Efforts to pool African resources, capabilities, financing, market access and technology, to help achieve a continental response to MSMEs has been launched with the collaboration of AUDA-NEPAD (the African Union Development Agency) and Ecobank Group as both agreed to commit resources to Africa’s Micro Small and Medium Enterprises (MSMEs). The second virtual workshop facilitated by McKinsey over the weekend provided an opportunity to reaffirm the importance of sustaining market access and strengthening capabilities for MSMEs. During the session, high level representatives from the African Union Commission, regional development banks, development financial institutions, international organisations and commercial banks from the continent, agreed to put in place the AUDA-NEPAD “100,000 MSMEs by 2021” programme.
AUDA-NEPAD Chief Executive Officer Dr Ibrahim Assane Mayaki
Because MSMEs require collective resources to secure and create new jobs on the African continent, the need for collaboration becomes necessary, and as such, the AUDA-NEPAD MSME programme will have five pillars mainly, AUDA MSME Academy, MSME Financing Support Programme, MSME Marketplace, MSME Micro-health insurance Scheme and MSME digital platform.
These five pillars are designed to ensure that MSMEs across the continent are supported to become more resilient, improve their market access and take advantage of technology to tap into the African market of 1.3 billion consumers and leverage the Africa Continental Free Trade Agreement.
AUDA-NEPAD Chief Executive Officer Dr Ibrahim Assane Mayaki commended the contribution of all the Financial Institutions, Development Partners and other Stakeholders who participated in designing the “100,000 MSMEs by 2021” programme. He emphasized the need for all actors to work together and support the private sector in Africa, in order to protect employment and to create the 440 million jobs the continent will need by 2030.
Ade Ayeyemi, Ecobank Group CEO
Ade Ayeyemi, Ecobank Group CEO reiterated Ecobank’s commitment to the initiative and specifically confirmed its support in building the digital platform, developing content for the MSME Academy and participating in lending to African MSMEs.Governments have committed to support MSMEs at the national level. The AUDA-NEPAD programme will pool African resources, capabilities, financing, market access and technology, to help achieve a continental response to MSME’s.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Mastercard has launched the most ambitious business networking project building on the platform of a similar programme like its Mastercard Farmer Network and Kasha which connects people across East Africa. The new project aims to connect over 500 million people that have been financially included over the past five years; maximizing technology, partnerships to deliver aid, insights and access to businesses and communities.
Raghav Prasad, Mastercard’s Division President for Sub-Saharan Africa
Mastercard Corporation notes that the health and economic consequences of COVID-19 have highlighted the critical need to support vulnerable populations, many of whom are disproportionately impacted. In this time of global crisis, thus it has expanded its worldwide commitment to financial inclusion, pledging to bring a total of 1 billion people and 50 million micro and small businesses into the digital economy by 2025. As part of this effort, there will be a direct focus on providing 25 million women entrepreneurs with solutions that can help them grow their businesses.
The extended commitment builds on Mastercard’s ongoing efforts to address the COVID-19 related health and economic challenges facing individuals all over the world, including in Sub-Saharan Africa. Speaking on the development, Raghav Prasad, Mastercard’s Division President for Sub-Saharan Africa notes that “financial inclusion remains key to unlocking the potential of Sub-Saharan Africa, and will become crucial as we support Governments in driving long-term, sustainable economic recovery. Digital transactions are both safe and efficient and giving access to these for as many people as possible is an important part of supporting the most vulnerable parts of the population through the current situation. Our focus right now – beyond philanthropy – is to steadfastly continue Collaborating with governments and private sector partners on solutions that are safe, viable, and most importantly, socially impactful for communities across the region.”
At the 2015 Spring Meetings of the International Monetary Fund and the World Bank Group, Mastercard committed to bring 500 million excluded individuals into the financial system. It achieved that goal through more than 350 innovative programs across 80 countries.
The Mastercard Lab for Financial Inclusion – the technology company’s first lab focused on financial inclusion – is committed to empowering millions of Africans through the use of public-private partnerships, and the innovation of locally relevant technology solutions. One such solution is the Mastercard Farmer Network, a mobile platform that improves market access, increases price transparency and digitizes payments to connect small farmers in Kenya, Uganda and Tanzania.
East Africa is also served by Kasha, an e-commerce platform optimized for women’s health and personal care. It offers confidential and convenient service, online/offline digital ordering and delivery to both urban and low-income rural areas. In Uganda, Mastercard launched Kupaa in partnership with UNICEF Uganda and the country’s Ministry of Education. It enables parents and caregivers to pay school fees and other school expenses with their mobile phones securely, easily, and in small payments when they are able, easing the burden of lump sum payments.
Mastercard also expanded its partnership with Unilever to create Jaza Duka (fill up your store) – a digital program for micro-merchants in Kenya with more than 18,000 duka owners already registered. The program provides a micro-credit eligibility recommendation to Kenya Commercial Bank (KCB), which can then assess a retailer’s creditworthiness and extend credit for stock purchases.
