Category Archives: Donor AID

10 Points from AfDB 2022 in Accra

The African Development Bank (AfDB) Group held its 2022 series of annual meetings in May in Accra, Ghana with the theme of achieving climate resilience and a just energy transition for Africa.

Highlights of the meetings:

  1. Food Security: Most countries in Africa are Agri-based. But going forward, they should engage in modern agriculture with technology, fertilizer & seed improvements, and not just produce, but also process and package high-value foods to quality standards that they can export. Agriculture can then bring transformation and jobs to rural areas.

Africa has 400 million hectares of savannah which, the President of the African Development Bank Group Dr. Akinwumi Adesina, said, is better than Brazil’s (which is a net exporter of maize, beef, and soya) – and that for Africa to be a major player of global food, must transform its Savannah.

In six years, the Bank’s Technologies for African Agricultural Transformation (TAAT) program has provided 76 million farmers with improved agricultural technologies. In Sudan, the AfDB provided certified heat-tolerant wheat seeds that, when cultivated over 65,000 hectares, made the country self-sufficient. In Ethiopia, the country progressively increased its acreage cultivated with certified heat-tolerant seeds from 5,000 to 167,000 hectares in 2021. With the increased harvest, they expert to export 1.5 – 2 million tons to Kenya and Djibouti.

  1. Energy Transformation: Currently 85% of the bank’s energy investment are in renewable energy with plans to double funding to $25 billion by 2025. While the bank has a policy not to support any coal, as part of its climate change, they acknowledge that intermittent renewable energy sources cannot power Africa alone, and that Power must also be accessible, secure and affordable.
    • One solution for Africa is gas. Nigeria has $200 trillion worth to exploit, according to President Adesina who said that Europe, which gets 45% of its gas from Russia, should look to Africa. Other countries with gas potential are Ghana, Cote de Ivoire, Angola, and Morocco. The AfDB is assisting Mozambique with a $24 billion LNP project that may make the country the 3rd largest producer in the world.
    • Some of the renewable energy investments the bank has undertaken are the Quarzazate Solar in Morocco – the world’s largest concentrated solar farm, the 3,000 MW Benban energy in Egypt, the $20 billion Sahel 10,000MW, and the largest wind project in Africa at Lake Turkana in Kenya.
    • The bank is mobilizing $40 billion for South Africa to ease its transition from a reliance on 44,000 MW of coal toward renewable energy sources. Donors have committed $17 billion of grant financing, and concessions, that the bank will leverage to meet this gap without South Africa getting into debt. As the government plans to move to net-zero emissions, the AfDB has invested in solar (Xina and Redstone projects) and wind (Sere) and is also supporting a feed-in tariff for renewable energy.
  2. The ADF: The Bank’s African Development Fund (ADF) receives donations from regional members and has provided $45 billion to low-income countries. Nine of the ten countries that are most vulnerable to climate change are in Africa and 100% are ADF countries. As the ADF needs more resources, the Bank plans to tap the ADF’s accumulated equity of $25 billion to raise $33 billion from capital markets. This will make the future of the ADF more sustainable and member countries will enjoy lower borrowing costs.
  1. The Infrastructure Gap: Infrastructure’s share of the bank’s funding portfolio is high because infrastructure projects are capital intensive. One project showcased was the Pokuase road interchange that is part of the Accra Urban Transport Project and which now disperses traffic on four levels to help reduce transport congestion in Accra. It was funded with $84 million from the Bank and the Government of Ghana.

Also at the summit, Tanzania’s President Samia Suluhu Hassan received the Africa Road Builders–Babacar Ndiaye prize for 2022. In her speech, she credited her predecessors, especially President John Pombe Magufuli who was a Roads and Public Works Minister in two governments before leading the country. The AfDB in 15 years had advanced $2.1 billion for 2,315 kilometres of road on the Tanzania mainland while Zanzibar has received $113 million for 139 kilometres of roads.

