United Capital CEO Acquires 1M additional shares worth ₦5.17M

Esan Bolaji
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United Capital CEO Acquires 1M additional shares worth ₦5.17M
Peter Ashade, Group CEO of United Capital Plc, a leading African investment banking group providing capital and financing solutions to African governments, companies, and individuals, has increased his stake in the company in accordance with the insider dealing rule by the NSE.

According to the statement released on the Nigerian Stock Exchange, Peter purchased ordinary shares of 1,000,000 units at N 5.17 per unit on January 14, 2021.

United Capital CEO Acquires 1M additional shares worth ₦5.17M
SOURCE: NSE

United Capital’s Financials

United Capital Plc grew its Gross Earnings and Net Income (i.e. PAT) by 33% and 26% respectively to ₦7.069 billion and ₦3.463 billion compared to the corresponding period of 2019.

Sharp Drop in Other Income Failed to Impact Gross Earnings

Despite the 65% decline in United Capital Plc, Other Income (to ₦308.82 million) relative to the corresponding period of 2019, the company’s Gross Earnings rose by 33% in 9M’2020 to print at ₦7.069 billion compared to ₦5.322 billion reported in 9M’2019.

The increase in Gross Earnings was jointly driven by a 55% surge in Investment Income to ₦74.386 billion, a 62% increase in Fee & Commission Income to ₦2.249 billion, and a 61% spike in Net Interest Margin to ₦125.28 million relative to 9M’2019.
Insider Dealing brandspurng Group CEO of United Capital Plc Acquires 1.78M Units of Shares

Brief Profile

Peter Ashade is an astute investment banker and business leader with 29 years’ cognate experience in Nigeria’s capital market; 14 years as Chief Executive.

He is a well-rounded capital market player having participated in various landmark capital market transactions across all segments of the market and a member of various policy-formulating capital market committees. He is reputed for transformational leadership and outstanding execution capabilities.

Prior to his appointment as the Group CEO of United Capital, Peter was Managing Director/CEO, Africa Prudential Plc (then UBA Registrars Limited). Peter led the transformation of the business from a subsidiary of UBA Plc to the only listed investor services firm on the Nigerian Stock Exchange. More than 15000% growth in profitability was achieved within eight years.

He championed disruptive innovation in the registrars’ business in Nigeria, pioneering many e-products and successfully achieved the business diversification of Africa Prudential Plc.

Peter recorded a number of landmark achievements at Africa Prudential Plc, including consistent growth in earnings and payment of dividends, and development of the first share registration portal in Nigeria in 2008.

Under his leadership, the company also developed GreenPole, the first web-based core registrars operating software in 2016, and the first USSD based product in the Nigerian Capital Market in 2017.

Under his leadership, the company’s blue ocean strategy also produced some giant strides outside the Capital Market space. Africa Prudential ventured into the cooperative space and within a short while, the company developed EasyCoop Cooperative Manager, which is Nigeria’s first independent self-service portal for cooperative thrift and loans societies.

This feat, coupled with the company’s growing reputation in deploying business support solutions resulted in the firm’s appointment as consultant development partners to the International Cooperative Alliance – Africa (Alliance Africa).

Among many other achievements, Peter is a two-time recipient of the Business Day Top 25 CEOs Awards (2014, and 2018).

Other awards won by the company include International Quality Crown Award (London, 2013), Best Profit Margin Ratio Company – PEARL Awards 2015, Best Corporate Governance Company in Nigeria – PEARL Award 2015, and Best Registrar Firm in West Africa Award at the 2017 West Africa Innovation and Excellence Awards by the Africa-Canada Trade Alliance.

Peter has a diverse academic and professional background:

  • BSc, Banking and Finance
  • MBA, Marketing
  • MSc, Finance
  • Fellow, Institute of Chartered Accountants of Nigeria
  • Fellow, Chartered Institute of Bankers
  • Fellow, Institute of Capital Market Registrars
  • Associate, Chartered Institute of Taxation of Nigeria
  • Associate, Institute of Directors
  • He is an alumnus of the prestigious Lagos Business School (CEP23, LBS).

