macroafricaintel Daily Brief | 15 Nov

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian shares rise as Kudlow comments lift trade hopes
  • MSCI Asia ex-Japan +0.67%; Nikkei +0.76%
  • Kudlow says US, China getting close to trade deal
  • Yen weakens, US treasury yields higher

Oil Markets

  • Oil rises on hopes for OPEC supply curbs, new optimism on US-China trade deal
  • Brent up 0.5% at $62.58 a barrel (0147GMT)
  • WTI up 0.5% at $57.06

Precious metals

  • Gold falls as US-China trade pact hopes spur risk appetite
  • Spot gold down 0.24% at $1,467.44/oz. (0117GMT)
  • US gold futures down 0.4% at $1,468.20/oz.

Grains

  • Wheat faces 4th week of decline on ample world supplies
  • Wheat futures down 0.1% at $5.07-1/2 per bushel (0118GMT)
  • Corn futures unchanged at $3.75-3/4 per bushel
  • Soy futures up 0.1% at $9.17-3/4 per bushel
  • Rice futures unchanged at $11.85 per hundredweight

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • South African Airways’ staff strike; Fri & Sat flights cancelled
  • Kenya’s Kenyatta to meet key Mount Kenya politicians
  • Nigeria digital economy summit; 14-15 Nov

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Eastern Libya authorities stop plane from rival territory
  • Demonstrator dies in protests against Guinea president
  • BRICS leaders avoid discussion of Venezuela divisions
  • Algeria lawmakers approve reforms to oil industry, other sectors
  • Algeria appoints new central bank governor and head of energy company
  • Kenya, Somalia agree to restore ties after spat over oil rights
  • Egypt central bank makes third straight cut to interest rates
  • BRICS nations vow to stand up to unilateral protectionism
  • Nigeria to form border force with neighbours Benin and Niger to fight smuggling
  • Africa Oil – Angolan slumps on weaker middle distillate margins
  • Morocco’s OCP sees Nigeria ammonia plant starting up in 2023
  • Paris wheat curbed by Egypt tender, German premiums rise again
  • South Africa’s SAA cancels flights as employees plan strike over wages
  • Nigerian stocks rise as local funds snap up banking shares
  • South Africa’s Pepkor to take 1.2 bln rand charge in FY 2019
  • Russia-Zimbabwe platinum venture needs $500 mln for first phase
  • Sudan looks to pyramids to attract tourism – and hard currency
  • South Africa’s rand firms despite risk-off mood, equities fall
  • South Africa’s Netcare expects FY HEPS to more than triple
  • Zimbabwe to cut value added tax to boost consumer demand
  • Nigerian stocks rise to 5-wk high as banks rally
  • Egypt to create firm to guarantee credit for exports to Africa – c.bank
  • Zimbabwe to lower value added tax from January – finmin
  • Zimbabwe’s economy forecast to grow 3% next year – finmin
  • UAE, Egypt plan $20 bln spending on social, economic projects – Abu Dhabi crown prince
  • Algeria lawmakers approve new energy law to attract foreign investors
  • Africa FX – East African currencies seen firm, Zambia’s weak
  • Egypt unemployment increases to 7.8% in Q3 – stats agency
  • Rollout of Johnson & Johnson ebola vaccine begins in Congo
  • Egypt textiles salvage plan reveals backing for state sector
  • Russia says BRICS nations favour idea of common payment system
  • Two SAA unions to challenge airline’s jobs cut plan in court
  • Ivory Coast mandates Morocco’s BCP to arrange bond
  • Egypt issue dollar-denominated eurobonds worth $2 bln
  • South Africa’s SAA to offer striking employees revised wage hike at emergency meeting
  • South Africa’s Nedbank to pay for mortgages under new rewards scheme
  • Kenyan shilling firms to near 4-1/2 mth high, helped by remittances

N.B. Full stories of above headlines are available on Reuters

macroafricaintel Daily Brief | 14 Nov

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian stocks retreat as China’s growth slowdown deepens
  • Chinese Oct economic indicators miss forecasts
  • Hopes for resolution to US-China trade war fade
  • Asian stocks drop, Hong Kong falls most

Oil Markets

  • Oil rises on decline in US crude stocks, Fed comments on economy
  • Brent up 0.3% at $62.54 a barrel (0111GMT)
  • WTI up 0.4% at $57.32

