Report - Afrikan Heroes

Nigeria to experience drop in diaspora remittances this year

November 3, 2020

World Bank Group President David Malpass

The World Bank Group has predicted that inflow of Diaspora remittance to Nigeria will drop by $2 billion in 2020 to $21.7 billion as against the $23.8 billion the country recorded in 2019. The World Bank in a report hinged the decline in remittances from Nigerians living abroad on an account of the double whammy of the COVID-19 pandemic and the attendant economic crisis that has continued to spread.

However, another report from the National Bureau of Statistics (NBS) showed that the federal government generated a total sum of N424.71 billion from Value Added Tax (VAT) in the third quarter of the year (Q3 2020) compared to N327.20 billion in Q2 as well as N275.12 billion in Q3 2019.

Globally, the bank also anticipated that the amount of money migrant workers send home would decline by 14 per cent by 2021, compared to the pre-COVID-19 levels in 2019.

The global lender made this known in its new report ‘Migration and Development Brief 33,’ which was released yesterday. It stated: “Remittances are helping to address the impact on African households. Nigeria remains the largest recipient of remittances in the region and is the seventh largest recipient among LMICs, with projected remittances to decline to around $21.7 billion, a more than $2 billion drop compared with 2019.”

According to the report, remittance flows to low and middle-income countries (LMICs) are also projected to fall by seven per cent to $508 billion in 2020, followed by a further decline of 7.5 per cent, to $470 billion in 2021. It stated that the foremost factors driving the decline in remittances included weak economic growth and employment levels in migrant-hosting countries, weak oil prices; and depreciation of the currencies of remittance-source countries against the US dollar.

“The impact of COVID-19 is pervasive when viewed through a migration lens as it affects migrants and their families who rely on remittances,” Vice President for Human Development and Chair of the Migration Steering Group of the World Bank, Mamta Murthi said.

He added: “The World Bank will continue working with partners and countries to keep the remittance lifelines flowing and to help sustain human capital development.”

The report said the anticipated decline in 2020 and 2021 would affect all regions, with the steepest drop expected in Europe and Central Asia (by 16 per cent and eight per cent respectively), and followed by East Asia and the Pacific (11 per cent and four per cent), the Middle East and North Africa (eight per cent and eight per cent), Sub-Saharan Africa (nine per cent and six per cent), South Asia (four per cent and 11 per cent) and Latin America and the Caribbean (0.2 per cent and eight per cent).

“The importance of remittances as a source of external financing for LMICs is expected to amplify in 2020, even with the expected decline.

Remittance flows to LMICs touched a record high of $548 billion in 2019, larger than foreign direct investment flows ($534 billion) and overseas development assistance (about $166 billion). The gap between remittance flows and FDI is expected to widen further as FDI is expected to decline more sharply.

“Migrants are suffering greater health risks and unemployment during this crisis,” lead author of the brief and Head of Global Knowledge Partnership on Migration and Development (KNOMAD), Dilip Ratha, said.

“The underlying fundamentals driving remittances are weak and this is not the time to take our eyes off the downside risks to the remittance lifelines,” he stated.

The report said: “This year, for the first time in recent history, the stock of international migrants is likely to decline as new migration has slowed and return migration has increased. Return migration has been reported in all parts of the world following the lifting of national lockdowns which left many migrant workers stranded in host countries.

“Rising unemployment in the face of tighter visa restrictions on migrants and refugees is likely to result in a further increase in return migration.

“Despite being the cheapest, money transfer and mobile operators face increasing hurdles as banks close their accounts to reduce the risk of non-compliance with anti-money laundering (AML) and combating terrorism financing (CFT) standards.

“To keep these channels open, especially for lower-income migrants, AML/CFT rules could be temporarily simplified for small remittances.”

It said strengthening mobile money regulations and identity systems will improve the transparency of transactions, explaining that facilitating digital remittances would require improving access to bank accounts for mobile remittance service providers as well as senders and recipients of remittances.