He is currently:

  • Treasurer, Institute of Capital Market Registrars (ICMR)
  • 1st Vice Chairman, Chartered Institute of Bankers of Nigeria (CIBN), Lagos State Branch.

A Slow Start into The New Week as Market Activities Remain Dampened in The Fixed Income Space

ZedCrest Capital
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A Slow Start into The New Week as Market Activities Remain Dampened in The Fixed Income Space

The FGN bond market kicked off the new week on a sluggish note, with light trading volumes consummated in the market despite bond coupon inflows hitting the system. Bond maturities, especially at the curve’s belly, remained aggressively offered throughout the day with very few bids to match.

However, towards the close of business, activities picked up slightly on the 2028s and 2029s bond, which traded within the range of 7.85%-8.00%. Consequently, yields expanded by c.4bps on the average across the benchmark bond curve.

We expect the market to remain sluggish tomorrow as institutional investors queue up their demand towards the monthly FGN Bond auction scheduled to hold on Wednesday. 

Treasury Bills

The Treasury bills market started the week on a tepid note as market participants continue to shy away from the market due to the unattractive yields. Offshore players remained firm sellers of OMO T-bills throughout the trading session as they seek to position for another OMO auction expected to hold later this week.

We saw a few trades executed on the January 2021 bills at 2.50%; however, this was not enough to lift the market mood. The NTB space was also quiet, although we saw few order-driven demands for the new 1yr issue, with trades executed around 0.80%.

We expect trading activities to improve slightly as inflows from tomorrow’s OMO maturities (N226.31BN) should support T-bills’ market appetite. 

Money Markets

Interest rates remained depressed (trading sub 1%) as the Money Market remained flush with cash. System liquidity opened the day at c. N374.62bn positive, buoyed by the 2034 bond coupon inflows of c. N66bn hitting the system.

We expect funding rates to drop further tomorrow as inflows from OMO T-bills maturity of N226.31Bn are expected to boost market liquidity. 

FX Market

The I&E FX Market started the week on a positive note, supported by inflows from exporters, which was duly matched with outstanding demand. Consequently, rates strengthen slightly by N0.84k (0.21%) to close at N393.89/$ with trading volumes improving by 71% D/D at the window.

Parallel market rates continued to weaken as the Naira depreciated by N1.50k (0.32%) against the greenback to close at N474.00/$ in the cash market. In contrast, the transfer rate held steady, closing at N485.00/$ for another consecutive trading session. 

Eurobonds

Trading activities in the SSA Eurobond space today was muted mainly as most participants remained on the sidelines due to the U.S. market closure for MLK Day. For the NIGERIA Sovereigns, the 2032 bond was the major loser today (+10bps) D/D, while the sovereign curve expanded by an average of c.5bps.

In a similar vein in the SSA space, yields on both the ANGOLA and GHANA bond curves closed lower by -c.2bps on the average.

We also witnessed a slow trading session in the NIGERIA Corps space, with yields expanding slightly on most tracked papers except on the ACCESS 2021s, which compressed by -c.2bps.

MTN Nigeria Launches Accelerator Program with Unveil of Y’ello 200

Esan Bolaji
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MTN Nigeria Launches Accelerator Program with Unveil of Y’ello 200

MTN Nigeria has selected 200 Micro, Small and Medium Enterprises (MSMEs) across Nigeria to benefit from an accelerator programme, Y’ello 200, in continuation of The Revv Programme. The initiative was launched to address the critical needs of MSMEs as well as to mitigate against the effects of COVID-19 on their businesses.

Adopting a four-pronged approach that includes masterclasses, access to market, productivity tools support and advisory initiatives, the programme also seeks to address issues in the areas of re-igniting the economy by driving digital inclusion for SMEs.

To further this cause, 200 top-performing MSMEs have been selected from participants in The Revv Masterclasses to undergo further upskilling. The Y’ello 200 was unveiled at the closing ceremony of The Revv Programme which held virtually on Monday, December 14, 2020.