Precious metals

  • Gold inches down as hawkish Fed weighs on safe-haven demand
  • Spot gold down 0.1% at $1,461.50/oz. (0141GMT)
  • US gold futures flat at $1,462.40/oz

Grains

  • Soybeans firms, rebound from more than 1-mth low
  • Soybean futures up 0.2% at $9.17 a bushel (0133GMT)
  • Corn futures up 0.1% at $3.75-1/2 a bushel
  • Wheat futures unchanged at $5.09 a bushel

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • Nigeria digital economy summit; 14-15 Nov [Alibaba’s Jack Ma attending]
  • 11th BRICS summit in Brasilia, Ramaphosa attending; 13-14 Nov
  • South Africa inequality trends report by Stats SA
  • Nigeria inflation Oct-19 [fcst. 11.7% yy, prev. 11.2%]
  • South Africa mining production Sep-19 [fcst. -2.2% yy, prev. -3.2%]
  • Egypt triple-tranche dollar bond bookbuilding
  • International Conference on Population & Development (ICPD) in Nairobi; 12-14 Nov

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Australia’s Fortescue loses bid to develop Guinea iron ore blocks
  • Nigeria security agency denies opening fire on supporters of detained activist
  • Fire after gas leak in Egypt kills 7, injures 16 – state newspaper
  • South Africa’s Absa to appoint former c.bank deputy Mminele as CEO – media
  • Setback for Tunisia’s ‘Me Too’ movement as new MP gets immunity
  • 2 Namibian ministers quit in bribery scandal involving Icelandic fishing firm
  • Tunisia’s parliament picks moderate Islamist party leader as speaker
  • South African rand edges firmer, stocks dip
  • IMF revises up Rwanda 2019 growth forecast to 8.5%
  • Sudan’s bourse maps out expansion plans amid uncertainty
  • South Africa’s SAA says strike could push airline towards collapse
  • US to reevaluate South Sudan ties after unity govt deadline passes
  • Ghana’s GDP growth to slow, budget deficit to rise in 2020
  • Africa Oil – Nigerian light sweet crude offered high but cracks ease
  • Malawi receives 17 black rhinos from South Africa
  • South African Airways says strike endangers future of airline
  • Norway’s DNB to investigate allegedly improper Icelandic payments to Namibia
  • Tanzania says gunmen kill 6 in ambush near Mozambique border
  • Kenya’s KCB Group’s 9-mth profit rises 6%
  • Ghana’s govt proposes 21% budget increase for 2020
  • Zimbabwe bans new electric water heaters to save energy
  • US presses Egypt on alleged torture, mass arrests at UN review
  • South Africa’s retail sales up 0.2% y/y in September
  • Award-winning film ‘Atlantics’ offers haunting take on life in Senegal
  • Kenya’s budget update sees higher 2019/20 spending, deficit
  • African Development Bank decides not to fund Kenya coal project
  • Tunisia’s divided parliament attempts to choose a speaker
  • Nigeria oil output 1.6-1.7 mln bpd, in line with OPEC cut – NNPC
  • Zimbabwe to enforce “use it or lose it” policy for mining assets
  • Mozambique GDP growth seen at 5.5% in 2020 – IMF
  • Egypt starts marketing triple-tranche dollar bonds
  • South Africa’s SPAR posts profit rise despite consumer pessimism
  • Zimbabwe central bank will not allow miners to keep all forex earnings
  • Egypt to auction $1.56 bln 1-yr dollar t-bills on Nov. 18 – cbank
  • Zimbabwe to rigorously enforce “use it or lose it” policy on mining claims
  • Kenyan shilling firms due to remittances, inflows to stock market
  • Kenyan finance ministry asks parliament to hike 2019/20 budget by 86 bln shillings – papers

N.B. Full stories of above headlines are available on Reuters

macroafricaintel Daily Brief | 13 Nov

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian shares slide on trade disappointment, HK unrest
  • Trump offers no new details on US-China trade pact
  • Trade war has taken toll on major economies
  • Commodities highlight concern about global demand

Oil Markets

  • Oil dips as US-China trade deal hopes fade
  • US crude stocks seen rising for 3rd week – survey
  • Oil demand growth to slow post-2025 – IEA
  • Forecast points to increased fuel efficiency, Evs
  • Brent down 0.3% at $61.90 a barrel (0124GMT)
  • WTI down 0.3% at $56.65

Precious metals

  • Gold hit by uncertainty over US-China trade deal, firmer dollar
  • Spot gold flat at $1,457.91/oz. (0116GMT)
  • US gold futures up 0.3% at $1,458/oz.

