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February 2017

15 February 2017

Outlierz launches seed fund for African startups

By Staff Writer | Africa Global Funds

Outlierz, a Moroccan based investment firm, has launched a new seed fund dedicated to provide smart capital to startups in Africa.

The firm eyes tremendous opportunities at the intersection of Technology, Entrepreneurship and African economies. Outlierz said that there is talent, but not enough money and appropriate resources to grow scalable startups from emerging ecosystems.

The fund will invest $20-50K in “past-idea stage startups with a viable prototype and a dream team”.

In addition, it will look at $50-200K as follow-on investment or participate in Seed round / Series A of growing companies with traction and revenue.

Kenza Lahlou, Founder and MD of Outlierz, said: “We started from a simple yet striking conclusion: too many startups fail at the pre-seed and seed stages because of a lack of appropriate resources. We intend to change that by providing smart capital to the continent’s most promising companies.”

In addition to providing capital, the fund will provide hands-on advice, resources and access to its global network of world-class mentors and investors.

Outlierz stated that its goal is to take startups “to the next round of funding”.

“The target outcome will be a stronger pool of high potential startups that are ready for subsequent investment and, in the end, lead to success stories that are uniquely African,” Lahlou said.

Outlierz is backed by entrepreneurs and angel investors, including CEO of YCombinator, Michael Seibel, 500startups MENA partner, Hassan Haider, as well as tech entrepreneurs from Africa and Morocco.

Source: https://asokoinsight.com/news/outlierz-launches-seed-fund-for-african-st...

15 February 2017

Ethiopian banking industry finds silver lining amidst uncertainity

By Samson Berhane | Addis Fortune

The nation’s private banks have achieved remarkable results during the first half year of the current fiscal year, despite a popular perception that the economy has been sluggish due to political instability and forex crunch.

Last year was challenging for the economy as the country was hit by a severe drought, which left over 10 million people in need of emergency assistance, and the registered economic growth was the lowest in a decade.

All the16 private banks, in their semi-annual performance, have reported robust growth in deposits, loans and gross profits.

Their total deposit skyrocketed to a little over 170 billion Br, showing a staggering 30pc increase compared to the same period last year. This amount has taken industry observers by surprise for what private banks mobilized in half year surpassed the total deposits they had collected the whole of the previous year.

“This is surprising considering the political instability, severe drought and economic slowdown of last year,” remarked Abdulmenan Mohammed Hamza, a financial analyst.

In the first quarter of the current fiscal year, the unrest in Oromia and Amhara regional states has reached its peak, where hundreds of millions of worth of investments were ransacked, vandalized and turned to ashes.

Some banks, such as Oromia International Bank (OIB), have reported that the unrest adversely affected their capability to reach their customers. OIB has 40pc of its branches located in Oromia Regional State.

“The unrest adversely affected the Bank’s ability to collect remittances,” an executive who works at OIB told Fortune a month ago. “The problem even continued into the first quarter of the current fiscal year, when the unrest reached at its peak.”

The unrest in Oromia also affected the Bank’s performance in advancing loans, according to this executive.

“It affected the bank’s capability to move liquid resources from most branches to least liquidated one,” he said.

Abdulmenan relates massive growth in deposits to unprecedented expansion in branches by private banks.

In the first half of the current fiscal year, Ethiopia’s private banks opened 305 branches, raising their total network to 2,355. Accordingly, one bank branch serves around 33,448 people in the country, lower by half from the ratio five years ago.

Cooperative Bank of Oromia (CBO) is also the highest performer in this stance, opening 62 branches in just half year period while Zemen, which advocates consumer segmentation, is with no branches opened during this period. Yet, a directive from the National Bank of Ethiopia (NBE) compel banks to increase their branch network by 25pc every year.

In the first half year of the fiscal year, the CBO turned out to be the bank with the highest growth in deposits. It has reported a 35pc growth to 11.4 billion Br in deposit since June 30, 2016. This represents close to seven percent of the industry’s total. As more deposit indicates more income, this could be a trend in reversal for a Bank which was hit by an eight-fold decline in its profit last year, due to an increase in the demand for letters of credit.

The growth in deposits is even higher than last year’s growth of 14pc.

OIB too has reported a 32.4pc growth in its deposit of 9.3 billion Br, which is higher than the industry’s average rate of growth.