MTN Nigeria Revenue Driven By Surge in Data Revenue in Q3 2020

Speaking at the closing ceremony, Lynda Saint-Nwafor, Chief Enterprise Business Officer, MTN Nigeria, congratulated the selected MSMEs. She said,

“These 200 MSMEs were selected based on their performance and polls during the masterclasses. With MSMEs accounting for 94% of all businesses in Nigeria and 84% of employment, it is a known fact that when MSMEs thrive, the economy thrives. Our goal is to empower MSMEs with the tools to make them thrive in today’s digital economy. The Revv Programme has not ended but enters into its next phase”,

In his keynote address, the Chairman of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Otunba Femi Pedro, congratulated the MSMEs. “Let me sincerely congratulate members of the Y’ello 200 on your perseverance, your quest for knowledge and staying the course during this programme. It is our desire that the knowledge gained will position your business to be stronger and better in the coming years.

Once again, I thank MTN for this laudable initiative. We also use this opportunity to charge this great company that much more is expected to thoroughly empower the millions of MSMEs in Nigeria”, the Chairman concluded.

A recipient, Bolarinwa Yekeen, owner of Nile Delivery Services from Kaduna shared his appreciation.

“On behalf of myself and other beneficiaries, I want to sincerely thank MTN for the insight and eye-opening masterclasses that we attended. I want to say a very big thank you for all the wonderful experiences.”

The Y’ello 200 will enjoy exclusive access to a broad range of technology and productivity tools and services absolutely free, for a period of six months. They will also be supported with access to market and advisory initiatives. The Revv Programme is a give-back initiative targeted at MSMEs and will now be held annually.

Local Equities Market Falls by 0.23% amid Renewed Bearish Activity

Comercio
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Local Equities Market Falls by 0.23% amid Renewed Bearish Activity

Nigeria’s equities benchmark index fell today by 0.23% to 40,963.14 points. Year to date return and market capitalization settled at 2.02%, and N21.41 trillion respectively. Market performance was primarily weighed down by DANGCEM NL which shed 2.40% to N234.60.

Volume traded rose by 51.87% to 1.01 billion units as value traded dropped by 31.33% to N4.39 billion the most traded stocks by volume were LIVING TRUST NL (272.00 million units), JAPAULGOLD NL (92.36 million units) and UNIVINSURE NL (51.78 million units), while ZENITHBA NL (N820.12 million), GUARANTY NL (N422.02 million) and ACCESS NL (N302.96 million) topped the value chart.

The sectorial performance was mixed as the NSE banking, Oil & Gas and Insurance sectors rose by 1bps, 2bps, and 598bps, respectively as the consumer goods, and industrial sectors fell by 62bps, and 43bps, respectively.

Market sentiment was positive as market breadth came in at 1.60x with 37 advancers and 23 decliners.

Money Markets

Funding rates hovered around reference rates on fairly robust system liquidity estimated at N374.62 billion.

We expect interbank rates to hover around current levels in the absence of any funding obligations.

Treasury Bills Market

Yields in the NTB market fell on demand seen at the long end of the curve. Average benchmark yields settled at 8bps lower to 0.39%.

We expect a quiet NTB market tomorrow as yields in the market remain unattractive.

FGN Bond Market

The FGN bond market started the week on a bearish note as selloff at the midpoint of the curve pulled average benchmark yields up by 8bps to 7.04%.

We expect the market to continue to trade cautiously ahead of the first bond auction of the year

FGN Eurobond Market

Record COVID-19 cases continue to weigh in on investor sentiment on FGN Eurobonds. Average benchmark yields rose by 9bps to 6.32%

We expect the market to trade on developments around crude oil prices and prices as well as COVID-19 related news.

Foreign Exchange Market

The Naira appreciated against the US Dollar by 21bps to $1/N393.83 at the investors and exporters window. At the parallel market, the local currency closed flat at $1/N475.00.

