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Finance in Africa 2022: Navigating the financial landscape in turbulent times

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European Investment Bank

Banks weathered the pandemic well, showing the resilience of the sector

ABIDJAN, Ivory Coast, October 20, 2022/APO Group/ — 

The European Investment Bank (EIB) (https://www.EIB.org) has completed its annual survey of banks in Africa in 2022, supported by Making Finance Work for Africa. In Finance in Africa in 2022: Navigating the financial landscape in turbulent times (https://bit.ly/3goYM2l), the seventh report in this series, we surveyed 70 banks in sub-Saharan Africa between April and June 2022 to understand how the war in Ukraine is impacting banks and to learn their views on climate lending, gender lending and the accelerating digitisation of the sector.

Banks weathered the pandemic well, showing the resilience of the sector. However, the war in Ukraine is leading to new concerns. With central banks in many countries raising domestic interest rates and bond funding becoming more expensive due to tighter global financial conditions, there has been a significant increase in banks worried about funding costs. This hardly featured in the survey last year, when banks were mainly concerned about the impact of the pandemic on asset quality.

“The slowdown of the global economy and the tightening of financing condition amplify the economic problems facing Africa. As public sector debt servicing costs are increasing, there is a risk of crowding out for the private sector. Investment needs remain however significant and countries in sub-Saharan Africa will need to keep focus on limiting the effects on private lending,” said EIB Chief Economist Debora Revoltella (https://bit.ly/3eRzNUJ). “It will be crucial to maintain access to finance for companies during a global downturn. The region has a strong partner with the European Investment Bank. We have been investing in Africa since 1965 and in 2021 alone, the EIB signed agreements for investments benefiting operations worth €2 billion in sub-Saharan Africa under a dedicated ACP Investment Facility”.

Banks cautiously optimistic

Asset quality remains a concern this year for many banks, especially for loans to small and medium enterprises. Headline non-performing loan figures do not tell the whole story — there are significant shares of loans under moratoria or restructuring. Banks’ concerns about asset quality deterioration suggest that the size of the problem may be bigger than official data suggest and, correspondingly, that non-performing loan ratios are likely to increase in some countries as support measures are wound down and tough global economic conditions persist. Banks expect to see increased credit demand, and they also plan to expand their own operations, which in turn requires an expansion of their funding. The share of banks planning to expand lending operations is somewhat higher in the survey for 2022 compared to 2021. Despite clear concerns about asset quality, the mood that seems to characterise the sector is one of cautious optimism.

Banks are stepping up efforts on gender lending

Progress is being made to increase access to finance for women: 70% of the banks in our survey have a gender strategy in place and sponsor women and gender-focused initiatives in the community, an increase of 10 percentage points on the share in the 2021 survey. When it comes to women and asset quality, four in ten banks found that non-performing loan rates for women-led businesses were lower than the average rate of their loan portfolios. In some countries, the difference was even greater. For example, in Nigeria, 71% of banks observed lower non-performing loan ratios for women, as did 50% of banks in Kenya.

The slowdown of the global economy and the tightening of financing condition amplify the economic problems facing Africa

Accelerating digital transformation

The pandemic led to an acceleration in the rate of digitalisation of the banking sector, as banks were forced to use digital channels to reach customers. Ninety percent of banks agree that the pandemic has accelerated their internal digitalisation transformation and 70% say that they increased the range of digital services available to customers. However, there are constraints to increasing digitalisation, with three-quarters of banks ranking cybersecurity risks as the biggest issue. The rapid growth of the FinTech sector has been another catalyst for increased digitalisation. The entire FinTech ecosystem in Africa has grown to more than 1 000 active companies in April 2022, up from 450 in 2020. Of these, 80% are homegrown and 20% come from outside Africa. Payments and lending services are still the dominant products, but the sector has diversified. The increasing competition from this sector is a key concern for banks, with more than half of banks listing it among their top three issues.