  1. Climate Change: One of the themes of the 2022 meetings was “achieving climate resilience”. Climate change is an existential threat with droughts, floods, and cyclones devastating Africa and causing losses of $7-15 billion a year. Even though the continent contributes just 4% of greenhouse gas emissions, it just gets 3% of climate-related financing. Developed nations had promised to fund Africa with $100 billion to adapt to climate change but this has not materialized and the Bank now plans to mobilize $25 billion for climate adaptation through a new fund.
  1. Creative Financing: During Covid, the bank launched a $3 billion social impact bond on global capital markets and the funds went to train 130,000 health workers, provide social protection for 30 million households, and business advisory for 300,000 SMEs. The Bank now plans to use its AAA-rated balance sheet to leverage $100 billion of Special Drawing Rights (SDR) from International Monetary Fund and grow that four times.
  1. Development Financing by the AfDB can be targeted at specific areas:

• Towards Food Security: In the wake of Russia’s invasion of Ukraine, food prices have gone up 30-40%, oil is 60%, and fertilizer prices tripled. So the AfDB launched a $1.5 billion African Emergency Food Production Facility to enable countries to intensify agricultural productivity and ward off the looming hunger crisis.
• For agriculture, President Adesina said the bank will allocate $1 billion to fund special agri-processing zone in rural areas of Zambia, Nigeria, Tanzania, Ghana, CIV and Senegal.
• Towards transformational infrastructure projects; the bank continues to fund ports, highways, bridges and border-crossing stations.
• Towards Youth Funding: one mechanism to help youth stop fleeing Africa will be through a youth entrepreneurship investment bank that will invest in youth business in 13 countries. The Bank is working on a mechanism to be ready after June 2022.

  1. Looming Debt: Even as African countries recovered in 2021 from Covid shocks, they face elevated debt levels and limited financial capacity that constrained further growth.

The bank has a focus on debt management of countries to improve the quality, sustainability and transparency of the debt. They will work with the World Bank, IMF and G20 nations to deal with private debt and commercial debt that now account for 44% of Africa’s debt. The Bank helped Somalia build back its debt management capacity after decades of war and negotiate debt relief with an arrears clearance plan and it now plans to l work with partners to do the same for Zimbabwe and build it back to an economic breadbasket.

  1. Rain parade: The Economist magazine dive-bombed the meetings with an article about a missing evaluator at the Bank. Later in his speech at the end of the summit, President Adesina said that a two-year external review of the Bank showed that its governance was world-class where areas of improvement were pointed out, these will be done. The joint communique at the end of the meetings mentioned the AfDB would implement the recommendations of a governance committee.
  2. Accra Image: The host nation of Ghana, celebrated 50 years since the passing of Kwame Nkrumah its founding President. It is seen as the birthplace of Africa as, in 1957 Ghana was considered the first Sub-Saharan country to achieve independence and is now a showcase for AfDB -financed projects including roads, farms and airports.

See more about the last in-person annual meetings – the 2019 AM in Malabo, Equatorial Guinea.

Picture of President Samia Suluhu Hassan of Tanzania, speaking after receiving the Babacar Ndiaye prize for 2022. Courtesy of Edgar Batte. 

Next meetings: Following these first meetings since Covid, the next annual meeting will be at Sharm El Sheikh in Egypt from May 23-26, 2023. The new Chairman of the Board of Governors is Tarek Amer, the Governor of the Bank of Egypt. The First Vice-Chairperson will be a representative of Brazil and the second one will be from Uganda.

Russia – Africa: We Came and We Saw, What Next?

A guest post from the first Russia-Africa forum held from October 2019, in Sochi.

The forum was held in the Olympics stadium in Sochi, Russia. If you are coming from Moscow, it takes a three-hour flight to reach Sochi, a beautiful coastal city located on the Black Sea. It has warm weather during the day and is slightly cool in the evening. This is the city where the Russian Presidents receive other presidents. Mercedes Benz is a well-loved brand in Sochi.

Sochi Stadium was estimated to have cost $50 billion; this was the world’s most expensive Olympics. The stadium was home, for two days for the Russians and the Africans who were attending the first-ever Russia – Africa forum and leaders from more than forty African countries were in attendance. 

Besides the beautiful scenery of Sochi, the stadium had a few interesting sights, organized for the forum, including a display of army helicopters and AK47 rifles.

A session at the Russia-Africa forum

New businesses opportunities and new political dialogues happened.

In 2018, trade between Russia and Africa was valued at $20.4 billion in 2018. Also, there were 15,500 Africans registered in Russian universities, with the Russian government subsidizing half of their education costs through scholarships, according to the Botho Group.

During the forum, Russia’s President Vladimir Putin and his administration signed $12.5 billion worth of memorandums with more than 40 African governments for mining, oil and exploitation, nuclear energy, and military cooperation. Among these deals for data storage & software with the Democratic Republic of Congo and to build two 12,000 MW nuclear reactors in Ethiopia.

