Africa

The size of China’s bilateral trade with Africa in 2023, according to the country’s ministry of commerce. Data from the Chinese customs shows exports to Africa rose by 7.5% to $173 billion, but imports declined by around 7% to $109 billion. China has been extensively involved in financing and building infrastructure across the continent in the past decade, including rail, ports and roads. It has also opened up its market to more goods from the continent. China is also the continent’s largest source of imports and sub-Saharan Africa’s largest individual country trading partner in the last 20 years, IMF figures show.

Nigeria’s japa economy spurs a battle over remittances market

THE SCENE

LONDON — A young man gazes out of a poster on the side of a bus stop. He’s pointing, as if wagging his finger in admonishment, underneath a four-letter word: “Japa.” It’s a slang word in the Yoruba language predominantly used in southwest Nigeria that means “escape” or “flee.”

But the bus stop is in London, not Lagos. The term “japa” has become widely used among Nigerians to describe the large-scale migration of young people from the West African country to wealthy nations in recent years. The United Kingdom, United States, and Canada tend to be the most popular destinations for Nigerians typically leaving home in search of work and education opportunities.

The tagline for the London bus stop advertising campaign, which is run by remittance company TransferGo and helps to explain the finger wagging gesture, is simple: “But never forget home.” The implication is that it’s fine to leave Nigeria, but remember to send money back to your family.

Newly released World Bank data shows $20.5 billion was sent to Nigeria last year, which meant it accounted for around 38% of total remittance inflows to sub-Saharan Africa. And showed inflows have steadily increased, up from $20.1 billion in 2022.

By comparison, the bank’s data showed that in 2022 overseas investors took out $186.8 million more from Nigeria’s economy than they put in. That continued a trend which has seen remittance flows to Africa’s biggest economy dwarfing foreign direct investment in recent years.

KNOW MORE

Global remittances were for decades dominated by industry giants Western Union and Moneygram. But the proliferation of tech companies, along with greater adoption of mobile wallets, has increased competition from companies such as 11-year-old TransferGo which began serving the Nigeria market around two years ago, to much smaller fintech players across Africa and Europe. The japa phenomenon has opened up a chance to tap into the market for people sending money to Nigeria, a country of more than 200 million people.

“Nigeria is the biggest market we serve in Africa,” Bamiyo Awonusi, TransferGo’s London-based marketing manager, told Semafor Africa. Awonusi added that the campaign was run in the last few months along bus routes passing through communities with large Nigerian populations in the British cities of London, Manchester and Birmingham.

“The fact that people are leaving en masse to the USA, Europe, and Canada means that there is potential for remittance companies,” she said.

The companies quitting Kenya

→ What’s happening? German pharmaceutical company Bayer has become the latest multinational to scale down its operations in Kenya. It announced this week that it would be outsourcing its distribution, customer support, marketing and sales operations to a third-party. UK pharmaceutical giant GlaxoSmithKline made a similar transition last year, and American consumer goods manufacturer Procter & Gamble is also expected to exit Kenya in 2024.

→ What’s the bigger picture? Tough economic conditions including new taxes, a weakening shilling and high energy costs are hurting businesses in Kenya. Manufacturers have been hit particularly hard. The Kenya Association of Manufacturers (KAM) said in January that at least 10 manufacturers plan to exit the market in 2024. It blamed the introduction of new levies, coupled with the increase of existing taxes.

→ Are these problems showing up anywhere? Notably, manufacturers also accounted for the lion’s share of defaulted loans in Kenya in 2023 according to new data from the country’s central bank. The sector’s bad loans grew 59.2% to $833 million in the year to September 2023.

→ Why do these departures matter? The exit of major manufacturers could exacerbate Kenya’s unemployment problem, and slow growth in East Africa’s largest economy. Around 2.94 million Kenyans, or 5.5% of the country’s population, are unemployed. Frustration is also high over the cost of living and new taxes.

→ What do stakeholders want? Kenya’s umbrella trade union body COTU and the Kenya Private Sector Alliance (KEPSA), like the manufacturers association, have urged the government to review its taxation policies to make Kenyan businesses more competitive in the region. COTU wants the government to consider offering tax waivers to incentivize manufacturers.

→ What’s the government saying? The government last week unveiled a plan to revitalize the manufacturing sector. It aims to increase the sector’s contribution to GDP to 15% by 2027, from 7.6% in 2023. The plan is centered on creating 30 industrial parks across the country to develop local value chains. The country’s manufacturing cabinet secretary said the plan would “fundamentally redefine” Kenya’s economic landscape.

→ Is this just a Kenya problem? No, we’ve seen a similar macroeconomic dynamic in Nigeria where P&G, GSK and others also pulled out or cut back operations.

— Martin Siele in Nairobi

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Food price inflation was high across low and middle-income sub-Saharan countries in December 2023, with rates above 5% in 12 countries out of the 21 for which the World Bank has data for the month. In East and southern Africa, concerns about rising food inflation were amplified by warnings of food insecurity. Some 56 million people in “fragile and conflict-affected” states in the region could be at risk of hunger by June 2024, the World Bank said. Macroeconomic crises and extreme climate events such as the El Niño drought were the other major drivers of food insecurity in the region. West and Central Africa have also experienced disturbing food-related events. About 31.7 million people in the sub-region needed food aid in December 2023. That number could rise to 44.5 million by August this year “without appropriate measures,” the World Bank warned.

🇿🇦 French TV channel Canal Plus made a non-binding offer to buy all the shares it does not own in South Africa’s MultiChoice Group in a deal that values the business at 46 billion rand ($2.5 billion), according to Bloomberg. The pay TV company is MultiChoice’s largest shareholder with a 31.67% stake. Parent company Vivendi said it aims to combine its local Canal Plus operations with MultiChoice — which operates in 50 countries in sub-Saharan Africa — creating a group with nearly 50 million subscribers.

🇳🇬 Nigeria will offer investors at least a 75% stake in a proposed state-backed solid minerals corporation being set up to reduce the country’s reliance on oil. The government would hold no more than a 25% stake in the firm, the solid minerals minister said on Tuesday. Authorities hope to attract investment to extract gold, coal, iron ore, bitumen, and lead. Nigeria has struggled to extract value from its vast mineral resources. Its underdeveloped mining sector contributes less than 1% of the country’s gross domestic product.

🇿🇦 Google on Wednesday announced the launch of its first Africa cloud region in Johannesburg, South Africa. The tech giant said its Johannesburg data center will accelerate the African tech ecosystem, providing organizations with the resources they need to scale, innovate, and compete in the global marketplace. The launch comes after rivals Amazon Web Services and Microsoft both built cloud infrastructure in South Africa. The continent’s data center market by investment is expected to reach $5 billion by 2026, estimates the Africa Data Centres Association trade body.

🌍 The African Development Bank (AfDB) sold its long-awaited hybrid bond, becoming the first multilateral development bank to issue such a note. The $750 million note, which has a 5.75% coupon, combines features of debt and equity. Proceeds of the bond sale will be allocated to green and social projects. Multilateral lenders have been urged to explore hybrid financing structures to increase funding to help developing economies with crises including climate change. The asset class could potentially unlock billions of dollars in lending for poor nations.

Somalia’s only all-female media house is set to launch the country’s first current affairs TV show hosted by women. It will feature debates on contentious topics including period education in schools, critical shortage of female teachers and the challenges faced by women trying to get into politics, and environmental issues. And, in another first for Somali television, it will feature a panel of at least 50% women. The program is being produced by Bilan, an all-female media house formed in 2022 with support from the UN’s development agency. The debate show is due to launch on March 8 to mark International Women’s Day.

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