Author: Opinion

None of us particularly like money-lenders and few of us would want the stress and unpleasantness of being the type of money-lender that proliferates in cities like Kampala – leeching returns of 10% a month against assets pledged by desperate borrowers.  The reason that these bloodsuckers can exist is that access to credit on reasonable terms, or at all, from banks is still so difficult to get for most businesses.   Also Read: Mobile money loans affecting banks’ lending – report The fact is that there are some great businesses that cannot grow and often struggle to survive because cash-flow is such…

VUCA (Volatility, Uncertainty, Complexity and Ambiguity) in Sub-Saharan Africa presents challenges to doing business that are distinct and unique to each market in the region. Such issues as political and economic risk which affect business decisions and hamper business growth in some climes, language barriers and cultural distinctions which affect communication and understanding in trade and currency value disparities all create opportunities for solutions through strategic government relations.   Also Read:Coveting larger markets: Ethiopia’s bid to join WTO Forbes®, in defining the meaning of the acronym, explains that ‘Volatility’ refers to rate of change at a market or global scale. The more volatile the market is, the higher its…

The Nigerian economy may see a dip into recession, announced by the World Bank, in 2020, the worst the African country has seen in 40 years. This was largely due to the effects of the fall in the global price of oil, a commodity the nation‘s economy is heavily reliant on, and the outbreak of the COVID-19 pandemic, that nearly crippled not just Nigeria’s, but the global economy.   But these challenges were not the only catalysts for Nigeria’s imminent recession, issues around insecurity, infrastructural deficit, trade barriers, and power supply challenges all form a crude mix that has managed to drive the country down…

The second half period of 2020 has been marked with persistent bearish sentiment exacerbated by the financial performance amidst uncertainty in economic and business recovery in the pandemic era. On a year to date (YTD) basis, the NSE-20 and NASI have posted negative returns 34.2% and 22.2%, respectively. However, there have been outstanding performers that bucked the general market trend. Absa NewGold ETF (a security whose value is pegged on the value of global price of gold) is up 39.5%; Kenya Airways (+86.8%) on a buy-out fueled price rally; and Olympia Capital (+21.9%). The key index counters are all negative with the…

My July op-ed focused on the increased M&A activities in Africa under Covid-19. Network International announced the acquisition of Africa’s leading online commerce platform, DPO for $288M on 28th July 2020, confirming my analysis that we are going to see more M&A activities going forward.” According to Keet van Zyl, Managing Partner of Knife Capital (which turned ten last week), who managed Mark Shuttleworth’s ‘Here Be Dragons’ Fund – this is likely the largest tech acquisition in Africa since Shuttleworth sold Thawte to Verisign for $575m in 1999″. SoftBank, which had a $16.5B loss in Q1, returned to a $12B…

Most economists see structural transformation as one of the main routes to Africa’s sustainable development. What it means is changing the share of agriculture, manufacturing and services in an economy. It is a central aim of the African Union’s Agenda 2063. With this aim in mind, economists and policymakers need to know what determines structural transformation. They have flagged factors like demand for goods and services, trade policies, financial development, institutional quality and economic integration. But researchers haven’t closely examined the way economic integration through trade and finance influences structural transformation. I therefore set out to study African countries’ integration…

COVID-19 has prompted widespread discussion of the resilience of food systems and how efficiency and competitiveness have been previously understood. Recent decades have seen the growth of increasingly complex food value chains. These are underpinned by just-in-time delivery systems, a growing share of food products sold through supermarkets, and increasing concentration of ownership among powerful, large food manufacturers. The pandemic has further emphasised the need for a more diverse and inclusive food system, in which small and medium sized enterprises (SMEs) play a key role. As part of a larger project investigating challenges faced by agro-processing SMEs, we conducted qualitative…

Earlier this week, several people forwarded me a link to a recent article published by The Economist, which makes the bold claim that Tanzania’s official economic statistics are bogus. Among other things, the nameless author (a feature of The Economist is that it has no by-lines) claims that cement sales by the top two firms are “flat,” and bank lending to companies slumped. To quote the article directly:“If Tanzania’s economy grew by almost 7% in the fiscal year to the end of June 2019, why did tax revenue fall by 1%? And why has bank lending to companies slumped? Private data are bad, too. In…

Financial exclusion remains a major issue especially in the informal sector. Expansion of services in this area by banks will not be very easy because of the special situation and needs. This article suggests that while structural solutions are expensive and nevertheless must be pursued, banks should think of designing a process response to the problem, drawing on the experiences and practices of the traditional lenders.  Much progress has been credited to money transfer services that were introduced by mobile network operators (MNOs) in 2008. These services are also supported by a network of agents across the country offering a range of services and…

One of the oddest by-products of the Covid-19 pandemic is how it has affected many investors’ attitude to risk. Over the past three months nearly every client I have spoken to has become more risk-tolerant. Cautious investors have become balanced investors. Balanced investors have become risk-tolerant. And the risk-tolerant are all in the casino putting their life savings on zero at the roulette table. Why?!  We have seen recession before, stock markets correct cyclically and we are now very accustomed to very low interest rates over very many years. And I have never seen so much money going into Initial…