Grains

  • Soybeans inch up on slow US harvest pace
  • Soybean futures up 0.1% at $9.17-3/4 per bushel (0201GMT)
  • Corn futures up 0.3% at $3.76-3/4 per bushel
  • Wheat futures down 0.4% at $5.15 a bushel

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • Ghana 2020 budget statement by finmin Ofori-Atta
  • South Africa retail sales Sep-19 [fcst. 2.2% yy, prev. 1.1%]
  • 11th BRICS summit in Brasilia, Ramaphosa attending; 13-14 Nov
  • International Conference on Population & Development (ICPD) in Nairobi; 12-14 Nov
  • 2019 Africa investment forum by AfDB et al. in Johannesburg; 11-13 Nov

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Uganda protests police killing of 2 nationals in Rwanda
  • Egypt seeks to parry rights criticism after mass arrests
  • Kenya pledges to end FGM by 2022 – ahead of global target
  • Eswatini next to suspend South African animal imports after foot and mouth outbreak
  • Petrol stations on Nigeria’s borders close after fuel delivery ban
  • Nigerian ‘unicorn’ Interswitch sells stake to Visa
  • Africa Oil – Angolan cargoes dwindle, Nigerian strong
  • South African state airline says it could cut more than 900 jobs
  • South Africa’s state airliner SAA says job cuts could save firm $47 mln
  • Morocco mandates banks for bond investor meetings – document
  • South Africa’s AMCU mining union seals platinum wage deals
  • Algeria’s Sonatrach renews Edison contract
  • Rain halts oil shipments from Algeria’s Skikda – Ennahar
  • Dubai’s DP World signs deal to develop business park in Namibia
  • Algerian court jails 21 protesters
  • Kenya’s Equity 9-mth pretax profit jumps on lending boost
  • Kenya’s Silverstone Air suspends all flights
  • Eni CEO doesn’t rule out interest in Dana Gas Egypt assets, but not a priority
  • Egypt lifts LNG exports from Idku terminal to 1 bln cubic feet per day
  • Cargo handled by Kenya’s Mombasa port up 9% Jan-Sept – port operator
  • Egypt hires banks for triple-tranche dollar bond issue
  • Egypt’s sovereign wealth fund to raise authorized capital to up to 1 tln pounds
  • Ghana sells 200,000 tonnes of cocoa with farmer premium
  • Zimbabweans get new banknotes, but angered by withdrawal limits
  • Ghana has sold 200,000T of cocoa with LID for 2020/21 – Cocobod
  • Kenya shilling steady, remittances to meet importer demand
  • 2 die during heavy rains in South Africa
  • South Africa’s Telkom in deal talks despite plunging profit
  • Bill to nationalise South Africa’s central bank in parliament
  • Mauritius appoints Renganaden Padayachy as its new finmin
  • Kenya’s Equity Group Holdings 9-mth pre-tax profit up 11%
  • South Africa’s Telkom reports 36% plunge in H1 profits54

N.B. Full stories of above headlines are available on Reuters

macroafricaintel Daily Brief | 12 Nov

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asia shares left guessing on trade, await Trump speech
  • Shares mark time in Asia, bonds bounce a little
  • Awaiting Trump speech in New York for news on trade
  • Reports Trump to delay auto tariffs on EU for 6 mths
  • Sterling holds gains after Boris gets a Brexit boost

Oil Markets

  • Oil dips for 2nd day on lack of trade talk progress
  • Brent down 0.2% at $62.04 a barrel (0256GMT)
  • WTI down 0.3% at $56.68 a barrel

Precious metals

  • Gold flat as investors shift focus to Trump speech
  • Spot gold flat at $1,455.55/oz. (0057GMT)
  • US gold futures unchanged at $1,456.60/oz.