It added: “Remittances to Sub-Saharan Africa are expected to decline by around nine per cent in 2020 to $44 billion. Within the region, remittances to Kenya have so far stayed positive, though flows are likely to eventually decline in 2021. All major remittance-receiving countries will likely see a decline of remittances.

“As the COVID-19 pandemic affects both destination and origin countries of Sub-Saharan migrants, the fall in remittances is expected to further lead to an increase in food insecurity and poverty.

“Remittance costs: Sending $200 remittances to the region cost on average 8.5 per cent in the third quarter of 2020, representing a modest decrease compared with nine per cent a year ago. Sub-Saharan Africa is the costliest region to send remittances to,” the report said.

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

Why Nigerian CcHub Acquires Kenyan edtech Startup eLimu

November 1, 2020

Africa’s etech industry has witnessed a very commendable development with the announced acquisition of Kenya’s edtech startup eLimu by Nigeria’s Co-creation Hub (CcHub).
The acquisition cost which was not.made public is coming a year since it acquired Kenya’s major tech innovation hub, iHub after nine years of existence.
Ultimately, this will further expand CcHub’s foothold within Kenya’s technology ecosystem and East Africa. This move was initiated by iHub under the management of CcHub.

Consequent on the acquisition, eLimu will be integrated into CcHub’s digital education programmes unit, re:learn. In 2016, re:learn became a consolidation of all CcHub’s educational initiatives.
Based on CcHub’s founder and CEO, Bosun Tijani’s comment to Techpoint Africa, eLimu will continue as an independent product company while still under the responsibility of re:learn. Subsequently, eLimu’s apps will be retained, while plans are also underway to expand beyond Kenya.
Tijani saw the opportunity to acquire eLimu as a way to help CcHub accomplish its content creation plan.
Because eLimu’s focus has always been on primary education, CcHub’s will subsequently revamp and upgrade the revision app and expand it into Nigeria, Rwanda, Uganda, Tanzania and other East Africa countries within the first six months. Asides primary education, Tijani confirms that the app will also be used for science education at the secondary level.
Simultaneously, CcHub brings on board Abiola Olaniran, the founder and CEO of Gamesole, for his years of building local apps and monetising them. As one of the pioneers of building gaming products in Nigeria, Olaniran will drive the digital content publishing outcome expected from this acquisition using his expertise and network.

“Abiola will be joining eLimu not only as the Chief Technology Officer (CTO), but also as a director of the company, which means he is a shareholder. He is also part of the core management team of the organisation,” says Tijani.
CcHub’s attraction to eLimu was based on its ambition in education. Asides this, eLimu’s growth in terms of user metrics over the years in addition to international recognition is also an advantage.
While eLimu will turn out to be CcHub’s investment into digital academic content creation, there are some previous investments into Edverse Technologies and a partnership with TASUED to establish an edtech hub for tertiary education.
On the part of the Kenyan edtech startup, Tijani believes the acquisition is also a win for them as it will help them preserve the vision of the business following the exit.
eLimu is one of the earlier products incubated in iHub, founded by Nivi Sharma and Marie Githinji, with Sam Rich as CEO. It runs a number of products including Hadithi Hadithi!, Kenya Certificate of Primary Education (KPCE) Revision, and Teacher Training

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

Analysts sceptical of Citron claims on Alibaba investment in Jumia

By David Whitehouse

Claims from Citron Research’s Andrew Left that Alibaba or Softbank are likely future investors in African e-commerce retailer Jumia have left analysts scratching their heads.
“There is no doubt that Jumia will need more capital to fund its expansion,” Left writes in research this week. “Citron believes that Alibaba and/or Softbank will come in as a strategic partner/investor, which will simultaneously validate the business model, put Jumia on the radar of the world’s largest investors and provide a direct channel for Chinese goods into the African market.”