“We’ve worked aggressively in our marketing campaign,” a communications officer for the OIB told Fortune.

But the three largest performers in deposits are Awash, Dashen and Abyssinia banks. Nonetheless, industry analysis shows that higher deposit growth in one year is accompanied by lower growth in the next. The average growth rate in deposits was 24pc over the past five years.

Some bankers believe growth in aggregate deposit may not necessarily translate to real growth.

“We’ve to see details to understand whether there is growth,” says a banker. “It might be due to the slowdown of economic activities.”

Another banking veteran, who used to work at the central bank, agree. But in part.

“If the growth in deposits is due to an improvement in savings, that is a positive thing,” he told Fortune. “However, if it was as a result of time deposit, it means that the money is not mobilized which implies there is a slowdown in investments. We should know the source of the deposits.”

The growth in deposits hugely varies across banks. The rate registered by big banks such as Awash and Dashen is lower than of the average rate registered by either medium banks or small banks.

On the other hand, the most efficient income earner in 2015, Lion International Bank, and Bunna Bank have reported the lowest nine percent of growth rate among all banks.

“The political unrest in some parts of the country in July and August, 2016 has affected our deposit mobilization,” said Hailay Haftu, director for Business Development & Corporate Planning Department at Lion Bank.

“We lost between 30 million Br to 55 million Br from our deposit,” he disclosed to Fortune.

Andualem Alem, a director at Awash Bank with a decade of experience, believes the problem has little to do with an economic slowdown as the majority of the population is unbanked.

“It’s not easy to mobilise deposit in countries such as Ethiopia,” he said. “Banks invest too much in order to get depositors.”

A senior executive at Bunna attributed the slow deposit growth to accumulated debt of the Bank.

“We paid a significant amount of money,” he said. “This has affected our profit growth.”

These are banks which have seen their profits dropped from the same period last year. Lion saw a profit decline by one million Birr to 188 million Br in the first six months of the current fiscal year, due to a slow growth in exports. Earnings from exports have declined by 49 million Br to a billion Birr.

As observed in Lion, Bunna also saw a decline in profit by 35pc in the half year period of the current fiscal year compared with the same period last year. The Bank has earned a gross profit of 92 million in just a half year period.

The gross profit of the industry has gone up by 14.6pc to 3.35 billion Br. This is much higher than last year’s growth rate of 8.6pc, perhaps driven mainly by increased loan disbursements.

The total loans and advances have increased by 25pc to 116.17 billion Br for the six months ended December 31, 2016. The industry has reported a growth rate of 32pc compared with a similar period last year, which is higher than last year’s annual growth rate of 23pc. This must have been driven by increased deposits mobilization and liquidity, a rise from net investments in five-year bonds issued by the central bank, which was due for redemption since the last quarter of 2015/16.

The directive compels banks to invest 27pc of their gross loans and advances in government bonds, which has caused a liquidity crises in some of the banks.

The Bank of Abyssinia has reported the highest rate in growth of 36pc, advancing close to 11.1 billion Br during the half year, whereas as the loan book at Zemen has shrunk by four percent, to 3.2 billion Br. However, Awash leads its peers advancing loans of 20 billion Br, followed by Dashen Bank 16.3 billion Br.

The loan to deposit ratio of the industry has increased to 68pc from 67pc over the past year, which indicates banks are earning as much from deposits. It was 64pc on June 2016.

This phenomenon has been observed across a number of banks, something industry insiders attribute to the seasonality of loan disbursements and recovery.

Awash has the highest loan to deposit ratio of 77pc, whereas Zemen has the lowest at 54pc.

“We’ve disbursed the collected deposit to earn more income,” said Andualem, the communications director of Awash. “This is one of our main priority in our five-year strategy launched last year.”

Even though loan to deposit ratio of the industry has shown a modest growth Abdulmenan thinks there is still some room for improvement.

With a gross profit of 22 million Br in just half a year, Zemen leads all the banks with a growth of 57pc, compared with the same period last year.

The two big private banks, Awash and Dashen, have reported gross profits of more than half a billion Birr each, representing 15pc of the industry.

Banking experts agree that the profit performance is pretty remarkable.