Price of Maize Set to Crash, 300,000MT of Maize for Release in February 2021

Esan Bolaji
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Price of Maize Set to Crash, 300,000MT of Maize for Release in February 2021

About 300,000 metric tonnes of maize are soon to be released into the Nigerian market from strategic anchors under the Anchor Borrowers’ Programme (ABP) of the Central Bank of Nigeria (CBN), which watchers believe will reduce the current price of maize from N155,000 per metric tonne.

The anticipated release follows moves made by the CBN, working with the Nigeria Customs Service (NCS), in the last quarter of 2020, to facilitate import waivers to four agro-processing companies to import 262,000 tonnes of maize to bridge the shortfall in production and augment local production.

Nigeria's Poultry affected by Maize Ban Brandspurng

With the release of 300,000 metric tonnes in February 2021, it is expected that the prices of maize in the Nigerian market will drop significantly, thereby increasing demand for the crop and ultimately enhancing the gains of maize farmers.

Prior to the CBN-NCS collaboration, President Muhammadu Buhari had approved the release of 30,000 tonnes of maize from the National Strategic Grain Reserve to support the Poultry Association of Nigeria (PAN) at a subsidized rate.

In a chat with newsmen in Abuja, the National President of the Maize Association of Nigeria (MAAN) Alhaji Bello Abubakar, attributed the current shortfall in the quantity of maize available in the market, to include insecurity around the major maize producing belt of Niger, Kaduna, Katsina, Zamfara and part of Kano states. Alhaji Bello also identified the activities of hoarders and middlemen who engage in the hoarding of the grain.

Also speaking the same vein, a prime anchor under the maize production, Dr. Edwin Uche, noted that banditry, drought in some parts of the country in 2020 and activities of middlemen are responsible for the current high price.

He, however, opined that the planned dry season farming which is first of its kind in the country, timely distribution of inputs to farmers and improved security, would go a long way to enhance production and ensure stability in price. He expressed optimism about the price crashing to N120,000 per metric tonne in the next couple of days.

Another major stakeholder in the maize production, Mr. Ayodeji Balogun of AFEX, attributed the hike in price to the cash-flow problem of farmers which has to compel farmers to resort to collecting cash from buyers ahead of production and resort to side-selling, especially across the borders of neighbouring countries due to higher prices.

It will be recalled that the CBN in 2020 had provided credit facility and seed support to maize farmers, to enable them to increase their yield, particularly due to the challenge posed by the Corona Virus (COVID-19) pandemic.

As part of the Bank’s financing framework, the CBN has facilitated the funding of maize farmers and processors through the Anchor Borrowers’ Programme (ABP) Commodity Association, Private/Prime Anchors, State Governments, Maize Aggregation Scheme (MAS), and the Commercial Agricultural Credit Scheme (CACS).

Confirming the release of credit to its members by the CBN, the National President of the Maize Association of Nigeria (MAAN), Dr. Bello Abubakar disclosed that over 200,000 farmers targeted to produce more than 25 million metric tonnes of maize in the 2020/2021 planting season.

According to him, the credit secured by the CBN are being distributed to members along the maize value chain, nation-wide. He expressed confidence that the support of the CBN would boost production and ultimately ensure availability as well as stability in the price of the commodity. In spite of cases of insecurity in some parts of the country, he said farmers were committed to meeting the objective of food security.

Abubakar also charged middlemen not to take advantage of the supply gap to hike the price of the grains, even as he assured that farmers would maintain a reasonable price. He equally urged the Federal Government to put in place mechanism to protect farmers from market triggered shocks.

MTV Base premieres “Celebrity Bumps”, a new reality TV show starring BBNaija’s Mike Edwards and wife, Perri

Esan Bolaji
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0
MTV Base premieres “Celebrity Bumps”, a new reality TV show starring BBNaija’s Mike Edwards and wife, Perri

MTV Base has announced the African premiere of its UK hit reality show, Celebrity Bumps. The debut season dubbed “Mike + Perri Celebrity Bumps” will be featuring the first runner up and former Big Brother Naija ‘Pepper Dem’ housemate, Mike Edwards and his wife, Perri (Shakes-Daylon). 