Nuclear energy received high attention and the State Atomic Energy Corporation, disclosed that it had signed memorandums and agreements with 18 African countries including Ghana, Kenya, Rwanda, Ethiopia and Zambia.

  • “Rosatom today is an indisputable leader in nuclear technology. We are building 36 power-generating units in 12 countries around the world. During the past 14 years we have commissioned 15 new generating units, and this year we are putting the first floating power plant into operation,” Evgeny Pakermanov, President, Rosatom State Atomic Energy Corporation. “Africa is a priority region for us, and we have projects in over 20 countries. We see an incredible demand and incredible interest in nuclear energy from the African countries.”

Focusing on military cooperation, Nigeria purchased 12 helicopters at the summit while several other African countries including the Central African Republic, Namibia, Madagascar and Uganda. Egypt, Gabon, and Rwanda declared their interest in military equipment such as tanks, planes, helicopters, rifles, and military advisers, marketing and inviting Russia’s investment in their countries.

  • “I encourage our Russian partners to set their sights on Gabon. Gabon is a very stable country,” Jean-Fidele Otandault, Minister of Investment Promotion, Public and Private Partnerships, added that “We have an entire ministry dedicated to private-public partnerships for projects that are valued over 200 billion and I would like to invite Russian investors to join.”
  • Francis Gatare, Chief Executive Officer, Rwanda Mines, Petroleum and Gas Board said “Right now, we are looking for international investors,”

Besides the wonderful talks and agreements, it is important to remember that Africa does have challenges that hinder trade between the two regions. Lack of information has been a key impediment to trade as both regions are not informed about the opportunities and how to capitalize on these gaps for financial benefits. It is crucial to address the lack of information to enable new and deeper forms of cooperation.

What are the stumbling blocks to trade?

Investing in Africa has always been considered risky due to factors such as political instability, unfavourable business climate, rigid tax policies and the infamous corruption. On the other hand, some investors want success in Africa without gaining market insights or visiting these African countries.

  • “Some of the main challenges that our companies are facing is lack of information, lack of experience, lack of confidence to enter new markets, including African and Middle Eastern markets,” Andrey Slepnev, Chief Executive Officer, Russian Export Center.
  • “Lack of information is one of the major problems in Africa. It is not there, and it is really hard to extract consistently,” said Mikhail Orlov, Partner, Head of Tax and Legal, KPMG Russia; Chairman of the Expert Council of the Committee for Budget and Taxes of the State Duma of the Federal Assembly of the Russian Federation.

Lack of information has often led to several wrong assumptions by investors such as that the whole of Nigeria is in conflict due to the famous Boko Haram conflict – yet the regions of trade (Lagos, Abuja, Enugu, etc.) are very far from the conflict zone. There is also the use of non-African business plans across Africa which often fail as all African countries have very different characteristics.

  • “Africa is still considered to be a very risky place. This needs to change. Africa must be defined as a place of possibility and business. We must discuss and diminish the risks and guarantee comfort for our investors,” Monica Juma, Cabinet Secretary, Ministry of Foreign Affairs and International Trade of the Republic of Kenya. “To provide the right environment for our investors we also need Public-Private Partnerships (PPPs) which are very attractive for a country’s economic development and from the fiscal point of view. This is our focus for enhancing social, economic and political trade between Kenya and Russia.”

For the continent to progress, infrastructure needs to be implemented to drive economic growth. The continent needs to resolve the lack of and poor infrastructure to attain the required goals such as education and health.

  • “Africa needs $50 billion in sectors such as energy, transport, and natural resources so that our sponsors can strive in business, implementing infrastructure projects,” Samaila Zubairu, President, Chief Executive Officer, Africa Finance Corporation (AFC).

Foreign businesses underestimate country specifics in Africa.

  • “I would like to point out a few common mistakes our businessmen make when they come to work in Africa. Lack of understanding local mentalities leads to the gravest of errors,” Galina Sidorova, Professor, Moscow State Linguistic University. “Another important aspect is that our businessmen are preoccupied exclusively with their profit. It would be nice to see them also thinking about the interests of African people.”

What solutions are African nations implementing?

  • Gabon stated its progress in creating favourable investment conditions by diversifying the economy since 2009 to attract foreign investments.
  • “One of the key sources that allowed us to build an oil refinery was project financing that attracted $4.4 billion for us. Today, we produce petrol that complies with European regulations. How did we get this kind of money? Through a regime that attracts international financial institutions and welcomes them into the country,” Ahmed Heikal, Founder, Chairman of the Executive Board, Qalaa Holdings, Egypt.
  • “In Ghana, it is far easier for the business sector to attract foreign investment than for the state. Why is that? Because the business sector is far more efficient, primarily in human resources and human capital,” Frank Adu Jr, Chief Executive Officer, Managing Director, CalBank.
  • “Stability is extremely important, it is a key aspect of developing investment and attracting the capital,” Bob van Dijk, Group Chief Executive Officer, Naspers, South Africa.

