President Zuma Skips Monday’s innovaBRICS & Beyond Conferencelink

South Africa’s President Jacob Zuma cancelled his scheduled Monday appearance in London at the innovaBRICS conference, hosted by Deloitte. South African publication City Press reported that President Zuma cancelled his appearance due to not being able to secure a meeting with Prime Minister David Cameron, a claim the Presidency denies. Apparently, this is his second time canceling an appearance in London in the past year. I do not know how these things go in diplomatic circles, but I am sure a few folks involved in the planning for this let out a few curses. I also wonder if President Zuma’s inability to land a meeting with Prime Minister Cameron had some connection to South Africa’s refusal of the Dalai Lama’s visa application to the attend the Nobel Peace conference in Cape Town that was scheduled for October 13, but postponed due to protests from other Nobel laureates.

Nigerian Stock Exchange Keeps Moving On Up - linkThe Nigerian Stock Exchange (NSE) announced this morning that it secured full membership to the World Federation of Exchanges. The NSE has been going through the process of securing membership for the past three years, pretty much the entire time that its CEO, Oscar Onyema, has been leading the company. Other notable members include Intercontinental Exchange, the owner of the New York Stock Exchange (NYSE) and four other African exchanges – the Egyptian Exchange, Bourse de Casablanca, Stock Exchange of Mauritius, and Johannesburg Stock Exchange. This membership serves as another notch in the belt as the NSE strengthens its operations and positions itself as a ideal platform for global investors to place their funds.

East African Countries Continue Exploration of Geothermal Energylink

The 5th African Rift Geothermal Conference takes place this Wednesday through Friday in Tanzania. For the past several years East African countries have been working to tap into the region’s geothermal energy potential. Kenya plans to have geothermal energy make up about 5,000MW of its energy portfolio by 2030. The country currently has capacity of 210MW, according to KenInvest, the country’s investment promotion arm. The rest of the region is still in exploration mode, excluding Ethiopia which has about 7MW of capacity.

Oil Discovered Off Senegal’s Coast – link

The wave of West African countries discovering oil continues with Cairn Energy, a Scottish Oil Company, striking oil about 100km off the coast of Senegal. The company is not yet sure about the size of the discovery – a first for Senegal. When Ghana discovered oil in 2010, many looked to the country to debunk the resource curse theory. While Ghana has avoided the security issues parts of Nigeria have dealt with for the past 50 years, it has faced serious fiscal challenges since the oil discovery. Perhaps Senegal will be the leading country to show that African countries can manage their resources effectively. I’ll be watching how Senegal markets its oil in the coming years, in the wake of Nigeria not exporting oil to the U.S. for the month of July – the first time that has happened since rcords were kept in 1973.

Abraaj Takes Majority Stake in Libstar – link

The Abraaj Group, one of the more prominent private equity firms focused on developing markets, announced a majority stake it took in Liberty Star Consumer Holdings (Libstar), a company previously owned by Métier, another private equity firm. The company is a leader in the private-label and own-branded fast moving consumer goods spaces supplying customers like KFC, Pick n Pay, and Tiger Brands. The company’s latest annual revenue as reported on Metier’s website was about $405M.

Equatorial Guinea’s Second Vice President Agrees to Relinquish $30M in Assets – link

The United States Governent and Equatorial Guinea’s Second Vice President Teodoro Nguema Obiang Mangue reached an agreement for Second Vice President Mangue to relinquish $30M in assets in wake of charges that he used his influence to embezzle funds from the Equatoguinean people. As part of the agreement, $20M will go to a charitable organization in the benefit of the Equatoguinean people, and another $10M will go to the U.S. Government, which will also use the money for the benefit of the country’s people. This agreement came in the lead up to Equatorial Guinea’s Independence Day, which was this past Sunday. The U.S. Government originally sought $70M from Second Vice President Nguema.

Here’s the rundown on last week’s episode of New Rules Africa. Check out the video for our deep dive into Africa’s stock exchanges: Link

Marriott Plans to Build 50 Hotels in Nigeria, South Africa, and Egypt by 2020 – Link

Marriott is putting both feet in Africa, where it projects to have its highest revenue growth through 2020. The company plans to build 50 hotels in Nigeria, South Africa, and Egypt – 10,000 hotel rooms apiece.

That isn’t the end. Within the next 14 months, the company is opening nine hotels in Uganda, Ghana, Ethiopia, Uganda, and South Africa – 1,300 hotel rooms.

The company bought Protea Hospitality Holdings for $200M in April as part of its expansion across Africa. It is interesting that the company is taking both an organic and acquisition approach to growth on the continent.

