Africa

The number of South Africans who rely on grants from the state, according to President Cyril Ramaphosa. The figure equates to 47% of the country’s population. Ramaphosa has spoken of the role the ruling African National Congress (ANC) has played in providing grants, which include funds for child support and the elderly, as campaigning gathers pace ahead of this year’s general election. The vote is due to take place between May and August. The president has been accused of using scare tactics after claiming social welfare programs would be canceled if the ANC lost power. The ruling party could lose its parliamentary majority for the first time since taking power in 1994 following the end of apartheid, say analysts.

Nigerian fintechs brace for central bank’s new licensing regime

THE NEWS

Nigerian fintech executives are braced for a regulatory overhaul by the central bank which will push for tighter controls to battle a persistent fraud problem.

Yemi Cardoso, Nigeria’s central bank governor, announced plans last November to comprehensively review licenses granted to financial institutions, particularly those in “the technology-driven payment services sector.” Cardoso, who became Nigeria’s central bank governor last September, said operators under the bank’s purview have the duty to ensure they are licensed for services they offer, effectively ending startups’ previous free rein to float products before regulators caught up.

Details of the new requirements remain under wraps. “We are yet to be notified of any regulations,” Babatunde Obrimah, chief operating officer of the Fintech Association of Nigeria, told Semafor Africa on Tuesday. The bank would typically share its proposal with the group for input before a final draft is produced, Obrimah said, hoping “the new management will still accord us this privilege.”

As they await the bank’s guidance, fintech operators say they are exploring options to address a fraud problem that increased 277% within the first half of 2023, costing deposit-taking institutions 9.7 billion naira. The fintech group — whose members include over three dozen commercial banks, startups, and advisory firms — plans to announce its progress on developing a decentralized fraud-prevention platform before the end of March, Obrimah said.

Uzoma Dozie, chief executive of digital bank Sparkle and chair of the group’s committee of CEOs, told Semafor Africa the platform’s key feature is information sharing on “suspected and suspicious customers,” without infringing on data privacy rights.

ALEXANDER’S VIEW

Nigeria’s central bank leadership appears to believe that financial technology, after years of largely being left to grow on its own, now has to be matched for stride and, in some cases, led by regulators.

Cardoso’s promise to sanction companies “breaching the boundaries set for them” has set the tone for other money regulators. For example, NIBSS, which coordinates Nigeria’s decade-old instant payments system, warned operators in December — barely weeks after Cardoso’s speech — against allowing electronic transfers to companies not permitted to hold customer deposits.

It portends a landscape with more stringently enforced standards, Dozie said. While that could lead to a higher bar for approving fintechs, primary emphasis on compliance is a good thing as “it will help to ramp up the public’s confidence in the sector,” said Tosin Eniolorunda, chief executive of Moniepoint. The startup is a major player in Nigeria’s agency banking sector where point-of-sale devices are becoming the equivalent of physical bank branches and ATMs for cash-related transactions.

But whatever the bank’s priorities, the fintech ecosystem needs a streamlined licensing procedure akin to a one-stop shop that makes it easy for companies to get approvals for new products, Obrimah said. However, that would require Nigeria’s discrete money regulators — mainly the central bank, securities and exchange commission, and insurance regulator — to be interoperable, he said.

Omar Ben Yedder is the managing director of IC Publications whose titles include New African and African Business. He’s been a Davos regular on and off since 2009.

Africa at Davos

→ What’s happening? The 54th World Economic Forum kicked off this week in the snowy mountains of Davos, Switzerland. As usual it’s attended by the great and good of the global elites and geopolitical leaders. There’s also an increasing presence of African government and business leaders, despite the teeth-chattering sub-zero temperatures.

→ Who’s here? To be honest, it’s more about who’s not here this year when it comes to Africa. Both Nigeria’s President Bola Tinubu and Kenya’s President William Ruto pulled out of attending at the last minute. South Africa’s President Cyril Ramaphosa isn’t here either.

→ Why? Is it too cold this year? It’s the economy, stupid — and politics. Nigeria’s headline inflation topped 28.9% last month driven by food inflation, which climbed to 33.9%. Tinubu probably doesn’t want to be seen swanning around with Bill Gates while Nigerians are struggling. He sent Vice President Kashim Shettima in his place. Ruto spent a lot of time on the road last year and Kenyans have also been struggling with a sluggish economy and rising taxes. Rampahosa is in re-election campaign mode at home.

→ Any good gossip? One insider told me they were hopeful WEF would return to Africa in the near future. We might hear of some developments in April. Of course, this obviously all depends on money, I was told. But then again, according to reporting by Semafor’s Ben Smith and Liz Hoffman, WEF has plenty of money 💰💰💰.

