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Economy

Why Global Businesses are Banking on Africa

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Amid the COVID-19 pandemic, ever-changing lockdown regulations and travel bans for countries in sub-Saharan Africa, the continent has held firm with a positive outlook for its tourism and hospitality sectors. This has been further cemented by the increase in major global businesses either setting up shop in Africa or expanding further across the continent.

Tech hot spots for an expanding ecosystem

Zoho, the global technology company that offers the most extensive suite of business software in the industry, announced the opening of its South African office at the end of 2021 – the company’s flagship – in Cape Town.

“Zoho strongly believes in its growth being closely tied with the growth and development of the broader community that it serves, a strategy we refer to as ‘transnational localism’. As part of this vision, we’re focused on contributing to the creation of self-sufficient economic clusters across the world,” says Hyther Nizam, President MEA at Zoho Group.

In South Africa, Kenya, Nigeria and Egypt, Zoho offers its products in local currencies. Additionally, Zoho has hired individuals in all of these countries for customer-facing roles. And the company is committed to establishing partnerships that will aid local businesses in their digital transformation efforts.

SweepSouth, SA’s leading on-demand home services brand, recently expanded its Pan-African presence by launching into Egypt. Already operating in Kenya and Nigeria, they acquired Egyptian start-up Filkhedma – Egypt’s leading home services marketplace that operates across three cities and serves tens of thousands of customers with cleaning, maintenance and beauty services.

“Africa has massive growth potential for us as a company,” says Aisha Pandor, CEO and co-founder of SweepSouth. “We already operate in three key markets and the acquisition of Filkhedma means that SweepSouth will be one of a few African start-ups operating in the continent’s four key tech ecosystems of South Africa, Egypt, Kenya and Nigeria.

“Egypt has a strong and growing middle-class that has been underserved in the domestic home services arena, which can be said of many other regions across the continent, too. With a compelling economic growth track record and outlook, and an economy that has been resilient in the face of challenging times, it made sense for us to eye this market for our next big leap. Our presence there now primes us for further expansion into other parts of Africa and the Middle East.

“We are entering a rapid growth phase and executing on a number of other new country launches in 2022,” adds Pandor. “Having the Filkhedma team on board is particularly exciting as it’s an intra-African acquisition by two companies in the same vertical. This acquisition almost doubles our addressable market on the continent and enhances the products and services that we already offer.”

An African expansion plan

Ramsay Rankoussi, Vice President, Development, Africa and Turkey for Radisson Hotel Group, says that while the Radisson Hotel Group will continue to pursue organic growth underpinned by domestic and regional travel, the Group will also be exploring other routes through inorganic growth that may be slightly more unconventional and would include different types of partnerships, joint-ventures, co-branding and potential capitalistic approaches.

One of these – Radisson Individuals, a conversion brand that offers smaller hotel operators the opportunity to be a part of the Radisson family without losing their identity – already came to fruition in 2021.

“Africa holds immense potential across various segments and product types – from resorts and city hotels to serviced apartments and boutique offerings. The lack of funding, be it equity or debt, along with the high cost of capital remains the biggest burden across the continent.

“Inorganic growth will certainly help us to not only mitigate materialisation risks but should also unlock synergies and economies of scale with other local and regional chains to the benefit of local communities,” he says.

As such, the Radisson Hotel Group has set its sights on Africa, boosting its African portfolio with 14 signings and five hotel openings in 2021, setting it on a positive path to reach its ambitious goal of more than 150 hotels by 2025.

A recognised business hub

South African serviced office provider The Business Exchange (TBE) recognised the Mauritian potential and in April 2021, the company launched its second investment opportunity in Mauritius – a sectional-title serviced office space.

Beyond the white beaches and get-away-from-it-all lifestyle, Mauritius is increasingly recognised as one of the hottest business hubs on the continent. In fact, the island paradise is currently the highest-ranked economy in sub-Saharan Africa, according to the World Bank’s Ease of Doing Index.

“Mauritius presents a sound environment, both politically and economically. Major international brands, including Samsung, Broll, Expedia and NBA (North America’s National Basketball Association), have already based themselves at our serviced office space there, which speaks to the potential of the location as a foremost business hub,” believes David Seineker, TBE founder and CEO.

Mauritius’s proximity to South Africa – it’s a mere four-hour flight from Johannesburg – is a further advantage, as the City of Gold remains the continent’s foremost business hub. Mauritius is also perfectly positioned en route from Asia and the Middle East to the tip of Africa, making it ideal for expansion into Africa as well as from Africa to the rest of the world. While the strategic relevance of the location was key to TBE’s expansion plans, others look for opportunities in regions that face the same challenges as in the business’s key operational area.