Expanding Russian-African cooperation holistically

  • “We need to work on consolidating and coordinating the efforts on promoting Russian-African cooperation with all of the stakeholders. Expanding cooperation with our African partners not only via bilateral cooperation but using the multilateral institutional opportunities as well, including Russian business programmes,” Alexander Shokhin, President, Russian Union of Industrialists and Entrepreneurs (RSPP). “Stimulating the development of multilayer cooperation mechanisms to foster business cooperation by increasing the resource potential of Russian companies encourage involving small and medium-sized enterprises, as well as Russian and African regions via project financing and project groups.”
  • “It is a huge mistake to try to get as much profit as soon as possible and ignore the long-term investments. It is a huge loss. Thirdly, we do not support small and medium-sized businesses in Africa. They cannot exist there without state support. So, let us create a few support centres for business, for instance, North, South, West, and East. It would be extremely efficient in promoting our investments,” Irina Abramova, Director, Institute for African Studies of the Russian Academy of Sciences, Corresponding Member, Russian Academy of Sciences.

Africa is attractive for investment and trade

Both Russia and Africa are well endowed with minerals, agriculture, human resources, and other sectors that will benefit if deals are well-structured and trade is enhanced.

  • “What do we see? Incredible opportunities – there are 55 countries and each one needs to be approached individually. Uralkali, as a business, is ready for that,” Dmitry Osipov, CEO Uralkali; Chairman, Russian-Nigerian Business Council.
  • “A promising area of cooperation involves attracting big Russian investors in industries strategic for many African countries, such as agriculture, mining or processing raw material,” Andrey Kostin, President and Chairman of the Management Board, VTB Bank.
  • “Africa is a large consumer of agricultural produce. Last year, the volume of our exports exceeded $4.6 billion,” Sergey Yushin, Head of the Executive Committee, National Meat Association.
  • “Rating agencies assess countries based on further investment in them, but our actual resources are much higher than the risks we are usually associated with. Our continent can only be perceived as a whole. $1 trillion is expected to be invested in infrastructure parts so that we could cooperate under our free trade agreement,” Paulo Gomes, Co-Founder, New African Capital Partners; Chairman, Paulo Gomes and Partners.

Russian companies are successful in Africa

  • “We have been working in Africa for over 10 years .. we have invested close to USD 2 billion in the African countries,” Evgeny Tulubenskiy, Chief Legal Officer, Corporate and Regulatory Affairs, Member of the Board of Directors, Nordgold.
  • The Institute of Africa of the Russian Academy of Sciences has stated that during the past 10 years Russian investment into Africa grew by 185% and reached USD 17 billion. This shows there is much more work for us.
  • “Having the large group of Africans was impressive because it demonstrated a deep interest in our desire to keep engaging with the greater global community to identify areas of continued cooperation. It was also interesting that the forum had a strong mix of private and public sector experts thus creating real opportunities for trade and other commerce activity,” Isaac Forkuo, CEO, Botho Consulting Group, Kenya. “This event had more action than talk.

There appeared to be a desire to create linkages among businesses, especially SMEs. African governments realize that leveraging the relationship with Russia through country-specific trade. From the Russian side, this forum provided an opportunity to re-engage with Africa also from a trade angle as African countries provide a market for Russian goods and services while also providing a market for diversification of Russian State and private investments.”

Let us wait and see how many of the signed memorandums will be implemented between Russia and Africa.

M&A Moment: September 2020

Since the last update of deals in the East Africa region, we are six months into the era of Coronavirus and its effects across the world.

