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Africa Top10 Business News

1 26 - Africa Top10 Business News

Africa’s New Trade Deal Launches

1 26 - Africa Top10 Business News

is taking a giant step towards harnessing its economic might now that 52 of the
continent’s 55 countries have signed a free trade agreement that forms the
Africa Continental Free Trade Area (AfCFTA). The new continental trade
agreement creates a single market for goods and services by removing existing
trade barriers across Africa. This multinational market has a combined gross
domestic product of $2m and a population of more than one billion people. The
rollout of AfCFTA is expected to boost Africa’s regional and international
trade, according to the Brookings Institution, a nonprofit public policy
organisation in Washington, DC. A January 2019 essay by the United Nations
Economic Commission for Africa noted that lifting trade barriers across Africa should
“increase the value of intra-African trade by between 15 percent (or $50
billion) and 25 percent (or $70 billion),” by 2040. Historically, it has
been challenging for African countries to diversify export destinations. But
AfCFTA will make more Africa-produced goods available among member countries.


State of Economy

2 25 - Africa Top10 Business News

The stock index is down 0.4% year-to-date while emerging markets
are up 2.3% and the MSCI Frontier Markets 100 is up 10.2%. As one of the better
 known, investable African equity markets, anyone who tried their luck
with the Global X Nigeria (NGE) exchange-traded fund is down 27.7% over the
last 12 months. In five years, the Nigeria ETF has blown up, now down over
74.5%. Frontier and emerging indexes are better than Nigeria. It’s also worse
than South Africa, Africa’s largest stock market, and Egypt, Africa’s second
largest. In terms of foreign direct investment, back in 2013 inflows totaled
$5.6 billion, most of it in the telecom and energy sectors. Last year,
Nigeria’s FDI flattened to $2 billion. Equity investment between 2013 and 2018
has fallen from around $2.9 billion in 2013 to just $139 million in 2018.
Nigeria’s GDP contracted 13.8% in the first quarter, wiping out last year’s
economic gains. The only country to do that of late is Venezuela. And like
Venezuela, Nigeria has also dealt with blackouts in the power grid—six of them
this year.

The Cost
of South Africa’s New Cabinet

3 26 - Africa Top10 Business News

President Cyril Ramaphosa has announced his new cabinet,
trimming the number of ministries from 36 to 28. While the number of
departments was reduced to 28, the actual cabinet was only reduced by 8 people.
The new cabinet will now be made up of 64 members (from 72 before) – including
president Ramaphosa, deputy president David Mabuza, 28 ministers and 34
deputies. These extra deputies will come at a cost for South African taxpayers
as they are scheduled to receive R1,977,795 each in the 2018/19 financial year.
Ramaphosa’s new ministers are slated to earn R2,401,633 while returning deputy
president David Mabuza is set to earn R2,825,470. For comparison purposes, a
normal member of the National Assembly (MP) will earn R1,106,940, while the
leader of a minority party will earn R1,309,563. Had the cabinet been kept the
same (at 72 members, with 36 ministers and 34 deputies) the total cost –
excluding the president – would have come to R156.5 million – thus Ramaphosa’s
reduced cabinet only saved the country R19.2 million.


Economies Can’t Afford to Miss Out on the Digital Revolution

4 26 - Africa Top10 Business News

Hundreds of millions of venture capital dollars are flowing into
the region which remains the fastest growing mobile phone market in the world,
and an emerging competitor in the global race for tech. With innovation hubs
sprouting up throughout the continent, solutions are being found to solve
uniquely African problems and dissolve barriers to trade, financial services
and capital. But governments need to do more to seize on the opportunities of
the global digital economy, which is set to grow from $11.5 trillion in 2016 to
over $23 trillion by 2025. The continent’s burgeoning populations and embryonic
levels of technology and underdeveloped infrastructure can be turned to an
advantage if countries adopt new technologies straight away and use them to
leapfrog into the 21st century. The week of round tables and expert discussions
sought to equip ministers and financial policymakers with the technocratic
know-how to reform their economies and legal systems to promote innovation in
the digital age. Delegations from 40 African countries shared their experiences
on issues ranging from investing in the technical skills of future workforces,
to using technology to build more inclusive and efficient financial


Betting on
West Africa

5 26 - Africa Top10 Business News

Why pay the government of Germany to hold onto your money if you
can get yields upward of 5% on euro-pegged debt in West Africa? That’s the
message the region’s biggest French-speaking economy, Ivory Coast, is trying to
get across as it fine-tunes processes to make it easier for foreign investors
to buy its local-currency debt. While foreigners are legally permitted to hold
the bloc’s securities, administrative burdens have made it difficult to attract
offshore interest. By contrast, foreign investors hold almost half the
securities with maturities of two years or longer that were issued in 2018 by
neighboring Ghana, which is not a member of the union and has a floating
currency. But the situation may change soon. One offshore investor took part in
Ivory Coast’s May 27 auction of one-year securities as a “test run” for broader
participation in future, said Kadi Fadika-Coulibaly, chief executive officer of
brokerage Hudson & Cie, which is a primary dealer for the country’s debt.
Moody’s Investors Service rates Ivory Coast’s debt at Ba3, or three levels
below investment grade, on par with Turkey.