Remote working made easy

Cheapflights, a global travel search site that compares flights, hotels and rental cars, reports that searches from South Africa to the rest of the continent were up 67% on average between September and December last year compared to the same period in 2019. Zimbabwe, Tanzania, Mauritius, Namibia and Mozambique were the most searched countries within the region.

Additionally, the site recently also launched its Work from Wherever Index, which provides travellers looking to work away from home or while on vacation a definitive list of the best countries that are easiest to work from while enjoying a new country.

The results of the Index are based on popular searches made on the Cheapflights site as well as on how well each country scored across six categories. Nigeria ranks 95th globally and 14th amongst countries in the Middle East and Africa region, with its highest scores in the categories of price, travel and weather.

Mauritius, which ranked fourth globally, beating out many European heavyweights, topped the ranking for the Middle East and Africa. The island nation offers great weather, low crime rates and a fairly low cost of living in addition to a remote work visa (also called a digital nomad visa), which is a travel authorisation for on-the-go workers, allowing them to work independently during their stay in a country.

Other African countries that made the list include Seychelles at number 26 globally and number 2 in the region; Réunion (at number 69); Kenya and Tanzania (ranked 80th and 81st, respectively); and Tunisia (ranked 84th); amongst others.

The Work from Wherever Index, as well as the increase in flight searches to the continent, might be additional indicators of renewed business and growing confidence among travellers.

Economy

NGX Spurs Capital Market Innovation to Attract Investors

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By Aduragbemi Omiyale

The Nigerian Exchange (NGX) Limited has disclosed that the NGX Made of Africa Awards will spur the next phase of capital market innovation to attract more investors into the space.

On Tuesday, December 6, 2022, the exchange held the award ceremony in Lagos to recognise innovativeness and compliance with best practices in the Nigerian capital market for the calendar year.

The event spotlighted excellence, creativity and integrity as NGX sought to amplify the activities of its stakeholders to further reinforce the values that attract investors to the market and grow the African economy.

Players in the capital market ranging from issuers, securities dealers, issuing houses, fund managers, trustees, legal firms and stakeholders, including the media and content creators were rewarded for their contributions to the development of the market.

In his opening remarks, the Chairman of NGX, Mr Abubakar Balarabe Mahmoud, explained that the goal of the exchange with the awards is to further catalyse innovation, corporate performance, shareholder return, compliance to rules and regulation in driving investor confidence and aiding regulatory oversight on the market.

“It is essential that we continue to collaborate, encourage and incentivise our partners through initiatives like the NGX Made of Africa Awards. At NGX, relationships, partnerships, collaboration and inclusivity continue to drive our actions in the quest to spotlight The Stock Africa is Made Of,” he said.

On his part, the chief executive of the bourse, Mr Temi Popoola, said the event had been reviewed to reflect the dynamism of the capital market and the transformation it had witnessed so far.

“We are delighted to be extending the reach of these Awards to further highlight our commitment to inclusivity, innovation and integrity whilst highlighting NGX as the platform of choice to raise capital,” he stated.

In his goodwill message, the Governor of Edo State, Mr Godwin Obaseki, highlighted the importance of the capital market to the economy, calling together all stakeholders to move Nigeria towards a more productive economy and less import-dependent.

He also noted that NGX has continued to stand out as a market infrastructure of choice for public and private sector capital formation.

Also, the Director-General of the Securities and Exchange Commission (SEC), Mr Lamido Yuguda, represented by the Executive Commissioner, Corporate Services, Mr Ibrahim Boyi, said that the commission had championed innovative measures that have improved the market, including dematerialisation, direct cash settlement and e-dividend.

“The long-term sustainability in the market requires innovation of which the fundamental outcome was a maximum return on investment, reduction in the cost of doing business and increased production,” he said.

Speaking on the African capital market potentials, Mr Aigboje Aig-Imokuede, the Chairman of Coronation Capital and a former President of the Council of the Nigerian Stock Exchange pre-demutualisation, said that after a long haul of liquidity in global markets, central banks across the globe are implementing hawkish monetary policies to revive price stability and tame inflationary pressures.

He noted that the capital market in this period of restrained global growth had an important role to play in stimulating economic growth and development through the efficient allocation of resources.

Business Post reports that a few of the awardees were Dangote Cement as Best Issuer in Terms of Number of Fixed Income Listings; Lafarge Africa as Leader in Sustainability Reporting; Pilot Securities Limited as Most Compliant Trading License Holder; Aluko and Oyebode as Best Solicitor in terms of Value of Deals; and Coronation Securities Limited as Best Sponsoring Trading License Holder of the Year. Lagos State won the State with the Largest Sub-national Debt Instrument; MTN Nigeria Communications won the Most Compliant Listed Company; CardinalStone Securities won the Best Trading License Holder Across Asset Classes; BUA Foods was awarded the Listing of the Year; and Capital Markets Correspondent Association (CAMCAN) won Capital Market Reportage.