Additional efforts include ongoing work on government disbursement solutions, wage digitization of private sector workers, solutions for gig workers, scaling efforts with fintechs, digital platforms and digital wallets/apps, solutions addressing needs of the financially vulnerable and the expansion of CityKey and Community Pass programs.
This announcement builds on Mastercard’s ongoing efforts to support an inclusive recovery by leveraging the company’s technology, capabilities and reach. That work includes: in the first weeks of the global health crisis, Mastercard committed up to $25 million in seed funding to establish the COVID-19 Therapeutics Accelerator in partnership with the Bill & Melinda Gates Foundation, Wellcome, The Chan Zuckerberg Initiative and others to help speed up the response to the COVID-19 epidemic by discovering, developing and scaling-up treatments for deployment around the world.
Mastercard has committed $250 million in financial, technology, product and services support over the next five years to small businesses in many markets where it operates, supporting the vitality of businesses and the financial security of their workers.
Mastercard is leveraging its network to provide support to governments around the world in a range of areas. This includes providing data insights to inform policymakers about the economic impact of the pandemic; increasing the speed and efficacy of aid disbursements to communities and business segments that need it most; developing donation platforms to enable emergency fundraising; and working with governments to assist business owners and consumers with cyber vulnerability assessments.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
It is becoming clear that most – if not all – our major social, economic and political decisions over the next few years will be made through the prism of the coronavirus and the ripple effects of the pandemic. Lacking the financial resources and healthcare capacity of the more developed Western countries, Africa will have to pave its own way in dealing with the crisis. To date, the continent has been spared the worst, with Europe and the US forming the current epicentres of the pandemic.
Cathy Smith, Managing Director at SAP Africa
However, it is certain that we are yet to see the worst of the disease, in terms of health, social impact and the economy. While lockdown measures are evident in much of the region, public health experts are unanimous in their view that we won’t escape a surge in new infections, especially as we head into the colder winter months in many countries.
Already, the economic effects of lockdown can be felt, as informal traders and small to medium enterprises grind to a halt due to government restrictions. The effects, while impossible to fully predict, are likely to reshape the future of the continent in fundamental ways.
While our current focus is on overcoming the immediate challenge posed by the virus, I cannot help but look up and consider what awaits us beyond the horizon. And, despite the chaos and uncertainty we all presently feel, I remain highly optimistic about our collective future, both as a business leader and as an African citizen.
Due to the digital skills divide and a number of other factors, most Africans are not actively working in the digital economy. The overwhelming majority of Africa’s citizens are informal traders, smallholder farmers and other forms of entrepreneurs. An estimated sixty percent of Africa’s workforce is engaged in agriculture alone. The continent’s 250 million smallholder farmers, working on plots of around 2ha each and earning less than $1,000 per year, produce 80% of all food consumed here. A single smallholder farmer financially supports multiple family members and makes an invaluable contribution to food security. Any intervention that supports this sector has the potential to deliver dramatic socio-economic returns.
We can see this in Nigeria, where an initiative by the Convention on Business Integrity’s for-profit arm CBi Innovations has seen the deployment of a technology tool to support 850 000 maize farmers and connect them more sustainably to the agricultural value chain.
Where countries have invested in building stronger agriculture sectors, the entire economy has been lifted. World Bank data shows that Ethiopia’s poverty levels dropped by a thirds since 2000 mainly thanks to impressive agricultural GDP growth of nearly 10% per year.
A growing and evolving continent
Africa’s population growth has been on an accelerated path for some time. Experts agree that, at current rates, the continent’s population will double by 2050. This will be accompanied by a mass urbanisation that could see rural areas empty as more citizens seek a better life in fast-growing cities. The World Economic Forum predicts that the population in Lagos in Nigeria could pass 88 million by 2100, making it the most populous city on the planet.
However, these oft-quoted predictions are extreme. The latest data shows that the working age population in Africa – those aged between 25 and 64 – is growing faster than other age groups, which provides an opportunity for accelerate economic growth, also known as the ‘demographic dividend’.
How we engage, mobilize and equip this demographic dividend in service of the continents socio-economic goals will be instrumental in our collective effort to build a better future. Which makes the advances in digital skills development, driven by investments from public and private sector organizations into digital skills development among teachers and students, all the more exciting.
Digital skills training crosses tipping point
With more than 700 million youth spread across 54 countries, Africa’s wealth of youthful talent is the envy of even more developed nations that face aging – and in some cases, declining – populations. A broad collective effort has been underway over the past few years to equip this youthful talent pool with the skills and knowledge they need to be active participants and contributors to the global digital economy. Much of the developed world has been able to quickly shift learning to online platforms thanks to the pervasive high-speed internet connectivity and broad use of internet-enabled devices in those markets. In Africa, too many children simply don’t have that option.
Public and private sector organisations will need to build on the success that has been achieved over the past years to bring digital skills learning to more of the continent’s youth. Such efforts should focus not only on expanding access to technology among especially rural communities, but on equipping teachers and educators with the tools and knowledge they need to be effective digital learning champions.
