Bizcommunity.com
Africa, renowned for its inventive spirit, is steadily emerging as a breeding ground for pioneering high-tech enterprises.According to BCG, between 2015 and 2020, there was a 46% growth in companies attracting and securing funding.
The problem, however, is nurturing an environment conducive to sustainable growth and scaling past the startup phase. The solution lies in enterprises turning their existing partnership approach on its head.
There are currently 1,200 unicorns (startups with a valuation of $1bn or more) in the world. Seven of them are in Africa, and of those, six are in the fintech space.
However, the same BCG report points out that African startups seldom survive past the Series B funding round and, “As a result, returns on venture capital investments are weak – less than 3% on average across the region over five years, compared with around 11% in Asia-Pacific and nearly 16% in Europe.”
For a continent with such huge potential and latent innovation, there seems to be a disconnect between ideation and building a sustainable, scalable operation.
Sergio Barbosa, CIO of enterprise software development house, Global Kinetic, and CEO of its open banking platform, FutureBank, says:
“We know that partnering with nimble, innovative fintechs can make all the difference to enterprises hoping to deliver exciting new products and services. Enterprises should be looking to invest in tech startups where the startup’s sphere of influence will have a large impact on the enterprise’s revenue in key business focus areas.
“Unfortunately, most business leaders see this as a high-risk move, worrying that they may suffer should the startup fail to deliver, and rather assign their engagements to sidecar investments in low-impact areas to reduce risk. This needs to be turned on its head.”
Barbosa says the cautious approach of enterprises often stems from business leaders worrying they could be found negligent or that their brand may be negatively impacted should the startup fail.
However, he strongly believes that investing in tech startups that operate in high-impact areas will give the required impetus to the tech startup to deliver on expectations. It will also encourage the enterprise to take its investment in the startup more seriously.
In addition, Barbosa says the momentum of success in a high-impact area will almost certainly guarantee long-term sustainability for the tech startup, helping it reach maturity faster and boosting its sustainability.
Adopting a ‘more’ or ‘better’ approach is best
How enterprises choose to partner with startups has a significant impact on their chance of success. Barbosa says setting up a robust product and market feedback loop, as well as ensuring a great talent acquisition strategy, can make all the difference.
“There is a great industry anecdote that talks about ‘More’ or ‘Better’ and how companies must focus on one or the other. In the beginning of a partnership, companies should focus on making their product or solution better, ensuring they crack the right product or market fit.
Once they have achieved that, they can focus on the ‘more’ part and scale their sales and marketing. Once the company starts facing constraints, they should switch again to focus on the ‘better’.
This means they once again work to improve the efficiencies, and then flip back to look at scale. And so it goes, ‘more’ or ‘better’, but always starting with better,” he explains, adding that when scaling begins, companies should also be mindful to pay attention to executive and business development processes and hires.
Let them be startups
Barbosa says another big challenge facing startups is the often unrealistic expectations placed on them by their enterprise investors and partners. He warns that what works for enterprise companies will hinder small companies.
The added pressures of unnecessary governance, bureaucracy, and processes that are designed for larger companies with multiple teams, focus areas and disciplines, can be crippling to a small startup.
“Startups should be allowed to leverage their nimbleness and agility. It is their greatest asset and it is easily and quickly lost as the startup becomes successful. However, enterprises can help startups see blind spots and then guide them through the challenges of dealing with them.
“Having key people that cross-pollinate or move between the enterprise and startup worlds allows the relationship to develop with a sense of empathy and appreciation for each party. Africa has a vibrant startup ecosystem. But with the rig
Zimbabwe cuts 2024 economic growth target to 3.6% from 5.3%, finmin says
Reuters News
Zimbabwe is targeting economic growth of 3.6% next year, down from an earlier target of 5.3%, due to drought conditions, its Finance Minister Mthuli Ncube said on Wednesday.
South Africa business activity falls in October – PMI
Reuters News
Reuters Images
South African private sector activity fell in October after holding steady in September, hurt by weak customer demand and high fuel prices, a survey showed on Friday.
The S&P Global South Africa Purchasing Managers’ Index (PMI) fell to 48.9 in October from 49.9 in September, moving further below the 50-point line that separates growth from contraction.
It was the first notable decline in business conditions since July and prompted a rapid cut to firms’ procurement levels, S&P said.
On the positive side, lower demand for inputs helped cool the rate of cost inflation. Staff numbers at South African firms also expanded for the third successive month, the survey showed.
