Stories that Matter | April 2024

Africa
African Countries Set to Outperform Resource-Rich Nations
A report by the World Bank titled “Addressing Inequality to Revitalize Growth and Alleviate Poverty in Africa,” highlights this fact as it forecasts that African countries with fewer to no resources are set to outperform countries on the continent with vast resources. According to the report, not only are non-resource-rich African countries set to experience more growth, but the disparity between them and the resource-rich countries is set to widen.

“Declining international commodity prices from their 2022 peaks are expected to weigh on exports for resource-abundant countries. Still, this group of countries will grow from 2.2 percent in 2023 to 2.8 percent in 2024 as hydrocarbon projects resume or come online in Niger and Senegal and mining production kicks off in the Democratic Republic of Congo, Mali, and Sierra Leone,” the report reads.

The report shows that compared to the growth of resource-abundant countries which is set to go from 2.2% to 2.8%, a 0,6% growth, the growth of non-resource-abundant countries in the same period is set to leap by 1%, going from 2.4% to 3.4%. This growth would be backed by both private consumption and gross fixed investment. “Growth in non-resource abundant countries is supported by gross fixed investment and private consumption, and these countries are expected to grow from 2.4 percent in 2023 to 3.4 percent in 2024, and further increase to 4 percent in 2025–26,” the report adds.

Source: Business Insider

East Africa
East African Nations Among Countries with Firms Making USD 1 Billion Revenues
Africa has at least 345 companies with revenues of USD 1 billion or more per annum of which 3 percent (11) of the firms are located in East Africa (EA) underlining the region’s growing consumer market for various goods and services, according to a report by global consultancy firm McKinsey Global Institute.

Kenya tops its EA counterparts by hosting the highest number of companies (six) that produce USD 1 billion in revenues per year, followed by the Democratic Republic of Congo (DRC) with four and Tanzania with one company. Uganda, Rwanda, Burundi, South Sudan and Somalia missed out on the list, according to the report, ‘Reimagining economic growth in Africa; Turning diversity into opportunity,’ which did not disclose the identity of the companies under review. According to the report dated June 2023, a bulk (40 percent) of the African companies with USD 1 billion in revenues per year are located in South Africa.

Source: The East Africa

Egypt
State to Receive USD 20 Billion for Real Estate Project 
In an interview with CNBC Arabia, Finance Minister Mohamed Maait stated that Egypt is set to receive approximately USD 20 billion from the second tranche of the Ras El Hekma project by the end of May 2024. By the end of June 2024, Egypt anticipates receiving USD 1 billion from the World Bank, EUR 1.07 billion from the European Union, and an additional USD 820 million from the International Monetary Fund (IMF).

Furthermore, Japan will provide Egypt with USD 230 million, but the timing of their disbursement has not yet been determined, Maait disclosed. Minister Maait revealed that a sum of payments totaling between USD 25 and USD 30 billion is expected to be received by Egypt by the end of April, including the months of May and June. He further stated that 50 percent of the proceeds from offerings, particularly from the Ras El Hekma project, will be allocated towards reducing debt.

Source: Egypt Today

Ethiopia
Ethiopia Embarks on Construction of Africa’s Largest Airport
Ethiopian Airlines recently unveiled plans to initiate the construction of Africa’s largest airport, a monumental project estimated to cost USD 7.8 billion. This ambitious endeavour marks a significant milestone for the national carrier as it ventures into the realm of infrastructure development.

Mesfin Tasew, CEO of Ethiopian Airlines Group, disclosed that extensive research and deliberation have culminated in the commencement of this groundbreaking initiative, named the “Mega Airport City.” Mesfin emphasised the collaborative efforts between the Oromia region and the federal government to facilitate the project, aiming to uplift local communities and create employment opportunities for farmers in the area.

Spanning 35 square kilometres in the picturesque locale of Obosirraa, near Bishoftu city in the Oromia region, the expansive airport city is set to redefine air travel infrastructure in Africa. The grand design includes provisions for 300 aircraft parking spaces and four air runways, poised to accommodate the burgeoning demand for air travel.

Source: Capital Ethiopia

Kenya
Kenya Tops Africa as Start-Up Funding Destination
Kenya has defied a global funding drought for budding companies to post a 17 percent increase in new start-up investments, toppling Nigeria and Egypt as the continent’s largest destination for start-up financing. In 2023, 62 Kenyan start-ups raised an estimated USD 673.78 million from local and international investors, a rise from the USD 574.8 million raised in 2022, even as the rest of the continent saw a drop in funding, data by start-up research organisation, Disrupt Africa shows.
Nigeria and Egypt, which dominated the start-up funding space in Africa over the past decade, 2023 recorded a drop, which resulted from a global slowdown in investments due to a cocktail of macroeconomic challenges across the world. levels, although the number of start-ups to secure funding was down like most other destinations.” In Kenya, most of the funding raised last year went to energy start-ups, with off-grid solar pay-as-you-go firms M-Kopa and Sun King raising USD 465 million, or 69 percent of the start-up funding received.

Source: The EastAfrican

Libya
OPEC Announces Libya as Africa’s Largest Oil Producer
Libya overtook Nigeria as the top African crude oil producer for March, data from the Organization of Petroleum Exporting Countries (OPEC) has shown. According to the April 2024 Monthly Oil Market Report (MOMR), Libya recorded 1.236 million barrels per day (bpd) of crude production in March, up from 1.173 million bpd in February.

