Bloomberg Invest: Focus on Africa
May 17, 2022
By Bloomberg Live
The Bloomberg Invest: Focus on Africa summit in London, UK, rounded up government representatives, ministers, CEOs, company founders, and thought leaders to discuss various aspects of investing in Africa.
Click here to view the sessions.
- Cina Lawson, Minister of Digital Economy and Digital Transformation, Togo
- Yemi Lalude, Partner, Head of Africa, TPG Rise
- Tim Steel, CEO, Copia
- Isis Nyong’o Madison, Co-founder, WomenWork; Principal, Asphalt & Ink
- Vicky Ford, Parliamentary Under-Secretary of State (Minister for Africa, Latin America, and the Caribbean)
- Norman Moyo, Group CEO, Distributed Power Africa
- Peter BenHur Nyeko, Co-founder, Mandulis
- Maher Jarmakani, Chairman and CEO, Nigerdock
- Sergio Pimenta, Regional Vice President for Africa, IFC
- Sarmad Lone, Regional Head, Client Coverage Corporate, Commercial & Institutional Banking Africa & Middle East, Standard Chartered Bank
- Steve Murigi, Head of Programmes & Partnerships, Amref Health Africa UK
- Vera Daves de Sousa, Finance Minister, Republic of Angola
- Gregory Smith, Author, Where Credit is Due
- Razia Khan, Head of Research, Africa and the Middle East, Standard Chartered Bank
- James Mwangi, CEO, Equity Group
- Ernest Addison, Governor, Bank of Ghana
- Arijit Ghosh, Africa Managing Editor, Bloomberg
- Samuel Gebre, Africa Correspondent, Bloomberg
- Akshat Rathi, Senior Reporter, Climate, Bloomberg
- Mallika Kapur, Deputy Global Editor, Bloomberg Live
- Jennifer Zabasajja, Anchor, Bloomberg Quicktake
- Henrique Almeida, Breaking News Reporter and Editor for Bloomberg in Western Europe, Bloomberg
- David Malingha, East Africa Bureau Chief, Bloomberg
- Jennifer Zabasajja, Anchor, Bloomberg Quicktake
Conversation With a Newsmaker
The conversation commenced with Cina Lawson, the Minister of Digital Economy and Digital Transformation in Togo, discussing the country’s Novissi platform, which offers contactless emergency cash transfers.
Lawson pointed out the tool was developed swiftly during the Covid-19 pandemic as a means to transfer funds to the poverty-stricken parts of the country.
“It was a platform using USSD, which means that people didn’t need to have internet access – it was just a shortcode. They would register using ID, and within minutes, in less than two minutes, they would receive one-third of the minimum wage,” the Minister explained, saying the government spent $34 million.
The payments reached a quarter of Togo’s adult population, and the government determined the beneficiaries through a pair of AI algorithms. The first algorithm scanned the country to determine the most impoverished parts of the country, while the second one decided the most poverty-stricken individuals within those areas.
Lawson added that the government’s next step is to make the Novissi platform a public good available to the entire continent.
However, challenges remain such as determining the identities of the recipients. And to tackle those challenges, the country is rolling out the biometric ID for all Togo citizens, the Minister added.
Lawson stressed that rolling out biometric IDs is vital for future programs. “We’re using a similar model as India,” the Minister added, sharing plans to present the new IDs by the end of the year.
The package will contain more than just the document. Specifically, the citizens will get a SIM card and a mobile banking account. “By the end of the rollout, every Togolese with a biometric ID will have a mobile banking account as well,” Lawson added.
The Minister was then asked about her goal of cutting down the astronomical costs of the internet in Africa, which reach almost 20% of income per capita.
“In order to really grow now, we need fiber infrastructure, which is fixed-line infrastructure,” Lawson replied, “And in order to invest in fixed-line infrastructure, we need the governments to participate.”
Lawson added that the country could not rely solely on the private sector, saying that swift progress is critical.
The Minister then explained that since around 50% of households in Togo have electricity, implementing fiber internet via the existing electricity lines would instantly grant half the country internet access. She called this move “extremely powerful,” saying she firmly believes it would “transform Togo forever.”
The minister added that the second critical aspect is affordability, especially considering that 60% of Togolese live under the poverty line, saying the plan is that the government takes on 2/3 of the expenses and the private sector to handle the remaining third.
Lawson also highlighted the country’s collaboration with Google, which is set to deliver the most advanced cable internet seen in Togo to date.
