No. 144: Three AM Reads: Education in Africa Needs $16-$18B | Dangote Refinery Signs Equipment Deal with Honeywell | Egypt Tops List of Countries for Hotel Development

Report Touts Investment Opportunity for Private Education Across Africa

DC-based Caerus Capital put together a report on the investment opportunity in private education across Africa. The authors project that 25% of school age children – 66 million children – across Africa will be in private education by 2021, up from the 21% who are currently enrolled. The authors also point out that private education across Africa needs about $16-$18B in private investment over the next five years to ensure a strong industry on the continent. One of the rough data points in the report is that ~30M school-age children across the continent are not in school right now. I’m still digesting the report, but a few things immediately come to mind:

1) African stakeholders need to be involved in funding these type reports. None of the funders of this report are African organizations.

2) The investment opportunity for education is massive on the continent, yet I’m nervous about governments not being a good partner with the private sector in developing private education. That leaves much room for private education that is all over the place in terms of quality.

Dangote Oil Refinery Company Purchases Equipment from Honeywell International

New Jersey-based Honeywell International announced that one of it’s subsidiaries will be supplying the Dangote Oil Refinery Company with an equipment package for the construction of its single-train refinery complex near Lagos. The refinery is slated to be the largest of it’s type in the world. Construction of the refinery is slated for completion in 2018, and due to be operational in 2019. I’m curious to see how many American jobs this deal will support.

Top 10 African Countries for Hotel Development

This is an interesting list of the top African countries for hotel development. According to TOPHOTELPROJECTS, Egypt, Morocco, and Nigeria take the top three spots. I’m curious about those 12 projects going on in Cape Verde. Anyone up for a vacation soon?

No. 143: Three AM Reads: Falling Commodity Prices | Kenyan Regulators Split over Bitcoin | IMF Making the Rounds

Coffee Prices Are Going to Drop 6% This Year, But My Americano Will Still Be $4

The World Bank put out its forecasts for global commodity prices last week, and it expects coffee, cocoa, and tea prices to fall 6%. Ivory Coast’s President Ouattara recently called on the country’s cocoa farmers to increase their output and quality of their beans in light of falling cocoa prices. Apparently, greater-than-expected supply of these commodities is driving the price drop, so I’m not sure how increasing output helps with that. Feel free to send me notes explaining that. Increasing cocoa bean quality could help with competitiveness in a crowded market, but cocoa is such a slow developing crop that expectations for quality to improve in a year is not realistic.

Kenyan Regulators Split on Virtual Currencies  

The Central Bank of Kenya and the Capital Markets Authority don’t agree on the use of virtual currencies like Bitcoin in Kenya. The CBK argues that the unregulated nature of Bitcoin exchanges leaves users vulnerable to losses, while the CMA has left the door open for the regulator and fintech players to feel each other out and determine how to move forward with the potential use of Bitcoin in the country. To be clear, Bitcoin startups like Bitpesa are operating in Kenya, though not without challenges. Last year, the Central Bank of Kenya effectively shut down Bitpesa’s operations by shutting down its bank accounts. Ultimately, both regulators will figure out what to do about virtual currencies. Hopefully, they won’t find themselves flat-footed like they did during the rise of mobile payments platforms.

IMF is Making It’s Rounds – Egypt, then Zambia

The IMF has a team in Egypt currently discussing a $1.7B loan, expected to be disbursed in June. Next up, Zambia is slated to continue talks with the IMF this month for a $1.6B loan. The IMF has been working with Mozambique in dealing with it’s hidden debt issue. In all, there are about 20 African countries that have taken money from the IMF. I look forward to seeing that number decrease significantly over the next decade. We’ll see how realistic of a hope that is.

No. 39: Three Things in African Markets You Needed to Know Last Week – October 9

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.