“Jumia is now shipping over 20 million packages a year to cities and rural areas across 11 countries,” according to the latest Citron note. “Nigeria is benefiting from the logistics network, technology and product offerings that Jumia has brought.”
“The only way that this does not work is if this young, tech-hungry population of Nigeria decides that they do not want e-commerce.”
So Jumia stock, according to Citron, is set to advance to $100, from its current level of $17.27. Last year, Left was short-selling Jumia shares and claiming they were worthless. But in early October, he announced he’s buying the stock.
Asian corporate investors take a more stable approach to valuing companies.
“The better timing would have been before Jumia’s IPO if Alibaba ever planned the investment,” says Ming Lu, head of Chinese equities at Aequitas Research in Shanghai. “It’s unlikely that they would do it now or in the future.”

“Softbank seems very unlikely,” says Kirk Boodry, founder of Redex Research in Tokyo. “There is no strategic rationale at all. The company has transitioned almost completely to private equity investment and Jumia as a listed company is probably too late stage for them.”
“Alibaba has demonstrated an interest in expanding globally and there is synergy potential but Africa is one of many regions it could go to,” adds Boodry.
COVID-19
Citron now argues that the COVID-19 pandemic has “quickly shifted the purchasing habits of Africans and accelerated the acceptance of e-commerce”.
But the pandemic has not increased African Internet penetration and has reduced rather than increased the purchasing power of consumers. Jumia co-CEO Sacha Poignonnec was cautious on the second-quarter earnings conference call of 12 August.
The four African countries where lockdowns were implemented represent only about 24% of the company’s market, he said.
Localised lockdowns and partial curfews led to “less drastic changes in consumer lifestyles and behaviour,” said Poignonnec. “In other words, in those countries, we have not seen a surge in demand.”
“My view is that Citron’s report dramatically overstates the market and market potential for Jumia,” says Vicki Bryan, CEO at bond research shop Bond Angle, which publishes on Smartkarma. She questions why Alibaba and Softbank have not already invested in Jumia if they are interested.
“For Alibaba I would expect target regions to be Asia, Latin America and the Middle East before they expanded into Africa,” says Mio Kato, an analyst at LightStream Research in Tokyo. “For Softbank, they generally look for players they think will go global on a grand scale.”

“The idea is plausible but pushing plausible ideas as highly likely is a good way to try and pump a stock,” adds Kato. “I would personally take this with a grain of salt.”
Bottom line
Investors shouldn’t expect Alibaba or Softbank to bail them out of a risky punt on Jumia stock.

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

Ericsson’s ICT Graduate Program for Africa Launched

October 29, 2020

Head of Talent Acquisition at Ericsson Middle East and Africa, Caroline Berns

The 2020 edition of the Graduate Program in Africa by global telecoms equipment firm, Ericsson has been launched. The program which aims to grow the technical skills of the graduates, train them in the Ericsson technology solutions and their delivery. In addition, getting exposed to working in a large global matrix driven organisation in terms of the ways of working, understanding vision, mission, strategies, corporate culture and values of the company.

Head of Talent Acquisition at Ericsson Middle East and Africa, Caroline Berns, said: “We believe this graduate program helps build local talent for our African markets and helps build into our long-term commitment to develop and grow our business in Africa. This way we access the best talent and provide them careers in a global environment, over a period of time.

“The Fresh Graduate Program in Africa is designed to give graduates’ career an added momentum at just the right time – maximising the skills they have gained in the course of their degree, adding more to their repertoire and equipping them to make a positive impact on the continent.

“Aiming to attract and guide the most talented, innovative and creative technology minds, the programs offers graduates an opportunity to engage with the most exciting technology on the planet and the challenges it brings.”

The Graduate Program helps Ericsson to move the needle on gender equality within the field of technology; half of the graduates hired are women. This is in alignment with Ericsson Educate and local Connect to Learn projects which empower women in STEM (Science, Technology, Engineering and Math) fields and leverage connectivity to increase access to education for children, especially girls.