Tech’s New Frontier
The panel discussion focused on the meteoric rise of the tech startup scene in Kenya in the past year, which trumped the past three years’ earnings, exceeding all three years combined with $5 billion of investments.
Yemi Lalude, the Partner, Head of Africa at TPG Risesaid he’s been waiting for a time like this.
Explaining the massive expansion, Lalude singled out the development of necessary infrastructure as the first critical point and the Y Combinator Model as the second important factor.
Isis Nyong’o Madison, the co-founder of WomenWork and Principal at Asphalt & Ink, agreed with Lalude‘s assessment regarding Kenya’s infrastructure advances.
Tim Steel, the CEO of Copia, the company that raised $50 at the beginning of the year, said the investors’ fundamentals remain unchanged in his view, as they still search for companies that can scale and reach profitability.
What has changed, according to Steel, is that the companies began delivering successful platforms that attract users, offering concrete value propositions.
Nyong’o Madison was then asked about the low percentage of women in the investment sphere, which is odd considering that females occupy a significant part of the continent’s leading economic positions.
The WomenWork co-founder said that only a minuscule percentage of the investments went to female-led businesses.
She added that the pool of investors is not diverse enough, – it is predominantly male and foreign but she said that things are changing for the better
In Focus: Climate Change
The segment commenced with Vicky Ford, the Parliamentary Under-Secretary of State, the Minister for Africa, Latin America, and the Caribbean, discussing the UK’s support for African-led projects to protect the communities at the frontline of climate change.
In the opening message, Ford condemned Vladimir Putin’s “barbaric” invasion of Ukraine, saying the financial consequences of the war can be felt even in Africa as commodity prices rise worldwide.
During the conversation, the Minister discussed one of the most difficult decisions made during the Covid-19 pandemic and making financial cuts in certain areas of public finance.
Ford pointed out that returning humanitarian investments to pre-pandemic levels is one of the government’s crucial goals.
The Minister also added that the war in Ukraine had prompted the world to accelerate its transition to cleaner energy sources, highlighting the “devastating” consequences of fuel theft and illegal fossil fuel extraction in Nigeria.
“We should be working to diversify those energy sources,” Ford added.
In conclusion, Ford said she is “incredibly proud” to be serving as a female Foreign Secretary, highlighting the hurdles faced by females in her environment.
The Road to Green Energy
The conversation started with Peter BenHur Nyeko, the co-founder of Mandulis, discussing his company’s use of biogas to deliver green energy.
“We basically get agricultural waste that nobody needs, and that’s usually burnt,” Peter explained, adding, “We convert that into methane and hydrogen, which then goes into an engine that runs it, and that generates electricity.”
Nyeko explained that this process could generate enough energy to power up an entire village, and if that village happens to be many miles away from the power grid, the process is invaluable to the local community.
“It becomes significantly cheaper to develop that mini-grid than to connect that village to the grid,” he added.
Norman Moyo, the Group CEO of Distributed Power Africa, then discussed his company’s approach to creating green energy, which relies mainly on g solar power.
“We like to call it distributed energy or decentralized energy,” Moyo said, highlighting that businesses should invest in placing solar panels on their roofs, parking lots, and other spaces exposed to the sun.
“We can generate anything up to 20 megawatts,” he said, highlighting the affordability of solar energy and adding, “Solar has to be our default energy source to resolve the energy problem in Africa.”
Nyeko then shared an interesting analogy involving airplanes and African villages. He said:
“I flew here on an Airbus A380 – a few hundred seats, and each seat’s got phone charging, a television screen, and that’s probably the amount of electricity that you would have used by a whole village.
“You have a village of about 500 homes, and that’s probably the same amount of energy used in an Airbus A380.”
Nyeko also explained his company’s approach to energy accumulation and keeping the village powered up around the clock. The Mandulis co-founder pointed out that villagers mostly use the power at night since they’re in the fields during the day. However, power is required during the day to run mills, for example.
Nyeko then touched on the payment methods and charging his customers, which are mostly farmers, for the company’s services.
“They pay us through cashless, prepaid systems. They buy the kilowatts that they need to use,” he explained.
At the beginning of the discussion, Sergio Pimenta, the Regional Vice President for Africa, IFC, noted that by 2030, the continent will need investments of around $150 billion per year to cover the gap that will still be there, and the level of investments is currently not even half of that.
Pimenta agreed with Bloomberg’s Twitter poll that infrastructure development is critical, branding energy “extremely important.”
He said that the number of people without energy access is growing as 2/3 of the people on Earth without access to energy is located in Africa.
