Africa

🇪🇹 Ethiopia’s prime minister announced his country had filled the reservoir at the Grand Ethiopian Renaissance Dam (GERD) on the Nile River, prompting criticism from Egypt. Abiy Ahmed’s announcement on Sunday came two weeks after the country resumed negotiations with Egypt and Sudan on access to water around the controversial hydroelectric dam. The Egyptian foreign ministry condemned Abiy Ahmed’s announcement as “illegal.” Egypt and Sudan fear the dam will severely reduce the share of Nile water they receive but Ethiopia insists it will not reduce the volume of water flowing downstream.

🇳🇬 Singapore’s Olam Group on Monday denied media reports alleging that its units, including Olam Nigeria, were being investigated by Nigeria’s State Security Service over mega economic fraud. Nigerian media outlets reported last week that the companies have been involved in a chain of round-tripping foreign exchange deals since 2015, amounting to over $50 billion. Olam Group said Olam Nigeria has responded to requests for information by Nigerian authorities and will continue to cooperate, adding that it has directed its audit committee to review the matter.

🇿🇲 The United States and the European Union jointly announced their support for the development of the Lobito Corridor rail line by Angola, Zambia, and DR Congo. Backers of the plan say upgrading the 1,300km rail corridor would improve trade routes between the countries. It would connect the Atlantic Ocean port of Lobito in Angola to DRC — which has reserves of coltan, uranium, cobalt, and copper — and the copper belt in Zambia. DRC and Zambia are key suppliers of cobalt and copper which are currently transported by road to ports in South Africa and eastern Africa.

🇲🇦 Rescuers in Morocco are searching through rubble for survivors after an earthquake that killed more than 2,800 people. Thousands more are injured or unaccounted for in the wake of the 6.8 magnitude quake which struck in the North African country’s High Atlas mountains late on Friday. Entire towns have been destroyed, according to eyewitnesses. Morocco’s emergency services have struggled to cope in the aftermath of the quake which is the country’s deadliest since 1960 when an earthquake killed more than 12,000 people.

The population of Africa whose inhabitants will now be represented at the G20 after the African Union (AU) joined the club of the world’s most industrialized and developed economies. South Africa was the only African member until the summit on Saturday. Admitting the AU, which has 55 member states, as a permanent G20 member marks a “significant stride towards a more inclusive global dialogue,” said Indian Prime Minister Narendra Modi.

Safaricom’s bumpy Ethiopia ride has investors worried

THE NEWS

NAIROBI — When Kenya’s Safaricom set up shop in Ethiopia last October, it looked set to make a big splash in a long underserved market in Africa’s second most populous nation.

While it started off well enough, signing up 5 million customers by August, it soon became apparent that Safaricom’s lofty ambitions have exposed managerial, operational, and domestic challenges. Its problems have included the sudden exit of its top Ethiopia executive and an uncertain rollout of its mobile money service, M-Pesa, against stiffer-than-expected competition from the former local monopoly.

Serious concerns about ongoing hostilities in Ethiopia have added to the company’s problems, fueling questions about whether it will be able to meet its ambitious growth targets — it expects to have 10 million subscribers by March. It was forced to shut down its sites in Ethiopia’s second largest region, Amhara, after a state of emergency was declared by the federal government last month.

Besides the security headache, the telco is also dealing with a boycott campaign in Ethiopia’s largest region, Oromia. The campaign dubbed #BoycottSafaricomEthiopia is led by activists protesting what they consider to be unfair hiring practices and the company not using the local Afaan Oromo language in its operations in the region.

KNOW MORE

The unexpected exit of Safaricom Ethiopia’s launch CEO Anwar Soussa in July, after less than two years — and just weeks before the all-important launch of M-Pesa — was the first obvious sign of trouble. His replacement, former MTN Uganda CEO Wim Vanhelleputte, took over on Sept.1. The Belgian is one of the continent’s most experienced telecom executives having also run MTN Côte d’Ivoire and before that Bharti Airtel’s Francophone Africa operations.