Merger and acquisition (M&A) deal are still happening, with some older ones having been in the pipeline for months before. The impact of the pandemic has also created some new M&A deals and partnerships, while reducing the value of others, and even killing off some earlier-announced merger deals, in scenarios that had all been foreseen by deal-makers.

https://twitter.com/gina_din/status/1227504077203886081

Here are some notable deals (1 US dollar equals 108 Kenya shillings)

Airline/ Oil/Energy/Mining M&A

  • Jubilee Holdings is acquiring an additional 9.4% share in Uganda’s Bujagali Hydropower from SN Power for $40 million to now own 18.2% of the project as part of a diversified portfolio that includes quoted stocks, bonds, real estate and interests in Farmer’s Choice, PDM and Seacom. 
  • The proposal to nationalize Kenya Airways through a National Aviation Management Bill, which grew out of a proposal by the airline to manage Nairobi’s main airport, will be debated in Kenya’s Parliament over the next few months.
  • Shareholders of Tullow Oil approved the sale of its entire interest in Blocks 1, 1A, 2 and 3A in Uganda and the proposed East African crude oil pipeline System to Total. 
  • The proposed Transfer of 85% of Global Petroleum Products Kenya  to E3 Energy DMCC has been approved 
  • Barrick Gold and the Government of Tanzania have signed an agreement to launch a new joint venture to oversee the company’s future gold mining operations in the country. 
  • The Competition Authority approved the proposed acquisition of 100% of Acacia Exploration (Kenya) by Shanta Gold Mauritius.
  • Safaricom bought 18.96% of Circle Gas for Kshs 385 million. The gas company has interests in Tanzania also acquired KopaGas’s technology in a $25 million transaction, one of the largest private equity investment in the clean cooking sector. 
  • In what will be a controversial deal, Kenya plans to have the Industrial and Commercial Development Corporation become a super agency to oversee a new Kenya Transport and Logistics Network (KTLN) that will coordinate the Kenya Ports Authority, Kenya Railways and Kenya Pipeline Company.
  •  Deal Undone: The Competition Authority has noted that the acquisition of 80% of the Embraer by Boeing has failed to take place following the decision of the parties to withdraw from the transaction. 

Banking and Finance: Finance, Law, & Insurance M&A

Kenyan Banks  

  • Kenya’s Central Bank approved the acquisition of 51% of Mayfair Bank by Commercial International Bank, Egypt’s leading private sector bank, and it will be renamed as Mayfair CIB Bank.  
  • The Central Bank of Kenya approved the takeover of 90% of Jamii Bora Bank by the Cooperative Bank of Kenya.
  • Access Bank completed the acquisition of 100% of Transnational Bank. 
  • Centum’s Bakki Holdico has acquired all the shares of the late Ambassador Bethuel Kiplagat in Sidian Bank (via Business Daily) 
  • Equity Bank has completed its buyout of 66.53% BCDC in DRC. Covid saw the final price reduced by $10 million to $95 million.  
  • Deal undone: Atlas Mara and Equity Bank mutually agreed to discontinue transaction discussions given the effects of the COVID-19 pandemic.
  • Deal undone? Businessman Naushad Merali and Mwalimu National Sacco plan to sell their stakes in Spire Bank after it issued a notice to engage potential suitors to buy a 100% of the bank. 

Investment Markets and Deal Makers

  • The Nairobi Securities Exchange acquired 61% of AKS Nominees, which holds an 18% share in the Central Depository and Settlement Corporation (CDSC) for Kshs 77 million.
  • Genghis Capital has partnered with EGM Securities to offer investors a wider range of alternative asset classes including online currencies, commodities, precious metals, oil, and biotech stocks.
  • Helios & Fairfax to partner on Africa investments. 
  • Fanisi Capital and Ascent Capital are set to merge and raise funds for bigger deals in the region.
  • Two Nairobi stockbrokers AIB Capital and Apex Africa entered a joint venture that will lead to a merger. The entity will be part of Mauritius firm, the AXYS Group which acquired Apex in 2015.
  • African Alliance Kenya investment bank is divesting from stockbroking owing to a structural decline in the agency trading model in both the local and global financial markets (amplified by the Covid-19 pandemic)

Insurance

  • The Competition Authority approved the acquisition of 24.1% of ICEA Lion Insurance Holdings by Eastern Africa Holdings which is being used by private equity firm Leapfrog Investments for the buyout of  ICEA Lion Insurance Holdings for Kshs 10 billion.
  • The sale of Stanlib Kenya to ICEA Lion was approved by the Competition Authority though clients have pulled out Kshs 75 billion following the deal. 
  • Mauritian insurance company MUA completed the acquisition of Saham Assurance Company Kenya. 
  • Octagon Africa, who offer pension, actuarial and insurance services in Kenya, Uganda and Zambia acquired a 49% stake in the Zambia subsidiary of Alexander Forbes who doing a group strategic review. 
  • EDIT: Allianz will acquire controlling stakes in Jubilee Insurance’s general insurance business (property & casualty insurance) in Kenya, Tanzania and Uganda as well as the short-term insurance business in Burundi and  Mauritius for Kshs 10.8 billion ($ 100 million) while Jubilee will also acquire Allianz Insurance Kenya.  