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

Cybersecurity is a puzzle – Make sure you have all the pieces

Brian Pinnock, cybersecurity expert at Mimecast

By Brian Pinnock

Spare a thought for the modern CISO. The global cybercrime industry has been in overdrive since the start of the year, as threat actors capitalise on the disruption brought by the coronavirus pandemic. The Mimecast Threat Centre found a dramatic increase in cyberattacks during the first 100 days of the pandemic.

In sub-Saharan Africa, spam attacks increased by 46%, impersonation attacks by 75% and malware by a massive 385%.

Cybersecurity is a ‘complex puzzle’

To protect against these threats, organisations have to build complex, multi-layered security strategies that safeguard customers, employees and company data.

The sheer volume of threats and the abundance of attack vectors makes effective cybersecurity a complicated puzzle. In many cases, organisations have no clear idea of how to put those puzzle pieces together in an effective way.

Only 62% of South African organisations have or are actively rolling out a cyber resilience strategy, well below the global average of 77%.

What are the pieces of the cybersecurity puzzle? In our experience, the following four elements can add up to a holistic cybersecurity strategy that protects customers, employees and data from exploitation:

Visibility

Without visibility over employees, data and your online brand, building an effective cybersecurity strategy is a bit like building a puzzle in the dark.

Threat intelligence can play a vital role by providing insight into how organisations are targeted, what cyber threats have been blocked and why, which employees are the riskiest and what actions to take to optimise the broader cybersecurity strategy.

However, visibility should extend beyond the perimeter of the organisation. The speed at which cybercriminals can imitate brands online, makes it easy to launch sophisticated attacks using lookalike domains that can easily trick customers, partners and employees.

Tools such as DMARC, are effective and an essential piece of the puzzle, but only for protecting domains already owned by the organisation, against email brand exploitation.

Supplementing DMARC with tools that protect against online brand exploitation can help identify attack patterns at the preparation stage and block compromised assets before they turn into live attacks.

To fully protect a brand, an organisation should consider implementing DMARC along with brand exploitation tools, managed from one integrated system that provides both visibility and proactive remediation.

Resilience

All organisations regardless of size are at risk of cyberattack. While defences are important, being able to quickly recover from a successful attack is just as vital. Unplanned outages – such as those typical in cloud services such as Microsoft365 – can also disrupt business and lead to losses in productivity, revenue and reputation.

Email is still the most widely used business tool and email continuity solutions provide guaranteed access to email, from anywhere and on any device even when email servers fail.

Cloud archiving can further help keep corporate knowledge available despite disruptions. And specialised sync-and-recover tools can fill data recovery gaps for those instances where data is corrupted or deleted – whether intentionally or by accident.

Culture

Cybersecurity is at its most effective when every employee understands their role in protecting the organisation – and themselves – from attacks.

Organisations should seek to instil a culture of cybersecurity awareness that permeates from the top to the bottom of the organisation. Micro-learning together with engagement is the key. Ongoing training that is short, relatable, memorable and that regularly reinforces key concepts works.

We know this, because during lockdown periods across the world, Mimecast researchers found that users in organisations that had Mimecast awareness training were 5 times less likely to fall prey to social engineering attacks than those that didn’t.

Management teams should be ready to take swift action in the wake of a data breach, to ensure the threat is contained, damage mitigated, and the organisation is not at risk of non-compliance to prevailing regulations.

Compliance

With the Protection of Personal Information Act now in place, South African organisations are under immense pressure to protect customer data or risk heavy penalties. Both data management and data protection are key elements in achieving compliance.

It is difficult for an organisation to achieve data management compliance with unstructured data like email. What’s key is to have a third party, independent and immutable data repository that complies to regulatory standards and mitigates legal risks.

The importance of data security and protection is elevated with significant POPIA financial and criminal penalties. Organisations also need to consider the brand damage that is associated with data breaches.