Climate issues still in focus

Almost 42% of banks assessed the climate exposure of their portfolio in 2021. In 2022, this has increased to 46% but with an additional 26% now planning to do so – none were planning this in 2021. Nearly 70% of banks see climate lending as an opportunity to fight climate change. To date, only one-fifth of banks have introduced green lending products, meaning there is significant scope to expand green lending – provided banks obtain support to do this. About 60% cite lack of expertise, data and tools for climate risk as a barrier to doing more on identifying climate risks and opportunities. In addition, two-thirds of banks think that IFIs can help them expand green lending by providing training and technical assistance. This sets out a clear policy objective for IFIs in terms of growing green lending.

Financial markets are also supporting climate change. The issuance of ESG bonds by African entities increased substantially to almost $5.1 billion in 2021, eclipsing the previous high of $3 billion set in 2018 before the pandemic, with a significant increase in the issuance of sustainability-linked loans and sustainability bonds. Banks and sovereigns were the principal issuers of ESG financial instruments in Africa in 2021. Historically, ESG issuance in Africa has been dominated by corporate issuers so recent developments point to a wider range of actors getting involved in ESG financing.

Nonetheless, the size of the green debt market in Africa is still small on a global scale and green funding costs are inflated by high sovereign risk.

Private capital

African private capital markets had a strong year in 2021. Fundraising reached pre-pandemic levels, following a significant fall during the pandemic. Private investment, which had remained quite resilient during the pandemic, grew by 48% annually to reach $6.3 billion, surpassing the previous peak of $5.4 billion set in 2014/2015. The increase in investment in 2021 was driven largely by the venture capital side, which saw deal value increase from $485 million in 2020 to $3.23 billion in 2021. Roughly half of this investment was in FinTech. Nigeria was the largest market for private equity/venture capital investment in 2021, followed by South Africa. Private equity is also contributing to the growth of green financing. There has been a surge in fundraising for climate-focused investing in recent years. However, like green financing, tougher market conditions in 2022 mean the record volumes seen in 2021 are unlikely to be repeated.

Distributed by APO Group on behalf of European Investment Bank (EIB).

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RIOT Network and MediaTek collaboration expands digital access in South Africa through innovative, community-driven Wi-Fi solutions

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MediaTek

RIOT Network aims to make fast, unlimited Wi-Fi services accessible for people in townships and underserved communities

JOHANNESBURG, South Africa, November 22, 2024/APO Group/ — 

MediaTek (www.MediaTek.com), a global fabless semiconductor company powering nearly 2 billion connected devices a year, and RIOT Network (https://RIOT.Network), a community mobile broadband provider in South Africa, have announced the successful integration of Mediatek’s Filogic 830 (https://apo-opa.co/3CIbkNl) chipset into RIOT’s second-generation CROWDNet Core Nodes.

The successful deployment of the CROWDNet nodes has enabled RIOT Network to achieve its aim of offering uncapped internet at an affordable price of R99 per month, and to do so profitably. To date, RIOT Network, in partnership with Sonke Telecommunications, has leveraged the nodes to connect more than 800 households and 5000 users in Olievenhoutbosch to uncapped Wi-Fi services.

RIOT Network aims to make fast, unlimited Wi-Fi services accessible for people in townships and underserved communities. Its CROWDNet Nodes, enable an innovative model for deploying user-operated network infrastructure. Community members serve as operators of some of the core network devices to earn a share of the fee from neighbours who use the service.

With each new connection, RIOT Network is highlighting the role of innovative fixed-wireless solutions in extending broadband access and improving digital inclusivity

CROWDNet powered by MediaTek Filogic 830 brings affordable, last-kilometre broadband to communities where it is not commercially viable to deploy towers or fibre. The MediaTek Filogic 830 is a high-performance SoC for routers, repeaters, access points and mesh networking devices. The SoC enables device makers to build-in powerful applications based on an energy-efficient, Wi-Fi 6-ready platform.

“The Mediatek’s Filogic 830 chipset delivers a unique balance of high performance and cost-efficiency, allowing us to keep operational costs low while maximising network reliability and speed,” said Jarryd Bekker, CEO at RIOT Network. “This combination of affordability and sustainable business growth is pivotal to our vision of expanding digital access in underserved communities. Our work in Olievenhoutbosch near Centurion demonstrates the power of reliable, affordable internet, creating new opportunities for economic and social engagement.”