Safaricom’s entry into Ethiopia signaled the end of state-owned Ethio Telecom’s decades-long monopoly. Ethio Telecom has 72 million subscribers and has a two-year headstart on mobile money with its Telebirr service because Safaricom had to spend time pitching regulators for a local license for M-Pesa, which ended up costing $150 million.

Safaricom spent nearly $400 million (55.6 billion Kenyan shillings) capitalizing the new Ethiopia venture, in the financial year ended March 2023. It plans to spend another $300 million in the current financial year which ends in March 2024.

Safaricom Ethiopia did not immediately respond to queries from Semafor Africa.

MARTIN’S VIEW

In Ethiopia, Safaricom has a unique opportunity to cement itself as a regional behemoth. But in order to tap into a market of over 119 million people, the company must maintain a long-term view while navigating political hurdles and cultural nuances in a complex market. At the same time, it needs to streamline hiring practices and labor relations for all workers, including those recruited through third-party firms.

Analysts see the combination of market challenges in Ethiopia, coupled with macroeconomic factors, posing a threat to the company’s prospects, and some question its grasp of emerging issues in a new market. Ken Gichinga, chief economist at Mentoria Economics said Safaricom hasn’t shown a “very deep understanding” of the situation in Amhara. “It seems like they’re playing catch up, yet with that scale of investment one would expect that they would have near perfect intelligence.”

Security challenges, however, threaten to limit M-Pesa’s reach, particularly in rural communities outside the capital Addis Ababa. Safaricom must also brace for the toll of macroeconomic factors including hyperinflation, which threatens to erode value for shareholders.

Hyperinflation is a “key operational concern” for Safaricom Ethiopia, said Wesley Mambo, a research analyst at Nairobi-based Genghis Capital. He said it affects “both the disposable income responsible for healthy topline numbers, and the return on investments from the repatriation of earnings.”

In the meantime, Safaricom’s shares have fallen by more than a third since the start of the year as investors worry about the level of capital investment needed to compete with Ethio Telecom.

Read the full story with Room for Disagreement.

One year later...President William Ruto

Tomorrow (Sept. 13) marks the first anniversary of Kenya’s President William Ruto having been sworn into office. Ruto, deputy president in the preceding administration, defeated opposition leader Raila Odinga in last year’s election.

→ What have been President Ruto’s main policies?

President Ruto was voted in after vowing to uplift “hustlers” — the poorest Kenyans. His signature initiative has been the 50 billion Kenyan shillings ($342 million) Hustler Fund which was set up to create jobs and spur economic growth by providing affordable credit to individuals and small businesses. More than 21 million Kenyans have applied to access the facility.

→ Which key promises have not been kept?

The cost of living remains high for many Kenyans who have been hit by galloping inflation that hit 8.52% this August compared with 6.61% a year ago. Ruto vowed to protect the poorest Kenyans from economic hardship but his government’s removal of fuel, electricity, and maize subsidies has been blamed for higher living costs.

→ How are Kenyans faring under the “hustler” president?

The introduction of more taxes through Ruto’s first budget — the controversial Finance Bill 2023 — has added to the financial pressure felt by many Kenyans. A report released in July by Nairobi-based polling company Tifa Research showed that 52% of Kenyans surveyed in June this year believed the country was heading in the wrong direction, with increased economic hardship cited as the main reason.

→ What has Ruto done on the international stage?

Ruto hosted the Africa Climate Summit last week, bringing African leaders together to create a common continental framework for negotiations on climate financing and reparations. Other issues he has pursued internationally include a common currency for intra-African trade to ease dollar pressure, and lower interest rates on loans from multilateral lenders including the World Bank and the International Monetary Fund.

​​→ What are the biggest challenges he faces?

