Economy
Investing in Africa: An Outlook on Nigeria and Ethiopia
By Itumeleng Mukhovha
One can easily assume that international investors are deterred from investing in Africa given the growing need to weather a global financial crisis, which has been distorted by Brexit, rising geopolitical tensions, tightened global liquidity conditions, leveraged loans and sketchy debts that continue to riddle bank systems, idiosyncratic governments and the bond yield curve that is trending toward inversion. However, this is not the case. Conversely, the global financial crisis and the desperate search for growth, yield and solvency has led investors to pay more attention to emerging markets in Africa, and in particular frontier markets with favourable growth paths, moderate debt levels and high returns on investment.
The stock markets across Africa have reportedly exceeded a market capitalization of USD 100 billion and are substantially larger than those in Central Europe and Russia in the mid-1990s, when they first opened up to foreign investors. According to the International Monetary Fund, the African markets have been a strong bull run and shown a compound annual growth of 3.5% in 2018 and are projected to pick up to 3.9% in 2019. There are many factors that make the African continent an attractive destination for institutional investors, such as the economic prospects, a favourable demographic profile, high urbanisation and the rise of the African consumer. The acceleration in growth has also been driven by cyclical improvements and supported by favourable regional conditions. These favourable conditions include the restoration of oil production in Algeria, Angola and Nigeria, the improved external financing conditions, the moderate increase in commodity prices, surging foreign direct investments and the narrowing current account deficit in certain jurisdictions. In Ethiopia and Nigeria, this growth has been spurred by partial privatisation of state-owned companies and high commodity prices, respectively.
Contrary to the images that would previously conjure up at the mere mention of Ethiopia, the country has made commendable economic progress in reducing poverty and improving living standards. While the market outlook continues to be somewhat subdued for Ethiopia, due to dynamics that were historically hampered by poor government policies and state-owned monopolies, foreign exchange shortages, and weak prices for traditional exports, Ethiopia has displayed economic growth potential. In the last quarter of 2018, the International Monetary Fund’s World Economic Outlook Report predicted Ethiopia to be the fastest growing frontier economy in Africa with 8.5% growth, thereby far outstripping the growth of advanced economies.
Ethiopia’s economic growth has been driven by an increase in industrial activity and the availability of domestic and foreign investments in certain industries such as infrastructure, manufacturing and telecommunications. The reduction in its current account deficit to 6.4% of the real gross domestic product in 2017/2018, the flexible exchange rate regimes and the various attempts to bring inflation back on target have all supported Ethiopia’s economic growth. In addition, the current Prime Minister’s reform agenda is driven by a strategy to shift the engine of economic activity to private sector development while allowing the public sector to be consolidated into such development. For instance, the Ethiopian Government has accelerated its efforts to bolster network expansion and improve the hardware capabilities and infrastructure of its state-owned telecommunications company, Ethio Telecom, which boasts over 60 million mobile subscribers and 18 million internet users. To this end, the Ethiopian Government has reportedly opened-up Ethio Telecom’s assets and shares, for acquisition by local and foreign investors as part of a multi-billion dollar investment. This investment is aimed at accelerating fixed broadband and internet penetration and ultimately, fast-tracking the development of Ethio Telecom’s infrastructure. Although the telecommunications monopoly seems to be the main prize, because of its protected market and the absence of competitive broadband services, other major state-owned companies facing partial privatisation in 2019 include Ethiopian Airlines, Ethiopian Shipping and Logistics Services Enterprises and Ethiopian Electric Power.
Turning to Nigeria, the upgraded forecast reflects improved prospects for Africa’s most populous nation and the growth of its real gross domestic product is projected to increase to 2.3% in 2019. Although the sharp recovery of oil prices and various portfolio outflows have provided some relief to Nigeria’s 1.5% annual contraction and technical recession recorded in 2016, the country’s improved economic growth still falls short of the levels seen during the commodity boom of the 2000s. Although crude oil and gas products accounted for over 94.4% of Nigeria’s foreign exchange earnings in 2018, Nigeria is under immense pressure to introduce reform policies in order to adjust to the global pursuit of sustainable energy alternatives, which include solar energy, wind power and geothermal energy. The Nigerian economy’s vast dependence on its crude oil and natural gas resources also makes it vulnerable to oil discoveries in other African countries, the global push towards technologies that promote energy sustainability and fluctuating commodity prices. The extent to which the Nigerian economy moves towards its near-term development aspirations will depend on the success of its import substitution policies, the fast-paced implementation of structural reforms and economic diversification of non-oil economic indicators.