“Input cost inflation slid to the lowest level in just over two years, as a sharp drop in input demand and slower wage hikes helped to cool inflationary pressures,” said David Owen, economist at S&P Global Market Intelligence.
“Nevertheless, output charges continued to rise at an above-average rate, signalling that consumer prices will continue to rise rapidly as firms pass on previously-absorbed cost burdens.”
Egypt’s central bank keeps interest rates unchanged
Reuters
Egypt’s central bank, as widely expected, left its overnight interest rates unchanged on Thursday, saying it was focused on future rather than present inflation and that economic growth appeared to have been stable in the July-September quarter.
The central bank’s Monetary Policy Committee (MPC) left the lending rate at 20.25% and the deposit rate at 19.25%, it said in a statement.
The median forecast in a poll of 16 analysts had been for the MPC to leave rates steady. Three analysts had expected a hike of 100 basis points (bps).
Many analysts believe that despite inflation that surged to a record 38% in September the central bank will leave both interest rates and the currency exchange rate against the dollar unchanged until after a presidential election set for mid-December.
“The MPC decided to keep policy rates unchanged and to continue assessing the cumulative impact of previously enacted tightening policies and its transmission to the economy in a data-driven manner,” the MPC statement said.
“The MPC reiterates that the path of future policy rates remains a function of forecasted inflation rather than prevailing inflation rates.”
It added that growth appeared to have slowed in the financial year that ended in June and had remained at a reduced pace in the July-September quarter.
“Leading indicators for 2023 Q3 suggest a general stability in economic activity compared to 2023 Q2,” the MPC said, without saying what second quarter growth had been.
The economy grew by an annual 3.9% in the last quarter of 2022 as well as the first quarter of 2023, it said, down from 6.7% in fiscal 2021/22.
Moody’s: S.Africa’s lower revenue forecasts, spending pressures raise risks
Reuters News
Mike Segar
South Africa’s lower revenue forecasts over the next two years and growing spending pressures from state-owned companies and social relief grants increase the risk of deterioration in the government’s balance sheet, Moody’s said on Thursday.
The key elements of South Africa’s mid-term budget, announced on Wednesday, were broadly in line with expectations, the ratings agency said in a statement.
Zimbabwe cuts 2024 economic growth target to 3.6% from 5.3%, finmin says
Reuters News
Zimbabwe is targeting economic growth of 3.6% next year, down from an earlier target of 5.3%, due to drought conditions, its Finance Minister Mthuli Ncube said on Wednesday.
South Africa plans tax measures to boost revenue, debt seen rising
Reuters News
CAPE TOWN – South Africa’s finance minister will propose tax measures next year to raise additional revenue, a mid-term budget review said on Wednesday, as the National Treasury projected wider budget deficits and higher debt over the next three years.
A major constraint on South Africa’s economic growth potential in the last decade has been rolling power cuts as utility Eskom struggles with breakdowns at its coal-fired power plants. Underperformance at state-owned logistics company Transnet has also weighed on growth.
This, coupled with a significant drop in mining revenue as commodity prices fall, has resulted in lower tax receipts. Revenue collections in the current 2023/24 fiscal year were projected to be 56.8 billion rand ($3.04 billion) below estimates in the main February budget, the treasury said.
The treasury said it remained committed to stabilise public finances. This will be achieved through spending reductions, moderate tax revenue measures and efficiency measures across the government – including the reconfiguration of government that would involve the merging or closure of public entities.
“Given the extent of fiscal consolidation required, the Minister of Finance will propose tax measures to raise additional revenue of 15 billion rand in 2024/25 in the 2024 budget,” the treasury said.
The treasury did not elaborate on the specific measures, but Finance Minister Enoch Godongwana said in his budget speech that “our most effective way of funding government is through an efficient tax administration and by broadening the tax base”.
South Africa’s 2023 economic growth is forecast at 0.8% from 0.9% seen in February. The economy grew by 1.9% in 2022.
A consolidated budget deficit of 4.9% of gross domestic product (GDP) is expected in 2023/24, wider than a 4.0% deficit seen in February. Next year the treasury predicts a deficit of 4.6% of GDP and the following year 4.2% of GDP, wider than the 3.8% and 3.2% seen in February.