Regional Banks

  • The Tanzania Postal Bank (TPB) has absorbed a third bank, TIB Corporate, in a new merger deal. 
  • The National Bank of Malawi plans to invest in Akiba Commercial Bank in Tanzania in a bid to expand its operations beyond Malawi.
  • The Bank of Tanzania approved the merger of Mwanga Community Bank and Hakika Microfinance Bank to form the Mwanga Hakika Microfinance Bank. 
  • EFG Hermes and the Sovereign Fund of Egypt aim to acquire 76% of the Arab Investment Bank. EFG Hermes will own 51% of the bank and plans to transition from an investment bank to a commercial bank. 
  • I&M Bank is buying Orient Bank in Uganda.  edit The deal in which I&M Holdings acquired 90% of Uganda’s 12th largest bank from 8 miles LLP and Morka Holdings was completed in April 2021. Through the acquisition, I&M Group has acquired additional net loan assets of approximately KES 7.7 Billion, deposits of KES 18.2 Billion, a customer base of close to 70,000, a staff component of 340 employees and a network of 14 branches and 22 ATMs across the country.

Remittances

  • WorldRemit has agreed to acquire Sendwave, an app-based remittance company in a cash and stock transaction. 
  • Beyonic has been acquired by MFS Africa.  

Agri-Business, Food & Beverage M&A

  • Kenya has floated an international expression of interest for the privatization of five sugar firms. 
  • The Kenya Tea Development Agency Limited (KTDA) and the Japan International Cooperation Agency (JICA) are each investing over Kshs 150 million to set up Africa’s first Japanese speciality green tea production factory at Kangaita Tea Farm in Kirinyaga County. 
  • President Kenyatta has ordered the Kenya Meat Commission to be transferred from the Ministry of Livestock to the Ministry of Defence
  • Dominion Farms on a parcel of land comprising 3,700 hectares at Yala Swamp in Siaya County is being transferred to Lake Agro Ltd.
  • edit Nathan Kalumbu has acquired control of Interstrat Ltd (Big Square Kenya) which has assets worth Ksh 689 million.
  • edit The Competition Authority has approved the acquisition of Dilpack Kenya by Elgon Kenya and the companies will from March 2020 will jointly service the East African market with packaging solutions for the horticultural and floricultural industries.
  • edit The Competition Authority has approved the acquisition of Marsyetu Ltd by Mija Ltd. 

Health and Medical, Pharmaceutical M&A

  • Indo-Oceania Ventures is acquiring Mayfair Healthcare Holdings
  • The CDC Group and Novastar Ventures have invested in mPharma which currently operates in Ghana, Nigeria, Kenya, Zambia and Zimbabwe, and serves approximately one million patients annually, through a network of over 400 pharmacies.
  • edit Goodlife Pharmacy, which had a turnover in 2018 of Kshs 936 million, is acquiring assets of Salama Pharmaceuticals which had a turnover of Kshs 13.3 million and Eurose Enterprises which had a turnover of Kshs 9.8 million in the same years.

Logistics, Engineering, & Manufacturing M&A

  • Mum’s Village Kenya has merged with BabyBliss Nigeria to create the Bliss Group Africa. 
  • Portuguese multinational Salvador Caetano Group has invested Kshs 350 million to launch an automotive hub in Kenya and be the dealer for Renaultand Hyundai cars with plans to venture into the local assembly of the two brands.
  • Bolt, the ride-hailing app, has received a EUR 50 million as venture debt facility from the European Investment Bank to support its research and development strategies.
  • Kenyan e-commerce startup AfricaSokoni has acquired Nigeria company Bolorims to expand into the West African country. The deal, which gives Bolorims a 10% cent stake in AfricaSokoni, creates a new entity in Nigeria, Bolosokoni.com, with AfricaSokoni continue to trade as before in Kenya. 
  • edit Evo Pack Ltd is acquiring Kshs 234 million worth of assets of Digital Packaging Innovation Holdings.
  • edit The Competition Authority has approved the acquisition of certain assets of Bamburi Special Products, a wholly-owned subsidiary of Bamburi Cement, by Yellow House Ltd. .. the deal was terminated by the parties in December 2020
  • edit The Competition Authority has approved the acquisition of 25% of Macquarie Airfinance Limited by Sunsuper Pty.
  • edit The Competition Authority has approved the acquisition of Ignazio Messina and C.S.P.A and Roro Italia S.R.L by Marinvest S.R.L on condition that Ignazio Messina East Africa business continues to operated and managed independently of Marinvest.
  • edit Shareholders of NSE-listed Nairobi Business Ventures approved the sale of 84% of the firm to Delta International FZE of Dubai, for Kshs 83 million, pending regularity approval.