Grains

  • Soybean futures rebound from 1-mth low
  • Soybean futures up 0.1% at $9.17-3/4 per bushel (0148GMT)
  • Corn futures up 0.1% at $3.73-3/4 per bushel
  • Wheat futures little changed at $5.05-3/4 per bushel

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • International Conference on Population & Development (ICPD) in Nairobi; 12-14 Nov
  • 2019 Africa investment forum by AfDB et al. in Johannesburg; 11-13 Nov
  • Lesotho PM Thabane in Kenya

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Guinea president replaces security minister following deadly protests
  • Jordan, UAE, Turkey, Sudan accused of violating sanctions on Libya – UN report
  • Ghana to finalise $600 mln cocoa loan package this week
  • Kenya hosts global sexual health summit amid protests from Catholics, pro-life groups
  • Africa Oil – Spot muted after previous flurry of sales
  • South Africa’s rand weaker on China-US trade deal delay
  • Nigeria’s mental health system routinely chains patients up, says Human Rights Watch
  • After fanfare, new Zimbabwe banknotes fail to arrive
  • Egypt sells 695 mln euros in euro-denominated t-bills – central bank
  • Gambia files Rohingya genocide case against Myanmar at World Court – justice minister
  • Reopening of Boungou mine in Burkina will depend on security – Semafo
  • Founder of South African asset manager Allan Gray dies at 81
  • South Africa’s MultiChoice H1 profits rise 22%
  • South Africa – Johannesburg seeks to avert ‘ecological disaster’ from beetle-infested trees
  • African oil states offer new deals to lure more selective investors
  • South Africa’s Absa to open New York office by end of the year
  • Egypt’s core inflation rises to 2.7% in Oct from 2.6% in Sept – c.bank
  • Drought-hit Zimbabwe readies mass wildlife migration
  • Egypt has imported rice reserves through first week of February – minister
  • Congo central bank lowers 2019 GDP growth forecast to 4.6%
  • Egypt targets 6.4% growth, 6.2% deficit in fiscal 2020/2021 – finance ministry
  • Kenyan shilling firms to 4-mth high, helped by remittances
  • ArcelorMittal South Africa to close Saldanha operation
  • South Africa’s Aspen to sell Japan business to Novartis in bid to reduce debt
  • South Africa’s Vodacom H1 profits rise 19%

N.B. Full stories of above headlines are available on Reuters

macroafricaintel Daily Brief | 11 Nov

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian shares give up gains as HK chaos hits sentiment
  • Focus on US-China trade talks
  • Gold near 3-mth lows

Oil Markets

  • Oil slips on jitters over US-China trade talks progress
  • Brent down 0.6% at $62.12 a barrel (0117GMT)
  • WTI down 0.6% at $56.89

Precious metals

  • Gold inches up on concerns over trade deal, disappointing China data
  • Spot gold up 0.3% at $1,462.46/oz. (0110GMT)
  • US gold futures flat at $1,463.30/oz.

Grains

  • Corn falls on stronger dollar, USDA estimate caps losses
  • Corn futures down 0.5% at $3.75-1/4 a bushel (0116GMT)
  • Soybean futures down 0.4% at $9.27-3/4 a bushel
  • Wheat futures down 0.5% at $5.07-1/2 per bushel

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • 2019 Africa investment forum by AfDB et al. in Johannesburg; 11-13 Nov

