Kurt Davis Jr.
Kurt Davis Jr., 12:26 pm AFKI Original
Egypt floated its currency earlier this month. The Egyptian pound dropped nearly 50%. Early signs show increased investment in the country. Despite diverging perspectives on the methodology, most economists buy the long-term upside. If the Egyptian story is any indication of success, letting the naira hit rock bottom on a fully-floated basis will result in greater investment in the country and a recovering naira over time. As one local put it, Nigeria should be able to do this (and many other things) better than Egypt. Maybe this is the opportunity to back up such bold statements.
Kurt Davis Jr., 10:10 am AFKI Original
The risk in some sub-Saharan Africa deals can push mezzanine interest rates up between 20-30%. Yet mezzanine finance is a vital opportunity for the SSA financial market. Avoiding equity dilution is a top concern for entrepreneurs and family business owners. Mezzanine finance is a way to do that. If the company is willing to assume more debt to avoid equity dilution, then mezzanine finance is vital. Mezzanine finance is also a vital part of greenfield or brownfield infrastructure, especially power projects.
Kurt Davis Jr., 3:41 pm AFKI Original
Sub-Saharan African banks are late to the party. More than 75% of Africans lack access to traditional banking. Fintech offerings with the most potential are the ones that address the unbanked and underserved. Addressing Africa’s poor is impactful and a money maker, but it’s also time-consuming — something to consider if you want a quick return. Africans may be quick to try a mobile app or technology but end users are not always quick adopters. Here are five sub-Saharan markets with the most opportunities in fintech.
Kurt Davis Jr., 8:49 am AFKI Original
Japan has a favorable rating in many countries. The Chinese have been criticized for executing half-effort projects such as using poor quality materials on roads. China-Africa trade in 2015 amounted to about $180 billion — nearly 7.5 times more than Japan-Africa trade. African leaders are watching and appear willing to benefit from the sociopolitical competition between the two countries. If the numbers grow because of the “race to Africa,” Africa will benefit.
Kurt Davis Jr., 10:42 am AFKI Original
When the vote closes on Nov. 8 in the U.S., Ghanaians may realize that they were watching the American version of their election, which will take place in December. The opposition New Patriotic Party, still led by Akufo-Addo, is pushing a narrative centered on the economic trail of tears. He prefers to ask the crowd if their lives have improved in the last eight years, emphasizing the perceived economic woes of President Mahama’s party’s eight years in office.
Kurt Davis Jr., 9:53 am AFKI Original
Critics argue the Trans-Pacific Partnership will cancel out trade benefits that many African countries have under the African Growth and Opportunity Act. Others say TPP is the newer, better AGOA. The next trade agreement between the sub-Saharan African countries and the U.S. as well as Europe should be a better version of TPP. Intra-Africa regional trade still accounts for just 25% of total exports in sub-Sahara. By comparison, European and Asian intra-regional exports are at 70% and 50%. Sub-Sahara still has a way to go.
Kurt Davis Jr., 1:34 pm AFKI Original
African private equity deals fell to $2.5 billion in 2015, compared with $8.1 billion in 2014. Fundraising and transactions are expected to be down further in 2016. It is time to buy for 2017. Market expectations are low in some places, so asset prices are low. Logistics and financial services – going against the past market movement – are huge opportunities if you can buy in at low asset prices and ride the unavoidable African rebound in the next year and beyond.
Kurt Davis Jr., 3:21 pm AFKI Original
Fund managers have struggled in 2016 to raise capital for sub-Saharan Africa-focused natural resource funds. Here’s where having a $1 billion sub-Saharan Africa natural resources fund really helps. In 2017, expect more assets on the market at more reasonable prices. The focus will be on capital management. Expect a buyer’s market. Low M&A value will persist but expect a recovery in volume of deals. Transaction structures will become more complicated. Expect contingencies as buyers and sellers attempt to manage exposure to commodity price volatility.
Kurt Davis Jr., 8:52 am AFKI Original
Many Kenyans worry a crash may be coming. Bubble advocates stress the near-30 percent annual growth rate in real estate since 2011, but occupancy rates are stable and high at 90 percent. Residential housing demand has always outpaced supply, particularly in lower- to middle-income segments of the market. The reality is most housing constructed in Kenya in the last five years is unaffordable to most Kenyans. Less than 10 percent can afford a mortgage. A local land price index shows that land and property returns in Kenya are outperforming treasury bills, bonds and stocks.
Kurt Davis Jr., 10:00 am AFKI Original
Under the new law, lending rates will be capped at 4 percentage points above the benchmark central bank rate. The Kenya Bankers Associations criticizes the move as a populist policy, arguing that President Kenyatta has his eye on next year’s election and hopes the cap will boost the economy in the short term. Kenyans supporting the bill are asking the bankers to suggest a better rate if this bill is so bad. Some fear a cap on interest rates brings potentially riskier borrowers into the system.