The investments we make in training our youth today will pay huge dividends as we steer through the coming years and decades.
Diversity our greatest strength
Just as technology is supporting smallholder farmers by connecting them to better information and market opportunities, so too will we see innovations that empower female entrepreneurs to maximise their business ventures. In the latest Global Entrepreneurship Monitor Women’s Report, sub-Saharan Africa boasted the highest rate of female entrepreneurs at 21.8%. This against a global rate of 10.2% – in Europe, the rate drops to 6%. This means more than one in five women in Africa are engaged in some form of entrepreneurial activity.
Social entrepreneurship is also gaining ground as a more sustainable and broadly beneficial business model for addressing socio-economic challenges on the continent. In 2019, Africa hosted the Social Entrepreneurship World Forum, first established in 2007, in Addis Ababa in Ethiopia. In that country alone, 55 000 social enterprises have sprung up to address a wide spectrum of challenges. Surprisingly, more than a quarter of social entrepreneurs in the country are women, compared to only 4.5% who lead mainstream Ethiopian businesses.
I believe it is our diversity and multiculturalism that gives us immense strength in innovation and resilience. Three thousand ethnic groups speaking more than two thousand languages lend the continent an unmatched richness in perspectives and lived experiences.
As a greater share of our daily work output becomes automated by more efficient machines and algorithms, we’re likely to see a shift back to those skills and qualities that make us uniquely human. Empathy, creativity, and compassion, the ability to consider and engage with a diverse set of views – these are the skills that will distinguish us as we head into the coming decades.
In closing
There’s no doubt we face a difficult and uncertain road ahead. Things are likely to get worse before they get better. But we have done so much work over the past decades, achieved so much, overcome such immense socio-economic challenges, that I take heart that our continent will survive.
More than that, I believe we are well-placed to create a pan-African community with a shared vision for a more equitable future, one driven by the deeply African belief in Ubuntu. Some global analysts believe there is opportunity for Africa to rival China’s economic might, despite our challenges.
I think Africa will chart its own course, one that is no less transformational than the so-called Chinese Miracle, but takes all our best qualities: our diversity, our natural wealth, our youthfulness, our creativity and resilience, and forges an inclusive future for all who call this continent home.
By Cathy Smith isthe Managing Director at SAP Africa.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
As part of efforts aimed at dousing the controversies trailing the launch of the Covid-19 drug produced by Madagascar, an agreement has been reached between the governments of Madagascar and that of South Africa seeking South Africa’s scientific support in carrying out further research on the herb used in producing the drug.
South African Health Minister Zweli Mkhize
South Africa confirmed yesterday (Wednesday) that Madagascar had requested assistance with scientific research on Artemisia – the herb used in the production of COVID-Organics. Speaking on the issue, the South African Health Minister Zweli Mkhize said South Africa had agreed that its scientists will only assist with analysis of the herb. “We received a call from the government of Madagascar, who asked for help with scientific research. Our scientists would be able to assist with this research. We will only get involved in a scientific analysis of the herb. We are not at that point yet,” Mkhize tweeted.
The now controversial herb has been donated by the Malagasy government to a number of African countries amongst them: Equatorial Guinea, Republic of Congo and Guinea-Bissau – the latter received a consignment meant for the ECOWAS region.
In a related development, amid WHO caution, the African Union, AU, have confirmed that they are in talks with Madagascar over COVID-Organics, the island nation’s purported herbal cure for COVID-19. A statement by the AU said it was in contact with Antananarivo “through its embassy in Addis Ababa, with a view to obtain technical data regarding the safety and efficiency of the herbal remedy, recently announced by Madagascar for the reported prevention and treatment of COVID19.”
AU and Malagasy diplomats have held meetings in Addis Ababa with the view to getting necessary information regarding the remedy. “Once furnished with the details, the Union, through the Africa Centres for Disease Control and Prevention (Africa CDC), will review the scientific data gathered so far on the safety and efficacy of the COVID-19 Organics. “This review will be based on global technical and ethical norms to garner the necessary scientific evidence regarding the performance of the tonic,” an AU statement further disclosed.
Meanwhile, the World Health Organization, WHO; have reiterated its caution against people putting their faith in herbal remedies that have not been scientifically tested.
In a statement, WHO said despite supporting all efforts – including traditional medicines – in search for treatments, it was important that any purported treatments be thoroughly tested.
In his last address, President Rajoelina said Madagascar was building a factory to scale up production. He also said the cure was to undergo clinical trials and that aside the drinks, injection options were being pursued. Over half-dozen African countries have expressed interest in it.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
The focus that agriculture currently enjoys is a golden opportunity for science and skills transfer to position Africa as the solution to the food security conundrum. Ever since he took office in February this year, President Cyril Ramaphosa has placed agriculture firmly on his agenda. The obvious and loudest aspect has been and continues to be, land reform and how expropriation without compensation will play out in practice.