In order to address Nigeria’s economic diversification and growth, the federal government launched the Economic Recovery and Growth Plan (ERGP) in April 2017. The ERGP is a medium term all-round developmental initiative for the period 2017-2020, focused on restoring economic resurgence and building a globally competitive economy. Some of the objectives of the ERGP include stabilising the macro environment, increasing non-oil revenue generated from the agricultural sector, improving transportation infrastructure, driving the industrialisation of small and medium-sized enterprises and ensuring sufficiency in energy and petroleum products.
Although there have been challenges in achieving the ERGP objectives, positive results are already manifesting in key economic indicators. For instance, the Nigerian economy has witnessed an increase in non-oil revenue generated from the agricultural sector, which has reportedly shown a steady growth of 18.58% in the last quarter of 2018 and contributed 14.27% to the nominal gross domestic product. In addition, the ERGP task team has launched a number of agricultural projects such as the commissioning of the West African Cotton Company Limited rice mills in Argungu, Kebbi State, with a production capacity of 120,000 metric tonnes, geared towards enhancing productivity in the agricultural sector. According to the most recent data published by Nigeria’s National Bureau of Statistics, other non-oil sectors that are contributing to Nigeria’s economic growth include trade, telecommunications, mining and quarrying, real estate services, finance and insurance and construction.
Evidently, there is great investment potential across the African continent and the outlook on African countries remains positive despite the reported downgrades for the global economy.
Itumeleng Mukhovha is an associate in the Corporate/M&A practice at Baker McKenzie in Johannesburg
By Adedapo Adesanya
A 10 per cent equity stake has been acquired by Odu’a Investment Company Limited in a subsidiary of FCMB Group Plc, FCMB Pensions Limited.
The move is aimed at strengthening its presence in Nigeria’s growing pension industry.
The company disclosed that the transaction was completed after receiving all required regulatory approvals from the National Pension Commission (PenCom) and the Central Bank of Nigeria (CBN), while the Securities and Exchange Commission (SEC) has also been duly notified.
Odu’a Investment said the acquisition represents a strategic investment in a resilient and steadily expanding segment of Nigeria’s financial services sector.
The company added that the deal also reinforces FCMB Pensions’ shareholder base through the entry of a long-term institutional investor.
Chairman of Odu’a Investment Company Limited, Mr Bimbo Ashiru, said the investment aligns with the organisation’s strategy of partnering with strong institutions operating in sectors critical to Nigeria’s long-term economic stability.
“This investment reflects Odu’a’s strategy of partnering with strong institutions operating in sectors that are central to Nigeria’s long-term economic stability and growth,” he said in a statement.
“The pension industry plays a critical role in mobilising long-term savings and strengthening the financial system. FCMB Pensions has built a solid platform serving contributors across Nigeria, and we see a significant opportunity to support its continued growth and impact,” he added.
Also commenting on the transaction, the Managing Director of Odu’a Investment Company Limited, Mr Abdulrahman Yinusa, described the deal as a vote of confidence in FCMB Pensions’ leadership and long-term prospects.
“Our partnership with FCMB Group Plc reflects confidence in FCMB Pensions’ strategy, leadership, and long-term potential. Together, we will work to expand its reach, support its strategic objectives, and deliver sustained value to contributors and other stakeholders,” Mr Yinusa said.
The investment brings together two established institutions with complementary strengths and a shared focus on long-term value creation. According to the company, the partnership positions FCMB Pensions to deepen market penetration and enhance service delivery within Nigeria’s contributory pension scheme.
Odu’a Investment Company Limited is an investment holding company jointly owned by the governments of the six South-West states of Nigeria.
The firm manages a diversified portfolio spanning real estate, financial services, hospitality, agriculture, and industrial investments, with a mandate to generate sustainable economic value and support regional development.
By Aduragbemi Omiyale
The chief executive of the Nigerian Exchange (NGX) Group Plc, Mr Temi Popoola, has said Nigeria’s capital market is undergoing a re-rating as global investors begin to reassess the country’s economic trajectory and investment potential.