February 2017

02 February 2017

Rolake Akinkugbe on the BBC's Global Newspaper Review (January 23rd 2017)

Rolake Akinkugbe , Head of Energy at FBN Merchant Bank (Lagos, Nigeria) does the morning global newspaper review on BBC with Sally Bundock and Adnan Nawaz on Trump & the Media, Sino-Russian LNG 

See here: https://www.youtube.com/watch?v=cBEeUyQzzyc&t=81s



January 2017

30 January 2017

Airtel to exit fifteen African markets within the year

By Staff | Joy Online (Ghana)

Bharti Airtel, the mother company of Airtel Ghana has announced that it will be closing shop across 15 African countries by the end of 2017.

The affected countries include Ghana, Nigeria, Congo, Chad, Gabon, Kenya, Madagascar, Malawi, Niger, Rwanda, Seychelles, Tanzania, Uganda and Zambia.

BloombergQuint, the India-focused subsidiary of Bloomberg, quotes Bharti Airtel Chairman Sunil Bharti Mittal as saying “the moves would pare the size of operations on the continent and could be completed within a year…some of Bharti’s businesses in 14 African nations would be affected.”

This confirms earlier rumours that Airtel and Tigo will merge in Ghana this year and will be taken over by a French telecom giant, Orange.

A further confirmation was a hint by some local telecom executives who told this writer they have been approached by Orange with a job offer in Ghana, while some Airtel and Tigo vendors close to talks on the possible merger have also confirmed they have been approached to start preparing for the change.

Airtel Ghana has declined to comment on the plan to exit the country.

A Tigo Ghana executive also confirmed in a conversation with some industry stakeholders that “the merger will happen”.

Two years ago, when Airtel began talks to sell off its operations in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone to Orange, the company had stated that it wouldn’t be exiting Africa.

But mobilityarena.com, a telecoms industry online portal, reports the sale of the 14 operations in Africa has become necessary because Bharti Airtel is faced with poor performance across those markets and that is shoring up its debt portfolio.

Bharti’s African unit, for instance, lost $91 million in the quarter ended September 2016, compared with a $170 million loss same period in the previous year.

The Indian global telecoms giant is, therefore, looking for ways to pare net debt equivalent to about $12 billion by September this year.

In Ghana, Airtel recently instituted charges for services it used to offer for free and made a failed attempt to take more money from its value-added service partners, and the VAS folk suspended services in protest to an 80-20 percent revenue share arrange in favour of Airtel.

Indeed, since MTN went 4G in Ghana last year, there have been moves by Tigo and Vodafone to join, but Airtel, which is part of the top four telcos in Ghana, is pretty much silent about 4G LTE.

In Nigeria, Airtel is the only one of the big four mobile operators that are yet to launch a 4G LTE network.

Back in Airtel’s home country, India, Reliance Jio is reported giving Airtel a big run for their money in a fierce price war that is reportedly depleting their gains.

As part of moves to reduce its debts, Bharti is also considering selling it 73.5 per cent stake in its tower unit, Bharti Infratel Ltd., but a decision is yet to be taken whether to sell minority or controlling shares.

In Ghana, Airtel is the fourth biggest operator out of six operators. Its subscriber base stands at 4.68 million, representing a market share of 12.54 per cent. It data subscriptions is a little over three million, representing some 15.71 per cent market share.

Airtel Ghana market value is estimated at some US$200 million.

Source: https://asokoinsight.com/news/airtel-to-exit-ghana-this-year

30 January 2017

Commercial Bank of Africa plans on lending $90 million to Kenyan enterprises

By James Anyanzwa | Business Daily, Kenya

Commercial Bank of Africa is set to on-lend small and medium-sized enterprises (SMEs) in the country Sh9 billion ($90 million) advanced by the African Development Bank (AfDB).

The package will include Sh5 billion ($50 million) line of credit and Sh4 billion ($40 million) trade finance line, the continental multilateral development lender said.

AfDB said the funding will be channelled to SMEs and local corporates in infrastructure, trade and other transformative sectors in the country.

“It will provide liquidity support to expand financing to local corporates involved in value-addition in the trading, manufacturing, agriculture, infrastructure, transport and construction,” AfDB said.

Financial Package

CBA is the sixth largest of 43 banks in Kenya and has 19 million mobile platform customers.

AfDB said the financial package will contribute to CBA’s efforts to broaden access to its services, thereby reducing financing constraints by SMEs and local corporates while narrowing Africa’s trade financing gap.

