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African Business 2021

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The 2021 edition of African Business is the second issue of this useful guide to business and investment on the continent. The positive reception accorded the inaugural edition in 2020 was encouraging and we are optimistic that this publication and future issues will continue to meet the need for timely and relevant information in an exciting time for African business. African Business 2021 has articles on recent trends plus overviews of the key economic sectors on the continent and regional and country profiles. There is an in-depth analysis of the implications for trade on the continent of the introduction of the African Continental Free Trade Area agreement (AfCFTA) and an article on the growth and importance of exploration for minerals, gas and oil. Namibia and Botswana feature in an article on how cooperation can drive economic growth and an opinion piece focusses on the role that digital technology can play not only in the financial sector, but in the driving progress in a broader sense. Global African Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform:

OVERVIEW Banking and

OVERVIEW Banking and financial services Mobile payment applications are growing more sophisticated. SECTOR INSIGHT The West African franc is no more. New branding in Botswana. More than 500-million Africans have Internet access and most of those people use mobile devices to connect. This number continues to grow quickly and it is no surprise that many of the most innovative startups are in the fintech sector. With movement restricted by Covid-19 lockdown regulations, even more customers signed up for mobile money solutions. Transactions in Rwanda increased five-fold by late April and a Nigerian payments firm, Paga, reported a 330% increase in customer signups in the second quarter (The Economist). M-Pesa launched in 2007 in Kenya and has grown steadily ever since. M stands for mobile and pesa is the Swahili word for money. M-Pesa is operated by Safaricom and Vodacom and has more 41-million customers in seven countries, the Democratic Republic of Congo, Egypt, Ghana, Kenya, Lesotho, Mozambique and Tanzania. In 2019, a total of 12-billion transactions were recorded. The average monthly amount processed by M-Pesa is .9-billion. Similar services are offered in Zimbabwe by EcoCash, Ethiopia’s M-Birr and services like Orange Money and Airtel Money. MTN’s mobile money platform, MoMo, has connected more than 13-million users in 14 African countries. Customers can pay salaries, buy airtime or data, pay bills, among other services. Where 170-million Africans had access to banking in 2012, that number grew to nearly 300-million in 2018. The consulting group McKinsey expects that number to reach 450-million by 2022. The presidents of Ivory Coast and France agreed in 2019 that the West African AFRICAN BUSINESS 2021 46

OVERVIEW CFA franc would be replaced by a new currency, the eco. There are currently no plans to change the Central African franc, but it is possible that this currency will also be changed in the near future. Eight countries used the West African CFA franc, while six countries continue to use the Central African franc. Both currencies were historically pegged to the euro and were supported by France. The Dakar-based Central Bank of West African States (BCEAO) issues currency in all of the member states of the West African Monetary Union (WAMU): Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. The social development bond issued by the African Development Bank (AfDB) has received the Environmental Finance 2020 bond award. The proceeds of the one-billion Norwegian kroner (NOK) bond, which was made available to investors in Norway and Sweden in 2019, are allocated to inclusive growth in Africa, poverty reduction and job creation. AfDB has issued about -billion of similar bonds since 2017, denominated in US dollars and euros, and now NOK. The rebranding of Absa’s assets in Africa is speeding up. Absa bought Barclay’s African operation in 2013 but continued to trade for some time under the Barclays brand. In February 2020, the bank’s largest two operations outside South Africa – Ghana and Kenya – went into the red, but only in the branding sense. In financial terms, Absa’s 11 African operations outside of South Africa hugely outperformed the home base: 17% growth in earnings compared to a drop of 3% in South Africa (Business Times). Absa Kenya (of which Absa owns 68.5%) is listed on the Nairobi Securities Exchange. The banking group earns 21% of its income from north of the Limpopo River. Standard Bank’s non-South African assets in Africa contribute 31% to headline earnings and have a far better return on equity than do those in South Africa. Standard Bank is present in 20 African countries. Standard Bank’s history involves both colonial ONLINE RESOURCES Africa Financial Markets Initiative: African Securities Exchanges Association: Association of African Central Banks: Central Bank of West African States: Financial Action Task Force: Making Finance Work for Africa: and African components, but its current ownership reflects a major trend. The bank’s market capitalisation at the end of 2018 was -billion and the group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. The Making Finance Work for Africa Partnership (MFW4A) is an initiative to support the development of African financial sectors by coordinating initiatives across the continent and avoiding duplication. The Secretariat of the partnership is hosted within the AfDB in the Ivory Coast capital of Abidjan. Exchanges There are 27 stock exchanges in Africa, 25 of which are members of the African Securities Exchanges Association. Ethiopia intends launching a stock exchange. The African Exchanges Linkage Project (AELP) aims to assist cross-border trade and the settlement of securities, increase continental investment flows and to add depth and liquidity to African financial markets. Seven exchanges are currently participating, representing 85% of the continent’s securities market capitalisation. ■ 47 AFRICAN BUSINESS 2021

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