Top 5
Opportunities for Investment in Djibouti

6 26 - Africa Top10 Business News

Bordering the Gulf of Aden and the Red Sea and situated between
Eritrea and Somalia, Djibouti is the route to the sea for African countries
such as South Sudan and Ethiopia. Ethiopian imports and exports account for
more than 65% of the port activity at Djibouti’s container terminal. In the
absence of a local Djiboutian consumer base, the foreign military presence
provides a major portion of the consumer spending. The Somalis, known as big
players in the trading and informal Djiboutian market, place their cash in real
estate to avoid having money in banks. The country is also home to internationally
renowned scuba diving places in the north. Unfounded and founded security
concerns have kept the tourism sector from growing. At the same time,
Djibouti’s touristic areas could use a heavy boost from investment in
moderately priced, quality hotels as well as other touristic amenities. Salt
production, logistics and education are also key sectors.


Africa Needs to Take Care of its Waters

7 26 - Africa Top10 Business News

A thriving trade in fish maw – made from the swim bladders of
fish – could lead to the extinction of the Nile perch fish in east Africa’s
Lake Victoria. Demand for fish maw has spawned such a lucrative business
enterprise in the region that it is raising concerns of overfishing. The high
profits involved mean that traders keep a low profile, and are secretive about
their haul’s eventual destination, according to the women who gut the perch to
extract the precious maw. Fish maw has various uses, including the manufacture
of surgical sutures, but it is also a delicacy in China, where it is served in
soups or stews in addition to being used as a source of collagen. It is also
used to make water-resistant glue and in the production of isinglass, a refining
agent involved in the manufacture of beer and wine. Ironically, Nile perch is
an invasive species. It was introduced to Lake Victoria in 1950, and has been
blamed for the disappearance of the native fish and interfering with the lake’s
ecosystem. But it is now an important part of the local economy. According to a
report commissioned by the German development agency GIZ in collaboration with
the Lake Victoria Fisheries Organisation in August 2018, the Chinese agents
supplying maw had better opportunities for business growth compared with others
in Uganda. There is still little knowledge of this trade in the region, and
this in itself contributes to unsustainable fishing. For example no guidelines
or policy exist to regulate the fish swim bladder trade in Kenya, Uganda and


will be Key in Transforming the Continent’s Urban Areas

8 25 - Africa Top10 Business News

Some 3,000 delegates, including four presidents, cabinet
ministers, urban planners and population experts are attending the United
Nations Habitat Assembly meeting this week in Nairobi. They are seeking better
urban and sustainable planning to deal with rising populations as well the
effects of climate change. At the inaugural U.N Habitat Assembly, delegates
will put their heads together hoping to find solutions to make big cities more
habitable. For Africa, urgent solutions are needed as the United Nations
estimates nearly half of the continent’s populations live in slums. At the end
of the five day summit, delegates plan to come up with a ministerial
declaration with proposals on how to make cities more inclusive, safe,
resilient and sustainable by 2030.


Private Equity Firm Goes Big

9 26 - Africa Top10 Business News

Helios Investment Partners LLP plans to raise a fund of about
$1.25 billion to invest across the continent. The London-based company, led by
Tope Lawani and Babatunde Soyoye, is in talks with asset managers and
development agencies about what would be its largest private equity fund for
African investments, the people said, asking not to be named because the
discussions are private. Helios could start the fund this year, but is no rush
to do so, the company, which manages about $3.6 billion, closed a $1.1 billion
Africa-focused fund in 2015 after exceeding a $1 billion target. Yet, foreign
interest in Africa has been fickle. New York-based Blackstone Group LP is
scaling back in Africa after less than five years and Bob Diamond, the former
Barclays Plc chief, is turning his attention elsewhere after struggling to get
his banking venture off the ground.


Furniture Maker Strives to be the IKEA of Africa

10 25 - Africa Top10 Business News

Ciiru Waweru is a Kenyan entrepreneur who deploys the latest
technology in her furniture factory, using computer-controlled cutting machines
to make children-friendly fittings. Yet every day, a donkey cart delivers water
to the FunKidz workshop located in Kikuyu town, just 20 kilometers (12 miles)
northwest of the capital Nairobi. Water supply isn’t her only challenge:
electricity is unreliable too and the facility has to use diesel generators
time and again. Besides reducing productivity, these factors make the
production process more expensive, hindering the final products’
competitiveness in the local and global market. Almost a decade since starting
her company, FunKidz has however distinguished itself as a quality furniture
brand, spreading beyond Kenya’s borders. FunKidz’s strategy aligns with a slew
of programs launched in Kenya in the past year aimed at enabling sustainable
businesses and planting 1.8 billion trees. Even as the East African nation aims
to enhance its manufacturing sector from 9.2% to 20% of its gross domestic
product by 2022, businesses have been encouraged to adopt climate mitigating
practices and green technologies. Waweru says she’s struggled with training and
retaining women at her factory but hopes her new business model will create a
supply chain that employs more women, especially farmers, who can be paid to
collect, shred, dry and package the waste. This also plays into her hope that
authorities would boost small-scale, decentralized manufacturing businesses
that can make products that are currently exported.


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