“The package will promote private sector development as well as support broad-based economic growth,” said the African lender.

“It will also contribute to CBA’s endeavours to complement efforts of various partners such as the government’s long term development strategic agenda and Vision 2030, which seeks to revitalise the economy by developing infrastructure and improving access to affordable credit for SMEs that support economic transformation,” said the development finance institution.

Source: https://asokoinsight.com/news/commercial-bank-of-africa-plans-on-lending...

30 January 2017

Rand Merchant Bank lists ‘US Dollar Custodial Certificates’ (South Africa)

By Staff Writer | Africa Global Funds

Rand Merchant Bank (RMB), a division of FirstRand Bank, has listed a new product on the Johannesburg Stock Exchange (JSE), which will enable companies and individuals to hold unlimited quantities of cash in US dollars.

US Dollar Custodial Certificates (DCCs), listed on the Exchange Traded Funds sector of the JSE on January 24, are easily tradable, dollar-denominated investment instruments that have no exchange control implications.

RMB, which created, issued and listed the instruments, will act as the market maker providing liquidity in the product.

RMB said that investors earn the return of a US Treasury note, receiving an income stream in US dollars, which is settled in Rands.

DCCs represent the first inward listing of US Treasury notes on the JSE giving investors direct exposure to the Treasury notes.

Investors’ credit exposure will be to the US Federal Reserve, giving them protection from the possible insolvency of a bank.

Ebrahim Patel, RMB’s Alternative AssetSpecialist, said: “Investors are able to invest in a global currency, therefore avoiding the potential devaluation of their rand savings and working capital.”

“DCCs will therefore benefit investors who take the view that investing in dollars may preserve their assets, while businesses can take advantage of a dollarized working capital solution,” he added.

Source: https://asokoinsight.com/news/rand-merchant-bank-lists-us-dollar-custodi...

30 January 2017

Lubricants producer Engen appoints a distributor in Mozambique

By Antony Kiganda | Construction Review Online

ENGEN, a leading producer and marketer of a wide range of fuels, lubricants and oil-based products, has appointed D.M. Distributors as official distributor of lubricants in Mozambique’s Nacala region.

Rogerio Fernandes, Engen Commercial Sales Manager: Mozambique North Region, says the company is pleased to have announced the appointment.

“D.M is an established distributor in the region with a reputation for integrity and competitiveness,” says Fernandes.

Owned by Danilo Morgado, D.M. Distributors will work within a rolling annual contract and will help spearhead Engen’s drive for growth in the commercial and retail space.

It will distribute the full range of Engen’s automotive and industrial lubricants and greases, as well as selected PETRONAS Syntium engine oils and PETRONAS marine lubricants from Engen’s Nacala Depot.

General Manager of Engen’s International Business Division, Drikus Kotze, says in addition to D.M. Distributors’ distribution strength, the partnership has strategic importance as it will increase Engen’s lubricants footprint in Mozambique.

“The port of Nacala in the north of Mozambique unlocks the economic potential of Northern Mozambique and offers an economic supply corridor to neighbouring landlocked countries,” says Kotze.

Engen Petroleum is a subsidiary of PETRONAS, the National Oil Company of Malaysia and one of the world’s leading integrated energy companies.

Source: https://asokoinsight.com/news/lubricants-producer-engen-appoints-a-distr...


January 2017

27 January 2017

Japan to fund phase two of Ngong Road expansion (Kenya)

By Mugambi Mutegi | Business Daily, Kenya

The second phase of the ongoing expansion of Ngong Road into a dual carriageway will start in July to cover the stretch between Yaya Centre and Dagoretti corner.

The Kenya Urban Roads Authority (Kura) Thursday said the three-kilometre stretch will be financed by the Japanese government, which is also funding the initial phase between the Kenya National Library and Prestige Plaza.

The upgrade is expected to ease traffic on the often clogged stretch that leads to the city centre.

“The Japanese government has committed to finance the second phase as well, based on the timelines,” Kura replied to the Business Daily but did not share details about the cash involved.

The first phase runs for 2.57km and is being built by Japanese firm World Kaihatsu Kogyo (WKK) at a cost of Sh1.4 billion.

Construction started last August and is currently 23 per cent complete.