“With each new connection, RIOT Network is highlighting the role of innovative fixed-wireless solutions in extending broadband access and improving digital inclusivity,” said Rami Osman (https://apo-opa.co/4ghZBUn), Director for Business Development, MediaTek Middle East and Africa. “We look forward to supporting RIOT in building a future where high-quality internet is accessible and impactful for all.”

Distributed by APO Group on behalf of MediaTek Inc

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African Energy Chamber (AEC) Endorses Inaugural Congo Energy & Investment Forum, Catalyzing Growth in the Republic of Congo’s Energy Sector

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African Energy Chamber

The African Energy Chamber proudly supports the inaugural Congo Energy & Investment Forum, scheduled for March 25-26, 2025 in Brazzaville

BRAZZAVILLE, Republic of the Congo, November 21, 2024/APO Group/ — 

The African Energy Chamber (AEC), as the voice of Africa’s energy sector, proudly supports the inaugural Congo Energy & Investment Forum (CEIF), set to take place in Brazzaville on March 25-26, 2025. Unveiled during African Energy Week: Invest in African Energies in Cape Town by the Republic of Congo’s Ministry of Hydrocarbons, this milestone event signals the nation’s commitment to strengthening its role as a key energy player on the continent, while showcasing a range of investment opportunities. 

Under the leadership of Hydrocarbons Minister Bruno Jean-Richard Itoua, the Republic of Congo has emerged as sub-Saharan Africa’s fourth-largest oil producer, with anticipated production of 280,000 barrels per day (BPD) by the end of 2024 and ambitions to reach 500,000 BPD within three to five years. Building on this momentum, the CEIF will highlight innovative projects and foster strategic partnerships that enhance investment, drive economic growth and position the Congo as a leader in Africa’s energy expansion.

Meanwhile, Société Nationale des Pétroles du Congo (SNPC), led by CEO Maixent Raoul Ominga, is spearheading the Congo’s energy growth. SNPC holds a majority stake in the Mengo Kundji Bindi II permit, with 2.5 billion barrels of estimated oil potential. The company is developing the site through 13 wells, 3D seismic data acquisition, and the construction of six production platforms. 

We are honored to secure the Chamber’s endorsement for this pivotal forum

With the Chamber’s official support, the CEIF is set to attract government leaders, C-suite executives from major IOCs and energy experts, who will offer critical insights into Congo’s oil, gas and energy sector developments. The country is overhauling its gas sector to unlock 10 trillion cubic feet of resources through a comprehensive Gas Master Plan and new Gas Code that introduces favorable fiscal terms and enables small-scale project development, as well as large-scale, integrated gas megaprojects like Eni’s Congo LNG and Wing Wah’s Bango Kayo. 

“The Congo Energy & Investment Forum marks a major milestone for the country, amplifying its strategic energy initiatives and showing industry stakeholders that it is serious about advancing its energy sector. We look forward to supporting this forum, which promises to connect investors, drive impactful partnerships and elevate the Congo’s position within Africa’s energy sector,” says NJ Ayuk, Executive Chairman of the AEC.  

“We are honored to secure the Chamber’s endorsement for this pivotal forum, which, through its vast network and influence, will help attract key stakeholders and decision-makers to the event. Together, we aim to highlight the immense potential of the Congo’s energy sector, foster strategic partnerships and drive transformative investments that contribute to sustainable growth across the industry,” notes James Chester, CEO of Energy Capital & Power, organizers of the CEIF.   

This premier forum provides a unique platform for connecting local and international investors with high-impact opportunities across a diversified range of energy projects, paving the way for collaborations that drive growth and transformation. The AEC’s endorsement underscores its commitment to fostering strategic partnerships, sustainable investment and regional cooperation, aligning with its broader mission to make energy poverty history across the continent by 2030.  

