South Africa: Latest News
Staff, 10:25 am
Venture Capitalists are becoming more and more interested in investing in African startups, and this is only expected to increase over the next few years. According to Clarium Capital founder Peter Thiel, entrepreneurs should look for secrets where no one is looking and turn them into business opportunities. Thiel says it best in his book: […]
Tom Jackson, 1:00 am AFKI Original
South African startups were the most popular in Africa for investment in 2016, with Cape Town and Johannesburg establishing themselves as hubs. Junk status could have a serious impact on this. Michael Jordaan, former CEO of South Africa’s First National Bank, is now an investor in innovative tech startups. The ratings downgrade is bad news for the economy as a whole but startups will be less affected than larger firms, he told AFKInsider. “Startups need to dominate a niche at first and in this sense the macro economy is a very small factor,” he said. “Startups should take comfort that they will survive and thrive if they keep their customers happy.”
Peter Pedroncelli, 9:29 am
South African Reserve Bank governor Lesetja Kganyago believes that the country is still capable of thriving despite being downgraded to junk status by two credit ratings agencies in the past few weeks. President Jacob Zuma upset markets and triggered downgrades from both S&P Global Ratings and Fitch Ratings to BB+ after his surprise cabinet reshuffle at the end of March, which included the removal of respected finance minister, Pravin Gordhan.
Peter Pedroncelli, 5:29 am
The Democratic Republic of Congo hopes to import 200 megawatts of power from South Africa, which would enable Africa’s largest copper-producing nation to boost copper production in 2017 by as much as 20 percent. South African state-owned utility Eskom has made 1000 megawatts available for export over the next decade. Trust issues between mining companies and the Congolese state-owned power company threaten to derail the deal. Previous promises to deliver energy supply have failed.
Kurt Davis Jr., 2:00 am AFKI Original
Short-term volatility and uncertainty in the African growth story create opportunities for hedge funds. Hedge funds generally operate more flexibly than private equity, and they have the creativity to generate bond-like returns that outpace inflation. Critics say hedge funds have limited liquidity in an opaque world. The riskiest play — but with big returns — is in agriculture and land. Where land is for sale in Africa, investors are making a play for a limited resource, especially when it’s arable, ripe for production or ideal for commercial and residential construction.
Staff, 5:34 pm
South African food giant Pioneer said the deal would have created Africa’s largest consumer goods company. The deal was 95 percent finalized when the country’s foreign-currency debt was downgraded to junk by S&P and Fitch. The downgrade followed Zuma’s cabinet reshuffle and removal of Finance Minister Pravin Gordhan. It’s not clear what impact the downgrade will have on M&A in South Africa. With economic conditions expected to worsen, companies could struggle and could go through a period of distressed sales.
Tom Jackson, 12:36 pm AFKI Original
Across Africa, banks are choosing to work with startups rather than compete against them. Citibank has run mobile challenges in Nairobi, Standard Bank has incubators in South Africa, and Barclays has just selected its second cohort in its Cape Town-based accelerator. Fintech startups are reimagining the concept, delivery and consumption of financial services in ways banks have been unable. However, such companies lack the financial clout and access to customers to ensure mass uptake of their solutions. Banks can offer them this.
Peter Pedroncelli, 5:36 am
The World Bank Group has committed to supporting the growth of Africa’s digital economy with the launch of XL Africa, a business acceleration initiative that will provide a raft of benefits for the 20 most promising startups in sub-Saharan Africa over the next five months. African digital entrepreneurs will have an opportunity to be mentored by various global specialists, increase their visibility on the continent and receive access to corporate partners and investors.
Dana Sanchez, 9:40 pm
Mastercard hopes to roll out fingerprint payment cards globally by the end of 2017. South Africans’ willingness to try new technology and their familiarity with using biometrics for identification made the country an ideal market to test the payment cards. They’ll work with any card terminal around the world that accepts embedded chip technology. In the U.S., embedded chips are increasingly popular. Regulations make merchants and financial institutions liable for breaches resulting from a lack of support for chip-and-pin cards. Some merchants won’t have to get new equipment to accept fingerprint-enabled cards.
Dana Sanchez, 4:53 pm
An IPO today on the Johannesburg Stock Exchange introduced a new option for investors who want to add African exposure to their portfolios. The AMI Big 50 ex-SA ETF offers 50 African blue-chip companies outside South Africa. The IPO is a world first – an ETF offering exposure to a pan-African index that excludes South Africa. “A lot of people do worry about the liquidity risk, but being an ETF means that there is a secondary market on the JSE which allows investors in smaller quantities to trade exposure in and out of Africa,” a stakeholder said. The ETF is managed by Cloud Atlas, which plans to launch two more Africa-focused ETFs by July.
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