The reality TV show, set to air for the first time on MTV Base, DStv Channel 322 and GOtv Channel 72, on Tuesday, 19 January at 8 pm WAT, will take viewers through the pregnancy journey of the first-time parents, whose love story captured the hearts of millions across the continent.

Celebrity-Bumps-Mike-Edwards-And-Perri-ShakesDrayton-KOKO-TV-NG-12 Brandspurng MTV Base premieres “Celebrity Bumps”, a new reality TV show starring BBNaija’s Mike Edwards and wife, Perri

With deep-dives into their baby shower, dealing with the pandemic, gender reveals party, doctor visits, and other priceless moments with friends and family; Mike and Perri will be sharing their unique and unfiltered experience as expectant parents, amidst the COVID-19 pandemic.

This season of the reality show is filmed as an extended pregnancy vlog, in compliance with all health and safety protocols. Mike + Perri Celebrity Bumps first premiered on MTV UK, and we cannot wait to experience the fresh and unique content.

Catch episodes of Mike + Perri Celebrity Bumps on MTV Base DStv Channel 322 and GOtv Channel 72, every Tuesday at 8 pm WAT. For more on this week’s episode, follow @mtvbasewest on Facebook, Instagram and Twitter. 

Nigeria Economy in 2021: Tough times, tough takes!

United Capital Research
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Nigeria Economy in 2021: Tough times, tough takes!

Covid-19 took its toll on the Nigerian economy in 2020, after the FGN imposed widespread nationwide lockdowns in Q2-2020 to contain the virus. The oil market collapse wiped out export earnings and 50.0% of government revenue, even as domestic economic activities were ground to a halt in the country’s largest commercial hubs.

The CBN devalued the Naira on its official and I&E windows in the face of the pandemic, launched a series of intervention programs, slashed the monetary policy rate, and kept the system inundated with liquidity.

Nigeria Economy in 2021 Brandspurng Tough times, tough takes!
Sources: NBS, United Capital Research

Despite the concerted efforts, the economy slipped into another recession as GDP contracted in Q2 and Q3-2020. Inflation galloped to a 33-month high of 14.89% y/y in Nov -2020, amid sharp food price increases and the currency market crisis.

Also, the CBN imposed administrative measures to curb the depletion of the external reserves, which slid to $35.4bn (down $3.2bn YTD) in Dec-2020. As such, the parallel market rate crossed N500/$ in Q4-2020 while foreign capital inflows hit rock bottom.

In 2021, we expect GDP growth to rebound by 1.7% to 2.0%, buoyed by increased economic activity and some improvements in the oil market. Although the reopening of the borders in Q4-2020 should ease pressures on food prices, other structural factors such as FX market illiquidity, potential increases in petrol price, etc. may keep general prices elevated.

As a result, we expect the headline inflation rate to peak at around 16.0% before pulling back if no further policy adjustment is made. Finally, we expect that the CBN would begin to tighten its monetary policy stance at some point in Q2-Q3 2021.

Ekiti State To Unveil Nigeria’s Largest Snail Farm

Esan Bolaji
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0
Ekiti State To Unveil Nigeria’s Largest Snail Farm

In line with the Ekiti State Government’s policy of encouraging private investments in the state, the State Governor, Dr. Kayode Fayemi, will be commissioning a multi-billion naira Egbeja Snail Village, Okemesi Ekiti, on Tuesday, January 19, 2021.

The project, which is a private initiative of Farmkonnect Agribusiness Nigeria Limited, in partnership with Touchstone Snails Technology, Cyprus, is designed to be the largest snail farm in Nigeria and second-largest in Africa, with the capacity to produce a minimum of 2.6 million kg (2,600 metric tons) of snails per annum.

Ekiti State To Commission Unveil Nigeria’s Largest Snail Farm Brandspurng
Ekiti State Governor, Dr. Kayode Fayemi | www.brandspurng.com

Founder of Farmkonnect Agribusiness, Azeez Oluwole Saheed, said he decided to set up the integrated snail farm in Okemesi Ekiti because of Ekiti State’s friendly investment environment made possible by the ease of doing business policy of the Dr. Kayode Fayemi administration.

