Africa

🇸🇨 Seychelles President Wavel Ramkalawan declared a state of emergency on Thursday after a blast at an explosives store that caused massive damage in an industrial zone on the main island of Mahé, and major destruction caused by flooding due to heavy rains. The blast ripped through the area, destroying commercial buildings and nearby housing. The Seychelles International Airport was also damaged. The president’s office said only workers in essential services and tourists would be allowed free movement.

🇬🇭 Ghanaian independent power producer Sunon Asogli postponed its decision to suspend operations at its 560 MW gas-fired power plant for a week. The company, which owns around 10% of the West African nation’s installed generating capacity, had said accumulated bills totalling more than $900 million had affected operational capacity, prompting its decision to shut down. Sunon Asogli’s chairman said the company had reached an interim payment agreement with the government to receive a payment of $60 million in two installments. Ghana’s government has sought a debt deal with independent power producers as it grapples with an economic crisis characterized by double-digit inflation and ballooning public debt.

🇰🇪 Kenya’s central bank raised its benchmark interest rate for the second time since June with the aim of stabilizing the depreciating shilling that has affected foreign investment and debt-servicing. The bank’s monetary policy committee announced the surprise 200 basis points rate hike to 12.5% — the largest increase since 2011 — on Tuesday. The shilling has weakened by almost 20% against the dollar so far this year, making it one of the worst-performing currencies in Africa. Charlie Robertson, head of macro-strategy at FIM Partners in London, said the rate rise was “helpful in reassuring foreign investors” about the bank’s “commitment to macro stability.”

🇧🇫 🇲🇿 Paris-based lender Societe Generale is set to sell two subsidiaries in Burkina Faso and Mozambique to pan-African banking group Vista Group for an undisclosed amount, the companies said on Thursday. The transactions are expected to be completed next year pending regulatory approval. Vista president Simon Tiemtore said the acquisition is in line with their expansion strategy “which aims to make Vista Bank a pan-African group present in 25 countries.”

The official estimate Rio Tinto Group says it will cost to develop Guinea’s massive Simandou iron ore deposit, believed to be the world’s largest untapped high-grade iron ore mines. The mining company said that initial production would begin in 2025. It is the majority shareholder in Simfer, a mining joint venture that also includes Guinea’s government and the Aluminium Corp. of China (Chinalco). As part of the project, over 600 kilometers of new rail and port facilities will be built. Critics, however, warn that development of the Simandou deposit could drive a supply glut and push prices lower.

Ethiopia’s call for foreign investment in its banking sector comes with strings

THE NEWS

ADDIS ABABA — Ethiopia’s central bank is fast-tracking the rollout of a new legal framework to spur foreign competition in the local banking sector while simultaneously imposing strict limits on the role of foreign players.

The central bank governor told parliament last week that a framework will be in place by the end of the government’s fiscal year in July 2024.

Financial services authorities are poised to place a ceiling on the maximum number of shares foreign investors could own in local banks. This is in contrast with regional trends within the East Africa region which have enabled full mergers and acquisitions. Ethiopia’s government is keen to benefit from foreign investment but wants to prevent smaller local banks from being swallowed up by larger foreign rivals.

Foreign institutions and individuals will only be allowed to acquire up to 30% of a local bank, which can then sell an additional 10% to another overseas buyer. The remaining 60% must remain under local shareholder ownership.

KNOW MORE

Ethiopia’s National Bank Governor Mamo Mihretu has said that preparations for proclamations and other legal frameworks to open the sector would be finalized before July 2024.

One of Ethiopia’s top financial regulators, Brooke Taye, of Ethiopian Capital Market Authority, told Semafor Africa that despite the ownership limits the country would still “support the entrance of foreign investors” in the country’s financial markets.

Ethiopia is Africa’s second most populous country, with 120 million inhabitants. Just 45% of the population is currently banked, according to development agency, Financial Sector Deepening Ethiopia (FSD).The government plans to digitize its economy and move from a cash-based society, which has prompted rapid changes in the country’s banking sector. In the last four years, 15 new local banks have entered the market with state-owned Commercial Bank of Ethiopia commanding over a third of the market.

The Ethiopian banking sector is valued at around 2.4 trillion Birr (almost $43 billion), according to Addis Ababa-based investment firm Cepheus Growth Capital. Foreign banks including Kenya’s KCB Bank and Standard Bank, along with banks from Egypt and the United Arab Emirates have expressed interest in the Ethiopian market.

