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This week in Africa's Finance
Richest man navigates Africa's regulation, Uganda drills oil, Kenya raises rates
Good day,
Welcome to Africa Finance Today.
This week marked a month since we embarked on this journey. In this short span, our weekly newsletter garnered some good attention and we take pride in this achievement.
We have put out three weekly newsletter that have attracted the attention of readers who are desperately looking for timely, fun, engaging, and easy-to-understand content.
Each week we have been publishing three articles on average and in total we have published more than 16 articles. These articles give deep insights into some of Africa’s major startups such as Ampersand, firms like Aterian Plc and Rio Tinto that are investing in mining activities across Botswana, Rwanda, Kenya, and Morocco, as well as Africa’s race to raise startup funding.
We also published content around Rwanda’s race to explore lithium, a story of the world’s largest electric vehicle maker and its expansion plan in Africa, we dived deep into why Kenya’s billionaire is buying a cement company in Rwanda, and we shared insights into the direction of interest rates and what 2024 holds, just to mention but a few.
In the span of this period, we have grown our subscriber base by 103.9% and the open rate for our articles exceeds by far the threshold, standing at 57.7%. The open rate for our popular story was 60.5%, something we are so grateful for our readers.
Time flies, really! Who would have thought that a month down the road we would have accomplished the few steps we have made with the little resources.
What this shows us really is that anything you put your mind on you can accomplish.
Let’s get down to business!
IT’S A WRAP 🎁
This week, World’s Richest Man Struggles to Take on the African Market.
Elon Musk’s Starlink wants to expand across Africa. It has hit bumps. Courtesy.
🌍️ Elon Musk, until recently the world’s richest man, finds it to operate in Africa. Musk though his Starlink, a company trying to roll out last-mile connectivity, entered the African market last year.
🇷🇼 🇳🇬 Starlink, a subsidiary of SpaceX, another company that sends rockets into orbit, already has operations in Rwanda, Kenya, Nigeria, Zambia, and Malawi, among others.
📡 However, Starlink is struggling to navigate regulatory hurdles in South Africa, Ghana, Zimbabwe and Senegal. These countries are putting quite similar restrictions in place, demanding that Musk’s company collaborate with domestic players if it’s to sell its services in these countries.
🛰️ There is, however, another reality. Starlink provides internet connectivity via satellite. This kind of connectivity comes at a high price compared to available pricing options in many African markets. It, therefore, doesn’t make sense that people will migrate to Starlink when they are already getting slightly cheaper internet with existing plans.
🤑The last point I want to make is that Africa no longer has a coverage problem and I argued that it is a losing proposition for any connectivity company to invest in extending coverage when we know clearly that coverage currently outpaces usage.
🌍️What Africans need right now is affordable and accessible internet services.
DEEP DIVE
Uganda’s Billion-Dollar Oil Development Ambitions.
Uganda’s oil projects could add $20bn to the economy. Courtesy Photo.
🇺🇬Uganda has been on the journey to develop its oil and gas sector. First, it were the rules the country put in place that governs the sector, which includes relevant regulations and laws.
🪙 💎 Uganda has rich natural resources, one of the most diverse in the region. It has copper, uranium, cobalt, tin, and crude oil, which it hopes could generate billions of dollars to the economy.
⛽️The country has an estimated 6.5 billion reserves of oil of which 1.4 billion barrels are recoverable. The first oil exports are expected in 2025, according to state-owned firm Uganda National Oil Company.
💵 The biggest task the country has is to attract investors and it hasn’t been easy to do this. Initial investors that were carrying out of exploration activities were kicked out after failure to raise necessary funding.
👷♂️What’s for sure, Uganda is committed to drill oil and it has secured an investor for its refinery, which will cost $4 billion. Uganda’s oil projects have potential to generate $20 billion toward the country’s economy.
💰️Countries like Rwanda and Kenya have expressed interest to invest in Uganda’s oil and gas projects and Uganda has a natural ally in Tanzania, which could make it possible to transport oil products to the international markets through the Tanzanian port.
BONUS 💸
Kenya Raises Interest Rates, Fed Sees Less Confidence for Rate Cuts.
Dr. Kamau Thugge, the Governor of the Central Bank of Kenya.
🇰🇪 The Central Bank of Kenya (CBK) this week raised the benchmark rate by 50 basis points to 13% as the monetary authority grapples with high inflation and foreign exchange pressures.
💹 This level of rate increment was last seen in September 2012 years ago, and it means that ordinary Kenyans should brace for tough times ahead as borrowing gets tighter and tighter.
🥒 🥕 Kenya’s inflation rate rose from 6.6 per cent in December 2023to 6.9 per cent in January 2024. The hike in the cost of living has been spiked by the rise in non-vegetable food items, fuel, and electricity as well as the depreciation of the Kenya Shilling against the US Dollar.
🇺🇸 Meanwhile, the US Federal Reserve Chair Jerome Powell, a man who rarely appears in media interviews, this week gave a rare interview to 60 Minutes, discussing the direction of inflation and monetary policy stance.
🏦 The decision that the Fed takes usually affects other countries and determines the pace at which other central banks across the world will act on their monetary policies, which makes sense why everybody cares about what Jerome Powell says.
Jerome Powell said there is no easy path to managing inflation, at least that’s the key takeaway from his rare interview. This week we published the excerpts from the interview, which you can check it out.
What we know
🥑 🥕 Inflation remains a key concern for consumers, businesses and economies alike. Central bankers keep promising us that we shall see light at the end of the tunnel. Well, yes, we probably will, but the question is how soon. I think it’s the question of urgency that matters here. I don’t want to sound alarmist but think about how much worse elevated inflation has made poor households.
🫂 🌍️ Poor households especially those in Africa now have to choose between eating two meals a day or taking the children to school. 🏫 it’s an unfair trade off that anyone wouldn’t have to make if they had an option.
🏦 2024 won’t probably be any different from last year, at least Gita Gopinath, the IMF Deputy Managing Director said recently that we might be in this for a little longer. Monetary policy tightening regimes don’t seem to work faster than we would want.
🇷🇼 🇺🇬 🇰🇪 🇹🇿 But again, there is light at the end of the tunnel. Looking at inflation trends in Rwanda, Kenya, Uganda and Tanzania, we have started to see signs of easing that we hope that momentum will be sustained in 2024.
That’s it for this week.
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