Ruto heads a youthful population in need of job opportunities. He is also confronted with the impact of global crises, such as rising inflation spurred on by supply chain problems caused by the war in Ukraine. Decreased food production, largely due to extreme weather patterns tied to climate change, has exacerbated these difficulties. Ruto’s government is also grappling with mounting public debt.

— Muchira Gachenge in Nairobi

Africans in some of the continent’s largest countries show a marked preference for democracy as a form of government over any other type, according to a new global survey of 30 countries by Open Society Foundations (OSF). Their preference also outweighed those of some nations with longer established democratic forms of government. The survey has added significance for Africa watchers given the spate of coups in West and Central Africa over the last couple of years in countries including Gabon, Niger, Burkina Faso, and Mali. But in many of those countries there has been some public support for the military juntas who overthrew civilian governments. The OSF survey also found that young people (18-35) around the world are increasingly skeptical about democracy, with just 57% deeming it preferable to other types of government.

Fintech startup Flutterwave is adding a forex bureau allowing Nigerians to buy U.S. dollars and other currencies online. Known primarily as an online payments processing company, Flutterwave has increasingly sought paths into other financial service verticals ahead of a widely-expected public offering in coming months. It has added cross-border remittances, business lending, and e-commerce services to its offerings in recent years. Swap, as the currency trading platform is called, comes in the wake of the Nigerian naira’s accelerated depreciation against the dollar after a new government policy did away with multiple fixed exchange rates. Flutterwave said it is able to offer Swap with the approval of Nigeria’s central bank and in partnership with a local commercial bank, Wema.

Amazon’s Starlink competitor ‘Project Kuiper’ is taking its first steps in Africa, agreeing a deal to expand 4G and 5G internet access for South Africa’s Vodacom. Like Starlink, Kuiper is composed of thousands of low-orbit satellites built to beam fast internet connection to so-called underserved areas in the world. Kuiper’s terminals, which customers will require to access the service, look very much like the Starlink ones too. Vodacom said it will deploy Kuiper terminals close to their cell towers, providing internet access to customers from the satellite-based system. The idea is that for telcos, Kuiper allows them to save time and resources required to maintain broadband infrastructure. Amazon’s satellites are expected to begin testing at the end of 2024.

AltSchool Africa, an online coding academy, is experimenting with offering courses in content creation and music business, branching out of an exclusive focus on training for roles in software engineering and data analysis. The course on music uses Afrobeats as its first case study with Nigerian rapper Folarin ‘Falz’ Falana (who is one of the startup’s investors) as part of the faculty. TikTok and Instagram are brimming with African influencers at an ever increasing pace but AltSchool aims for its content creation course to cut out the repeated cycles of failure for aspiring creators.

Senegalese teenager Amara Diouf has become the youngest player to represent the West African nation’s football team. The 15-year-old striker, who captains ​​Senegal’s Under-17 team, featured in the senior national side’s Africa Cup of Nations qualification game against Rwanda at the weekend. Diouf was a 70th minute substitute in the 1-1 draw. The striker’s five goals in this year’s year’s Under-17 Africa Cup of Nations helped Senegal to win the title and made him the top goalscorer in the tournament. His performances led to him being selected for the senior team, which goes by the nickname Les Lions de la Teranga. Diouf plays for Senegalese football academy Génération Foot and is widely reported to be on course to sign for its partner club, French side FC Metz — despite interest from other European clubs including Real Madrid and Arsenal.

• X, Elon Musk’s social media platform formerly known as Twitter, appears to be attempting to limit its users’ access to The New York Times.
• After many schools rushed to ban ChatGPT, some professors now say they’re not worried about it — while others are teaching with it and encouraging students to embrace it.
• The CEOs of America’s biggest companies promised a more egalitarian approach to business. Four years later, CEO pay is up, ESG ratings have barely budged, and companies are still spending billions on buybacks.

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— Yinka, Alexis, Alexander Onukwue, and Muchira Gachenge