The number of projects funded in Africa by foreign direct investment increased 64% in 2022 to 733, with more than one in five such projects being in South Africa. It is ranked as the second-best performing country for FDI on the continent behind Egypt which, at $107 billion, attracted the largest share of the $194 billion capital investment into Africa. Nigeria and Kenya dominated the West and East Africa regions respectively for amounts received and project size. The sharp growth comes after slow economic activity during the pandemic years of 2020/21. Noting that “there is a relationship between growth, economic freedom and investment inflows,” EY’s report on investment attractiveness says African countries can boost investment by addressing issues including youth unemployment, increasing agricultural productivity and accelerating energy transition.

Deals, deals, deals

• The African Development Bank (AfDB) unveiled a planned $1 billion facility to provide insurance against severe impacts of climate change for more than 40 million farmers across Africa. It is also meant to stimulate private sector investment in agriculture by mitigating risks.

• State-owned utility Ethiopia Electric Power (EEP) signed a $600 million wind farm deal with AMEA power of the United Arab Emirates (UAE). A 300 MW wind farm will be developed on 18,000 hectares in eastern Ethiopia.

• Planet Solar, a greenfield 50 MW solar power co-investment project in Sierra Leone, will be backed with $52 million funding by development finance institutions BII, FMO, and Proparco. Only 23% of the country’s population currently have access to electricity.

• The Emerging Africa Infrastructure Fund (EAIF) committed $19 million to a new 20MW solar PV project in northwest Uganda to provide clean, affordable energy for households in underserved regions there.

• The AfDB and Arab Bank for Development in Africa (BADEA), alongside Germany, France and Japan, pledged more than $175 million to the Alliance for Green Infrastructure in Africa. The alliance aims to unlock $10 billion in private capital for green infrastructure projects. 

Ghana’s masked presidential contender

→ What’s happening? Giant billboards featuring a man in a mask and the simple message “leadership for the next generation #thenewforce” have appeared in major cities across Ghana in recent weeks.

The billboards have been placed beside busy streets in major cities such as Accra, Kumasi, Cape Coast, Takoradi, Ho, and Tamale. The campaign is widely believed to be championed by an individual whose identity is yet to be revealed but a spokesperson did not respond to questions on when the person’s identity will be revealed.

→ Why is this happening? Ghana will hold presidential elections in exactly a year. Power has alternated between the two main political parties — the New Patriotic Party (NPP) and the National Democratic Congress (NDC) — since the country’s switch to multi-party democracy in 1992. However, critics of the main parties say their governance has been marred by nepotism, corruption, and financial mismanagement. The five smaller parties are fragmented and their combined tally typically makes up less than 5% of the vote in elections. Campaigning ahead of next year’s election is gathering pace at a time when Ghanaians are enduring the worst economic crisis in a generation — one that forced the NPP government to turn to the IMF for a $3 billion loan.

→ Who’s behind this? It is unclear who the man behind the mask on the billboards is, but most people believe it is a businessman named Nana Kwame Bediako, also known as Cheddar. “It is obvious it is Cheddar, the stature of the individual looks exactly like him,” graphic designer Felix Frimpong, an Accra resident, told Semafor Africa.

→ How likely is it that a new party could succeed? Despite growing support for the #thenewforce campaign, a new party would have to compete for the third force slot with the Movement of Change, a political group founded by a former trade minister who left the ruling NPP. “A third force will be difficult to emerge at this time to disrupt the NDC or NPP within the next 12 months,” explained Professor Samuel Adu-Gyamfi, a political analyst.

— Nana Oye Ankrah in Accra

Dr. James Mwangi is the CEO of Equity Group Holdings, parent of Kenya’s largest bank. He took part in the COP28 conference in Dubai this month where he led the bank’s Africa Recovery and Resilience Plan.

Senegalese-American R&B/hip hop star Akon announced plans to build a futuristic city named after himself in 2018 at a staggering cost of $6 billion in Mbodiène, a coastal village in Senegal. But five years later, the project site is mostly wasteland with few signs of construction. The initial promise was for Akon City, which was inspired by the fictional kingdom of Black Panther’s Wakanda, to bring tourism and jobs to the country. It was also supposed to run on Akoin, the artist’s proposed cryptocurrency. The Afrofuturist vision had state backing from outgoing president Macky Sall and Sapco, Senegal’s agency for the development and promotion of coasts and tourist zones. Akon, whose real name is Aliaune Thiam, now faces the prospect of contract termination by Sapco if the project does not advance by next year, according to local media reports.

• COP28 is awash with companies, governments, and independent oversight groups looking to cut or facilitate carbon-trading deals and patch up the industry’s battered reputation.
• George Santos has lined up more than the $174,000 salary he earned as a member of Congress in just 48 hours on the celebrity video platform Cameo.
• Companies using AI “just want the human to disappear,” the CEO of software platform startup Retool said in an interview.

If you’re enjoying the Semafor Africa newsletter and finding it useful, please share with your family, friends, Ethiopian banking sector investors and masked presidential hopefuls. 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