IMF Forecasts Ghana’s Outlook in Wake of Recent Meetings – Link

Ghana concluded those meetings last week, and walked away with a pretty grim outlook on the country. It may see its lowest growth levels in the past decade, with GDP growth dropping to 4.5 percent from its 7.1 percent growth for 2014. Compare this to the country’s double digit growth levels in the few years following the discovery of the Jubilee Oil Fields. The struggle the country is facing includes:

  • Low revenue
  • High government employee wages on aggregate
  • Rising cost of paying off debt
  • Struggling currency – dropped 30 percent to the dollar this year
  • High inflation – average of 15 percent for the year

It’s a tough situation and hopefully, the country will see it’s way out of this sooner rather than later. President Mahama spoke at a conference I attended a few weeks ago, and while he spoke relatively frankly about the country’s challenges, and the runway for improvement being a potentially long one, he remained hopeful in his comments. The two sides continue talks this week during the IMF/World Bank Annual Meetings.

Mo Ibrahim Foundation Releases 2014 Governance Index – Link

Mo Ibrahim, since 2006, has taken on the task of ensuring that Africa’s governments operate for the people, by the people. The mobile phone pioneer’s Mo Ibrahim Foundation released its latest annual index that ranks the continent’s governments based on a comprehensive set of criteria covering participation and human rights, human development, sustainable economic opportunity, and safety and rule of law.

Here are the highlights:

  • Governance improved on the aggregate slightly over the last five years;
  • The primary drivers of improvements were in participation and human rights, and human development categories. Economic opportunity and human development used to drive the improvement;
  • These countries improved in all four categories: Côte d’Ivoire, Guinea, Zimbabwe, Rwanda, São Tomé & Príncipe, Kenya, Sierra Leone, Lesotho, Liberia, Zambia, Congo, Chad and Gabon; and
  • Côte d’Ivoire, Guinea, Niger and Zimbabwe saw the biggest improvements.

Cherae and I had a great time on New Rules Africa this week, covering:

  1. Zimbabwe established sovereign wealth fund
  2. Rocket Internet filed for IPO in Germany
  3. African Development Bank opened Young Professionals Program

Read the summary below to get up to speed on what we covered, and check out the show.

Zimbabwe Establishes Sovereign Wealth Fund

Last Tuesday, Zimbabwe’s Senate passed a bill that lays the groundwork for the country to establish a sovereign wealth fund – a tool used by countries around the world to maintain long term wealth and resist economic shocks. The African countries using the tool include Angola, Botswana, Senegal, Nigeria, Libya, Algeria, and Ghana. Countries like Uganda and Kenya are considering establishing their own funds with their new found oil resources. Let’s keep an eye on Zimbabwe’s fund as it is unclear what the structure of the fund will be and who will manage it. Countries like Nigeria and Senegal announced the managers of the funds pretty close to the establishment of the fund, and had a detailed governance structure.

Rocket Internet Files for IPO in Germany

Rocket Internet, the emerging market, uber-startup launcher is filing for an IPO on Germany’s stock exchange that would raise around $1.8B. For the past six years, Rocket Internet has launched emerging market copycats of some of the top internet brands in the US and Europe – Amazon, Paypal, and Zappos to name a few. In Africa, these include Jumia, Zando, HelloFood, and EasyTaxi among others. Rocket has absorbed a lot of criticism for just copying other business models, but is unapologetic about its business model and has raised more than $2B in venture capital since its founding in 2008. Jumia, Rocket’s flagship brand in Africa recently went under a management shift and has been relatively quiet after raising several millions in venture capital and building a 90,000 square foot warehouse in Lagos. Keep an eye out on the IPO and future Africa activity from the company.

African Development Bank Announces Young Professionals Program

The African Development Bank is recruiting young professionals, particularly women, to apply for its two or three-year rotational young professionals program. The bank will select 15-20 candidates who will be based in the bank’s headquarters in Cote d’Ivoire. The bank has been a critical part of the continent’s development, ensuring the contract negotiation skills of African countries, committing dollars to the combatting of threats like Ebola, setting up an infrastructure fund, among many other things. Apply. The folks that work there are talented and its a nice alternative to working at a place like the World Bank or IMF, if you are looking to work at an international development agency.

Preparing Cities for the Future

The Corporate Council on Africa is holding its annual infrastructure conference in the lead up to the World Bank/IMF Annual Meetings, and the focus is on building resilient cities on the continent as rapid urbanization continues to take place.

As cities continue their rise, Africa’s cities will increasingly have to figure out where these people will live, how to provide them with services, make sure they are able to move around, and the list goes on. Investors are paying more and more attention to the threat/opportunity in these cities. If these cities develop well, they could be hubs of consumerism, new ideas, innovation, you name it. If these cities do not develop well, we could see the failure of institutions, increased political unrest, and the list goes on here as well.

What else? What are some other interesting things that happened in business in Africa this past week?