As the energy industry continues to serve as a critical pillar of the Congolese economy and a catalyst for sustainable development, the AEC remains dedicated to supporting initiatives like CEIF that foster progress, investment and partnerships across the African energy landscape. 

For more information, please visit www.CongoEnergyInvestment.com

Distributed by APO Group on behalf of Energy Capital & Power.

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Any Successful African Energy Policy at Conference of the Parties (COP) or Anywhere Must Have Oil and Gas at its Core (By NJ Ayuk)

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Conference of the Parties

Africa will need global financial systems, including multilateral development banks, to play a significant role in financing our energy growth which must include fossil fuels

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JOHANNESBURG, South Africa, November 21, 2024/APO Group/ — 

By NJ Ayuk, Executive Chairman of the African Energy Chamber (www.EnergyChamber.org).

I believe the ultimate responsibility for getting there is ours and no one else’s. Yes, we need partners to walk alongside us, but the success of our energy movement rests on African shoulders.

To begin with, I would love to see African energy stakeholders speaking in a unified voice about African energy industry goals.

This will be particularly important in COP29 in Baku. It is imperative that African leaders present a unified voice and strategy for African energy transitions. We must make Africa’s unique needs and circumstances clear and explain the critical role that oil and gas will play in helping Africa achieve net-zero emissions in coming decades.

I would encourage African leaders to talk about the need for financing, as well, to make it possible for us to adopt renewable energy sources and set up the necessary infrastructure. Africa will need global financial systems, including multilateral development banks, to play a significant role in financing our energy growth which must include fossil fuels.

Africa’s governments have a role to play in a successful African energy movement as well.

Because Africa’s energy industry still can benefit greatly from the presence of international oil companies, our government leaders need to approve contracts with oil and gas companies promptly instead of allowing red tape to delay projects after discoveries are made.

And, they need to offer the kinds of fiscal policies that allow oil companies to operate profitably in Africa. In turn, that will help those companies generate revenue, create jobs and business opportunities, and foster capacity building.

I also would encourage governments and civil societies to reward companies that exemplify positive behavior. Let’s incentivize the kind of activities we want, from creating good jobs and training opportunities to sharing knowledge.

I would love to see African energy stakeholders speaking in a unified voice about African energy industry goals

And there’s more.

We in Africa must work together to create more opportunities for women to build careers in the oil and gas industry at all levels. Our energy industry can’t reach its potential to do good when half of our population is left out. Our progress on behalf of women has not been great—We need to do better, and we need to act quickly.

How the world can support

Now, I mean it when I say Africans are responsible for building the future they want. But, I would love to see Western governments, businesses, financial institutions, and organizations support our efforts.

How? They can avoid demonizing the oil and gas industry. We see it constantly, in the media, in policy and investment decisions, and in calls for Africa to leave our fossil fuels in the ground. Actions like these, even as Western leaders have pushed OPEC to produce oil, are not fair, and they’re not helpful.

I also would respectfully ask financial institutions to resume financing for African oil and gas projects and stop attempting to block projects like the East African Crude Oil pipeline or Mozambique’s LNG projects.

Please understand that with the war in Ukraine, the energy crisis in Europe, and the energy poverty facing our continent, our countries, like many others, are simply choosing the paths they believe are most likely to help their people.

You know, people for years have accused me of loving oil and gas companies more than Africa. The opposite is true. In my frequent travels around the continent, I’ve observed far too many young people with little in the way of opportunities.

I know our young people have aspirations for a better future. I know they have big dreams. And, I know that future is nearly within their grasp.

A thriving, strategically managed energy industry can make it possible for many of these young people, whether it leads to good jobs or it fosters the kind of economic growth that creates jobs in other fields. Even if we only get the lights on in their communities, we’ll be giving our young people hope and improving their chances of realizing their goals.

This is what drives me, the idea that with our ongoing efforts and determination, our young people can realize meaningful opportunities. I encourage each of you to work with us at the African Energy Chamber, in a spirit of cooperation and mutual respect. Together, we can build the kind of African energy movement that our continent, our communities, and our young people need and deserve.

Distributed by APO Group on behalf of African Energy Chamber.

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