All posts by Michael Patotschka

General

The long view for Africa

While many question Africa’s achievement over the last decade, there is a greater perspective needed to show how far Africa has just come.

Certainly, Africa is not monolithic –   it’s 54 Africas –   but just if you count up the GDP figures for the whole continent, it averages 5 % growth per year over that period, according to the world bank –   a strong long term position that is well above the global average of 3 % over the last decade..

Since 2000, Africa has also seen a 200 % increase in intra-continental trade and trade with the rest of the world. Fast forward, Africa continues to house some of the world’s fastest growing economies and despite the recent collapse in commodity prices, private equity investment grew by 51 % last year.

At least a dozen economies have grown by more than 6 % per year for six years or more.

Source: AI, May 2016

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General

African startups need foreign investment – booming middle class

Nigeria’s population will be over 440m by 2050

Historically, fast growing African tech companies needing an immediate capital injection would have to reach out to foreign investors for this funding.

The need for investment, whether foreign or domestic, is crucial to both established an startup technology companies in Africa.

As most companies are unprofitable for a couple of years, capital is required to disrupt the current status.

Positive trends

The changing demographics in most African countries are helping consumer focused technology companies to reach better sales figures. A perfect storm of increasing smartphones penetration, improving disposable income and the rise of a highly connected younger generation is boosting this sector

Positive trends

There are almost 1bn Africans on the continent; millions are coming online each week, almost via the mobile, which is what’s driving demand. Soon, there will be more than 400m smartphones on the continent. The mobile is the most powerful communications and technology tool on the continent.

It is no surprise that many successful tech startups are based in Nigeria, Based on current projections, Nigeria’s population is forecast to grow to over 440m by 2050 and see a rapidly increasing middle-class population, with commerce spending in the country on track to total $8bn by 2025-

One thing is for sure – this is only the beginning of Africa’s tech boom.

Source: African Business, May 2015

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Nigeria

Additional 10 000 megawatt by 2019 in Nigeria

President Muhammadu Buhari said on Monday that his administration would ensure steady power supply before the expiration of his tenure through the provision of additional 10,000 megawatts.

The President gave the assurance at the National Economic Council Retreat holding at the Presidential Banquet Hall, Abuja.

According to him, 2,000 of the anticipated 10,000 megawatts will be added to the national grid in 2016.

“Nigerians’ favourite talking point and butt of jokes is the power situation in our country. But, it is no longer a laughing matter.

“We must and by the grace of God we will put things right.

“In the three years left for this administration we have givenourselves the target of 10,000 megawatts distributable power.

“In 2016 alone, we intend to add 2,000 megawatts to the national grid.

“In our determination to change we must and will, Insha Allah, put a stop to power shortages.’’

The President, who stated that the nation was facing the classic dilemma of privatisation of the power sector, noted that no remarkable improvement in the quality of service had been recorded after the exercise.

He, however, stated that the National Electricity Regulatory Commission (NERC) must ensure that consumers get value for money and over-all public interest is safe-guarded as government will complete the process of the privatisation.

Source: Daily Post, Mach 22, 2016

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Nigeria

US encourages businesses to explore Africa’s opportunities

LAGOS: US Commerce Secretary Penny Pritzker and a slew of American business executives are meeting in Nigeria to encourage trade they say will create jobs on both continents. The visit to Nigeria, expected to be among the top 10 economies in the world by 2050, and one of Africa’s smallest but most innovative nations, Rwanda, is designed to transform the perception of Africa from an aid-dependent continent to a region brimming with business opportunities, Pritzker told The Associated Press in an interview.
She said Africa has seven of the fastest 10 growing economies in the world; a burgeoning young population and a rising middle class (50 million in Nigeria alone). “So the message to Americans is now is the time to come and explore the opportunity in Africa,” Pritzker said. The figures for Nigeria tell the story: In 2014, US exports to Nigeria topped $5.9 billion and imports from Nigeria totaled $3.8 billion, compared to US aid of $694 million last year.
The latest US push comes as Nigeria is hurting from the downturn in the economy of China, which last year overtook the US to become Nigeria’s biggest trading partner. China accounted for 22.5 percent of Nigeria’s imports in the third quarter of 2015, compared to 9.6 percent from the US, according to Nigeria’s National Bureau of Statistics.
Nigeria’s current economic woes, including lower prices for oil that produces 80 percent of government revenue and a related slump in the naira currency, are positives for investors, said General Electric’s Jay Ireland, who runs the US multinational’s Africa operations.
“This is the time to come in,” he said, adding American companies should be looking at long-term investments that ride out the cycles of oil prices and currency exchanges. “We’re going to be here for a long time and feel very comfortable investing in Nigeria. … (It) provides a tremendous platform for growth.” GE is investing $200 million in Nigeria to build two facilities to assemble oil and gas and power generation equipment that the company hopes to export to other West African nations. The company employs nearly 500 people in Nigeria. US businesswoman Rahama Wright’s firm partners with some 1,200 women from two cooperatives in Ghana to produce shea butter beauty products sold in the United States.—AP

Source: Kuwait Times, January 27th, 2016

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Nigeria

Nigeria is the largest economy in Africa

Nigeria is the largest economy in Africa, with a Gross Domestic Product greater than USD 500 billion. We grew steadily at over 7 per cent per annum between 2005 and 2014, but this growth has been slower in 2015. This growth was driven primarily by the non-oil sectors, such as financial services, telecommunications, entertainment, etc. Foreign direct investment (FDI) inflows have been strong, averaging USD2 billion per quarter since 2013, with over 70 per cent of this in the non-oil sectors. Nigeria’s economy is actually more diversified than it seems, with the oil sector contributing only about 14 per cent to GDP. Nevertheless, we ought to be doing more to diversify with the significant natural and human resources with which Nigeria is blessed. There is no doubt that oil has contributed substantially to Nigeria’s revenue since its discovery in 1956 and more especially, since 1970 when its price was on the upward trend. Yet, oil receipts and their management have challenged governance to the core over time in Nigeria. Deeper economic diversification is an urgent necessity to undertake structural transformation, buffer the domestic economy from externally transmitted shocks and accelerate growth accompanied by job creation. The task ahead of further diversification of the economy is enormous. We do not take it for granted. It will not happen quickly or easily and Nigeria shall be strategic about diversification. We are however encouraged by the strides that have been made in some sectors already. I will use three sectors or categories as examples:
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