He said over N5.2 billion had been committed to the integrated snail farm project with the capacity to employ over 2,000 skilled and unskilled personnel. He added that aside from snail meat that would be produced at the farm, slime extracted from the snails would be exported as it is in high demand in pharmaceutical and skin and hair care industries.

Aside from commissioning the project, Governor Fayemi would also undertake a guided tour of facilities on the farm.

Ekiti State To Acquire Drones To Fight Insecurity In 2021

Brand Spur
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Ekiti State To Acquire Drones To Fight Insecurity In 2021

The Government of Ekiti State has disclosed plans to purchase drones (unmanned aerial vehicles) as part of measures to boost security surveillance, expose criminal hideouts, and combat security challenges in the State. The government is also set to complete many of its ongoing legacy projects this year through the 2021 appropriation.

Commissioner for Budget and Economic Planning, Mr. Femi Ajayi, disclosed these while providing a detailed analysis of the 2021 budget to journalists and critical stakeholders in Ado-Ekiti at the weekend.

Ekiti State To Acquire Drones To Fight Insecurity In 2021 Brandspurng
Ekiti State Governor, Dr. Kayode Fayemi | www.brandspurng.com

Ajayi said the state government projected a sum of N550 million to purchase the drones as part of plans to tackle rising cases of armed robbery, banditry, and kidnapping in the state and ensure that the lives and properties of residents are safe.

Dr. Kayode Fayemi had on December 23, 2020, signed the 2021 Appropriation bill of N109 billion into law, days after it was passed by the State House of Assembly.

According to Ajayi, the 2021 budget size which was a 17 percent increase on the 2020 revised budget size of N91 billion has a recurrent expenditure of N58 billion and capital expenditure of N51.6 billion, a 53:47 recurrent to capital expenditure ratio.

Ajayi who was flanked by the Commissioner for Information and Values Orientation, Barr Akin Omole, Director General, Office of Transformation, Strategy and Delivery (OTSD), Prof Mobolaji Aluko; and Chief Press Secretary to the Governor, Mr. Yinka Oyebode, explained that the budget would be financed through earnings from Federation allocation, Internally Generated Revenue, Value Added Tax, funds from international donor agencies, grants from Federal Government, State Fiscal Transparency Accountability and Sustainability (SFTAS), State Covid-19 Action Recovery and Economic Stimulus (CARES) and sundry sources.

According to the statistics released by the Commissioner, infrastructure, and industrial development under capital expenditures got the highest allocation of N19.6 billion, which constitute 45 percent of the total capital expenditure. It was followed by governance and Social Investments with 22 percent and 20 percent respectively.

Ajayi also explained that the state government will continue to focus on the completion of critical capital projects in the state, adding about N18 billion was budgeted for personnel cost, which he said includes provision for the payment of consequential adjustments as agreed for the new minimum wage.

He added that a sum of N1.9 billion has been appropriated to agriculture and rural development to boost food production and enhance the distribution of agricultural products to both new and existing markets.

He said: “The Government is committed to instituting measures aimed at improving revenue generation in the State by harnessing huge revenue potentials and opportunities in the informal sector to enhance the economic growth of the State.

“To this end, the present administration has proposed the sum of One Hundred and Nine Billion, Six Hundred and Sixty Six Million, Three Hundred and Seventy-Six Thousand, Seven Hundred and Twenty-Two Naira, Sixty One kobo (N109,666,376,722.61) only indicating an increase of 17% over and above the sum of Ninety One Billion, One Hundred and Twenty Eight Million, Nine Hundred and Ninety-Six Thousand, Four Hundred and Eighty-Two Naira, One Kobo (N91,128,996,482.01) projected as Revenue from all sources in 2020 Revised Budget.