Real Estate, Tourism, & Supermarkets M&A

  • LSE-listed Network International Holdings is to acquire Nairobi-headquartered DPO Group for $288 million worth of shares of Network. The firm whose payment services are used in 19 African countries, was affected by COVID disruptions of travel and the tourism sector. DPO’s founders will get $13m worth of shares and Apis Growth Fund receives $50m of shares in Network. 
  • PrideInn Group has acquired Azure Hotel and re-opened the Kshs 1.2 billion Westlands hotel that suspended operations in March during the pandemic.  
  • Cloud9xp, an online booking service for leisure experiences and an alumnus of Nairobi Garage, has been acquired by Kenyan-based travel-tech outfit HotelOnline in a share swap deal. 
  • Tusker Mattresses announced plans to recapitalize through the sale of a majority stake that is supported by seven shareholders in its Orakam parent company. But it’s not clear if this will be enough to save the struggling retailers that initially tried to secure short-term supplier support through ring-fencing of payments.  
  • Slumberland Kenya is being transferred to Simba Foam.
  • Deal undone: Tiffany & Co. has filed a lawsuit to compel LVMH Moët Hennessy-Louis Vuitton to complete a merger transaction on earlier-agreed terms, noting that COVID-19 has not prevented other parties from concluding similar deals 
  • edit The Competition Authority has approved the acquisition of control Of Kingdom 5-KR- 185 Ltd by Madison Hotels and Resorts. The Business Daily has this story of the sale of hotels between billionaires by Prince Al-Waleed bin Talal to Binod Chaudhary.

Telecommunications, Media & Publishing M&A

  • Edelman, the largest independent global communications firm, has expanded its African footprint with the acquisition of Gina Din Corporate Communications. 
  • Scangroup completed a long-standing deal after a special EGM in May 2020 saw 88% of its registered shareholders participate and vote 99.98% in its favour.
  • Safaricom and Vodacom have acquired control of M-Pesa in Africa from Vodafone for Kshs 2.15 billion, with each firm paying 50% of the amount (Kshs 1.07.billion) as their share of the joint venture. 
  • Tigo has combined with Zantel. The Tanzanian firms have a combined 12.8 million customers and 7.4 million mobile money users.
  • Mettā and Nairobi Garage are combining their services to create Kenya’s largest innovation community, offering access to all their networks, while members will have access to both organizations’ workspaces throughout Nairobi and the complimentary business support services
  • Nigeria’s CcHub acquired Kenya’s iHub to create a mega Africa incubator.
  • edit French media company Groupe Canal+ SA has acquired a 6.50% stake in Multichoice Africa. This comes after Canal+ acquired African film and television studio ROK in 2019.
  • Deal undone: Telkom Kenya and Airtel have mutually agreed to end their pursuit of a joint venture. This came after conditions were raised that delayed the deal.  
  • edit The Competition Authority has approved the acquisition of 20% of Icolo Limited By Prif Africa Holding.
  • edit Autochek.Africa is buying out Ringier One Africa Media’s Cheki and will operate in Nigeria, Ghana and Kenya where Cheki runs new and second-hand car sales, car importation services, car loans and financing.

Other M&A

  • Sport: The legendary Williams F1 racing was taken over by US investment firm Dorilton Capital. Covid and a sponsor departure were triggers for the deal. 
  • Foreign Aid: The United Kingdom, which is leaving the European Union, plans to merge the Department for International Development and the Foreign and Commonwealth Office – to become the Foreign, Commonwealth and Development Office.
  • Art: The art prize collection of the bankrupt Abraaj Group was acquired by a Saudi art organization Art Jameel and will be hosted at their space in Dubai. 

How can the US engage in Africa, and go around China?

.. Extracts from “Deconstructing the Dragon: China’s Commercial Expansion in Africa,” a recent report by Aubrey Hruby that postulates what the United States can do to reposition its influence in Africa whose governments have received extensive assistance from China, mainly in terms of infrastructure projects.