Pimenta pointed out that his company is also looking for innovation and carefully following off-grids, mini-grids, and similar technologies.
He explained that despite their name, mini-grids are not exactly “mini” in size, as we’re talking about sizable facilities that cover entire cities with several million inhabitants. He described them as a top-notch solution for areas where the population is widely spread across vast areas.
Maher Jarmakani, the Chairman and CEO of Nigerdock, talked about the funds coming into Africa, saying the investors usually seek “very clear guarantees,” describing them as “patient capital,” or long-term capital, but still cautious and thorough.
Sergio agreed with Maher, saying that the limitations of fiscal space require private-sector investments to enter the mix.
Elsewhere in the conversation, Pimenta discussed the regulation required to make the process work, stressing the need to keep the rules up to date.
Jarmakani also addressed the concern that China is behind a large share of loans granted in Africa, saying that the Chinese have a significantly different approach than US investors. He described the Chinese investors as “very China-centric,” widespread across many areas, and exceptionally patient.
“Doing business with them, you’ve got to look very carefully how to protect your interest versus theirs. But that said, the Chinese have the ability to look long-term, to make changes that are appropriate for the business, bringing their technologies and capabilities to the Africant continent for long-term sustainability,” he said.
Pimenta stressed it’s vital that investors follow the best practices possible regardless of the part of the world they come from.
Jarmakani added that while the Chinese bring major investments, they still have “catching up” to do, as the local African governments are still more used to European and American investors providing the funds.
Public Health: The Path to Self Reliance
Before the discussion about building up the pharmaceutical industry in Africa commenced, the host highlighted the fact that only 375 drug manufacturers cater to the entire African continent and over a billion people.
Compared to around 5,000 companies in China and 10,000 in India, Africa’s numbers are exceptionally low, leading to massive imports of medication across the continent.
Asked about Africa’s biggest lesson from the Covid-19 pandemic, Steve Murigi, the Head of Programmes & Partnerships at Amref Health Africa UK, stressed the importance of countries having their own medicinal supplies.
“The biggest lesson is that if you’re overly reliant on other partners for the vaccines, you’re always at the back of the queue,” Murigi said.
He added that importing up to 99% of vaccines for a population of over 1 billion makes it difficult to ensure the health security of the people.
Sarmad Lone, the Regional Head, Client Coverage Corporate, Commercial & Institutional Banking Africa & Middle East at Standard Chartered Bank, said that while the pandemic didn’t affect Africa as badly as some other parts of the world, it made it glaringly obvious that some of the core aspects of health infrastructure across the continent are very weak.
Lone added that the “backbone” of challenges Africa faces is the fact that the continent primarily exports raw products and imports refined products. “That to me is the genesis, the basic ingredient that needs fixing,” he said.
Another crucial point in Lone’s opinion is developing infrastructure, especially in the transport department, to help create an ecosystem that promotes the exchange of goods and services.
Elsewhere in the conversation, Murigi said he firmly believes Africa has the capability to create vaccines to cover its entire population.
Asked if the pandemic will serve as a turning point, Steve said that economic and political security is not possible without health security, leading partners across the continent to join forces to achieve a higher goal.
Lone agreed that the entire world had learned important lessons from the pandemic. “There’s a lesson to be learned by everybody. It’s a wake-up call,” he concluded.
In Conversation with a Newsmaker (Virtual): An Economic Outlook for the Oil-Rich Nation of Angola
The virtual meeting with Vera Daves de Sousa, the current and first female Finance Minister of the Republic of Angola, commenced with De Sousa expressing optimism about the upcoming Banco BAI IPO.
Asked when the state will carry out the IPO of Sonangol, the biggest Angola-owned oil company, the Finance Minister said the IPO would move on when the market feels comfortable and when all issues and doubts are entirely resolved.
“We still have a complex moment with Sonangol,” De Sousa pointed out, “When it finishes in about a year and a half, we will feel comfortable about selling a minority stake in the company.”
Asked about the current state of global affairs and the EU’s plans to step up its collaboration with African countries in boosting energy supplies, the Finance Minister said the state has the political will and openness to proceed.
“But we need to do a lot of homework,” she added with a chuckle. “We are motivating oil companies to make more investments.”
De Sousa noted that the results of investments happening now would be seen in two to five years.
Asked about the oil prices and whether she expects them to stay at similar levels in times to come, the Finance Minister said the government is taking the conservative approach and not basing its future on high oil prices.