Email remains the number 1 attack vector for cyber-attacks. It’s widely reported that 91% of all attacks start with an email, with some not even requiring malware.

Call for greater awareness, effort

There is no silver bullet when it comes to security, even when it comes to protecting against a specific attack – like phishing. The entire ecosystem needs to take security seriously or everyone remains at risk. Protecting your brand and customers with solutions like DMARC and tools that prevent brand impersonation online is important.

But if the organisation at the receiving end of a phishing email doesn’t have protections in place, they could fall victim to an attack. Ultimately, the entire business world needs to prioritise security and protect each other.

The first step is to consider managing security solutions and a resilience tool in an integrated system that helps reduce cost and complexity, and ultimately enhances the broader security ecosystem.

Brian Pinnock, cybersecurity expert at Mimecast

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

South Africa finds itself in a fix over World Bank loan conditions

The South African government is in a quagmire on whether to go ahead with its proposed loan from the World Bank or to drop the idea as the conditions from the World Bank is not favourable to them. The World Bank told South Africa’s government it has to cut its wage bill to qualify for a loan of as much as $2 billion and agree the money won’t be used to bail out insolvent state companies, a person familiar with the situation said.

Those conditions have stalled negotiations on the loan that began in April, the person said, asking not to be identified because the content of the discussions have not been made public. The World Bank said it will only comment if an agreement is reached. South Africa’s National Treasury didn’t respond to requests for comment. South Africa this year has turned to multilateral lenders for the first time since the end of apartheid, overcoming political opposition from within the ruling party, as it tries to kick-start an economy forecast to contract the most in nine decades.

Finance Minister Tito Mboweni is expected to outline plans to fund a revival in output when he presents the medium-term budget on Wednesday and is under pressure to earmark more money to bail out state companies. So far the country has borrowed $1 billion from the New Development Bank, the lending arm of the BRICS group of nations, $4.3 billion from the International Monetary Fund, R5 billion ($310 million) from the African Development Bank and $50 million from the World Bank.

All of those were deemed as emergency loans to combat the immediate impact of the coronavirus outbreak. The additional World Bank loan is a standard borrowing facility and therefore may carry more conditions.

South Africa’s state-owned companies, ranging from the national power utility to the state arms firm, are surviving on government bailouts and straining national finances. A recent pledge by the South African cabinet to support the insolvent national airline has attracted criticism from opposition parties who say it is unviable. South Africa is making an attempt to cut its wage bill. In April it reneged on an agreement to raise pay for the more than 1.2 million workers, saying it couldn’t afford it. That decision has been challenged legally by labor unions. Still, any conditions could be difficult to enforce because loans and the proceeds of bond sales are not ring-fenced and are pooled in South Africa’s National Revenue Fund.

The only major loan by the World Bank to a South African state entity, a $3.75 billion loan extended to Eskom Holdings SOC Ltd to help it build its Medupi coal-fired power plant, has run into complications, with the utility wanting the World Bank to waive a condition that stipulates that it must install equipment to reduce sulphur dioxide pollution. The flue-gas desulfurization equipment would cost 42 billion rand, Eskom has said.

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

Standard Bank Partners Mastercard and Google on SME Digital Platform

Suzanne Morel, Country Manager, Mastercard, South Africa.

Three global brands have signed a memorandum of understanding to help small and medium enterprises to accelerate their digital footprints to wither the impact of the Covid-19 pandemic. This collaboration comes as Small and Medium Enterprises (SMEs) accelerate digital transformation efforts in response to the pandemic, thus this collaboration between Standard Bank, Mastercard and Google aims to help them move their businesses online, accept digital payments and attract more customers.

Through the collaboration, SMEs can get free access to Standard Bank’s SimplyBlu, an all-in-one e-commerce solution powered by Mastercard Payment Gateway Services, plus free Google Ads to the value of R500. These capabilities have been packaged as a bundled solution to help support business owners to tackle the economic challenges posed by the COVID-19 pandemic.