South African president Cyril Ramaphosa
But of equal importance, at least from where I stand as a professional and businessman in the agricultural sector, are his utterances, actions and policy decisions related to the sector.
In just the past two months, agriculture featured at three of the most high-profile events in South Africa. In September, with the announcement of the economic stimulus package, agriculture was singled out as a priority area. The president said that investment would be channeled to black commercial farmers to increase their entry into food value chains through access to infrastructures such as abattoirs and feedlots.“The agricultural sector has massive potential for job creation in the immediate and long term,” he said.
This view was reiterated at both the Jobs Summit and the Investment Conference that took place in October. At the latter president Ramaphosa said that land reform was needed not only to redress a historical injustice but also to effectively unlock the economic potential of the country’s land.And this brings me to an issue close to my heart: the role Africa can and should play in global food security.In 2013, the world’s human population breached the seven billion mark; we are told that by 2050 there will be nine billion mouths to feed – and a quarter of them will live in Africa.We have a mere 32 years in which to double food production in general, and protein (mainly meat) in particular.
Faced with this immovable target, food security and food production have been major scientific and political topics of discussion and debate for some time now.The land available for food production is finite, therefore the only possible solutions are to increase production on land that is currently underused, and to employ science and technology to improve the efficiency and productivity of farming enterprises.In both these solutions, Africa takes centre stage.
Africa is the only continent suited to commercial agriculture with underutilised land. Neither Europe nor North America has “spare” land available. It is therefore up to us to do more with what we have.When it comes to exploring science and technology in the interest of increased productivity and yield, farmers in the developed world are already using precision farming and similar advances.In fact, the introduction of advanced genetics, feeding systems, animal health controls and other technologies over the past four decades, has allowed industrialised countries to reduce their overall land requirement for livestock by 20 percent while doubling meat production.
Only in Africa is there room for a massive increase in the difference science can make to production.What this means for us here at the southern tip of Africa is opportunity: opportunity to contribute to food security and the resultant financial security of millions of families on the African continent..While it is unwise to place all one’s faith in one person, I do believe that President Ramaphosa is the right leader at the right time to position South Africa to capitalise on this opportunity.
For the first time we have a head of state who understands agriculture, and the livestock and game industries. More than that, he appreciates what he calls in his book, Cattle of the Ages, the “miracle of science”, ie, the contribution veterinary science is making and can make to the future of the country.
It is incumbent on us as players in the animal health industry to strengthen the president’s hands by bringing our science A-game to the table. In addition, we must invest in real and meaningful skills- and knowledge-transfer that will put our continent’s millions of small-scale farmers in charge of their own destinies and position them as a cornerstone of the global food security project.
At Afrivet we are seeing the impact that this combined approach can make. Our animal health products are proven and trusted – we know the science works and we continue to develop remedies for Africa’s specific needs.Through our BBBEE subsidiary, Afrivet Training Services, we entered into a joint venture with the Onderstepoort Faculty of Veterinary Science of the University of Pretoria in 2010 to sponsor the world’s first chair in Primary Animal Health Care. The joint venture has already produced a comprehensive (and ever growing) body of knowledge for students, veterinary professionals, commercial farmers and emerging stock owners alike.
It is also involved in community-based outreach and skills transfer programmes that empower communal stock owners to view and manage their herds as stores of commercial value.We call on our industry partners and peers to heed President Ramaphosa’s “thuma mina” (send me) call, and add our own to it: “mazene’thole” (may your cow calve).
Together we can turn Africa’s agricultural potential into production.
Dr Peter Oberem is the founder and chief executive of Afrivet.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Out of the gate, 2020 is being hailed as a comeback year for emerging-markets investing. In sub-Saharan Africa, the World Bank forecasts economic growth to pick up to 2.9% (from an estimated 2.5% in 2019.
Goodwell Investments’ Wim van der Beek
But global investors watching indicators like oil and commodity exports may be missing the real story, according to local and regional impact investors.
“There are so many more investment opportunities in Africa than people will see from afar. If you only fly in and out, you won’t find them,” Goodwell Investments’ Wim van der Beek said in an interview with Impact Alpha “What we find most exciting are opportunities investors often misunderstand.”
For example? Financial inclusion, logistics and agriculture. Goodwell, with offices in Amsterdam, Nairobi and Cape Town, is raising a series of funds for its pan-African uMunthu impact initiative. Goodwell has recently invested in Nigeria’s MAX.NG, a motorcycle taxi hailing and finance startup, and South Africa’s Nomanini, which designed a digital payments platform for informal business owners.
Small and growing
Van der Beek is bullish on opportunities for financial inclusion on a continent where as many as 350 million adults are still unbanked. The explosion of mobile money across the continent has created infrastructure to support a raft of new services. In agriculture, unlocking the productive capacities of nearly millions of smallholder farmers, he says, could fuel a “bottom-up agricultural revolution.” Efficient logistics has a knock-on effect on every other sector, from healthcare delivery to education.
The different approaches in different sectors, “all add up to the same thing, which is improving small business infrastructure,” the key to inclusive economic growth, van der Beek explains.