Credit: McKinsey Global Institute

Credit: McKinsey Global Institute

Last weekend, some friends and I hopped on a Google Hangout to discuss McKinsey Global Institute’s report on Nigeria’s inclusive growth prospects and what needs to happen for the country to realize that potential. 

Here is a quick rundown of some numbers:
 
40 million Nigerians are in the consuming class, but 130 million live below the Empowerment Line – an indication of their ability to afford eight household essentials for a decent standard of living.
 
GDP could reach $1.6 trillion by 2030. Investment in infrastructure could reach $1.5 trillion to support GDP growth and address road density being 1/7th and power generation 1/5th that of India.
 
Three things that stood out from the conversation:
 
1. Nigeria is growing in spite of the serious challenges it faces. We have seen the coverage of Boko Haram’s activity in the North and the 130+ days the government has still not rescued the girls kidnapped from their school. We have also seen the largest acquisition by a Nigerian company when Oando bought ConocoPhillips’ Nigeria oil assets for $1.65B. Nassim Talib’s theory of antifragility comes to mind – the notion of shocks, disorder, volatility driving gains. 
 
2. The skills gap in the country was troubling. The report states that 1 out of 6 of the world’s out of school children between age 6 and 17 are in Nigeria – 10.5 million children. Just thinking about the world’s population, I would think there are more than 60 million children not in school within this age range. Nonetheless, think about all the latent potential in Nigeria. Furthermore, the report highlights the poor quality of education. After six years of school, one out of five Nigerians between the ages of 15 and 29 can read and write.
 
3. Urbanization in the country was another interesting part of the conversation. McKinsey’s insights on urbanization not having the same economic effects as in traditional models was quite interesting. We discussed the rise of financing tools to get more people into homes and the potential risk of tools like mortgage-backed securities. 
 
Nigeria’s growth potential is real, as are its risks. The report had a lot of information and I am interested in your insights. What are some other things that stood out for you in the McKinsey Global Institute report? Shoot me a tweet with your thoughts.

Key Points

1. The saga around the suspended Central Bank of Nigeria governor continues;
2. The Central Bank governor is handily backing up his reputation;
3. President Jonathan could get a black eye from this fight; and
4. The independence of the Central Bank of Nigeria is in the balance.

The Saga

The February 20 suspension of Central Bank Governor Sanusi Lamido Sanusi for “financial recklessness and misconduct” drew many a side-eye. Two months prior to the suspension announcement, Governor Sanusi made claims that Nigeria’s National Petroleum Company had failed to repatriate 49.8 billion USD to the government, before reducing the claim to 20 billion USD.

Governor Sanusi challenged his suspension on the grounds that it is illegal for the President to suspend the Central Bank Governor under the Central Bank of Nigeria Act. This past Thursday, Nigeria’s High Court declined to rule on Governor Sanusi’s challenge. Check out Governor Sanusi’s response.

The suspension is not the only issue Governor Sanusi is dealing with. The Financial Reporting Council of Nigeria is pushing to investigate his use of 1 billion USD while CBN Governor. Nigeria’s High Court has struck down to-date and Governor Sanusi has provided a detailed response.

Dueling Reputations

Governor Sanusi points to the stability of the Central Bank of Nigeria and its effectiveness in fixing the country’s banking system, controlling inflation, and stabilizing currency as wins. The global investing community has taken note and I wouldn’t be surprised if we see Governor Sanusi advising other central banks on their activities when the dust settles – unless the forensic audit of the NNPC proves the company’s financials to be in good shape.

President Jonathan, on the other hand, could be licking his wounds from this fight and the continued threat of Boko Haram in parts of the country. The results forensic audit of the NNPCs financials will serve as vindication for one or the other.

Central Bank Independence

The bottom line is that this situation has big implications for the independence of the Central Bank of Nigeria. Will future governors have Governor Sanusi’s fate on their minds when making decisions? If so, we could very well see the slow unwinding of the governance structure Governor Sanusi helped develop.

Davidson profiled Muna Musiitwa on her work in Africa. Great nuggets on key questions for mapping the way forward on the continent – [http://buff.ly/1ojta8X]

Jason Njoku does some nice analysis on property values in Lagos in parallel with tech investments – [http://buff.ly/1ojtfsY]

Former New York Mayor Michael Bloomberg has paid a good bit of attention to Africa, including a $10M initiative to support the development of financial journalism – [http://buff.ly/1ojtkgt]

Ben Leo, Senior Fellow at the Center for Global Development, provides six key things the Millenium Challenge Corporation should focus on – [http://buff.ly/1n4f3Vb]

My Nigerian brother, Odini Nwakuche, is making waves with his clothing venture – [http://buff.ly/1n4f8Iv]

