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Economy

Nigerian Startups Attract $1.2bn from $4.8bn Inflow to Africa in 2022

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Nigerian startups

By Adedapo Adesanya

Nigeria remained the most dominant force when it came to funding raised in 2022 as the country saw a total of $1.2 billion injected by investors in startups, according to estimates seen by Business Post.

In a report, Africa: The Big Deal, Nigerian startups, in the year under review, saw 286 deals worth more than $100,000.

This is even as there was a 29 per cent drop in funding into the country compared to $1.7 billion recorded in 2021. For context, Nigeria recorded $440 million in 2020 and $704 million in 2019.

The country recorded two $100 million+ mega deals in 2022, led by Flutterwave’s $250 million Series D in February and Interswitch’s $110 million round announced in May. This is a drop compared to five deals on record in 2021.

“Nigeria is still the largest market by far in terms of funding (286 $100k+ deals, +14% YoY | $1.2bn, -29% YoY),” the report noted.

In 2022, Western Africa was the region that attracted the largest share of both fundings as it recorded 37 per cent of the investments that came into the continent. It also held the lead in the number of $100,000+ deals (37 per cent also) on the continent.

Overall, Nigeria has seen its regional hegemony further challenged in 2022, with its share of regional funding down 17 percentage points to 68 per cent. In 2021, it had 85 per cent, and it was 88 per cent in 2020, while it stood at 92 per cent in 2019.

The West African region topped the charts in 2021, with 37 per cent of deals and an even higher share of funding then (43 per cent). However, last year, the numbers went down 12 per cent to $1.8 billion compared to $2 billion in the preceding year.

East Africa continued in the second spot as it raked in $1.2 billion.

However, the report fingered noted that most of this dip recorded by Nigeria is due to Ghana’s very strong performance in 2022. The country recorded 47 deals over $100,000 for a total of nearly $400 million (estimating PEG Africa’s acquisition by Bboxx at $200m), nearly 8x times more than in 2021. Ghana ranked #5 at the continent level in terms of funding raised in 2022.

Senegal (#6) followed with 19 $100,000+ deals (same as 2021) and $112 million raised (-50 per cent Year-on-YearoY). Its unicorn, Wave, continued to dominate the numbers, though with 82 per cent of the amount raised in 2022 (with $90 million+ in debt secured), and 90 per cent in 2021 (through its $200 million Series A round).

Further behind is Côte d’Ivoire, with a stable amount of $100,000+ deals (12) but saw a 300 per cent increase in funding to $34 million compared to  $11 million.

Togo recorded $10 million following Gozem’s $10 million deal with the International Finance Corporation (IFC).

The report noted that while Mali, Sierra Leone, and the Benin Republic also raised some funding, seven countries in the region recorded no deal at all over $100,000 in 2022.

“Finally, it is worth noting that Western Africa punches above its weight with a higher percentage of funding (37%) than its share of the continent’s population (30%) or GDP (27%). The same goes for its heavyweight Nigeria (25% of Africa’s funding vs. 15% of its population and 17% of its GDP).

“The region averages $4.2 of funding raised per capita, which is over the continental average ($3.2pc). For Nigeria, this number stands at $5.5pc,” the report noted.

Continent-wide, the total amount of funding recorded by African startups amounted to $4.84 billion in 2022, a 7.6 per cent increase from $4.46 billion recorded in 2021.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Economy

Stock Exchange Rises 0.15% as Market Cap Nears N29trn

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Local Stock Exchange

By Dipo Olowookere

Sustained bargain-hunting activity stretched the Nigerian Exchange (NGX) Limited further by 0.15 per cent on Tuesday, following strong corporate earnings.

The 2022 fourth-quarter results of companies on the stock exchange gave investors an overview of what the full-year earnings would look like, resulting in buying stocks expected to pay good cash rewards in the coming months.

From an analysis of the market data, the insurance counter appreciated by 2.98 per cent, the industrial goods sector rose by 0.03 per cent, while the consumer goods and banking indices closed lower by 0.17 per cent and 0.03 per cent, respectively, with the energy space closing flat.

At the close of business, the All-Share Index (ASI) grew by 80.84 points to 53,238.67 points from 53,157.83 points, while the market capitalisation nudged closer to N29 trillion with a N44 billion increase to N28.998 trillion from N28.954 trillion.

The activity chart revealed that traders transacted 250.2 million shares worth N5.9 billion yesterday in 4,328 deals as against the 201.4 million shares worth N5.7 billion traded in 4,332 deals on Monday, indicating a decline in the number of deals by 0.09 per cent and an improvement in the trading volume and value by 24.23 per cent and 3.51 per cent, respectively.

Universal Insurance was the busiest stock on Tuesday as it transacted 48.6 million units, with GTCO trading 14.2 million units at the close of transactions. Zenith Bank sold 12.5 million shares, Access Holdings exchanged 11.6 million stocks, and Unity Bank traded 10.9 million equities.

The trio of Veritas Kapital, Living Trust Insurance and Geregu Power gained 10.00 per cent each during the session to settle at 22 Kobo, N1.98, and N193.60 apiece, as John Holt rose by 9.92 per cent to N1.33, while SCOA Nigeria increased by 9.78 per cent to N1.01.