Other local and regional investors agree small and growing businesses represent the biggest impact opportunities on the continent.
“This segment of the market is the bread and butter of the African economy,” Nigeria-based Aruwa Capital’s Adesuwa Okunbo Rhodes told ImpactAlpha. Investing in these businesses’ growth is impact investing, she argues. That’s not something outside investors readily see. The gender-focused impact investor is targeting West African individuals and family offices to raise its first fund in order to show what’s possible
“Fundraising from them was intentional. They understand the ecosystem and know the companies in our pipeline,” Rhodes says. “We can take that portfolio and track record to institutional investors.”
Big tickets
A handful of high profile, big-ticket deals last year put Africa back on the radar of global investors, and stirred concerns about an Africa “bubble.” Medical drone delivery company Zipline scored a whopping $190 million from TPG Growth’s Rise Fund, Temasek, Goldman Sachs and others. Andela, an African tech training and job placement venture, took in $100 million. Off-grid solar companies in Africa raised hundreds of millions of dollars.
Digital financial services companies have set new records in both revenues and valuations. LeapFrog’s Andrew Kuper told ImpactAlpha that JUMO’s $70 million capital raise, led by Goldman Sachs in December 2018, was the first sign of maturing digital lending, followed by Tala’s $110 million Series D round last August. Digital remittance company WorldRemit raised $175 million in a Series D funding round. LeapFrog is an investor in both JUMO and WorldRemit.
LeapFrog raised $700 million for its third fund last year on the strength of its tally of exits and successes in under-capitalized segments of the African market. Kuper says access to basic services for tens of millions of people across the continent represents a major positive shift. “Impact investors have the rare opportunity to expand and accelerate that destiny,” says Kuper.
Kuper said LeapFrog “sees excellent deal flow continuing in consumer-led healthcare and financial services in 2020. He also expects to see more “buy-and-build deals,” such as Goodlife Pharmacy in Kenya.
Goodlife, a local chain of pharmacies, grew from six to 19 stores under its first private equity owner, then to 60 stores under its second owner. Many of its pharmacies have expanded into broader health hubs that provide nutrition advice and telemedicine consultations with doctors. “This is the future of healthcare, in resource-constrained environments, not just for Africa but for emerging and developed markets too,” Kuper said.
Proceed with caution
Fintech is one sector with both enormous impact potential and where impact investors should proceed with caution. In Kenya, for example, a proliferation of alternative credit-scoring services are providing first-time borrowers with near-instant access to mobile credit — at the same time usage of gambling apps is soaring among individuals who have secured quick and easy digital credit.
“Impact investors need to be careful” to scrutinize the fintechs’ underwriting models, van der Beek says. Goodwell and other investors last year collaborated via the Responsible Finance Forum on Guidelines for Responsible Investing in Digital Financial Services. “If services aren’t being offered in a responsible way, they can actually perpetuate financial exclusion.”
Pressure to deploy ever-larger volumes of capital, coupled with questionable due diligence practices and minimal to no local presence or expertise create the conditions for a correction or market shakeout.
“There’s a lot of herd behavior throwing money at a few initiatives,” cautions van der Beek. “It’s a scenario we’ve seen in emerging markets investing before. There will be some train smashes in the next few years.”
Jessica PotheringJessica is works with ImpactAlpha.com, with a focus on impact investing, social entrepreneurship and economic development.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
He could be contacted at udohrapulu@gmail.com
As part of efforts aimed at bridging economic and trade gap within the continent, especially for Lusophone countries of Africa, the African Development Bank and the governments of Equatorial Guinea and Portugal have signed a country-specific memorandum of understanding for the implementation of the Lusophone Compact, which aims to accelerate private sector development in Portuguese-speaking countries of Africa, known as PALOPs. Equatorial Guinea is the sixth and final PALOP country to sign the Compact after Angola, Cape Verde, Guinea-Bissau, Mozambique and São Tomé and Príncipe.
Cesar Mba Abogo, Minister of Finance, Economy and Planning of Equatorial Guinea
The Lusophone Compact is a financing platform that provides risk mitigation, investment products and technical assistance to accelerate private sector development in Lusophone African countries. In Equatorial Guinea and elsewhere, project preparation has been identified as one of the main impediments to making projects bankable. The Portuguese Government allocated 400 million euro in guarantees and other risk sharing mechanisms in the 2019 national budget to support the implementation of the Compact.
The signing ceremony which took place in Bata last week was between Cesar Mba Abogo, Minister of Finance, Economy and Planning of Equatorial Guinea, Manuel Grainha do Vale, Chief of Mission of Portugal in Equatorial Guinea and Racine Kane, Deputy Director General for the Central Africa region at the African Development Bank. Also present at the ceremony were Equatorial Guinea’s Minister of Foreign Affairs and Cooperation Simeón Oyono Esono Angue, Minister of Trade and Promotion of SMEs, Micha Ondo Bile, Minister of Justice, Salvador Ondo Ncumu, several secretaries of state, and over 50 representatives of the public and private sector.