The Dropifi team probably felt chills running through their bodies while watching Zendesk’s share price rise 49 percent on day one of its IPO on Thursday, and then reach a $1B market cap on its second day of trading on the New York Stock Exchange. Here’s why:

1. Big Sandbox – In its Form S-1 filing, Zendesk highlights International Data Corporation intel pointing to the customer relationship management market being $20.7B, as of 2012. Zendesk did $72M in revenue in 2013. Couple that with IDC’s projection that software as a service (SaaS) platforms will grow 10x faster than legacy platforms in a world with 76M small-to-medium sized businesses, and you get the picture. Zendesk has 42,000 customers. Dropifi has 8,000 customers. Dropifi has a lot of sand to work with to build its own castle.

2. Little Sibling Effect – I’m the oldest of my siblings and after breaking through many new seasons of life, I’ve watched my siblings do everything better than me. Dropifi has the same opportunity to watch Zendesk’s missteps and capitalize on the lessons learned. This will be critical in customer acquisition. With more than 8,000 customers, Dropifi is behind the 10,000 customers Zendesk had in its fourth year of operation.

In David Cummings’ post last night, he pointed to design as one of the big differentiators between the first and second generation SaaS companies. Dropifi may have some work to do to compete with Zendesk here. This has been a tough post to write because I want to pull out my yoga mat every time I pull up the Zendesk site.

The bottom line is that Dropifi has an opportunity to scale massively. After hearing David Osei, CEO of the company, speak at Harvard’s Africa Business Conference, the company certainly has the hunger to make this happen. More than 10 500Startups companies, which recently eclipsed the 500 mark, have been acquired. Dropifi is already the incubator’s first Africa-originated company. If Dropifi can avoid acquisition by Zendesk, Salesforce, or another player in the CRM space, perhaps we could see it be 500Startups’ first company to reach IPO-status. 

What else? Do you think Dropifi has what it takes to compete with the likes of Zendesk?

Your reputation is powerful. I recently sat in on a workshop covering best practices for managing one’s reputation. The three prevailing themes were:

1. What do you perceive your reputation to be?
2. What do you want your reputation to be?
3. How do you plan to make your desired reputation a reality?

None of these is very helpful if you do not know what your reputation actually is. That requires the hard work of going to someone and asking them to tell you about yourself.

I will never forget the wise words of Margaret, one of my middle school classmates. I’m walking to the school bus after classes had ended for the day, making all kinds of pompous comments. I was that not-cool kid who tried extra hard to fit in. Foolish.

Finally, Margaret got fed up and stopped me before getting on her bus: “You think you’re the s%#t, but you’re not.”

If I was born with a tail, it would have been tucked all the way between my legs. I had an idea of what I wanted my reputation to be, but had lost sight of what my real reputation was. I had no idea that humility rather than jackass-like behavior was necessary in managing my reputation. Margaret’s insights helped me re-calibrate.

So, before you receive an unpleasant dose of medicine like that served to me by Margaret, develop a level of self-awareness by:

1. Identifying a core group of people who represent the various parts of your life;
2. Asking the people in that group for their observations of what you’re reputation is;
3. Getting their thoughts on what you might do to maintain, repair, or enhance your reputation;
3. Asking for them to encourage you whenever they notice you making positive gains and to hold you accountable when they see you stepping backwards; and
4. Checking back in periodically with this group to gauge how your reputation is changing.

Iron sharpens iron, and one man sharpens another. -Proverbs 27:17

What else? What other things are key to managing your reputation?

“I don’t feel pressure from being the President of the Toronto Raptors. I feel pressure from Africa.”  The energy that entered the room when Masai Ujiri said that at yesterday’s NYU Africa Economic Forum is why I am still awake.

Masai went on to say that his work would be a waste if he didn’t have any impact in Africa to show for being NBA Executive of the Year or potentially winning an NBA championship. Boom!

Masai’s speech was the highlight of the NYU Africa Economic Forum, though three ideas from other speakers really got my brain going and I may dive deeper on them later this week.

Makhtar Diop, World Bank VP for Africa, explained how pursuing a credit rating for Senegal while he was Minister of Finance provided investors data they could understand, subsequently increasing their level of interest in placing capital in the country. 

Ken Ofori Attah, retired CEO of Databank, stressed the importance of Diasporans marketing Africa well. 

Eric Guichard, CEO of Gravitas Capital and Homestrings, highlighted the opportunity for the structuring of projects to satiate the perceived lack of capital and projects from the perspectives of companies and investors, respectively. 

Kudos to the NYU Africa Economic Forum team for keeping me up way past my bedtime!

What else? What ideas struck you at the NYU Africa Economic Forum?

Follow

Get every new post delivered to your Inbox.

Join 3,241 other followers