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Economy

Crude Oil Prices Fall To Lowest Levels in 10 Months

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By Adedapo Adesanya

The prices of the crude oil grades in the market fell to their lowest levels this year on Wednesday, losing all of the gains they had accumulated since Russia’s invasion of Ukraine.

Brent futures fell by $2.18 or 2.8 per cent to trade at $77.17 a barrel, as the United States West Texas Intermediate (WTI) futures depreciated by $2.24 to $72.01 per barrel.

Oil surged to nearly $140 a barrel in March, close to an all-time record, following the launch of what Russia tagged a “special operation” in Ukraine a month earlier.

The market has been steadily declining recently as economists brace for weakened worldwide growth in part due to high energy costs.

The situation worsened on Wednesday with bigger-than-expected increases in US fuel inventories despite a drop in crude stocks.

The US Energy Information Administration (EIA) reported an inventory decline of 5.2 million barrels for the week of December 2 compared with a sizeable draw of 12.6 million barrels estimated for the previous week, which sent prices higher at the time.

A day before the EIA released its report, the American Petroleum Institute estimated another weekly crude inventory draw for the week to December 2 at 6.43 million barrels.

Meanwhile, the EIA also reported an inventory build in fuel and another rise in middle distillate stocks for the week to December 2. Gasoline (petrol) inventories added 5.3 barrels in the week to December 2, with production averaging 9.1 million barrels daily, in contrast to a build of 2.8 million barrels for the previous week and a production rate of 9.4 million barrels daily.

Prices are also slipping further down as traders relax about the potential consequences of the G7 and EU price cap on Russian oil.

It appears they have assumed that it would not affect the availability of oil in any significant way and are selling crude.

Analysts also note that Russian oil is already trading close to the cap, so it shouldn’t make much of a difference in revenues, but it is worth remembering Russia has said it would not sell oil to countries that enforce the price cap, meaning the supply of Russian oil specifically might tighten for some importers.

Russia has also threatened to set a price floor for its oil in response to the G7 price cap, which may further complicate matters.

Support came as China, the world’s biggest crude importer, announced the most sweeping changes to its anti-COVID regime since the pandemic began. The country’s crude oil imports in November rose 12 per cent from a year earlier to their highest in 10 months, data showed.

Still, warnings from big US banks about a likely recession next year weighed on the value of the commodity.

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Economy

Nigerian Stocks Maintain Upward Trajectory Amid Weak Investor Sentiment

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By Dipo Olowookere

The Nigerian Exchange (NGX) Limited closed higher for the fourth consecutive trading day by 0.12 per cent on Wednesday amid a weak investor sentiment.

At the midweek session, 17 equities shed weight, more than the 12 equities that gained weight. It was observed that traders embarked on profit-taking, but the gains by stocks in the consumer goods sector, especially Nigerian Breweries and Honeywell Flour, left the bourse in the green territory at the close of transactions.

Consequently, the All-Share Index (ASI) rose by 59.80 points to 48,426.49 points from 48,366.69 points, while the market capitalisation, while the market capitalisation jumped by N33 billion to N26.377 trillion from N26.344 trillion.

Yesterday, the consumer goods counter appreciated by 0.96 per cent, the industrial goods sector closed flat, while the insurance, banking and energy indices depreciated by 0.55 per cent, 0.17 per cent, and 0.08 per cent, respectively.

A total of 146.2 million stocks worth N3.4 billion exchanged hands in 2,810 deals on Wednesday compared with the 184.7 million stocks worth N3.6 billion traded in 3,189 deals on Tuesday, representing a decline in the trading volume, value and number of deals by 20.85 per cent, 5.56 per cent, and 11.88 per cent apiece.

FBN Holdings traded the highest number of stocks during the session, 59.3 million units, followed by Geregu, which sold 14.3 million units. Zenith Bank transacted 12.5 million stocks, Sterling Bank exchanged 7.0 million equities, and UBA traded 6.9 million shares.

The best-performing equity on Wednesday was Thomas Wyatt, which improved its share price by 10.00 per cent to close at 44 Kobo. Japaul gained 7.41 per cent to end at 29 Kobo, Honeywell Flour appreciated by 6.14 per cent to N2.42, May and Baker rose by 5.26 per cent to N4.00, and Nigerian Breweries grew by 4.62 per cent to N38.50.

The worst-performing stock yesterday was SCOA Nigeria, which dropped 9.38 per cent to sell for 87 Kobo. Unity Bank depreciated by 7.02 per cent to 53 Kobo, Cornerstone Insurance fell by 6.25 per cent to 45 Kobo, Courteville shrank by 6.00 per cent to 47 Kobo, and Chams lost 4.35 per cent to trade at 22 Kobo.

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