Mdundo lists on Nasdaq

September 4 saw the listing of shares of Mdundo on Nasdaq’s First North Growth Market in Copenhagen, Denmark. 

This comes after the Danish firm, Mdundo offered 4 million new shares at 40 million Danish Kroner in August. They were marketed in Denmark but got interest from Sweden and other countries, resulting in 2,900 investors taking up 8.4 million shares, and giving Mdundo a value of 102 million Kroner (~$16 million).

Excerpts from Mdundo’s investor prospectus.

  • Ticker name: “MDUNDO
  • Mdundo enables musicians to upload songs and make money from their content as people to stream and download music from their app and website. It has a commercial focus in Kenya and Tanzania. 
  • Mdundo means rhythm in Swahili and it has 5 million monthly active users, half of who are in East Africa, who stream music free, to listen, and pay to download songs. 
  • Mdundo has paid out 1.9 million Kroner (~$300,000) to artistes who have uploaded 230,000 songs from 32 African countries.
  • Tanzania’s Diamond Platnumz is one of Mdundo’s top artists with over 7.2 million downloads, while Kenya’s Willy Paul, Naiboi and Khaligraph Jones have all received the Mdundo Platinum Award which is given to musicians with 1 million downloads. 
  • Use of Funds: With the new investments, Mdundo aims to double in size to 9 million subscribers in 2021 and 18 million in 2022, targeting sub-Saharan Africa, the world’s fastest-growing mobile market which will be 623 million large by 2025. The app can also be used out of Africa and the company plans to grow its international users with a subscription model that goes for about $2 per month. 
  • In the deal, they are acquiring 100% of Mdundo Kenya for 1.2 million Kroner (~Kshs 21 million). As at June 2019, it had revenue of Kshs 6.8 million and a loss of Kshs 21 million for the year. This was after costs of sales of Kshs 4 million (they pay musicians over half their revenue), salaries of 12 million, and 4 million each for administration and distribution expenses. Mdundo Kenya had accumulated losses of Kshs 75 million.
  • Upside: They estimate their valuation at $2 per active user while their peers are trading at $10 to $115 per user. 
  • Mdundo had 40 angel investors, and the new shares were sold through Danske Bank, Nordnet, Jyske, Nordea Nykredit and Arbejdernes Landsbank, with Danske Bank as the settlement agent. 
  • Other “African exports” to foreign exchanges include Jumia at the NYSE, Naspers at Amsterdam and Airtel Africa and Vivo Energy in London. Hope Mdundo performs better than Jumia.

Konza and Smart City Solutions, post-COVID

This week, the Konza Technopolis Development Authority (Konza) hosted a webinar, with the theme was using digital technologies in the planning for the future of cities after coronavirus (COVID-19) has passed.  

It was unique in that it featured two of the original main movers behind Konza; Bitange Ndemo, the former Permanent Secretary in the Ministry of Information and Communication, whose’ brainchild was Konza and Mugo Kibati who was the Director-General of Kenya Vision 2030 Delivery Board, and Konza was one of their flagship projects.

The day’s main speaker was Jerome Ochieng, the current Principal Secretary ICT and Innovation who said it was exciting to see a planned city being built from scratch. He said that previous cities had traditionally developed services in silos, but this had led to high costs, waste, and duplication. But he said, going forward with Konza, and using smart cities planning and technology, they would be able to improve the quality and performance of urban living spaces, while reducing energy consumption, service management costs, greenhouse gas emissions. He added that COVID was one of the greatest advertisers of technology – to solve challenges we encounter and that such events will drive how the government will provide services post-COVID.

He highlighted they had been pre-occupied with building the necessary and extensive “basement” work of horizontal infrastructure at Konza- underground utility tunnels (for fibre, power, water and sensors), access roads for pedestrians, BRT etc. These would serve the current and future service needs of the smart city, but that once that was done, other construction projects would take off quickly.

At this stage, Konza, which is 30% done, will also host a permanent building of the national data centre that will be ready by year-end while the city will also host the Kenya Advanced Institute of Science and Technology, according to Konza CEO, John Tanui.

Mugo Kibati said we are now in an era of lower touch, and lower contact for all our interactions and this was happening through technology. Telkom Kenya, the company he now leads, is aiming to position itself to serve these current and future needs as, even after COVID ends, as some changes it has induced, will remain the norm and sustain long after the pandemic. he cited how residential homes now require more bandwidth as more people are working and schooling from home, ordering food and getting medical attention via telemedicine etc. He said that in smart cities, and with more data being generated, that require predictability and planning, telcos will have to move up the value chain to be part of that future.

Bitange Ndemo said that when Kenya did the open data initiative, they had to host a lot of data outside of the country, but that this would not happen any more now that there is a data centre at Konza. He highlighted how there would be opportunities to use data locally to upscale SME’s.

Adam Lane, Deputy CEO Government Affairs at Huawei Kenya, said that Konza will have an intelligent operation centre, comprising network, cloud, platform and then apps, that will provide management for the smart city, like other centres that Huawei has built. He said that on a smart city street, you do not have a pole for lighting, a pole for electricity, a pole for telecommunication etc.

Agro-ecology Explained

This week there was a Webicafe session arranged by the Route to Food Initiative on Agro-ecology. Route to Food has championed a petition in Kenya’s Parliament calling for the removal of harmful chemical pesticides that are sold in the country.

The session featured two experts; Dr David Amudavi of the Biovision Africa Trust and Nicholas Syano of the Drylands Natural Resources Centre (DNRC). Biovision Africa works with smallholder farmers in 13 counties to disseminate useful and practical scientific information through various channels, and they also have a program with the African Union working with 35 partners in 9 countries. The DNRC works with 800 farmers in Makueni county, training them on and sustainable agricultural practices such as indigenous plants and rainwater harvesting.