The looks at the nature of infrastructure deals that have come to be dominated by China state-owned enterprises through a combination of feasibility studies, negotiations financing through Chinese loans, and eventually mobilization to start construction. Quick-decision making is a factor and McKinsey found that over half of investment decisions for Chinese construction and real estate companies were made in under a month.

The US can counter to these mainly be through US government to African business initiatives, while contracts with China’s “government to government programs.

Recommendations include:

  • Niche infrastructure that fall within the US competitive advantage like renewable energy, oil exploration and urban/smarter city solutions. However on the last one, the report points out that China has made significant inroads in media, telecommunications and security services.
  • Push for anti-corruption agenda, as this will level the playing field for US companies. This can be through supporting African government efforts to investigate and prosecute corruption cases.
  • Generate a pipeline of projects, data, and trade links to assist US businesses to invest in Africa. This can be through sponsoring competitions and investor trips.
  • Support the creativity and education sectors. There is an opportunity in the entertainment spaces as recent deals involving Netflix, Mavin Records and the National Basketball Association have shown. Also a quarter of African children (66 million) could be studying in private schools by 2021.
  • US financial institutions can work towards providing working capital, which remains a great challenge for individuals and small businesses in Africa.

It also notes that more US intuitional investors have opened up to putting more funding to African venture. These include the New York State Common Retirement Fund, which has allocated $6 billion to investments in Africa and the Chicago Teachers Pension Fund that have invested in two African private equity funds.

EDIT: A story in the Africa Report shows how a new US Development Finance Corporation (DFC), which combines the Overseas Private Investment Corporation (OPIC) and the Credit Authority of the U.S. Agency for International Development’s (USAID) is part of the broader economic and trade battle led by the USA against China.  

The new organization has more latitude than its predecessors in that, it will be able to make equity investment in private firms (previously they were restricted to debt) and a restriction that OPIC could only support projects with “a significant link with the American private sector” has been removed.

China and Africa’s Infrastructure Developments

Excerpts from a piece by Andrew Alli, the former Africa Finance Corp (AFC) CEO, in his debut column for Quartz Africa on separating myths and realities of the role of China in Africa’s infrastructure developments.

China firms funded, built and operate Kenya’s new railway.

  • China’s was the fourth largest foreign investor in Africa spending about $40 billion in 2016, according to UNCTAD’s World Investment 2018 report, behind the US ($57 billion), the UK ($55 billion), and France ($49 billion).
  • Construction contracts are backed by Chinese financial institutions—like China Export -Import Bank and Sinosure – looking to support the exports or sales of Chinese products and services. The mission of these financing entities is to support jobs and income generation in China, as well as to support more strategic objectives of the Chinese government.
  • Chinese companies are surprisingly risk-averse when it comes to Africa – most Chinese financiers will not consider a project without insurance from Sinosure, the Chinese government-owned political risk insurer, or other similar institutions. In turn, Sinosure often requires a guarantee from the government of the country in which the project is located. (e.g. – with Kenya’s Standard Gauge Railway construction, the contracts specify that there will be insurance cover of 6.93% of the commercial loan – done by a Chinese firm, SinoSure, to take care of nonpayment). Sinosure insurance and other financing costs do not come cheap, which leads to the point that Chinese firms are not necessarily cheaper than firms from other countries – and while the bare construction costs of certain projects may seem cheaper, even after equalizing for quality, there are other costs that may apply including the insurance and other financing costs mentioned before, and costs associated with local content. 
  • It is true Chinese firms prefer to use all-Chinese inputs. If you want local workers and contractors, you will have to make that a negotiating point.
  • While some work done by Chinese firms can indeed be shoddy,  this doesn’t have to be the case.  For example, while a Western firm may tell you a bridge will cost you, say, $300 million. A Chinese firm may tell you that you can have a $300 million bridge, or a $250 million one.- and things that may be taken for granted in other parts of the world can be negotiable when dealing with a Chinese firm. You have to be careful to specify the quality that you want and the standards that you would like the project to be built to. You also need to be very specific about the environmental and social standards you want the project to adhere to.
  • For too long the number of firms willing to engage in, and finance, projects in Africa has been very limited, meaning that competition has also been limited leading to high prices and a lack of innovation. The increase in interest by Chinese firms has increased the amount of competition, forcing prices down overall and improving quality. The bleating of companies being forced out of cozy monopolies is probably one cause of the constant refrain we hear about the “dangers” of Chinese interest in Africa. We shaved the costs of that project in Ghana by over 20% from initial quotes by running a competitive process involving a Chinese firm.
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