→ What is there to look forward to? Nigeria’s big party in the lobby of the plenary hall at Davos Congress Centre with the VP and ministers including finance minister Wale Edun, ICT minister Bosun Tijani, and culture minister Hannatu Musawa, among other bigwigs. We’re most looking forward to some decent Nigerian food — it’s been slim pickings here in the Alps.

— Yinka Adegoke in Davos, Switzerland

South Africa will produce nearly half of sub-Saharan Africa’s renewable energy generation capacity over the next half decade, the International Energy Agency estimates. Most of the 64 gigawatts of renewables in the region are expected to come from solar and wind energy sources, the bulk of which will be driven by South Africa’s expansion of industrial and residential applications.There’ll also be expanding renewable energy generation from hydropower in places like Ethiopia, Angola and Tanzania. But there is a downside to that dependence, the IEA said. “While large-scale hydropower projects can cost-effectively improve electricity access, they can take a decade or more to plan and build,” it warns. “As a result, annual additions can fluctuate following hydropower investment cycles.”

🇬🇭 Ghana reached an agreement in principle with its official creditors to restructure some of its foreign debts under the G20 Common Framework for Debt Treatment, the ministry of finance announced on Friday. The resolution followed an earlier meeting by official creditors, led by China and France, who hold around a quarter of Ghana’s $20 billion external debt due for restructuring. The agreement paved the way for the IMF’s executive board to release $600 million to Ghana under the $3 billion three-year extended credit facility arrangement. Finance Minister Ken Ofori-Atta (pictured with an IMF official), on X, called it a “significant step towards long-term debt sustainability.”

🇳🇬 Nigeria’s $20 billion Dangote Refinery, the largest in Africa, has started producing diesel and aviation fuel at its plant in Lagos, the company said on Friday. The refinery, which was founded by Africa’s richest man Aliko Dangote and has been beset by delays, has a capacity of 650,000 barrels per day (bpd). It will begin production at 350,000 bpd. Meanwhile, energy major Shell Plc on Tuesday said it had agreed to sell its onshore oil production business in Nigeria for $1.3 billion. Shell Petroleum Development Company of Nigeria (SPDC) will be acquired by a consortium of local and international companies, known as Renaissance.

🇨🇻 The World Health Organization on Friday declared Cape Verde malaria free. It became the third nation to gain the status, after Mauritius and Algeria, having not reported a single case of local transmission in three years. Authorities in the West African island nation of about 500,000 inhabitants said they reached the milestone by focusing on early and effective treatment, as well as the reporting and investigating of all cases. The WHO said malaria killed around 580,000 in Africa in 2022.

🇺🇬 🇹🇿 A pipeline project to transport crude oil from western Uganda to a Tanzanian port for export is seeking $3 billion in debt financing from the China Export & Credit Insurance Corp. and the China Export Import Bank, reports The East African. The 1,443-kilometer East African Crude Oil Pipeline is expected to cost $5 billion, with shareholders raising $2 billion. French major Total Energies holds a 62% stake in the project, while Uganda and Tanzania each hold 15%. China National Offshore Oil Corporation (Cnooc) holds an 8% stake.

Sponsorship of the ongoing Africa Cup of Nations tournament by French oil giant TotalEnergies has been criticized as both sportswashing and greenwashing. In a satirical video featuring Zimbabwean comedian Munashe Chirisa and British actor Jolyon Rubinstein, TotalEnergies is portrayed as an organization out to improve its reputation “while continuing to profit from climate-wrecking fossil fuel extraction across the continent.” Greenpeace Africa oil and gas campaigner Thandile Chinyavanhu said fossil fuels that are at the center of the company’s business in Africa “are poisoning the lungs of African athletes and soccer fans,” hence, the sponsorship is hypocritical and disregards the climate crisis.

• Why a border deal won’t work without Mexico’s help.
• China has slammed world leaders for congratulating Taiwan’s election winner.
• The British Museum is seeking a new director after a theft scandal.

If you’re enjoying the Semafor Africa newsletter and finding it useful, please share with your family, friends, jubilant Cape Verdeans, and anti-sportswashing satirists. We’d love to have them aboard, too.

Let’s make sure this email doesn’t end up in your junk folder by adding africa@semafor.com to your contacts. In Gmail you should drag this newsletter over to your ‘Primary’ tab.

You can reply to this email and send us your news tips, gossip, and good vibes.

— Yinka, Alexis, Alexander Onukwue, Martin Siele, and Muchira Gachenge