 8 December because of a “lack of satisfactory results on the ground”. The DRC will hold elections on 20 December (AP).

• Egypt. About 400 people in Egypt have been arrested over ‘riot incidents’ after President Abdul Fattah al-Sisi announced that he would run for a third term (BBC News).

• Gabon. The country’s new forestry minister committed to its role as a leading voice advocating for rainforest preservation. Minister Ntossui Allogo instructed the timber industry to transition to a new digital tracking system with a view to cracking down on deforestation and making the industry more transparent (Bloomberg).

• mRNA Vaccines. The Bill & Melinda Gates Foundation is giving US$40 million to advance mRNA research and manufacturing to bolster drug and vaccine supplies in lower-income African nations with a focus on combating diseases like malaria, TB, and Lassa fever (Bloomberg).

• Niger. Authorities have cut Niger’s 2023 budget by 40%, citing international sanctions imposed after July’s military coup. Over 10% of the country’s pre-coup budget came from international loans and budget support (Reuters). Meanwhile, the Biden administration formally declared the military takeover as a coup and cut off economic aid to the country (New York Times).

• Nigeria. An opposition party in Nigeria accused President Tinubu of forging a diploma he received from an American university during the run-up to this year’s elections. The opposition says Tinubu should be removed from office if the claims are true (AfricaNews).

• South Africa. Energy Minister Gwede Mantashe criticized “US-funded NGOs” for impeding economic development after environmental groups blocked oil and gas exploration in the country (Bloomberg).

In Context: The World Bank forecasts reduced economic activity across the African continent citing stubbornly high inflation fueled by rising food and energy prices as well as by weaker currencies and low investment growth (World Bank). For its part, the East African economic outlook for 2023 looks resilient with the highest projected growth on the continent at 5% according to the African Development Bank. As the world shifts eastwards, the Indian ocean will become an increasingly important trade corridor — allowing East African states to benefit from busier trade routes. The region also has significant opportunities in green growth sectors, notably agriculture, energy, ICT, transport, and the blue economy.

Debt reworks commence for some of Africa’s defaulted nations, including Zambia and Ghana, as an in-person IMF meeting kicks off in Marrakech, Morocco. These conversations happen in parallel with ongoing negotiations between the IMF, Tunisia, and Egypt over the terms of proposed bailout loans.

Ghana remains of particular concern – a one time trailblazer and African economic success story — the country now continues to experience financial distress. Recent protests called for the Governor of the Bank of Ghana and his two deputies to resign over the loss of about 60bn Ghanaian cedis (US$5.2bn) in the 2022 financial year. BBC News reports on claims that the bank illegally printed money to lend to the government, supposedly leading to the depreciation of the currency and crippling inflation. Claims also criticise the bank for spending more than US$762,000 on domestic and foreign travel, an 87% increase year on year, and US$250m on a new office building. The opposition says these figures are recorded in an internal audit (BBC).

Sticking with the macros, the IMF shaved 0.1% off its growth outlook for 2024. Nigeria, Africa’s largest economy, is expected to expand by 3.1% next year in part due to reforms being implemented by the new administration.

Poor sovereign credit ratings have hurt Africa’s public and private financial institutions, raising the cost of capital and scaring off would-be investors. The African Union wants a fair shake, proposing the establishment of an African Credit Rating Agency (ACRA). More on this story can be found in a great piece by the World Economic Forum.

Africa’s Railway

International Intrigue reports on the EU and US’ backing for an ambitious African railway project, the Lobito Corridor, which will connect three of the world’s largest producers in critical minerals and rare earths: Angola (copper and iron), DRC (cobalt), and Zambia (copper). President Biden called the project a “game-changing regional investment.” The European-owned Africa Global Logistics (AGL) has since won a government tender to manage the country’s second-largest port, Port of Lobito. The West’s attention to the Lobito Corridor and the recent tender award to AGL may be further evidence of China’s slowing Belt and Road Initiative.

African Business writes that China is said to have approved a proposed G20 debt restructuring framework for debtor countries. This would signal that Beijing is prepared to take a concessionary approach to African countries struggling under the burden of debt repayments. China, which held over US$73bn of the continent’s debt in 2020, will drop its demand for losses to be shared amongst other creditor countries and financial institutions.

400 people were arrested over ‘riot incidents’ in Egypt after its President, Abdul Fattah al-Sisi, announced that he would run for a third term. BBC News reports that Sisi's remarks about running again sparked a rare display of public anger, particularly in the north-western city of Marsa Matrouh. Egypt's Presidential elections are scheduled to take place in December (BBC).

Ivory Coast President Alassane Ouattara dismissed his Prime Minister, Patrick Achi, and announced an upcoming formation of a new government, two years before the next Presidential elections. Ouattara signed a decree ‘ending the duties of the Prime Minister, who is the head of the government, as well as those of the members of the government’. A report says the decision was expected after the President informed members of the government of an upcoming reshuffle during the last Cabinet meeting back on 28 September (News24).

After a slew of coups, the burning question remains as to which African government (democratic or otherwise) will be the next to fall to its own military. The Economist and Fitch Solutions crunched the numbers.

Stitch, the South African fintech that has built an “end-to-end payments solution designed to meet the complex and evolving payments needs for its enterprise clients,” raised US$25 million in an extended round of funding led by global fintech investor Ribbit Capital, bringing its total Series A to US$46 million. Existing backers, including CRE Ventures, PayPal Ventures, and the Raba Partnership, participated in the round (TechCrunch).

October and November are busy months for various trade shows across the African continent. In Johannesburg next month, the US-Africa trade summit will kick off to discuss the future of Washington’s African Growth and Opportunity Act (AGOA), which is due to expire in September 2025. Since its enactment more than two decades ago, oil has been the primary export covered by AGOA. The major benefactors between 2014 and 2021 of non-hydrocarbons are limited to just five countries: South Africa, Ethiopia, Kenya, Lesotho, and Madagascar.

Witney Schneidman and Vera Songwe wrote in FP this past August that provided with certain enabling factors, the 35 African countries that have duty-free access to the US market through AGOA could become major suppliers of clean energy minerals to the US. These factors would include the support of African research and development, analytics-gathering, and domestic value-addition processing. The US Minerals Security Partnership policy currently does not include any African nations. The oversight is particularly glaring considering many African states are among the largest producers of key minerals for the green energy transition, including cobalt, iron ore, and copper.