Key African events or data releases over the weekend & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Congo army kills leader of splinter Hutu militia group
  • Malta had deal with Libya coastguard over migrant interceptions – report
  • QP says Egyptian Refining Company Refinery now operating, to reach full production Q1 2020
  • Congolese forces kill 25 Islamist rebels in eastern offensive – army
  • Egypt’s annual urban consumer price inflation falls to 3.1% in October
  • ‘So many dead’: Survivors describe terrifying Burkina Faso ambush
  • Guinea-Bissau newly appointed PM resigns under pressure from ECOWAS
  • Tunisia’s moderate Islamist party may choose outside candidate as PM
  • Morocco’s Attijariwafa bank gets $5 bln from China’s Exim for Africa export fund
  • Mauritius elects incumbent PM for 5-yr term
  • Africa Oil – Flurry of spot cargoes sell as new IMO rules loom
  • Zimbabwe fires 211 striking doctors as economy worsens
  • South Africa power cuts hurt rand as they put economy under more pressure
  • Zimbabwe suspends South African livestock imports after foot and mouth outbreak
  • Libya’s NOC boosts production capacity at Nafoora oil field
  • Kenya passes data protection law crucial for tech investments
  • Nigeria’s Dangote enters Togo with fertiliser and cement deals
  • Vodacom Tanzania’s H1 core earnings rise on M-Pesa, data revenue
  • No apologies: Africans say their need for oil cash outweighs climate concerns
  • Mauritius starts counting votes after parliamentary election
  • Kenyan shilling firmer on offshore investor inflows
  • South Africa’s Steinhoff says could issue shares to help settle lawsuits
  • South Africa’s Tiger Brands looking at sale of processed meats business
  • Power cuts hit South Africa’s rand
  • South Africa’s Gold Fields maintains annual production outlook
  • Africa must quadruple power investment to supply electricity for all, IEA says

N.B. Full stories of above headlines are available on Reuters

Culture & Doing Business in Africa

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

I present a cultural framework for investing in Sub-Saharan Africa. If you are looking to invest in Africa, it is important to be aware of the cultural characteristics of the various countries and how they affect the likelihood of success. In general, most African countries have collectivist cultures. Still, there are differences. South Africa ranks relatively high for individualism, for instance.

I rely on the 2019 soft power rankings by the Nanyang Centre for Emerging Markets (CEM) Singapore for a quantifiable proxy for culture. Thereafter, I juxtapose this culture proxy with the 2019 World Bank Doing Business rankings to identify countries with cultural characteristics and business environments likely to make investing in them worthwile endeavours. And for the selected countries, I identify the sectors that are best suited to these characteristics.

The framework differentiates between investments aimed at production, consumption or both. Because even when the production of a good or service may not be ideally suited for some countries, consumption via importation may be viable. So, for instance, high-end goods, which may not be ideally suited for production in many African countries ex-South Africa, in light of the individualism-innovation nexus, may still do very well if imported, since collectivist face-saving cultures make even those not well-to-do aspire to the consumption of high-end goods.

Based on CEM’s 2019 Emerging Market Rankings[1], I identify the following top 2-3 countries for each region as ideal investment destinations. Botswana is the only African country in the rankings’ 2nd-level “accelerating” EM countries. South Africa and Namibia are the only SSA countries in the 3rd-level “intermediate” EM countries category, while the remainder Ghana, Senegal, Rwanda, Uganda, and Kenya form part of the penultimate 4th level “early” EM countries category of the rankings.

These choices correlate with the cultural thesis of my prior “culture and development” paper[2], which put Southern African countries on top. The CEM 2019 Soft Power Ranking[3] similarly identifies South Africa, Namibia, Ghana, Senegal, Kenya, Rwanda as the top 5 SSA countries with soft power. I recommend the top 2 countries in each region based on these indices. They are thus Botswana & South Africa (Southern Africa), Ghana & Senegal (West Africa) and Rwanda & Kenya (East Africa).

Figure 1: SP-DB mapping of African countries

Thus, my framework relies on these factors – culture, doing business ranking, EM status, & soft power ranking – to recommend sectors in Africa that are likely to be successfully tapped by foreign investors. I rely on the Global Industry Classification Standard (GICS)[4] in this regard.

  1. Energy

Oil & gas exploration decisions are not primarily culture-based. If there is no prospect of finding oil & gas resources in a jurisdiction, it does not matter what cultural variables there are. But in areas where exploration does take place, culture does matter. The pervasive and entrenched corruption in the Nigerian oil & gas industry has cultural underpinnings, for instance.[5] There is also a cultural element to why a robust indigenous value chain around oil & gas exploration has been elusive in Nigeria, the continent’s top oil producer. Government-owned refineries, the only ones in any case, are moribund or underperforming. Instead, fuel is largely imported.

Would it be profitable for a foreign investor to invest in a refinery in Nigeria, say? It is highly unlikely without local support. But a local investor like Aliko Dangote, Africa’s richest man, who is currently building a refinery in Lagos, Nigeria’s commercial capital, is incidentally likely to be successful, however. This is because in addition to his having access to foreign capital, he is also fully enmeshed in the political, social and cultural fabric of Nigerian society.[6] A foreign investor looking to invest in the sector would thus be well-advised to invest through such an influential local investor; if at all.

