Africa’s first certified green loan secured, MTN to play the fintech game.

May 9, 2021

Welcome to a roundup of news and insights dominating the world of business, economics, and finance in Africa.

Now 2 things of interest :

1) ) MTN to play the fintech game with a spinoff :

Johannesburg-based MTN a leading telecom player in Africa is finalising plans to spin off a separate fintech unit by March 2022. The company’s Rwanda operation MTN Rwanda has received a license to operate a separate fintech entity making up the 12 separate entities out of 16 fintech markets.MTN's fintech business includes MoMo, insurance, airtime lending, and e-commerce.

Why is this important: Africa’s fintech space has grown significantly with startups offering a range of services beyond mobile money to payments, insurance, saving, and lending. The scale of these startups has led to several impressive valuations and acquisitions like Stripe’s acquisition of PayStack, Flutterwave’s unicorn status at a $1 billion valuation based on a $170 million funding round, and Airtel Africa's valuation of $2.6 billion based on the recent sale of a minority stake. This indicates having a pan Africa approach to fintech creates an opportunity especially for companies like MTN who have the infrastructure and Africa footprint to offer these scalable services with a target valuation of $5 billion.

2) Nigeria’s diaspora remittance playbook.

Nigeria’s apex bank the Central Bank of Nigeria announced the extension of its N5 for every dollar received scheme indefinitely. The scheme is an incentive for senders and recipients of international money transfers who can collect remitted dollars in cash across the counter from their local banks or through their domiciliary accounts as a means of sustaining the inflow of diaspora remittance into the country.

Why is this important: Oil proceeds are a major source of revenue for the Nigerian economy and account for 95% of export earnings. The Covid-19 pandemic and declining oil revenue due to drop oil prices have put pressure on Nigeria’s foreign reserve which was at $34.8 billion in Mar 2021 from $35.1 billion in February 2021. To improve the foreign reserves innovative solutions like the ‘Naira 4 Dollar’ may yield immediate results but at a cost of devaluing the currency over time with more naira in circulation to fund.

Private Equity :

Nigeria-based Uhuru Investment Partners (Uhuru), a middle-market private equity investment firm has announced the first close of its Uhuru Growth Fund I (UGF) at $11 million. The new fund with investment from CDC Group a UK’s development finance institution (DFI) and other DFI partners, commercial and impact investors will invest across the West African region including Nigeria, Ghana, Côte d’Ivoire, and other Francophone markets.
South Africa Kombo King deep-fryer solution provider has successfully secured funding from the Vumela Fund, established by FNB and Edge Growth. It has also announced the launch of its innovative and patented deep-fryer technology to retailers offering less oil and faster cooking.

Venture Capital Deals:

Kenya-based Lami Technology an insurtech looking to democratise insurance products for low-income Kenyans has raised a $1.8 million seed investment led by Accion Venture Lab with participation from The Continent Venture Partners, Future Africa, Acuity Ventures AAIC, and Consonance. The new investment will fund its expansion across Africa.
Africa-focused mobile gaming publishing platform Carry1st has raised $6 million in Series A funding led by Konvoy Ventures with Riot Games, Akatsuki, Raine Ventures, and TTV Capital all participating in the investment. The new investment will help the company to scale its existing portfolio of games and secure new partnerships.
Tunisia-based B2B expenses management solution provider Expensya has raised a $20 million Series B investment. The new investment lead by MAIF Avenir and Silicon Badia as new investors and is in addition to the original investments from Seventure Partners and ISAI.
Egyptian On-Demand Warehousing and Fulfillment Platform Flextock have secured a $3.5 million pre-seed investment from a group of investors which includes Y Combinator, Egyptian VC Foundation Ventures, MSA Capital, CRE Ventures, Alter Global, Access Bridge Ventures, B & Y Ventures Partners, and Jameel Investment Management Company (JIMCO). The new investment will fund the company’s ambitions to capture a large portion of MENA’s $25 billion e-commerce logistics market.

M & A Activities:

Namibia-based Mergence Unlisted Investment Managers has increased its stake in the two Ejuva renewable energy projects in Gobabis from 17% to 66% after acquiring the 49% stake owned by co-developer CIGenCo a subsidiary of JSE listed Consolidated Infrastructure Group Limited (CIG). The two projects will have a combined output of 10MW.
East Africa’s biggest insurance company Jubliee Holdings has completed the sale of its Kenya subsidiary to German Allianz, making it the largest shareholder in Jubilee General Insurance Company with a 66% stake with Jubliee Holding the remaining 34 % stake. The company is active in 12 Africa countries via Allianz Africa. The Asset Manager had offered $100 million to acquire a majority stake in Jubliee’s general insurance subsidiaries in Kenya, Tanzania, and Uganda short-term insurance segment in Burundi and Mauritius.
South Africa’s leading insurance group Sanlam has increased its stake in Morocco’s Saham Assurance Marco from 61.7 % to 84.5 % by acquiring a 22% stake for $137.1 million
Kenya-based I&M Holdings PLC has completed the 90% acquisition of Orient Bank Limited (OBL) Uganda’s 12th largest bank, from Africa-focused private equity firm 8 Miles LLP and Morka Holdings Limited.

Fundraising Events:

South Africa’s Absa Bank has secured up to $150 million in loans from the International Finance Corporation. Africa's first certified green loan will be used to support green projects and strengthen Absa’s position as a leading financier of projects targeting biomass and renewable energy.
South Africa Vantage Mezzanine Fund IV has received a $25 million commitment from the International Finance Corporation. The fund is managed by Vantage Capital and will fund investments in high-growth mid-market companies in Africa.

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Economic Updates :

Tunisia’s annual inflation rate rose to 5.0% in April of 2021 from 4.8% from the previous month and the highest level since last October.
Botswana’s benchmark interest rate remains unchanged at 3.75% as reported by the Central Bank of Botswana’s April 2021 meeting.
South Africa’s foreign exchange reserves rose to $53.69 billion in April of 2021 from $53 billion in March.
Morocco’s unemployment rate rose to 12.5 % in the first quarter of 2021 from 10% in the same period a year ago. This was largely due to the ongoing pandemic crisis.

The week ahead

10th May - Egypt, Rwanda, Egypt Inflation Rate YoY APR
10th May - Kenya GDP Growth Rate YoY APR
12th May - Angola Inflation Rate YoY APR
13th May - Ghana, Namibia Inflation Rate YoY APR
14th May - Nigeria Inflation Rate YoY APR
15th May - Zambia Interest Rate decision, South Africa Inflation Rate YoY APR

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