“As one of South Africa’s leading financial service providers, Standard Bank is acutely aware that small businesses play an important role in driving economic growth and generating employment opportunities. Our strategic relationships with leading brands such as Mastercard and Google ensure that we are able to support small businesses and offer our clients tangible benefits that add real value,” says Nelisa Zulu from Standard Bank.

Launched in 2019, SimplyBlu enables SMEs to create an online presence through the plug-and-play e-commerce store builder, which is interfaced with an instant online checkout. Taking skill levels and resource constraints into account, the platform has been designed in such a way that users can set it up and start accepting payments in a matter of minutes.

“We recognise the overwhelming pressure that small business owners are currently facing and are committed to supporting them through COVID-19 and beyond as they adapt to a new way of operating and evolved customer needs. Through this collaboration, our mission is to help as many SMEs with tools and support to expand their digital capabilities and take their operations to the next level,” says Suzanne Morel, Country Manager, Mastercard, South Africa.

With Google Ads, SMEs can get access to a digital marketing channel that will further help them in driving increased website visits to grow online sales, bookings or mailing list signups; more phone calls and customer interest queries; as well as more in store visits.

“Small businesses have been hardest hit during this period. Many of them have had to figure out quickly how to pivot their operations to a ‘digital-first’ approach. Yet, there remains a gap between those who can access these online opportunities and those who can’t. That’s the gap we want to bridge with this collaboration,” says Google South Africa Country Director Alistair Mokoena.

This is even as eCommerce has been a boon for small businesses over the last few months, largely due to consumer’s rapid adoption of online shopping and digital services as they opt to shop from the safety of their homes. “eCommerce is a powerful tool for small businesses – be it retail operators or merchants offering services ranging from home maintenance to professional services. Our SimplyBlu platform has seen over 100 percent growth during the COVID-19 period, with business owners increasingly realising the benefits of operating their businesses on online platforms,” says Zulu.

Candy Smith, a fashion designer, opened an online shop using SimplyBlu, where she built a face mask-making business. In early March, she was selling more than 200 masks a day. By the end of May, she reached over 1,500 masks a day for individual sales and secured corporate orders of 10,000 masks at a time.

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

Airtel Plans to Quit Ghanaian Market

October 28, 2020

Airtel Africa which operates in Ghana under that joint venture – AirtelTigo – has announced that it will sell its assets and leave the West African country as certain government policies have been detrimental to its business model in that country.

“The parties are in advance stages of discussions for conclusion of the commercial agreement for the transfer of AirtelTigo on a going concern basis to the Government of Ghana,” Airtel said in a statement to the Bombay Stock Exchange. The proposed deal would result in the government of Ghana acquiring 100% shares of Airtel Ghana Ltd, also known as AirtelTigo, along with all its customers, assets and agreed liabilities.

AirtelTigo is a joint venture between ‘Airtel’ and ‘Millicom’ wherein Airtel holds a non-controlling 49.95% share in AirtelTigo. Airtel had merged its Ghana operations with Millicom in 2017, resulting in the second largest mobile carrier in the country. The merger was approved by the regulator subject to the condition that African country’s government will have the option to pick up a stake in the new entity in future.

But the joint venture has fallen behind MTN and Vodacom in the country. Airtel has previously said that it will look at consolidation opportunities, including exit, in markets where it is not among the top two players. According to the quarterly results ending September 30, Airtel said its Ghana operations had a customer base of 5.1 million. The company has successively been posting losses for the past four quarters and the Ebidta for the quarter fell to Rs 8.8 crore from Rs 9.9 crore in the previous quarter ending June 30. Total revenue remained stagnant at Rs 118 crore during the quarter and data customers as a percentage of the total customer base also saw a dip to 56.2% during the period from 59.4% in the June quarter.

Bharti Airtel’s Africa operations clocked in a net profit of $88 million for the second quarter this fiscal, down 8.3% on-year, hurt by higher net finance costs. But consolidated revenue stood at $965 million, increasing 14.3% from corresponding quarter last year.