“The 2021 Revenue projection is expected from Federal Allocation, Internally Generated Revenue, Value Added Tax (VAT), Funds from International Donor Agencies (IDA), Grants from the Federal Government, State Fiscal Transparency Accountability and Sustainability (SFTAS), STATE COVID-19 Action Recovery and Economic Stimulus (CARES) and other relevant sources.”

Ajayi said that the budget was in line with the fiscal policy of having a purposeful and all-inclusive budget that would serve as a tool for the implementation of socio-economic policy and prudent management of available resources.

The Commissioner during the presentation which was also transmitted virtually said the budget was designed to deliver on Agriculture and Rural Development, Infrastructure and Industrial Development, Social Investments, Knowledge-Economy and Good Governance which are the five key pillars of the Kayode Fayemi administration’s development agenda which are geared towards improving the standard of living of the masses in the State.

Kinyungu Ventures Research calls for Changes to Cut-and-paste VC Strategy In Africa

Esan Bolaji
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0
Kinyungu Ventures Research calls for Changes to Cut-and-paste VC Strategy In Africa

Paper recommends investment structures and approaches tailored to African operating conditions 

18 January 2021 – East African venture advisory firm, Kinyungu Ventures has published a white paper Chasing Outliers: Why Context Matters for Early Stage Investing in Africa that has found that there continues to be a wide misalignment between traditional venture capital models and the African market.

Kinyungu Ventures Research calls for Changes to Cut-and-paste VC Strategy In Africa BRANDSPURNG

The team behind the report is now calling for a broadening of approaches to institutional investors on the continent. Speaking with 100 Pan-African founders, investors, and LPs across 15 African countries, the research suggests investors should prioritize investing structures and practices that reflect the realities of operating in Africa. This includes adopting more flexible investing structures with longer time horizons.

According to the paper, there are multiple mismatches between key characteristics of Silicon Valley VC and African markets, which influence how startups and funds manoeuvre as well as what results in they expect and produce.

Findings show that African markets are large, but also fragmented, and its consumers have limited purchasing power. Furthermore, consumers on the continent are difficult to acquire and retain, yet the sheer size of the African market also presents a real opportunity for profit once the environment is clearly understood. The paper’s key recommendations for funds include:

  • Adopting more focused investment strategies, such as investing in b2b companies or cross-subsidizing a portfolio with less risky, steady return assets

  • Considering non-unicorn investing models geared at more resilient companies, with returns distributed more widely across the portfolio

  • Using flexible structures such as debt or PCVs to accommodate market-level changes, where feasible

  • Allowing a longer time horizon for returns, understanding that growth could be slow and difficult to achieve for many companies

Kinyungu Ventures catalyzes resilient businesses for local intergenerational prosperity. The East African-centric investor focuses on entrepreneurship in East Africa, startups, seed funding, debt financing, impact investing and angel investing.

Speaking on the launch of the white paper, Tony Chen, Managing Director of Kinyungu Ventures and co-publisher of the report says,

Tony Chen - Managing Director and CEO, Kinyungu Ventures Brandspurng
Tony Chen – Managing Director and CEO, Kinyungu Ventures | www.brandspurng.com

“Capital in Africa is scarce and pursuing a “growth at all costs” strategy where capital pools are shallow presents huge risks for companies. We’ve also found that many great businesses don’t fit the typical VC profile, but have tremendous unfulfilled potential”.

Tayo Akinyemi, lead researcher and writer of the report added:

Tayo Akinyemi - Lead Researcher and Report Writer Brandspurng
Tayo Akinyemi – Lead Researcher and Report Writer | www.brandspurng.com

“In our conversations with numerous investors and founders, it is clear that nuances in variables such as consumer behaviour, cultural norms, and business practices impact startups significantly and being on the ground is crucial for success. 

While African markets aren’t always able to provide the outsized returns that Silicon Valley typically looks for, in high-growth companies, a more focused strategy here could unlock real gems, as has been proven by some of the startup successes the continent has seen over the years.”

Osarumen Osamuyi - Report Editor brandspurng
Osarumen Osamuyi – Report Editor | www.brandspurng.com
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