  1. Materials

A good example in this regard is cement manufacturing, which with increased automation, no longer requires as much manpower as in the past. And with automation comes requirements for new skillsets and know-how, most of which are scarce on the African continent and take time and resources to acquire locally. Top-tier management talent is also in short supply. The pan-African success of Nigeria’s Dangote Industries, which relies a great deal on Indian expatriates, who are world-renowned for their work ethic[7], to fill the skills gap bears lessons in this regard.[8] So even when an investment decision on a materials venture on the continent relies on where the key raw material is located, disadvantages related to skilled labour and capital could easily be overcome with foreign alternatives.

The success of the Chinese in illegal Ghanaian gold mining, which contiunes unabated despite government action, is also a case in point.[9] Chinese entrenchment in Ghana’s mining sector is on the back of a pervasive local culture of artisanal-type but illegal “galamsey” small-scale mining practice. With many poor Ghanaians dependent on galamsey for their livelihoods, and the Chinese now major players, it has become very difficult for the government to clean up the sector. The illegality is not at all endorsed here. But the cultural element as a factor in the success of the Chinese in the Ghanaian gold mining industry is noteworthy.

  1. Industrials

Aerospace & defence, machinery and transportation industry groups thrive in innovative cultures. Southern African countries are ideal. They score highest for individualism and other relevant cultural dimensions. Incidentally, these industry groups already thrive in South Africa. Would they do similarly well in the identified countries in East and West Africa? The low scoring for individualism and high power distance rankings do not recommend them well for such investments.

  1. Consumer Discretionary

Downstream automobile production is enjoying a resurgence in Africa. Foreign brands have set up bases (or plan to) in Rwanda, Kenya and Ghana.[10],[11],[12] Unsurprisingly, much more upstream activities (e.g. design) take place in South Africa, which already has a thriving automobile industry. There is easily a cultural explanation for why the labour-intensive but less innovative downstream activities (e.g. assembly) are more viable in East and West Africa while a broader spectrum of the value chain thrives in South Africa. On the consumption side, however, almost every African country qualifies.

Retailing (apparel, etc.) is also more lucrative in South Africa, where a mall culture is already entrenched. The case of South African retailer Woolworths is instructive.[13] When it expanded to West & East Africa, it failed. Still, its business continues to thrive in South Africa. Incidentally, relatively small-scale local retailers, who import apparels etc., thrive in these same West & East African countries.

  1. Consumer Staples

Food & staple retailing has been found to be successful in almost all African countries. South African retailer Shoprite’s success in its African ventures is a good example; albeit they are floundering lately. And while largely a low-cost retailer, this has not been primarily the source of its competitive edge in its operations outside South Africa. A local culture of projecting success in Nigeria, say, means a visit by the average shopper to Shoprite during the weekend is more than just about shopping.[14] In general, food, beverage & tobacco investments have been similarly successful across the continent. Still, foreign and local firms involved in the industry have had to rely on robust market research on local cultures to succeed.

  1. Healthcare

High-end pharma activities are largely not viable in most African countries. Still, when a venture relies on certain local factors for success, it is still feasible. 54gene, a Nigerian healthcare startup, leverages on the local population for Africa-focused genetics research.[15] That is, even as local expertise is scarce. Diaspora expertise fills this gap. And much of its output feeds into ventures abroad. So, this is an example of a high-end innovative venture that uses the advantages of a large population and overcomes the expertise constraint using highly qualified diaspora Africans who also understand the local culture.

  1. Financials

There are now quite a number of pan-African banks; mostly headquartered from South Africa & Nigeria. Insurance has not been similarly successful across Africa, with West Africa the continental laggard.[16] Insurance unsurprisingly thrives in South Africa, which scores high on individualism and low on power distance. I would not advise foreign investments in the insurance sector in West & East Africa, for instance. But my framework would certainly recommend one in South Africa.

  1. Information Technology

Only southern Africa comes close to being well-suited for high-end tech hardware and semiconductor production. The latter is virtually non-existent on the continent, in any case. Low-end tech hardware like PC assembly could thrive almost anywhere. But such low-end tech hardware production is already being phased out. A Chinese firm manufactures phones on the continent, though.[17] Software and services, on the other hand, could be viable in most African countries. The success of Nigerian tech talent firm Andela is a good example. Call centres would certainly also thrive across the continent, since talking is a favourite past-time.

