Global Courant
Here are three big stories from the African business landscape that you (probably) didn’t miss, but should keep in mind this week:
The float of the naira sinks 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 comes at a cost: the naira is seeing a historic decline against the dollar.
Nigeria’s currency reached 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 one-day drop. After the CBN announced the new policy, the exchange rate plummeted from N477 per US dollar on June 13 to 750 on June 14. Since then, prices have fallen volatile. On Friday, trading on N770 closed at the window for investors and exporters.
Analysts expect the currency move to help close the gap between official and parallel market exchange rates, boost investor confidence, increase foreign inflows, lower 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 the country breathing space.
On Thursday, Zambia announced a landmark debt relief agreement with its bilateral creditors, under which payments of $6.3 billion in debt will be spread over approximately 20 years, with a three-year grace period. This deal ends a long deadlock over the nation’s bankruptcy in 2020. Zambia was the first African country to default on its national debt during the COVID-19 pandemic and has been struggling in protracted discussions to agree a deal ever since . But French President Emmanuel Macron’s government helped seal it at the global financial and climate summit in Paris.
Most of the deal involves loans from Chinese creditors, which account for about a third of Zambia’s total external public liabilities of more than $18 billion. The IMF estimated Zambia’s bilateral debt at nearly $8 billion by the end of 2021, but the government said only $6.3 billion of this will be restructured. It is unclear what has been excluded and why.
This debt relief is crucial for Zambia to release a much-needed $188 million payment from the International Monetary Fund. However, the job is not finished yet. The government has yet to ratify the deal with any lender and negotiate terms with commercial creditors, including bondholders. Nevertheless, according to President Hakainde Hichilema, Zambia has passed the most difficult parts. Zambia’s accord will free up the money it used to pay off debt to grow the economy and invest.
Russia’s war struck.
Plot twists don’t just happen in movies. They do in real life too. Over the weekend, the war in Ukraine came home to Russia in its most dramatic fashion when there was an attempted coup against Vladimir Putin’s government. The plot for the coup was orchestrated by Yevgeny Prigozhin, the head of the Wagner Group, a notorious mercenary that has fought for Russia in various conflicts around the world. Prigozhin, who was once a close ally of President Vladimir Putin, had a falling out with Defense Minister Sergei Shoigu over the war in Ukraine.
The coup attempt was suddenly abandoned after 24 hours, but not before the Wagner commander and his troops seized the military headquarters in the important city of Rostov-on-Don, shot down several military helicopters and advanced several hundred kilometers to Moscow.
According to reports, the negotiations that ended the coup included a “Determinationthat the majority of Wagner PMC troops would be transferred to Africa from Russia and Ukraine.
ICYMI: Market overview
The Nigerian stock market was slightly up in a five-day trading week, with the All-Share Index gaining 0.34% to close at 59,206.63. The top winners 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%). The biggest fallers 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 ended the week at ₦770.17/$ at the Investors and exporters window, lower than last week’s ₦663.04/$.
Brent crude closed the week at $74.64 a barrel, while West Texas Intermediate closed at $69.85 a barrel. The crypto markets had a bullish week, with the market cap rising 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 has announced the launch of the new Visa Africa Fintech Accelerator Program to enable Africa’s growing startup community through expertise, connections, technology and investment financing.
Seed Star Capital And Botnar Foundation have announced the launch of the Seedstars Youth Wellbeing Ventures mandate. The goal is to invest $20 million in early-stage, purpose-driven businesses 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 markets Opio, a direct-to-consumer (D2C) fashion brand, to create a powerful fashion group.
Kubika startup that turns hard-to-recycle plastic waste into affordable, low-carbon building materials announced the completion of a $3.34 million seed funding round.
