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News on Investments in Africa

Foreign Direct Investment (FDI) flows in Africa dropped by 28% over the first 6 months of 2020, according to an UNCTAD report (October 27). The situation is mainly due to the COVID pandemic which disrupted the global economic activity. A study quoted by UNCTAD by Daily Trust shows that between Jan and June 2020, FDI flows on the continent reached $16 billion: South Africa and Ghana attracted over 200% more FDI than Nigeria in the first half of 2020. It also suggests that South Africa and Ghana benefited despite the COVID-19 pandemic. Data from the National Bureau of Statistics (NBS) showed that Nigeria attracted $362.84 million FDI by June.

In a report by Partech, African startups raised $2 billion in VC funding in 2019. But, according to the report, of all 427 startups that raised funding throughout 2019, a mere 6% accounted for 83% of the total investments and over 75% of the deals took place in 3 markets—Nigeria, Kenya, and South Africa. Enter FXKudi, which saw this deficit as an opportunity to serve the SME market with innovative financial solutions. Late payment for services and long invoice maturity leads to significant cash flow deficits for small businesses, hampers short-term agility and long-term growth and investment. FX Kudi, therefore, launched a simple, SME-friendly money transfer service that serves as a reliable payment infrastructure, providing SMEs with secure, fast, and convenient payment options to or from anywhere in the world without hassle.

East African countries are increasingly becoming the choice for foreign investors and large consumer companies. Since 2016 East African countries’ led by Ethiopia, Kenya, Tanzania and Rwanda have been enjoying growth rates not less than 5% . Coca-Cola Beverages Africa (CCBA), the continent’s largest soft drinks bottler, recently announced it would invest $100 million in Kenya over the next 5 years to improve infrastructure and launch new products. In May, the company had also launched a $69 million new juice line at its Nairobi plant, one of its 4 bottling plants in Kenya. The South-African based company made its strategic move into Kenya, and the East African market, when in 2017 it bought Equator Bottlers, the third largest Coca-Cola bottler in Kenya.

In other news, Kasha, an ecommerce platform improving women’s access to genuine health, hygiene and self-care products, has increased the size of its Series A round to US$3 million after securing US$1 million from the Swedish development finance institution, Swedfund. Launched in July 2016, Kasha sells menstrual care products, contraceptives, pharmaceuticals and a range of beauty products, and delivers to customers confidentially. It expanded to Kenya last year and concentrated on raising a Series A round last year. It has already taken on funding from Finnfund and the United States International Development Finance Corporation. The funding will enable Kasha to accelerate its growth and impact across Kenya and Rwanda, improve its e-platform, and support its expansion into other African countries.

Bezos Expeditions, Jeff Bezos’s personal venture capital fund, has made its first investment in Africa – Chipper Cash, a cross-border, peer to peer payments service, has raised $30 million in a Series B funding round. Bezos’ fund has previously backed global tech brands including Uber, Twitter, and AirBnB.

Private equity firm Africa Capital Alliance has invested $20m in Accelerex, a financial services company to assist its continent-wide expansion plan. Mauritus-based Accelerex owns one of the largest payment terminal service providers in Nigeria, which works with over 95% of Nigerian banks and 90,000 merchants. Its agency banking arm, AccelerexNetwork, active since 2013, offers services to financially underserved Nigerians through a network of 9,000 agents and plans to reach 40,000 agents by the end of 2021. Accelerex, which commenced operations in Ghana in 2019, intends to use the $20m investment to expand into Cote d’Ivoire, Kenya, Tanzania and South Africa over the next 24 months and drive new product development across the group.

In November the Société Générale Cameroon (SGC) and the European Investment Bank (EIB) signed a strategic agreement aimed at supporting SMEs. The 2 financial institutions have set aside a XAF10 billion credit line, which will be managed by SGC. And in both Angola and Cabo Verde important privatization programmes involving companies active in key sectors in the 2 countries’ economies are for sale. In Angola, the programme involves 195 companies and assets and was originally planned to be concluded in 2022. Several tenders have already been launched or implemented and 14 companies/assets have already been privatized.

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Alastair Tempest


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