The organizations are all trying to ensure farmers can work with nature to achieve food security. This is at a time small scale farmers, who produce most food for the country, are most affected by climate change and get the least support from the Government.

Excerpts:

  • Agro-ecology is not a new concept. Agro-ecology is as old as agriculture. It borrows a lot from indigenous knowledge of agricultural practices, and it is only the term that is new.
  • Agro-ecology is not organic farming. Indeed, organic is just one of the ways in which farmers can apply agro-ecology practices, which all seek to promote the use of alternatives such as minimum tillage, conservation agriculture, crop-rotation, manure, inter-cropping, mulching, permaculture, agroforestry, and organic – that can all improve soil health and fertility through less, or no, use of chemical inputs in food production.
  • Agro-ecology as a science looks at how plants and animals get manipulated by man to stimulate production and consumption. There is a balance in the interaction of plants, animals and humans – and anything harmful to any of the three, or the environment, is not acceptable in agro-ecology.
  • Agro-ecology means food security: If you compare communities that rely on agro-ecology and those on monoculture, the ones that engage in diversified farming are more resilient to economic shocks – and governments should direct more research there to ensure food security and sustainable agriculture.
  • Challenges include low awareness and funding. Agro-economy can feed the nation., but agriculture gets a tiny share of the national budget devoted to research funding and even smaller for agro-ecology (estimated 2% of agricultural funding). Currently, most-research funding goes to mono-culture, industrial-based, crop farming that is also supported by political voices. This is compounded further by a lack of data on the uptake of agro-ecology. as well as people who can write well about agro-ecology.
  • In agro-ecology, if you plant trees, grow as many varieties of trees. In Makueni, DNRC has re-planted trees that had vanished – lost varieties of fruit, dry land species and nitrogen-fixing trees. They also plant acacia that grows very fast and is useful for honey farming and charcoal. Individual farmers bring in their small honey harvests and the organization sells them as a collective and share the money out. They also make green charcoal in a special kiln using pruned acacia wood. Over the last decade, DNRC has planted Moringa trees – and with the outbreak of COVID this year, they have seen great demand for Moringa seedlings, oil and powder.
  • One good agro-ecology practice is to have African farmers use seeds adapted to local conditions. These can be sold, re-used, and exchanged while avoiding some monopoly seed laws that restrict what farmers can do with their seeds and multinational intellectual property disputes.

AfDB 2020 annual meetings

The abbreviated annual meetings of the African Development Bank (AfDB) Group ended this week after just three days, a slimmed-down virtual event, compared to the meetings last year in Malabo.

The Governors of the bank, representing 54 African and 27 non-regional member countries, dealt with statutory matters and approved the accounts of the bank for 2019, and reviewed its performance and the auditor reports. The Governors also commended the bank for its measures to work through COVID and while also providing flexible support to countries through the COVID-19 Rapid Response Facility of up to $10 billion.

During the year there will be a focus on infrastructure finance and quality health care and collaboration with the African Union and regional economic blocs to fast-track the African Continental Free Trade Area which was postponed from July this year, and will now kick off on January 1, 2021. Another initiative that will be supported will be the G-20 debt relief effort, recognizing that many African countries will go in to recession for the first time in twenty-five years as they tackle lockdowns, weaker tax revenue, and increased emergency health expenses.

2020 Annual Meetings Day 2 – Best of

The main highlight of the AfDB meetings was the election of the President, which saw Dr. Akinwumi Adesina re-elected for a second term with 100% of the delegate votes. The USA appears to have been the main opponent of his re-election, and their comments calling for the bank to ensure cost-effective management, review its use of resources and strengthen oversight & governance were contained in the final communiqué released by the Bank at the end of the meetings.

The next AfDB Annual Meetings are planned to take place in May 2021 in Accra Ghana. They will be hosted by the new Chairperson of the Bank, Mr Ken Ofori-Atta, Ghana’s Minister for Finance who took over from Ms Niale Kaba, the Côte d’Ivoire Minister of Planning & Development after she stepped down at the end of her term this week.

Swearing in ceremony of President-elect Dr. Akinwumi Ayodeji Adesina

EDIT September 1: Dr. Akinwumi Adesina was sworn in to start his second term as President of the African Development Bank Group.

Absa Kenya absorbs Covid hit

Absa Kenya reported their June financial results, continuing the thread of banks taking being impacted by the reduced business activity and increased credit risks occasioned by COVID-19.

Kenya’s fifth-largest bank with Kshs 392 billion ($3.62 billion) in assets saw its deposits and loans higher than 8% last June and a pre-provision profit of Kshs 8.6 billion for the half-year.

However, the bank increased its provisions for bad loans threefold due to COVID-19 impacts and IFRS9 guidelines from Kshs 1.6 billion to 5.3 billion. This resulted in a net profit before tax and exceptional items of Kshs 3 billion, down from Kshs 6 billion last June, with a further one-time charge of Kshs 1.7 billion as the cost of completing the transformation from Barclays to Absa in the first half of the year.

During COVID, the bank had focused on helping its customers manage their livelihoods and has restructured 56,000 loan accounts, worth Kshs 57 billion, 28% of the loan book. COVID-19 has hit across the sector and commercial banks in Kenya have restructured a combined Kshs 844 billion of loans, 29% of the industry’s total. Absa’s bad loans are now at 8% compared to 13.1% average for the banking sector in June 2020.