“What we are seeing is a gradual re-rating of Nigeria. investors are beginning to look at the data more closely, the returns, the reforms, and the improving macroeconomic direction, and that is changing sentiment,” he said during a live interview on BBC Newsday in London.
He is in the United Kingdom as part of broader investor and stakeholder engagements during President Bola Tinubu’s state visit to Buckingham Palace.
Mr Popoola explained that Nigeria’s equity market has delivered strong returns in recent months, positioning it more competitively among emerging and frontier markets. According to him, this performance is helping to recalibrate long-held risk perceptions and attract renewed interest from international investors.
He added that improvements in Nigeria’s energy landscape, including increased domestic refining capacity and ongoing sector reforms, are helping to reduce the economy’s exposure to external oil price shocks, further strengthening investor confidence.
Mr Popoola emphasised that beyond short-term market movements, consistency in policy implementation will be critical in sustaining this shift in perception. “Global capital responds to clarity and consistency. As those elements become more evident, Nigeria naturally becomes more investable.”
He also highlighted the importance of sustained engagement with global financial centres, noting that platforms such as London play a key role in connecting Nigeria’s capital market to international pools of capital.
According to him, Nigeria’s evolving market structure, combined with ongoing reforms, is strengthening its position as a viable destination for long-term investment. “There is a broader recognition that Nigeria offers significant opportunities. The focus now is ensuring that this recognition translates into sustained capital flows.”
The NGX group chief concluded that Nigeria’s capital market is increasingly being viewed through a more balanced and data-driven lens, reflecting both its resilience and its long-term growth potential.
By Adedapo Adesanya
Global cryptocurrency platform, Luno, has launched a structured crypto prediction markets product in Nigeria, which will enable customers to apply their market knowledge to short-term crypto price events and earn USDC when their insights are correct.
The prediction market allows customers to express a view on whether the price of selected crypto assets, being BTC, ETH, SOL, DOGE, and XRP, will be above or below the daily price event. The market operates daily with clearly defined rules and settlement periods, offering customers structured, time-bound opportunities to act on their conviction.
Nigeria remains one of the most active crypto markets globally, with increasing demand for tools that combine simplicity and transparency. By introducing Prediction Markets focused solely on price levels, Luno aims to provide a fast, confident, and opportunity-forward format for market engagement.
Unlike traditional gaming or prediction firms like Polymarket and Kalshi, in which the odds are set by the company, Luno’s Prediction Market, powered by Limitless, is focused exclusively on crypto asset price movements within the Luno platform.
This means customers are not purchasing the underlying asset, but participating in a defined, outcome-based market that settles transparently based on real-time price data.
According to a statement, the launch reflects a broader shift in how customer behaviour is evolving in Nigeria’s growing crypto asset ecosystem, particularly as crypto asset adoption matures, many users are seeking more flexible and responsive ways to engage with markets beyond long-term holding or traditional spot trading.
Luno’s Prediction Markets product is designed to meet this demand within a familiar and regulated platform environment. The feature builds on how customers already interact with crypto asset prices – analysing charts, following market news, and forming views- and provides a structured framework for expressing those views.
According to Mr Ayotunde Alabi, chief executive of Luno Nigeria, the company is combining crypto education with a secure platform to help Nigerians confidently apply their market knowledge in a responsible and practical way.
“We are seeing a clear shift in how Nigerians want to engage with crypto assets. Many already follow price movements closely and form strong market views; we want to lead with education as well as provide a safe and secure platform to help them apply that knowledge. This feature is designed to be a natural extension for those who enjoy forecasting.
“By tying this to our ongoing educational initiatives, such as our scholarships with AltSchool, we are encouraging users to apply what they have learned about market analysis into a practical, responsible framework. Our priority is ensuring that where confidence meets opportunity, it is supported by the standards of trust our customers expect.”
Luno said it will further support the rollout with Learn & Earn educational content and tutorials explaining market mechanics and price determination. To promote informed decision-making and ensure the product is used responsibly,
Luno has embedded specific controls, including customers reading and acknowledging a risk disclosure before participating, as well as moving funds from their ordinary USDC wallet to a separate prediction wallet, which will be used to participate in prediction markets.
The firm also said that customers cannot hold both sides of the same market, in this case, Above and Below at the same time.
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