The Equatorial Guinea MOU identifies a list of potential private sector and PPP investment projects, which will be reviewed by the Bank, Equatorial Guinea and Portugal and prioritized for further support. It also includes an indicative list of technical assistance projects to accelerate private sector and PPP growth.
Mba Abogo described the occasion as “an important element in our strategy to strengthen and diversify the private sector” and underlined the central role of the private sector and public-private partnerships (PPPs) in the nation’s Horizonte 2035 national development plan.
Speaking on behalf of the Bank, Kane emphasized its commitment to two central pillars of Equatorial Guinea’s development – diversification of its economy and the development of human capital – which he said will be reflected through the Compact. For his part, Grainha do Vale stressed that Portugal seeks to deepen its cooperation with Equatorial Guinea and that the Compact will be an important element in the development of that relationship.
Following the signing, the Bata Chamber of Commerce hosted the Bank delegation which included Ezekiel Odiogo, Head, Private Sector Investment at the Africa Investment Forum, at a roadshow event for the local business community. “The Africa Investment Forum is a unique platform for Equatorial Guinea to showcase its investment opportunities to the global investor community,” Odiogo said.
The presentations were followed by B2B meetings with select project sponsors. A day later, the program was repeated in Malabo, at the Malabo Chamber of Commerce, where more than 50 entrepreneurs participated and over a dozen B2Bs were held.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Uncertainty over the global economy seems to be the most disconcerting to business leaders across Africa, than any other issue. This is contained in the Report launched on the eve of the ongoing World Economic Forum in Cape Town South Africa, The Africa Business Agenda Report gives inkling into the emerging patterns African business trends is likely for follow in the short to medium term. The Report highlights the thoughts of CEO’s across the continent pointing to their less than satisfactory view of the strength of the global economy and their organisations’ ability to grow revenues in both the short and medium term than they were a year ago. A quarter of African CEOs (25%) believe that the global economy will decline over the next 12 months.
According to this Report the unease about global economic growth is also dampening CEOs’ confidence about their own companies’ outlook in the short term, with 27% of CEOs stating they are ‘very confident’ in their own companies’ prospects for revenue growth over the next 12 months. Furthermore, only 39% are ‘very confident’ about their organisations’ growth prospects over the next three years. Speaking on the findings of the Report, the CEO of PwC Africa Dion Shango, said that as they look forward to the year ahead, African CEOs are less confident about the prospects for the global economy than they were a year ago. The same is true when they consider the prospects for their own organisation’s growth.
Dion Shango, CEO, PwC Africa
“In Africa, economic and policy uncertainty, among other issues, have cast some doubt upon business leaders’ hopes for immediate and future growth. Although there is a drop in optimism, African business leaders do see some opportunities on the continent – but overall, they are playing it safe.”
The Agenda compiles results from a survey of 83 CEOs across 19 African countries. The results are benchmarked against the findings of PwC’s 22nd Annual Global CEO survey of more than 1 300 CEOs, conducted during the 4th quarter of 2018. The Agenda provides an in-depth analysis and insights into how businesses are adapting to meet the challenges of operating in Africa.
Notwithstanding the current economic climate and other challenges, there is notable optimism among business leaders about the potential to unlock more growth on the continent. While the US, China and the UK continue to be the most dominant traditional markets for growth opportunities, it is notable that 20% of African CEOs ‘don’t know’ where else to look for growth and 5% say there is ‘no other country’ they would look to. The report suggests this may reflect the current economic and political climate.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Pepsico, the world’s third-largest food and drinks company has decided to seal its largest deal ever, out of the United States. Unexpectedly, South Africa is its most preferred destination. Any moment from now, the final gavel would go and Pioneer Foods, the South African local brand which owns major brands like Sasko, Spekko, Liqui-Fruit, Ceres, and Bokomo would become part of the Pepsico’s global portfolio.
“As we look to accelerate our growth in key markets around the world … we are absolutely thrilled to join forces with … one of South Africa’s leading food and beverage companies,” said Pepsico CEO Ramon Laguarta. “Pioneer Foods represents a differentiated opportunity for PepsiCo and allows us to immediately scale our business in Africa.
Now Here Is The Deal And Why Pepsico Is Settling For South Africa
This is a major acquisition in which Pepsico would be paying a 56% premium to Pioneer’s share price before the deal. Doing so means that Pepsico has seen substantial value in what lies ahead.
The deal is of much greater significance than the R24 billion PepsiCo will spend on buying Pioneer, says Schalk Louw, a portfolio manager at PSG Wealth.
Pepsi vs. Coca-Cola
“It sends a message that one of the largest companies in the world has faith in South African Incorporated,” says Louw.
It is hugely promising that a massive American company would do one of its biggest deals outside of the US in South Africa — it must mean that it is taking a positive view on the long-term prospects of the country, says Henry Biddlecombe, an analyst with Anchor Capital.
