Here are three big stories from Africa’s business landscape you (probably) didn’t miss but should keep in mind this week:
The naira’s float is sinking it
Earlier this month, the Central Bank of Nigeria implemented a clean float foreign exchange management system. This policy allowed the naira to trade freely against the dollar instead of maintaining a pegged rate. However, this move is coming at a cost: the naira is seeing a historic plummet against the dollar.
Nigeria’s currency hit a record low of N815 against the dollar after the spot market closed on Wednesday, according to Refinitiv data. Trading on that day started at N741.21. However, this was not the steepest single-day drop. After the CBN announced the new policy, the exchange rate plunged from N477 per US dollar on June 13 to 750 on June 14. Since then, the rates have been on a volatile downtrend. On Friday, trading closed at N770 at the Investors’ and Exporters’ window.
Analysts expect the currency float to help close the gap between official and parallel market exchange rates, boost investor confidence, increase foreign inflows, reduce import costs, and ease pressure on the naira. But it’s not that simple. Nigeria’s dollar liquidity and export volumes are still too low. That’s why the CBN announced the removal of limits on the amount of dollars depositors could place and hold with local banks last week.
Zambia’s creditors are giving it breathing space.
On Thursday, Zambia announced a breakthrough debt relief deal with its bilateral creditors that will see its payments on $6.3 billion of debt stretched out over about 20 years, with a three-year grace period. This deal ends a long impasse over the nation’s 2020 default. Zambia was the first African country to default on its sovereign debt during the COVID-19 pandemic and has struggled since then in protracted discussions to agree on a deal. But French president Emmanuel Macron’s government helped seal it at the global finance and climate summit in Paris.
The bulk of the deal covers loans from Chinese creditors, who account for about one-third of Zambia’s total external public liabilities of more than $18 billion. The IMF put Zambia’s bilateral debt at nearly $8 billion at the end of 2021, but the government said only $6.3 billion of this will be restructured. It’s unclear what’s excluded and why.
This debt relief is crucial for Zambia to unlock a much-needed $188 million payment from the International Monetary Fund. However, the job is not yet complete. The government still needs to ratify the deal with each lender and negotiate terms with commercial creditors, including bondholders. Nevertheless, according to President Hakainde Hichilema, Zambia has concluded the most difficult parts. Zambia’s accord will free up the money it was using to service debt to grow the economy and invest.
Russia’s war hit home.
Plot twists don’t happen in movies alone. They do in real-life too. Over the weekend, the Ukraine war came home to Russia in the most dramatic way when there was an attempted coup on Vladimir Putin’s government. The coup plot was orchestrated by Yevgeny Prigozhin, the head of the Wagner Group, a notorious mercenary outfit that has fought for Russia in various conflicts around the world. Prigozhin, who was once a close ally of President Vladimir Putin, had fallen out with the defence minister, Sergei Shoigu, over the war in Ukraine.
The attempted coup was suddenly abandoned after 24 hours, but not before the Wagner commander and his troops had taken over military headquarters in the key city of Rostov on Don, had shot down several military helicopters, and advanced several hundred kilometres towards Moscow.
According to reports, the negotiations that ended the coup included a “Stipulation” that the Majority of Wagner PMC Forces would be redeployed out of Russia and Ukraine to Africa.
ICYMI: Market Roundup
- Nigeria’s equities market edged upwards over a 5-day trading week, with the All-Share Index gaining 0.34% to close at 59,206.63 points.
- The top gainers were Skyway Aviation Handling Company (44.53%), FTN Cocoa Processors (40.74%), Chams Holding Company (35.71%), Japaul Gold & Ventures (32.65%) and Golden Guinea Breweries (31.13%). Top decliners were Jaiz Bank (-18.97%), Secure Electronic Technology (-17.39%), C & I Leasing (-13.78%), Sterling Financial Holdings Company (-12.88%), and Ikeja Hotel (-11.76%).
- The naira closed the week at ₦770.17/$ at the Investors’ and Exporters’ window, down from the previous week’s ₦663.04/$.
- Brent crude closed the week at $74.64 per barrel, while West Texas Intermediate closed at $69.85 per barrel.
- The crypto markets had a bullish week, with the market cap gaining 12.26% from $1.06 trillion to $1.19 trillion. Bitcoin gained 15.07% to start the new week at $30,171; Ether gained 8.77% to start at $1875, while BNB lost 3.09% to start at $235.
- Visa announced the launch of the new Visa Africa Fintech Accelerator program to help enable Africa’s expanding startup community through expertise, connections, technology, and investment funding.
- Seedstars Capital and Fondation Botnar have announced the launch of the Seedstars Youth Wellbeing Ventures mandate. The aim is to invest $20 million in early-stage, purpose-driven companies that would improve the well-being of young people in low- and middle-income countries across the continent.
- The Fashion Kingdom (TFK), one of Egypt’s leading curated fashion marketplaces, has acquired Opio, a direct-to-consumer (D2C) fashion brand, to create a powerhouse fashion group.
- Kubik, a startup that transforms hard-to-recycle plastic waste into affordable, low-carbon building materials, announced the completion of a $3.34 million seed investment round.