The urban roads agency expects the stretch to be complete by July. Ngong Road expansion will involve building four vehicle lanes as well as service lanes on both sides, comprising pedestrian walks and cycling paths.

The design also provides for the inclusion of a special bus lane to be used exclusively by public service buses without interacting with the normal traffic, under the rapid transit (BRT) system.

Intelligent traffic lights at major intersections are yet another special feature expected on the road.

Inviting Investors

The smart lights at junctions will allow a longer period of traffic flow from roads with most vehicles as opposed to the current analogue lights which are time-based, restricted to allowing and stopping vehicles at intervals.

Kura Thursday put a notice in the dailies inviting investors to bid for yet another stretch of the Ngong Road — between Dagoretti Corner and Karen Roundabout — to be financed by the Kenyan government.

The eight-kilometre stretch is part of the first phase but had been left out in the Japanese funding, prompting the Kenyan government to step in.

Kura communications officer John Cheboi Thursday said the tender for the project will be issued by April, paving way for construction in July which will run concurrently with the second phase.

Source: https://asokoinsight.com/news/japan-to-fund-phase-two-of-ngong-road-expa...

27 January 2017

Zimbabwe has only $300 million in circulation, government advisor urges rand adoption

By Staff Writer | The Source Zimbabwe

Zimbabwe has $304 million hard cash in circulation including $73 million in bond notes as of January 2017, about a third of optimum demand, reflecting a worsening liquidity crisis, an economist said.

Ashok Chakravarti, who also advises the Office of the President and Cabinet on improving the ease of doing business, told a Confederation of Zimbabwe Industries (CZI) symposium on Thursday that hard cash in circulation inclusive of bond notes and US dollars was five percent of total bank deposits which has contributed to the country’s liquidity crisis.

“If you look at comparative studies from other economies cash to deposit ratio should be between 10 (percent) to 12 percent. If an economy has got less than 12 percent, it faces liquidity crisis…..We need $900 million in cash to have adequate liquidity,” said Chakravarti.

Hard cash circulation in the country has dropped by 53 percent from $642 million in 2013 to $304 million currently. However, bank deposits have increased from $4,728 billion in 2013 to $6,2 billion in 2016.

At the onset of the multicurrency system in February 2009, total deposits in the banking system were $1,66 billion. Cash to deposit ratio has decreased from 35 percent in 2009 to five percent in January 2017.

The amount of cash held in Nostro accounts declined by 61,6 percent from $424 million in 2009 to $163 million as at November 2016.

“When liquidity challenges first surfaced in 2014, the RBZ reduced cash holdings in Nostro accounts from 30 percent to 5 percent of total deposits to improve the availability of cash in the economy. This decision simply led to externalisation of dollar cash, exacerbating the liquidity crisis,” said Chakravati.

To resolve the liquidity crisis in the country, Chakravarti recommended that the government should reduce wage bill, stop reissuing of Treasury Bills and borrowing from the private sector, repeal the indigenisation policy and adopt the South African Rand.

The business community has voiced its distrust of government methods of dealing with the acute cash shortage of bank notes and urged an adoption of the Rand, a suggestion the State turned down.

Chakravati has previously suggested a three percent import levy across the board which he said could raise $2 billion (annually) to incentivise exporters in real currency instead of the bond note incentive.

Source: https://asokoinsight.com/news/zimbabwe-has-only-300-million-in-circulati...

27 January 2017

Bank of Ghana justifies planned dollar auction to help stabilize cedi

By Staff | Joy Online (Ghana)

The Bank of Ghana (BoG) says its planned injection of dollars into the market is part a broader strategy to help stabilize the cedi.

The Central bank has come under serious criticism over its decision to sell some $120 million for the first quarter of this year.

Economists like Ishmael Yamson believes this strategy of releasing more dollars onto the market to halt the cedis stability is not sustainable and should be stopped.

But the Central Bank Dr. Abdul Nashiru disagrees. He believes this together with other measures, can help stabilize the cedi.

In a separate development, the Central Bank has disclosed it will no longer extend waivers to commercial banks to grant loans beyond a certain fraction of stated capital.

The move has been influenced by rising loan defaults, which could cripple some banks if this policy is not reviewed.

The Governor has also been speaking about plans to allow every Universal Banks to introduce, Islamic Banking products.

Source: https://asokoinsight.com/news/bank-of-ghana-justifies-planned-dollar-auc...