Dear Friends,

Happy Friday. Yesterday we celebrated the birthday of Nigerian playwright and political activist who received the Nobel Prize for Literature in 1986 — Akinwande Oluwole "Wole" Soyinka.

Enjoy the read. And please share the Africa Brief.

• Caster Semenya. The European Court of Human Rights overturned World Athletics’ rules which banned the South African running champion from competition (Newsday).

• Central African Republic (CAR). Wagner announced a troop rotation in CAR — a country in which it holds significant human and financial assets — raising speculation of its continued presence there (Reuters).

• Challenger Banks. Africa boasts some great examples of banks shaking things up - read more about outfits like Affinity in the Business & Finance Section.

• Climate. The first week of July was the hottest week ever recorded on the continent, according to the World Meteorological Organisation.

• Cost of Capital. African governments are claiming that credit-rating agencies as biased. They claim that pessimism about debt sustainability is unwarranted (Brookings).

• Ethiopia. Lawmakers have approved the creation of Ethiopia’s 12th regional state, called the ‘Southern Ethiopian Region’ (Africa News).

• Mozambique. Former Finance Minister Manuel Chang will be extradited to the US to face fraud charges after being involved in the ‘tuna bond’ scandal that triggered Mozambique’s economic collapse in 2016 (Financial Times).

• UK-Africa Investment. The UK is missing an opportunity to invest in African fintech and pharmaceuticals (BusinessDay).

• Sudan. The UN issued a warning of an imminent “full-scale civil war” in Sudan (Al Jazeera).

• Tunisia. Human Rights Watch has accused Tunisia of leaving hundreds of migrants and asylum-seekers on its remote border with Libya without food or shelter (Financial Times).

• Zimbabwe. More democratic backsliding in Zimbabwe as a court rules against the opposition hosting a rally ahead of the country’s election in August.

In Context: All the way up — the status of transaction values for African neobanks. The neobanking market is projected to reach US$13.70bn in 2023, with an expected annual growth rate (CAGR 2023-2027) of 22.62% resulting in a projected total amount of US$30.97bn by 2027. The average transaction value per user is US$5.43k. Meanwhile the number of users is expected to amount to 4.49m by 2027. User penetration will be 0.2% in 2023 and is expected to hit 0.3% by 2027.

In its report on the sector, McKinsey & Company finds that traditional African banks are costly to run, with an average cost-to-asset ratio between 4 and 5% — almost twice as high as the global average. The firm’s research suggests that banks may need to review their cost base and operating models, especially if they want to increase access to the banking system in a cost-efficient manner—a necessary condition for driving much-needed financial inclusion on a vastly unbanked continent.

Step in the challenger banks, those financial institutions that are looking to run cheaper, more dynamic, outfits and reach 50% of Africa’s population that remains unbanked or underbanked. Challenger banks like South Africa’s Tyme and Ghana’s Affinity show how these banks can lead the market. Earlier this year, TymeBank raised $77.8M from Norrsken22 and Blue Earth Capital (TechCrunch). Affinity has attracted backing from Africa’s best known VCs.

Devex reports that a group of International Monetary Fund (IMF) economists “found tangible reasons why investors demand much higher rates” on the continent. These economists suggest a series of reforms that would go a long way toward lowering costs. Reviewing the numbers on more than 1,500 bonds from the region, they found that sub-Saharan African countries pay a premium that is 66% higher than the average in other regions and about 2.1% points more than peers.

The study revealed that investors are rational in their demands of governments, citing political risk and economic (in)stability, specifically: budget transparency, extent of the informal economy, level of financial development, and quality of public institutions.

The IMF writes that should African governments implement reforms to fiscal transparency and the informal economy, then borrowing costs could go down.

Three Chinese warships arrived in Nigerian waters, anchored just off Lagos in a friendly visit to the West African national (The Africa Report)

In an apparent show of judicial partiality in favor of the ruling Zanu-PF, a Zimbabwean court upheld a ban on the opposition party’s launch campaign — the Citizens Coalition for Change. The country’s President, Emmerson Mnangagwa, beat the CCC’s candidate in 2018 in an election marred by alleged vote-rigging.

In Kenya, police have been deployed due to protests following the announcement of tax increases (Reuters).

The South China Morning Post reports on the growing medical and pharmaceutical ties with the continent, citing the Chinese built and funded Africa CDC headquarters as exemplar of this commitment.

In Sudan, more than 190,000 refugees have already fled over the border to Chad. While the UN issued a notice that the fighting could lead to civil war and genocide in Darfur where in the 2000s, 300,000 people were killed before UN and African Union Peacekeepers arrived. Compounding the devastating state of affairs — a region wide drought.

The Economist reports that new images suggest burial grounds are being burned in Ethiopia. The war there has left 600,000 dead. The international community looked away.

Meanwhile in CAR, several hundred Wagner troops left the country (Reuters). Some 1,900 Russian mercenaries are believed to be operating there, controlling gold mines and logging operations in a military operation that is paradigmatically extractive. Any restructuring of Wagner operations in CAR could have substantial commercial ramifications for the outfit.

And finally, Foreign Policy asks if Cameroon will be the next Sudan following the start of the 6th year of fighting between Anglophone separatists and Cameroon’s government.

Propel, a Lagos- and Berlin-based startup that wants to build sustainable talent pipelines for communities and help global companies de-risk the process of hiring remote talent from emerging markets, secures €2.5 million (~$2.74 million) in seed investment according to TechCrunch. The company offers a “value stack” as an all-in-one platform to over 100+ tech communities.

The Financial Times has finally taken a hard look at the minerals that are powering green tech and the dangerous conditions in which they are mined.

United States in Africa

Reuters reports on the US Assistant Secretary of State for African affairs, Molly Phee’s travels to Addis Ababa on Monday and Tuesday. There she meets with African leaders and Sudanese civilians in an effort to bring the rival factions to peace. Don’t hold your breath – diplomatic efforts have continuously proved ineffective, with competing peace initiatives creating confusion over how the warring parties might be brought to negotiate.

Since the fighting started on April 15 in Khartoum, more than 2.9 million people have been internally displaced and another 700,000 people have fled to neighboring countries (Reuters).