Private equity outlook optimistic in East Africa
ast Africa is the focus of private equity interest.
»East Africa attracted nearly a third of the 66 private equity deals in sub-Saharan Africa in 2011 – worth $188m out of a total $3bn, or 6%. Deals worth six times as much were done in West Africa, according to the East AfricaPrivate EquityConfidenceSurveyfrom Deloitte and Africa Assets, Kenya. Despite growing interest, private equity penetration into East Africa remains low.
onetheless, the outlook is positive. East Africa “experienced a significant influx of private equity interest in 2011”, says the report. It finds that 16 PE funds dedicate themselves solely to East Africa, beside another 37 broaderbased funds that also invest in the region. Optimistically, 80% of people surveyed by the report expect private equity activity in the region this year to grow. However, 40% of deals are worth less than $5m, with only 10% worth more than $20m, since donor-backed funds are keen to foster job creation through small and mediumsized enterprises (SMEs), and the fact that growth is strongest among smaller businesses. Large PE firms such as Actis have expressed doubts about the potential for bigger deals to be done in East Africa, says the report.
n everything from schools and agribusiness to manufacturing and healthcare, the latest survey, of 38 respondents, notes “increased appetite” for investment in PE ventures, not only in powerhouse Kenya but also in Ethiopia, South Sudan and DR Congo. Infrastructure and telecoms lead the sectors, although respondents said they are keen to focus on financial services, agriculture and agribusiness in the coming year. Ghana imports almost 70% of its rice from abroad at a cost of more than $500m
Uganda attracts $3bn in oil investments Uganda's oil rush has attracted an estimated $3bn in exploration investments since 2006. It is estimated to have brought in $120m in revenue from withholding taxes and stamp duty. $472m is expected from the sale of part of Tullow’s acreage to Total and CNOOC Mozambique Sumol Compal Moçambique plans to invest $10.4m in local production of fruit juices and nectars, both for the home market and export to the SADC. Its Portuguese parent group’s international sales in 2011 were €80m, up 30% year on year
$56mTheAllianceforaGreen Revolution in Africa (AGRA)
received a $56m grant in funding from the Bill & Melinda Gates Foundation to assist smallholder farmers in sub-Saharan Africa tion of land rights in Ghana, will receive a $1m loan to strengthen property rights for the poor, and GADCO, an integrated agri-food company, will receive a $1.5m equity investment. The Actis fund, based in Accra, will support entrepreneurs who create businesses that provide affordable housing, healthcare, education, clean energy and water, and agricultural goods and services. Since 2001, it has invested more than $70m in enterprises in South Asia and East Africa
CONSUMER CREDIT Visa and MasterCard target East Africa MasterCard has opened its East African regional headquarters in Nairobi. Its existing four African offices are in Cairo, Casablanca, Lagos and Johannesburg.
The company is developing payment methods such as PayOnline, a virtual card that operates off a mobile wallet, launched in collaboration with mobile operator Airtel and Standard Chartered Bank. PayOnline allows Airtel subscribers to shop online, even if they don’t have a bank account.
Visa has announced a partnership with the Rwandan government to develop the infrastructure required for electronic payments and to promote electronic payments innovation.
In Kenya, Ecobank has become the first bank to roll out chip technology for all its Visa debit card products. It offers high-level security due to an embedded microprocessor, which enables more secure transactions at ATMs and point of sale. Ecobank said that Kenyans are increasingly using debit and credit cards to make payments, with over 4.5m debit cards currently issued. AGRICULTURE Mozambique joins cotton initiative Mozambique is the latest country to sign up to the Cotton Made in Africa (CmiA) initiative, joining Benin, Burkina Faso, Côte d'Ivoire, Malawi and Zambia in a bid to improve the living conditions of smallholder farmers through trade.
Around 75,000 smallholder cotton farmers in Mozambique will participate in the scheme, which will collaborate locally with the cotton company Mozambique Plexus. Around 255,000 farmers are expected to benefit overall.
The initiative and its supporting organisation, the Aid by Trade Foundation (AbTF), estimate 13,325 tons of ginned cotton will come from Mozambique in harvest season 2011/12, meaning that scheme is set to produce an estimated 160,000 tons of ginned cotton this year. Kenya GM maize seeds to go on sale Genetically modified maize varieties may be available in Kenyan shops in the next two years. Research at the Water Efficient Maize for Africa (WEMA) Project, has
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