Two years ago, there were rumours that an international company — very likely PepsiCo — was considering buying Pioneer. But it was apparently scared off by a succession of credit rating downgrades and the political turmoil of the Zuma era.
Now it’s back, and this time Pioneer is a much bigger bargain.
In 2017, Pioneer was an R45 billion company — it shrank to R15 billion this year amid a perfect storm that wreaked havoc on its profitability. Rocketing maize prices, tough competition in the bread market and embattled consumers have hurt Pioneer.
Surprisingly, it seems Pepsico is coming just at the right time.
Data showed that South Africans have been shopping more than expected. Retail sales rose by 2.2% in the year to May — while economists were only expecting 1.7%. April’s number has also been revised upwards. Consumer spending represents 60% of the SA economy, which means that the GDP should have expanded in the second quarter, and a recession may have been avoided.
Apart from Pepsi, the US giant owns Mountain Dew, Lay’s, Gatorade, Tropicana, 7 Up, Doritos, Quaker Foods and Fritos.
Here Is What This Major Investment Could Mean For South Africans
Hope At The End Of A Tunnel?
Expect this to be a major remarkable sign of turn-around for the struggling South African economy. The first phase of a chain of these events has already happened. A 25 basis-point interest rate cut — the first in more than a year was reached last week, and the rand rallied to around R13.82/$ (from R15.02 to the dollar barely a month ago).
Although it may still be premature to speculate, the Pepsico deal is definitely a sign that South African market may be nearing the bottom of a very difficult period, says Damon Buss, equity analyst at Electus. Pepsico is paying a 56% premium to Pioneer’s share price before the deal, so it is clear they see substantial value in what lies ahead, Buss added. Buss believes South African consumers will remain under pressure for the rest of this year, but 2020 should bring relief.
A Deal From Pepsico Is No Ordinary Deal; So Expect More Takeovers
Right now, a lot of companies in South Africa are currently significantly cheap, says Biddlecombe. Recently, the Israeli firm Central Bottling announced its plans for a takeover of a South African dairy giant Clover. (The deal has hit a stumbling block after protests from a pro-Palestine group, but could still go ahead.) Tiger Brands — SA’s biggest branded food company — could also be a target, given that its share price has halved over the past year, Louw said. The company was hit by the listeriosis crisis, which killed more than 180 people in South Africa.
Louw expects more South African companies to become takeover targets, particularly in the food sector, where companies are cheap after a nightmare period of drought, a rocketing rand, sky-high fuel prices, and depressed household spending.
A Major Win For Consumers As They May Get More At Cheap Prices
“Pepsico is likely going to shake up the consumer market,” predicts Buss. Under former CEO Phil Roux, Pioneer made some progress to move away from basic commodities (maize meal, bread) to higher-margin branded products. But when Roux left the company in 2017, the current management seemingly struggled to progress, says Buss.
Now PepsiCo will use its considerable global know-how to boost Pioneer Foods groceries brands to a new level, which will mean trouble for Tiger Brands, owner of competitor brands like Albany, Ace, and Tastic. Add to that an increasingly aggressive Libstar, which owns Lancewood, Denny and produces food under the Woolworths and Pick n Pay labels, and competition in consumer products is expected to heat up. This should mean lower prices and better products.
Also, PepsiCo will almost certainly use the Pioneer Foods distribution network to launch some of its products in South African supermarkets, says Louw.
This means more products for consumers to choose from, and also more price competition. PepsiCo may use its massive balance sheet to spend money on promotions establish its new products locally, thinks Buss.
South Africa’s Manufacturing Index May Increase The Largest Now
“Pioneer Foods forms an important part of our strategy to not only expand in South Africa, but further into sub-Saharan Africa as well,” said Pepsico CEO
While Pepsico noted in its statement on the planned deal that Pioneer will offer it a solid ground for further expansion into Sub-Saharan Africa by boosting its manufacturing capabilities, this is invariably going to lead to a well-drawn battle for the sub-Saharan African market and a major win for manufacturing. Now the fallout of this is that more of Pepsico products could be made locally would be made in South Africa.
“We think Pepsico is seeing the transaction primarily as an opportunity to expand into Africa, using South Africa as a launchpad,” says Buss. Will Pepsico also ramp up exports of Pioneer’s South African brands — including Liquifruit and Ceres — to overseas markets? Buss doesn’t think so. “The global beverage market is notoriously competitive.” However, given that Pepsico is shifting to healthier snacks, the global giant may be interested in Pioneer’s dried-fruit brand Safari, and some of its Bokomo rusk and biscuit brands, for overseas expansion.
Beyond South Africa, Pioneer exports to around 80 markets and has joint-venture operations in Namibia, Botswana, Kenya, and Nigeria.
In late-2014, the pair agreed to terminate their ten-year tie-up in Pioneer’s home market. Pioneer has been PepsiCo’s brand bottler and distributor in the country since 2005 but had to take an impairment charge on the business, prompting the mutual decision to quit.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Good day for South African businesses, bad day for their Nigerian counterparts. This is because there are still so many issues surrounding equity crowdfunding in Nigeria. Below, we discuss the legal implications of crowdfunding in Nigeria more intensely.