On the flip side, the duo of Chams and NCR Nigeria lost 10.00 per cent each to close at 27 Kobo and N3.24, respectively. Unity Bank shed 9.09 per cent to sell at 50 Kobo, Royal Exchange depreciated by 8.97 per cent to 71 Kobo, and Japaul dropped 8.33 per cent to quote at 33 Kobo.

Analysis of the price movement chart indicated that the market breadth ended positive, with 29 price gainers and 18 price losers, representing a very strong investor sentiment.

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Economy

Oil Prices Mixed Amid Weakening US Dollar

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Crude Oil Prices

By Adedapo Adesanya

Oil prices were mixed on Tuesday despite drawing support from a weakening US Dollar, with Brent futures contract down by 37 cents to $84.53 per barrel and the US West Texas Intermediate (WTI) crude up by 92 cents or 1.2 per cent to $78.82 a barrel.

The US Dollar index turned negative after data showed labour costs increased at their slowest pace in a year in the fourth quarter. This occurred as wage growth slowed, bolstering expectations of the US Federal Reserve slowing its interest rate increases.

Investors expect the Fed to raise rates by 25 basis points on Wednesday, with increases of half a percentage point by the Bank of England and European Central Bank the following day.

The rate increase expected at the Federal Open Market Committee’s January 31- February 1 meeting would bring the policy rate to the 4.5 per cent – 4.75 per cent range; that’s two quarter-point rate hikes short of the level most Fed policymakers in December thought would be sufficiently restrictive to bring inflation under control.

Economists at UBS expect the US Dollar to travel along a weaker path, with limited and short-lived bouts of strength.

“The Fed is getting closer to the end of its rate-hiking cycle. With markets growing comfortable with a terminal fed funds rate close to or at 5 per cent, and US inflation likely to quickly roll over in the first half of this year, downward pressure on the USD should continue to mount,” they said in a note.

The Organisation of the Petroleum Exporting Countries (OPEC) panel will likely recommend keeping the group’s output policy unchanged when it meets at 2 pm (Nigerian time) on Wednesday.

Meanwhile, a Reuters survey showed 49 economists and analysts expect Brent crude to average more than $90 a barrel this year, the first upward revision since October, with gains likely driven by demand from the world’s second top consumer, China.

China has been easing stringent COVID-19 restrictions this month, with the country reopening borders for the first time in three years.

Analysts noted that China’s reopening is supporting demand prospects for oil.

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Economy

Economy in Danger, Nigerians Suffering—Lagos Assembly

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Lagos Assembly economy in danger1

By Aduragbemi Omiyale

The Lagos State House of Assembly has accused the Central Bank of Nigeria (CBN) of compounding the woes of Nigerians through the Naira redesign policy, which it said has also put the economy in danger.

Speaking through its Speaker, Mr Mudashiru Obasa, the Lagos Assembly commended the National Assembly for putting pressure on the Governor of the CBN, Mr Godwin Emefiele, to ensure that Nigerians would still be able to take their old currency notes to the banks after the current deadline of February 10, 2023.

At the plenary on Tuesday, legislators in the state parliament noted that even though the policy was a good one, its timing was wrong as it had further thrown the country into economic chaos, which could become difficult to resolve if urgent steps are not taken.

Mr Obasa noted that the concern of the lawmakers had to do with the pains, anguish and anger spreading among Nigerians over their inability to access the new currency.

“Economists have said most times you cannot use new currency to control inflation, it doesn’t achieve the purpose most times,” Mr Obasa said, adding that the intention of the policy, as claimed by CBN, had been defeated owing to the various complaints from experts and people across the country.

The Speaker said the CBN should have engaged stakeholders while citizens should have been adequately carried along rather than an ‘overnight’ policy by the apex bank.

“There are people in the rural areas. It is obvious that the additional 10 days are not even going to be enough.

“The idea is a good one, but the way it is being implemented will have an adverse effect on the people.

“We need to commend the National Assembly for showing quality representation and prompt action to intervene for an extension of the deadline,” he noted.

The Speaker said that in other countries, old currencies are not discarded in a rush but allowed to fade out of the system gradually.

Mr Rotimi Olowo, the lawmaker representing Somolu Constituency 1, who moved the motion, sought an extension of the deadline till July 2023 in line with the resolution of the National Assembly while noting the suffering the policy had brought on Nigerians.

He complained about the unavailability of the new notes and the effect on the people, including small business owners and those in rural areas.

Contributing to the motion, the chairman of the House Committee on Public Account, Mr Saka Solaja, argued that financial policies are not implemented the way the CBN had gone about the Naira redesign.

“We see videos of people beating themselves mercilessly at ATMs, yet there is no money,” he lamented while supporting the call for an extension of the deadline by the CBN.

On his part, Mr Richard Kasunmu argued that the timing of the policy was not right, especially as the country was still grappling with challenges of effective internet connectivity.

He recalled how he spent five hours a day earlier trying to make an electronic transfer of N55,000 to resolve an emergency situation.

“We should be looking at the larger Nigerian people. If we want to survive the Nigerian economy, this should not be a good time for such policy,” he said.

On his part, Mr Victor Akande stressed that Mr Emefiele breached a part of the CBN Act concerning the policy, while his colleague, Mr Setonji David, noted that, “All over the world, CBN governors are economists, not bankers like Emefiele.

“Our people are suffering, and the money can’t be found at the ATMs. If you go to the ATMs, you would see how people are struggling,” he lamented.

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