Meanwhile, Nigeria recorded an output of 1.23 million barrels per day in March 2024, compared to 1.32 bpd in February 2024. Despite the drop in output by 6.8 per cent, Nigeria retained its leadership position on the continent, producing 1.398 million bpd, while Libya produced 1.161 million bpd during the period.“According to secondary sources, total OPEC-12 crude oil production averaged 26.60 mb/d in March 2024, 3 tb/d higher, m-o-m. Crude oil output increased mainly in IR Iran, Saudi Arabia, Gabon, and Kuwait, while production in Nigeria, Iraq, and Venezuela decreased.”

Source: Business Insider Africa

Nigeria
FG to Execute USD 3.8 Billion Gas Supply Agreement in May
The Gas Supply and Purchase Agreement to support the Final Investment Decision for the USD 3.8 billion Brass methanol project is to be executed in May 2024. The Brass methanol project is a major industrial project being built in Bayelsa State to produce methanol, a key industrial chemical, using natural gas resources. Nigeria currently imports all its methanol. Located in Brass Island, Bayelsa, the facility is to have a capacity of 10,000 tonnes of methanol per day when completed, as it is still under construction and expected to be operational this year.

The USD 3.8 billion is to create up to 15,000 jobs during construction and aims to boost the Nigerian economy by reducing reliance on imports. This project is a joint venture between DSV Engineering Limited, the Nigerian National Petroleum Company Limited, and the Nigerian Content Development & Monitoring Board. The Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, recently announced the execution date for the gas supply agreement in Abuja after a meeting with key stakeholders of the project in his office. Ekpo, in a statement issued by his media aide, Louis Ibah, said the meeting was to confirm adequate gas supply to the Brass methanol project by the NNPC/Shell/TotalEnergies/NAOC Joint Venture.

Source: The Punch

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Reports

Digital Infrastructure in Africa| UNECA
Digital trade is inextricably linked to digital infrastructure. Regions or jurisdictions with booming digital trade tend to have robust digital infrastructure. There is no widely accepted definition of digital infrastructure, but the Digital Transformation Strategy for Africa (2020–2030) definition includes fixed and wireless networks telecommunications, including broadband and high speed networks, terrestrial fibre optic networks, fibre over power lines, submarine cables, satellite communication, mobile communication, internet exchange points (IXPs), postal infrastructure, terrestrial digital broadcasting, data centres, telecentres, and digital and smart devices (AU, 2020).

Digital platforms and affordable devices have also been bundled with the components of this definition. This study provides an overview of digital infrastructure in Africa and compares it with digital infrastructure in the rest of the world. The scope is limited to the components of digital infrastructure related to digital trade. In particular, the focus is internet infrastructure (notably, broadband infrastructure), data-related infrastructure (encompassing IXPs, data centres and cloud computing) and delivery-related or logistics infrastructure (such as the postal network). This study also covers elements that are likely to affect digital trade, such as digital payment systems and digital platforms.

Click here to read and download the full report.

Africa Horizons | Knight Frank
With the shackles of the pandemic now behind us, renewed global interest in Africa is evidenced by the recent engagement and investment commitments made by major global powers such as the US, UK, South Korea, UAE, Saudi Arabia, Turkey, and China. For instance, the UK has announced plans to invest USD 2 billion in sustainable projects across Africa, while the US has pledged an initial USD 200 billlion for its partnerships for Global Infrastructure Initiative. These efforts are expected to trigger an influx of multinational corporations into major hub cities, including Lagos, Nairobi, Cairo, Johannesburg, and Accra.

For private and institutional investors, this sovereign-level interest provides a springboard for taking advantage of emerging opportunities across individual real estate sectors, including Data Centres, Manufacturing, ESG, Infrastructure developments and Agro-processing. This report explores these sectors in more detail and highlights five stand-out investment opportunity areas as we see them.

Click here to read and download the full report.

2023 Private Capital Activity in Africa | AVCA
The state of economic affairs globally and in Africa had far-reaching consequences on private capital activity on the continent. Heightened economic uncertainty compelled fund managers to exercise caution in their investment strategies and retreat from initiating exits, resulting in a lower number of investments and exits than that observed in 2022. Where investments were made, fund managers refrained from making large investments except in a few instances, instead preferring to issue smaller ticket sizes. The decline in exits had indirect implications on the fundraising environment, as investors struggled with limited liquidity.

However, against this backdrop of economic challenges, 2023 emerged as a resilient year for Africa’s private capital industry, marked by the second-highest year on record for deal volume and the fourth-highest year on record for deal values. Furthermore, investor confidence in Africa’s private capital industry persisted, evidenced by interim fundraising which reached unprecedented levels in 2023. This report provides an analysis of the latest trends of fundraising, investments, and exits within African Private Capital Activity in Africa, shedding light on the recent developments that took place during 2023.

Click here to read and download the full report.

Africa’s Pulse | World Bank
Economic growth in Sub-Saharan Africa is expected to rebound to 3.4 percent in 2024 and 3.8 percent in 2025, after bottoming out at 2.6 percent in 2023. The rebound from 2023 can be attributed to receding inflationary pressures in the region, growth resilience in the United States and other large economies, recovery in global trade, as well as increased risk appetite and expected gradual easing of global financial conditions—particularly in the second half of 2024.

This issue of Africa’s Pulse suggests that the post-COVID-19 growth recovery in Sub-Saharan Africa remains fragile, and there is renewed urgency to revitalise economic growth. While some progress has been made, Africa still needs to overcome significant challenges regarding low and unstable growth, high levels of extreme poverty and inequality, and difficulty translating growth into poverty reduction. Addressing the drivers of structural inequalities requires policy frameworks that account for interlinkages, complementarities, and trade-offs across three phases of the income generation process – building people’s productive capacities, addressing market and institutional distortions that limit people’s ability to use and benefit from those productive capacities, and ensuring fiscal progressivity.

Click here to read and download the full report.