South Africa’s gross debt is expected to rise to 6.52 trillion rand in 2026/27 from 5.24 trillion rand in 2023/24. As a percent of GDP, gross debt is seen stabilising at 77.7% of GDP in 2025/26 compared with 73.6% of GDP in the same year seen in February.
($1 = 18.7143 rand)
Kenya to remove visa requirement for Africans to boost trade, says president
ZAWYA
Agence France-Presse (AFP)/AFP
Kenya will remove visa requirement for Africans by the end of this year in a bid to promote trade and investment within the continent, President William Ruto said.
To accelerate the creation of the African Continental Free Trade Area (AfCFTA), Ruto said the region has to address the low levels of intra-African commerce.
He also called for the lowering of customs tariffs across Africa, in a speech at the Three Basins Climate Change Conference in Brazzaville, Congo.
“Having visa restrictions amongst ourselves is working against us. When people cannot travel, business people cannot travel, entrepreneurs cannot travel, we all become net losers,” he said on Saturday.
“We are now moving in the direction of eliminating visas amongst ourselves. Let me say this, as Kenya, by the end of this year, no African will be required to have a visa to come to Kenya.”
Kenya will open embassies in the Congo Republic, Ivory Coast, Morocco and Eritrea with the aim of improving trade, he said.
“It is time we realise the importance of trading amongst ourselves and allowing good, services, people, ideas to move freely,” the president said.
African countries began officially trading under AfCFTA, a continent-wide free trade area in January 2021.
The bloc intends to unite more than one billion people in a $3 trillion economic bloc – the world’s largest free trade area since the World Trade Organization’s inception.
Ruto has previously backed de-dollarization to enhance Africa trade, and supported Kenya’s move to join a new platform known as the Pan African Payments and Settlement System (PAPSS) in September, a move lauded by the International Monetary Fund.
The platform allows trade between member countries through their local currencies and cuts the costs of dealing in US dollars or the euro.
IFC gives $2.9bln to East African green economy businesses
The East African
The International Finance Corporation (IFC) has given Kenya, Tanzania and the Democratic Republic of Congo (DRC) businesses $2.9 billion in long-term and short-term financing.
Mary Porter Peschka, IFC Regional Director for Eastern Africa, said it gave $65 million to fintech platform M-Kopa Holdings in Kenya to expand its financial services to under-banked consumers.
The fund aims to increase access to finance for small businesses, boost energy access and drive gender inclusion.“IFC increased its investments in Eastern Africa by 61 percent in the last financial year and this financing is supporting our partners to increase lending to small businesses, expand access to green and sustainable electricity, and drive greater gender inclusion,” Peschka said.
Read: Pan-African insurer in renewed push for continental investment“IFC aims to grow its work across Eastern Africa even further this year to support the region’s development agenda and the private sector’s role in building the foundation for a more inclusive and green future,” she added.
This is helping to increase access to productive assets such as solar home systems, smart phones and e-bikes, making them more accessible to customers.
IFC provided a $150 million loan to KCB Kenya to support businesses tackle the effects of climate change, with focus on financing the development of energy efficiency projects, renewable energy, climate smart projects, and green buildings.
In Tanzania, IFC launched ‘Anaweza: She Can’, a $10 million programme to empower more women across Tanzania to access financing, attain leadership positions in the private sector, and launch or grow businesses, including in agriculture.
IFC’s programme aligns with the Tanzania Development Vision 2025, the National Five Year Development Plan III (2021/22-2025/26), Zanzibar Development Vision 2050, the National Gender Policy and its Strategy, and the Tanzania commitments on Generation Equality, which outlines steps to enhance human capital, empowerment and gender equality.
The IFC invested $10 million in Nuru to expand access to renewable energy through mini-grid systems in the DRC. Nuru’s utility-scale “metro-grids” use cutting-edge technology and service, designed to provide reliable, round-the-clock renewable energy to communities in Eastern DRC.
Once completed, the installation at Bunia will be the largest off-grid solar hybrid project of its kind in Sub-Saharan AfricaSérgio Pimenta, IFC Vice President for Africa, said the lender had funded African investments to the tune of $11.5 billion between July 1, 2022, and June 30, 2023, across 40 countries.
South Africa producer inflation quickens to 5.1% y/y in September
Bizcommunity.com
South Africa’s producer inflation quickened to 5.1% year on year in September from 4.3% in August, statistics agency data showed on Thursday, 26 October.
On a month-on-month basis, the producer price index was at 1.5% in September from 1.0% the previous month, Statistics South Africa said.