  1. Communication Services

Collectivism, high power distance scores, etc. support talking as a past-time in most African countries. The huge success of South Africa’s MTN in Nigeria is an ideal case of how an investment decision based on a cultural practice proved to be quite profitable.

  1. Utilities

Except for South African countries, where there is relatively high state capacity, my framework would not recommend an investment in the African utilities sector; not in the traditional way, at least. Innovative solutions like off-grid, solar & other renewable power solutions are proving to be viable, though. But they tend to be development-oriented and better suited for NGO-type ventures.

  1. Real Estate

My framework would not recommend REITS ex-South Africa. There is a culture of direct house ownership for those who can afford it. And for rented real estate, there is a huge informal element in most African countries.

 

Appendix
Table 1: Soft Power v Doing Business

Soft Power Ranking Doing Business Ranking
South Africa 19 82
Tunisia 29 80
Botswana 31 86
Namibia 40 107
Ghana 41 114
Morocco 47 60
Senegal 52 141
Egypt 54 120
Sierra Leone 55 163
Kenya 57 61
Zambia 61 87
Rwanda 62 29
Algeria 65 157
Malawi 66 111
Gabon 68 169
Mauritania 69 148
Ivory Coast 73 122
Uganda 74 127
Zimbabwe 75 155
Burkina Faso 76 151
The Gambia 77 149
Tanzania 78 144
Togo 79 137
Madagascar 80 161
Guinea 81 152
Nigeria 82 146
Mozambique 85 135
Libya 86 186
Angola 87 173
Mali 88 145
Niger 89 143
Cameroon 91 166
Congo Repubic 92 180
Chad 93 181
Sudan 95 162
Burundi 96 168
CAR 99 183
DRC 100 184
South Sudan 102 185

Source: Nanyang CEM, World Bank

 

References
[1] Nanyang Centre for Emerging Markets (2019). 2019 Emerging Market (EM) Rankings: Feeling the pulse of an investor. Retrieved from http://www.nbs.ntu.edu.sg/Research/ResearchCentres/CEM/Research/Pages/Annual-Emerging-Market-Rankings.aspx

[2] Raji (2019). Culture & development: The case of Africa. Available at https://rafiqraji.com/2019/10/31/culture-development-the-case-of-africa/

[3] Nanyang Centre for Emerging Markets (2019). Revisiting Soft Power: 2019 Rankings. Retrieved from http://www.nbs.ntu.edu.sg/Research/ResearchCentres/CEM/Research/Pages/Annual-emerging-market-soft-power-index.aspx

[4] S&P Global & MSCI (2018). Global Industry Classification Standard. Retrieved from https://www.spglobal.com/marketintelligence/en/documents/112727-gics-mapbook_2018_v3_letter_digitalspreads.pdf

[5] Ehiemua, S. (2015). Nigeria crude oil: Sources of corruption and economic disparity in the nation. European Journal of Research in Social Sciences, 3 (4), 76-83. Retrieved from https://www.idpublications.org/wp-content/uploads/2015/04/NIGERIA-CRUDE-OIL-SOURCES-OF-CORRUPTION-AND-ECONOMIC-DISPARITY-IN-THE-NATION.pdf

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macroafricaintel Weekly | 11 Nov

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Click here for PDF version

Date Data / Event Period Forecast Previous
13 Nov South Africa Retail Sales, % yy Sep 2019 2.2 1.1
14 Nov South Africa Mining Production, % yy Sep 2019 -2.2 -3.2
Botswana CPI, % yy (mm) Oct 2019 2.5 (0.2) 3.0 (0.1)
Tanzania CPI, % yy (mm) Oct 2019 3.7 (0.1) 3.4 (-0.1)
Namibia CPI, % yy (mm) Oct 2019 3.2 (0.3) 3.3 (0.3)
Nigeria CPI, % yy (mm) Oct 2019 11.7 (1.1) 11.2 (1.0)
South Africa CPI, % yy (mm) Oct 2019 3.9 (0.3) 4.1 (0.3)