Asked if the country is still on track for the 2.4% GDP rise, the Finance Minister said Angola slightly exceeds expectations with a 2.7% growth.
Africa: The Path to Debt Sustainability
The next conversation shifted gears towards the issue of debt across Africa, as the number of countries in debt distress has increased from two to six, and debt issues are piling up across the continent.
Razia Khan, the Head of Research for Africa and the Middle East at Standard Chartered Bank, said that while many of the issues Africa faced in the past have remained, there is still plenty of room for optimism.
“I’m going to say something controversial. When we look at the origins of debt crises, the origins can be bound to the excessive liquidity conditions in the creditor countries,” Khan said.
The Head of Research added that China’s role as an investor in Africa had been much more politicized in recent years.
“If you look at the numbers, China’s lending to Africa, excluding Angola, had peaked as early as 2013. Including Angola, China’s lending to Africa peaked in 2016,” she added.
Gregory Smith, the author of Where Credit Is Due, said his book results from 15 years of travel across the country.
He added that the world is in need of a better borrowing system, highlighting three typical cases found in African countries. “One is heads in the sand,” Gregory said, explaining this approach as ignoring the accumulating debts.
However, the most common case is that the experts know the risks, but politicians don’t want to hear about it and simply seek quick money for their next campaign. The third type is when everything is lined up, and all the factors are in proper order.
Smith said that debt crises are pressing matters that can arise from a number of issues, including revenue problems, export issues, and investment problems.
In Conversation with a Newsmaker: James Mwangi, CEO, Equity Group
James Mwangi, the CEO of Equity Group, raised an interesting question during the conversation: Is it time to let the private sector lead development?
Asked what makes him optimistic about Africa becoming the resetting factor for the world despite the debt challenges, Mwangi highlighted two factors.
The first factor is what Africa brings to the table: 1.2 billion consumers. The second factor is that Africa takes up 60% of arable land. “Africa can bounce back,” he pointed out.
Mwangi continued by discussing ideology. “It’s neither right nor left for Africa; Africa wants to utilize its resources,” he said.
Mwangi also said the continent aims to move from selling raw resources to exporting refined products while stressing the government should facilitate and not continuously borrow money.
The CEO said countries are individually coming up with businesses and production areas they excel in while keeping in mind the collaboration across the continent.
The competitive spirit is alive and well, while keeping the development of Africa as a whole in mind, which is exactly what the private sector is looking for, Mwangi noted.
“The perception is still about Africa. We are not talking about specific countries,” the CEO later noted while stressing the importance of improving the connection between the countries.
In conclusion, Mwangi noted that the use of technology could make Africa much more competitive, adding he is open to accepting digital currencies as a tool.
“Cryptocurrency can also complement mobile money, but we essentially need to talk to the regulators because mobile money was made possible because of the regulators,” the CEO concluded.
In Conversation with a Newsmaker: Ernest Addison, Governor, Bank of Ghana
The conversation with Ernest Addison, the Governor of the Bank of Ghana, started with the ongoing issue of high inflation.
Addison said that the issue of reaching double-digit inflation is a pressing one as last year’s inflation was in single digits.
“At the Central Bank, we had anticipated this in November last year,” the Governor said, adding the country was still surprised by the wave of inflation that followed.
Asked how he sees the role of the Central Bank in stabilizing the economy during these turbulent times, Addison said the role is “very clear.”
“We have a limited set of instruments, trying to manage liquidity, trying to manage interest rates, and that’s what we have done in the last year or so,” the Governor said, adding the country is trying to manage liquidity “very tightly.”
The interviewer then noted that many experts point out the worst is yet to come due to the ongoing war in Ukraine. Asked when the Central Bank might see the peak of inflation, Addison replied that the government and the Bank are very aware of the problem and have brought about major decisions like cutting expenditure by 20% in 2022.
The governor compared the current situation to 2020, saying that Ghana saw a rise in growth during 2021.
The conversation then shifted towards the impact of the Ukrainian War and the possible end of the US Dollar’s global dominance. Asked if Ghana is diversifying its reserves, Addison said that USD “seems reasonably strong these days” and that the Ukraine War is not enough of a cause to force diversification.
The Governor noted that the country is trying to increase its gold reserves through local purchases.
Asked about cryptocurrency and the Central African banks cracking down on Bitcoin, Addison discussed Ghana’s stance on cryptocurrency.
The Governor said that cryptocurrency is not regulated by the Central Bank of Ghana, saying “you are on your own” if you engage in crypto transactions.
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