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

South Africa’s Economy Will Bounce Back–Economist

October 27, 2020

BNP Paribas senior economist Jeffrey Schultz

Inspite of the challenges facing Africa’s second biggest economy as a result of the protracted Covid-19 pandemic, there is silver linen in the sky, so says a senior economist at BNP Paribas. This is because the economy is expected to bounce back in the third quarter of the year – with finance group BNP Paribas even expecting things the work out better than the South African Reserve Bank expects.

In a note by BNP Paribas senior economist Jeffrey Schultz said that GDP growth in Q3 – following a record drop in Q2 due to the Covid-19 lockdown – will likely surprise on the upside, driven by better-than-expected performances in certain sectors. “Recent high frequency data in mining and manufacturing production and wholesale and retail trade to the end of August has generally surprised to the upside,” Schultz said.

A median of 21 economists, polled by Reuters (Oct. 15-20), forecast a budget deficit of 15.9% of GDP this financial year. The poll saw the deficit narrowing to 10.0% of GDP next year and then to 9.0% in the financial year 2022/23. The economy will contract 8.5% this year and grow 3.5% next year, the poll found.

The mining and wholesale trade sectors have already rebounded to activity levels seen in Q1 (pre-pandemic) on the back of improving mobility and some cushioning to household disposable incomes through some (albeit temporary) state-led income support measures. In addition, the mining sector has also benefited from record terms of trade, Schultz said.

Because of this, BNP sees Q3 GDP printing close to 65% quarter on quarter (seasonally adjusted and annualised) – or -7.0% year on year – with the largest expenditure side contribution coming from net trade.This is higher than the South African Reserve Bank’s projection of +45% in Q3.

“Our Q4 growth performance is now also more subdued at +1.0% q/q, and indicates an economy which still looks likely to contract 8.0% in 2020 (+0.5 percentage points higher than our initial estimate). We maintain our sub-consensus GDP forecast of 2.5% for 2021,” the economist said.

However, despite the more optimistic third quarter outlook, BNP noted that economic activity in South Africa is likely to remain weak, with inflation maintaining a structural downside bias. “This is likely to result in an accommodative monetary policy stance from the SARB, which looks unlikely to engage in a strong hiking cycle next year, we believe,” Schultz said.

While the bounce back in some sectors of the economy has been better than expected, in other areas such as restaurants and hotels, construction, logistics and vehicle sales, the picture remains challenging, he said.

“We continue to expect more disinflation in durable and semi-durable price components (eg, vehicle sales) into next year as the knock to disposable incomes and demand outweighs the lagged impact of a weaker rand which we think has already largely played out,” the economist said.

He noted that insurance prices are also likely to slow into the very low single digits from February to June 2021, on private medical aid schemes freezing price increases in H1 2021.

“We have shaved 0.2pp off our already sub-consensus CPI estimate for 2021, and now expect average price growth of 3.5%, up only marginally from our 3.2% forecast for 2020,” Schultz said.

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

UNICEF And UNDP Launch Hackathon In DR CONGO

#DATAFORCHILDREN is the official hashtag of the hackathon launched by UNICEF and UNDP in the DRC. This is a competition during which candidates will be asked to develop a web and mobile application that will allow users to digitally access data relating to the situation of children and women.

The implementation of the hackathon has been entrusted to the incubator Ingenious City. It will be held from November 18 to 20, after the application submission phase which has already started and will end on October 31, 2020. There will also be the regional selection stage which will determine the champion teams of Kinshasa, Lubumbashi and Goma.

#DATAFORCHILDREN Congo #DATAFORCHILDREN Congo

At the end of the contest, the winning team will win a prize of $ 15,000. She will work with UNICEF, UNDP and Ingenious City to finalize her solution. The two UN organizations will make it their authorized supplier, which will open the door to potential future partnerships.

How To Apply

To apply, click here.

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