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Ethiopia will use some of the proceeds from partially privatising state companies to pay off government-guaranteed debts issued by lenders, including the largest state bank by assets. The two main state lenders are Commercial Bank of Ethiopia, which accounts for more than 60% of the nation’s financial-services industry; and the Development Bank of Ethiopia (DBE), which allocates credit as directed by the government. Ethiopia’s privatisation plan is part of a shift in strategy under Prime Minister Abiy Ahmed to reduce national debt, generate foreign exchange and strengthen large swaths of the economy of Africa’s second most-populous nation. Ethio Telecom and assets owned by Ethiopian Sugar Corporation are first on the list, with rail, industrial parks and logistics assets among those slated to follow.
New York Continues to be the Most Important Hub for Nonstop Travel to Africa
Half of the nonstop routes out of the United States to the continent are routed out of either John F. Kennedy International Airport or Newark. American Airline’s new Philadelphia to Casablanca route will be the airline’s first flight into the African continent. But the new United route is not the first time the airline has flown nonstop to Africa. Three years ago, United discontinued a Houston to Lagos, Nigeria, route that serviced travelers in the energy and oil industries. Airlines are increasingly introducing nonstop flights, dramatically reducing travel time and further linking the United States to major African nations.
A Resurgence of Resource Nationalism Across the Continent
Last week, Sierra Leone abruptly cancelled an iron ore mining license with Gerald Group, a metals trader, “with immediate effect”. The action is the latest in a string of disputes between governments and mining companies in Africa, which is home to rich resources of iron ore, copper, gold and diamonds. A number of African governments are working to right what many see as historic imbalances in favor of foreign companies rooted in colonialism and to readdress contracts signed at earlier stages of certain economic cycles. Commodity prices have rebounded since the end of the China-driven boom in 2015, with increased use of metals, including cobalt and copper, in renewable energy technologies such as batteries and wind turbines. The Sierra Leonean government’s actions came as iron ore prices remain elevated at $94.5 a metric ton, having surged to a five-year high above $125 earlier this year.
The aid money that held the country steady after its brutal civil wars is ebbing and inflation has surged to more than 25%. Many businesses are struggling to stay afloat. But one industry seems to be weathering the storm: shipping. The tiny west African country, with a gdp of just $2.1bn, has one of the largest seagoing fleets in the world. Over 4,400 vessels which is about 12% of global shipping fly its flag. And the number is growing. The secret of this maritime success is an old practice known as the flag of convenience. In the 1920s shipowners began to register their vessels abroad for a small fee. This allowed them to avoid taxes and labour laws back home. Liberia had few regulations and made it easy to sign up. By the 1960s it had the largest merchant navy in the world.
Halting Food Smuggling into the Continent’s Most-populous Nation
The shutdown of Nigeria’s land borders to tackle rampant food smuggling and encourage an agricultural revival in Africa’s top oil producer is having an unintended side effect: higher inflation. A spike in food prices saw the annual consumer-inflation rate rise to 11.2% in September, after falling to a 3 1/2-year low in the preceding month, the National Bureau of Statistics. Food-price growth accelerated for the first time in four months, rising 1.3% from August. In late August, Nigerian President Muhammadu Buhari ordered the partial closing of its boundary with Benin to curb smuggling of rice, a staple. With a population barely 5% of Nigeria’s, Benin has turned into the world’s No. 2 exporter of rice while Nigeria is expected to be the biggest buyer of the grain this year. The policy has hurt food sellers in the capital, Abuja, who say Nigerians prefer imported food items because they’re more affordable. Prices of imported products such as rice, palm oil and frozen chicken have gone up by more than 50%, they say.
As part of its expansion plans into Africa, global ride-hailing firm Uber Technologies launched a pilot test of their taxi boat service on Friday in Lagos, Nigeria's commercial hub. To attract customers who want to avoid the city's frequently congested roads, Uber will operate a two-week pilot phase of the boat service in conjunction with the Lagos State Water Authority (LASWA) and local boat operators. The service will be available only on weekdays for the next two weeks and will cost $1.30 per trip. Lagos has an estimated population of about 22 million people and counting, more than double London or New York's tally. One study said commuters in Lagos an average of 30 hours a week stuck in traffic.
Safaricom, is considering buying a stake in Ethiopia’s telecoms monopoly under a privatization plan. The company joins many other mobile operators like Orange, MTN, Etisalat, Zain and Vodafone with interest in Ethio Telecom. Acquiring a stake by Safaricom would be a much easier solution for the company than starting afresh and setting up its own telecommunication company. The rigorous process of buying land, constructing buildings, recruiting staff and growing its brand in the Ethiopian market is time-consuming and hectic. Not to mention competing for users with the dominant Ethio Telecom. With a subscriber base of 44 million, Ethio Telecom makes Ethiopia the largest single-country customer base in Africa. This figure, coupled with Ethiopia’s fast-growing mobile market, is an attraction for global investors.
Addis Ababa is Undergoing its Most Radical Facelift in a Generation
The old station will anchor a vast development project, also called La Gare, in the heart of the city comprising malls, offices, five-star hotels, more than 4,000 luxury apartments and a surrounding park, as well as, in theory, low-cost housing for the district’s current residents. Covering 36 hectares and with a price tag of $1.8bn, Eagle Hills’ project was the largest and most expensive of its kind in the country’s history when it was announced last year. It is now already about to be surpassed: by a Chinese company who is investing $3bn in a 37-hectare, upmarket complex in Addis Ababa’s Gotera district. And more projects are coming, with offcials citing potential interest from European, American and Turkish investors.
Cashing in On the Infrastructure of Africa’s Mobile Revolution
Helios Towers rose 1.8% in London after raising $364 million in a long-delayed share sale that gives investors a foothold in Africa’s fast-growing wireless tower industry. Shares in the company backed by billionaire financier George Soros priced at 115 pence apiece in the initial public offering, the bottom of the range, the company said in a statement. Shareholders including Millicom International Cellular SA and Bharti Airtel sold down their stakes in the London IPO, with Helios set for a market valuation of 1.15 billion pounds. Helios has more than 6 800 towers spread across five African countries and the money raised from selling new shares will help it to roll out fourth-generation mobile services and keep pace with soaring mobile data consumption on the continent. It was originally looking to raise as much as $500 million.
A passion for diamonds drove South African sisters Mathole and Ramodipa to drop their careers as an investment banker and an optometrist. The siblings run one of the few women-owned diamond polishing businesses in the world. And, despite the slumping global market for diamonds, and a shrinking industry in South Africa, they’ve managed to keep shining and developing new female talent. After qualifying as diamond valuators, in 2008 they started a cutting and polishing shop, Kwame Diamonds — the first and only one run by sisters in South Africa. The sisters cut their way into the diamond industry, selling only responsibly sourced, certified stones bought from mining companies operating in South Africa.