Crowdfunding sometimes appears the only alternative for start-ups, in the face of stifling interest rates on loans from banks and financial institutions, and lack of funds from family and friends as well as the absence of venture capitalists and angel investors. Crowdfunding is a way of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Here is a quick grasp of reality.
The United States
The United States’ Securities and Exchange Commission has made a lot of rules on Crowdfunding which will enable eligible companies to offer and sell securities through crowdfunding. Thus in the US, all transactions under Regulation Crowdfunding take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal. A company is to raise up to a maximum aggregate amount of $1,070,000 through crowdfunding offerings in a 12-month period. However, there is a limit on the amount individual investors can invest across all crowdfunding offerings in a 12-month period. Securities purchased in a crowdfunding transaction generally cannot be resold for one year.
South Africa.
There is no substantial legislation on crowdfunding in South Africa, except that equity crowdfunding is a form of securities. However, South’s Africa’s first equity crowdfunding platform Uprise.Africa was launched after being told by the Financial Services Board (FSB) that the platform does not fall foul of the Collective Investment Schemes Act, the platform’s founder and COO Patrick Schofield said. Inge Prins, the Chief Marketing Officer Uprise.Africa, had hinted the platform, in one of its numerous success instances, paid out investment funds to a local brewery, Drifter Brewery following a successful campaign that raised R3,889,000 (US$293,000), far exceeding its stated goal by almost R1,000,000.
Understanding How Crowdfunding Works
Crowdfunding refers to raising money from the public (who collectively form the “crowd”) primarily through online forums and social media.
Crowdfunding models include: Donation-based crowdfunding (in which donors are not typically granted anything in return for their donation)
Rewards-based crowdfunding (in which backers contribute funds in exchange for some reward–in many cases the item produced by the campaign)
Equity crowdfunding (Equity crowdfunding refers to raising money from small public investors (who collectively form the “crowd”) primarily through online forums and social media. In exchange for relatively small amounts of cash, investors get a proportionate slice of equity in a business venture).
Debt/lending crowdfunding (in which lenders provide money and expect their loan to be paid back with interest).
Crowdfunding For Private Companies Cannot Work Unless Nigeria’s Companies And Allied Matters Act (Nigeria’s Chief Company Legislation) Is Amended.
The idea of having crowdfunding for companies is that the general public would be allowed to contribute towards the formation of the companies. Now while the public can contribute to an idea, the same is not possible for a company. By section 22(5) of Nigeria’s CAMA, it is impossible for a private company to invite the members of the public to subscribe to its shares. It is also impossible for equity crowdfunding to work because the idea of equity crowdfunding is that the public funds the formation of the company expecting to be repaid their contributions by way of shares in the company.
Again, under Section 22 of CAMA, the maximum number of persons a private company shall have shall not exceed fifty, not including persons who are bona fide in the employment of the company.
Nigeria’s Securities and Exchange Commission and Crowdfunding
The Commission determines governs all company securities in Nigeria. Section 13 of the Investment and Securities Act (the chief Act that regulates securities of companies in Nigeria) empowers the Commission to:
regulate all offers of securities by public companies and entities;
register securities of public companies;
prepare adequate guidelines …necessary for the establishment of securities exchanges and capital trade points.
register and regulate the workings of venture capital funds and collective investments schemes in whatever form;
Consequently, by Section 67(1) of the Act, no person shall make any invitation to the public to acquire or dispose of any securities of a body corporate or to deposit money with anybody corporate for a fixed period or payable at call, whether bearing or not bearing interest unless the body corporate concerned is-(a) a public company, whether quoted or unquoted, and the relevant provisions of Act are duly complied with.
To this effect, the SEC, which was empowered to do so, has gone ahead to give the listing requirements for any company in Nigeria to include that the company must be registered as a public limited company with no restrictions on the transfer of fully paid shares; have a minimum of three (3) years operating track record; have a pre-tax profit from continuing operation of not less than N300million cumulatively for the last three (3) fiscal years and a minimum of N100 million in two (2) of these years. Hence, since equity crowdfunding is ideally a thing for new, mostly private companies limited by shares, there is no way any of them would be able to fulfill the listing requirements, to be able to offer their securities to the public.
The continued ban on equity crowdfunding in Nigeria by SEC, therefore, is not a surprise, even though the Commission said it is looking at the crowdfunding rules in the US and Canada.
The SEC believes that crowdfunding cannot be effective in Nigeria in the meantime because of a lack of rules.
Bottom Line
While equity crowdfunding remains banned in Nigeria, donation and reward-based crowdfunding are however excluded from the SEC’s regulatory remit. This explains why there are a number of donation crowdfunding platforms, and not one for equity crowdfunding. Nigeria’s first equity-based crowdfunding platform, Malaik, launched in 2015 is now down and is up for sale at $3795 on HugeDomains.com, while other donation-based platforms such as Donate-ng.com, and Imeela have since carried on.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
