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Kenya’s big twin deficits will become a heavier burden when higher US interest rates push up borrowing costs, Renaissance Capital warned on Monday. That would batter an economy already damaged by falling tea prices and tourism revenues.

In a note, Who’s hot and who’s not? in sub-Saharan Africa, RenCap predicted that

an increasing interest rate cycle in the US from 2015 will slow the flow of debt to Kenya, particularly the flow of external debt that finances the CA deficit and half of the budget deficit. Partly because of a higher cost of external borrowing, and fall in global appetite for EM and FM assets, as yields on US debt improves. Kenya’s capital inflows are likely to slow at a time when the CA is being undermined by insecurity, which is dampening tourism revenue.

 Continue reading »

The number of middle class households in 11 key sub-Saharan African countries – excluding South Africa – are set to triple to 22m by 2030, creating a burgeoning consumer market for items such as vehicles, insurance policies, property and health products, according to a Standard Bank research report.

Simon Freemantle, senior political economist at Standard Bank and author of the report, said the prospective boom in middle class households – those earning between US$8,500 and US$42,000 a year – is also likely to be complemented by a swelling in the number of lower middle class households that earn between US$5,500 and US$8,500 annually. Continue reading »

Late at night during a power blackout in Ghana’s capital Accra is neither the time nor the place you’d expect pop diva Celine Dion to come to your rescue. But when a rider from restaurant delivery service Hellofood Ghana lost his bearings with a customer’s dinner on the back of his motorbike, he turned to Celine for help.

Unable to find his customer’s home in the gloom, he arranged for the client to come onto the street playing “My heart will go on” on her phone. The driver, also a Dion fan, played the same music on his phone, allowing the two of them to locate each other by siren song.

“Luckily, he still had a mobile phone signal so he could phone the client,” says Yolanda Lee, a 26 year-old Canadian who runs Hellofood Ghana, a subsidiary of Hellofood Africa which manages a meal delivery service in 10 countries and 14 cities in West, East and North Africa. Continue reading »

Following a decade in which Chinese largesse has helped to transform Africa’s prospects – and challenged the supremacy that western companies once enjoyed over the continent’s natural resources – Beijing has sent word to Washington that the world’s two biggest economies might combine their efforts to generate some much-needed electricity in one of the poorest.

The Democratic Republic of Congo, an expanse the size of western Europe that perennially ranks among the worst countries in which to do business, has known little but conflict and penury for decades. World Bank-backed plans to build a third dam at Inga are part of a broader vision for a dam complex capable of generating 40,000MW – twice the size of the Three Gorges dam in China. Continue reading »

Money sent home by Nigeria’s emigrant workers traditionally covers basic expenses like housing, education and medicine. Today however, the burgeoning middle class of Africa’s most populous country is spending an increasing proportion of the $21bn remittances it receives each year on consumer goods like televisions, personal computers and fashionable clothing.

For ecommerce startup Jumia, the African diaspora represents a potentially lucrative market and this month it launched a website through which UK-dwelling Nigerians can send consumer goods from watches to dishwashers directly to their family and friends back home. Continue reading »

After a deal-making spree in Africa in 2013 that included investments in Ghana, Cote d’Ivoire and Kenya, private equity group Abraaj is on track for an equally active 2014.

Abraaj, which has $7.5bn in assets under management and is based in Dubai, expects to complete four transactions in the region by the end of the year, including in South Africa, Nigeria and Kenya, partner Sev Vettivetpillai told beyondbrics. Continue reading »

Nigeria is receiving a large influx in foreign portfolio flows in spite of investors’ unease following the terror campaign of Boko Haram, after a closely-tracked index provider increased significantly the weighing of Africa’s largest economy.

MSCI, whose indices are followed by billions of US dollars from institutional investors, has lifted the weight of Nigeria’s equity market on its popular MSCI Frontier markets to about 19 per cent, up from 12 per cent previously. Continue reading »

The Nigerian economy has enough resilience to ride out the wave of Boko Haram terror attacks, the country’s finance minister said in an attempt to persuade foreign investors to keep their holdings in local bonds and stocks.

Nigeria is Africa’s largest economy and a magnet for international investors, which have poured billions of dollars into factories, oil fields and its local securities market.

“We are sticking to our growth forecast of 6.75 per cent [for 2014]. It is realistic. Any losses in the northeast [where Boko Haram is more active] will be made up by activity elsewhere,” Ngozi Okonjo-Iweala told the Financial Times in an interview. Continue reading »

By Melissa Cook, Africa Sunrise Partners

The headlines about Boko Haram’s deadly and vicious attacks in Nigeria threaten to overshadow what we see as considerable progress on one of the country’s top priorities: power reform and privatization. Despite ongoing challenges ranging from inadequate gas supply to funding shortfalls and antiquated wiring and transformers, the Nigerian power sector is moving full-steam ahead.

Access to electricity could be a game-changer for Africa’s largest economy. We realize that it may take years to get Nigeria’s power capacity up to the 40GW target from today’s 4-5GW (see chart). But step by step, we see barriers to business, household activity, and entrepreneurial activity dropping as power generation and distribution companies—and the government-owned transmission company—refurbish or repair assets. Continue reading »

The past five years have been a time of change for Nigeria’s banks but not all of it for the good. In a recent report on the sector, analysts at Ecobank Research, part of the pan-African banking group, say strategies being pursued by Nigerian banks are no longer sustainable and they must find a new growth story to boost thin lending margins and match the return on equity of their regional peers. Continue reading »

Nigeria is Africa’s biggest economy and the continent’s most populous state, but a recent spate of violence raises questions about the government’s ability to provide security within its borders. The FT’s Vanessa Kortekaas reports on the battle for power in Nigeria.

Nigeria’s insurance sector is growing rapidly and has low levels of penetration in a young society inhabiting Africa’s largest economy. Add to this what a recent Fitch Rating report calls an environment “ripe for consolidation” and it becomes easy to see why foreign insurance groups are eyeing the market keenly.

The March 2014 Fitch report says “foreign investors in the Nigerian insurance market have shown a preference for acquisition or partnership above setting up new insurance operations”. This preference is down to a need for local knowledge, a good distribution footprint and the ability to achieve scale quickly. Continue reading »

Nigeria has overtaken South Africa to become Africa’s largest economy after the government released updated figures that raised the country’s gross domestic product by 89 per cent to $509bn.

The re-calculation rightly put most Nigerian officials in celebratory mood. But Ngozi Okonjo-Iweala, the country’s finance minister (pictured), offered also a cautious note: the new figures do highlight some acute problems. Continue reading »

By Stephen Adams of Global Counsel

Events at west African lender Ecobank over the past six months have been widely and rightly interpreted as an important test for the credibility of African bank governance and regulation. A combination of internal whistleblowing, regulatory pressure and shareholder activism did for former CEO Thierry Tanoh and have prompted a fairly substantial overhaul of bank governance. All good news for African good governance.

But the bigger question for African banks like Ecobank is still unanswered. This is simply that as a cross-border African financial institution, Ecobank is evolving much faster than the institutions that supervise and regulate it. With operations in more than 30 sub-Saharan markets, Ecobank is a complex prospect for African bank supervisors and one that they are only just starting to get to grips with. Continue reading »

South Africa, the African continent’s largest economy, had better take note. West Africa, an area that includes Nigeria, has for the third time in three years notched up more private equity (PE) deals than Southern Africa.

West Africa had the highest reported value of deals ($545m) during 2013, surpassing Southern Africa ($491m) and Eastern Africa ($163m), according to the 2014 Deloitte’s East Africa Private Equity Confidence Survey, published this month. Continue reading »