Seeds of Opportunity: The African Growth Series
February 2024 | Issue 2
In this week's issue, you will learn more about:
- AFRICA TREND: Agricultural Revolution Unleashes Economic Growth
- AFRICA OPPORTUNITY: Frost & Sullivan's Commercial Due Diligence Process
- AFRICA TREND: VC Funding Equality for Female-Led Startups
- AFRICA TREND: Investments in Africa Turned Heads and Profit in 2023
- UPCOMING THINK TANK: THE 2024 GLOBAL ECONOMY AND GROWTH OPPORTUNITIES
- UPCOMING EVENT: Africa’s Green Economy Summit 2024 | Cape Town
- UPCOMING EVENT: AFRICA ENERGY INDABA 2024 | Cape Town
AFRICA TREND: Agricultural Revolution Unleashes Economic Growth
Nigeria is embracing a transformative shift in agriculture, prioritising food security through technology. The sector, historically neglected, is set for a resurgence, with AFEX leading the charge. AFEX, a Nigerian commodity exchange platform, has witnessed remarkable growth, achieving a CAGR of 505% between 2019 and 2021, creating unprecedented opportunities.
As the newly renamed Federal Ministry of Agriculture & Food Security gains prominence, there's a pivotal focus on improving logistics and access to credit for farmers. ThriveAgric, a leading agtech firm, exemplifies this shift with its data-driven decisions and financing in kind, empowering over 600,000 farmers.
AFRICA OPPORTUNITY: Frost & Sullivan's Commercial Due Diligence Process
Commercial due diligence for an acquisition involves thoroughly examining the target company’s operations, market position, and competitive environment. This process ensures that the acquiring investor fully understands the risks and opportunities of the deal.
Market analysis is crucial, assessing the target’s industry size, trends, and regulatory landscape to forecast future performance. Additionally, a deep dive into competitive positioning helps evaluate the company's market share, customer loyalty, and product or service quality compared to its rivals. This step also includes reviewing operational efficiency, supply chain effectiveness, and the potential for business scalability to identify synergies and integration hurdles.
Another crucial aspect is the business model analysis, which starts with analysing the target’s financial health, revenue, profitability, and cash flow to judge its economic stability and growth prospects.
The goal is to uncover any red flags, confirm the investment rationale, and provide insights for negotiation tactics. The final report from commercial due diligence offers a detailed risk assessment and identifies opportunities for value creation post-acquisition, enabling the buyer to make a well-informed decision.
Frost & Sullivan has conducted several commercial due diligence across various sectors (logistics, energy, mobility, etc.), helping our clients fully understand the individual targets' unique position.
AFRICA TREND: VC Funding Equality for Female-Led Startups
Over the last five years, there has been a significant increase in funding for female-led startups in Africa. In 2023, female-led ventures raised over $200 million in funding, marking a 7% year-over-year increase. This growth occurred despite an overall funding decline of 39%, highlighting the resilience and potential of these startups. Moreover, the share of total funding female-led startups captured increased from 4% to 7%, indicating a growing recognition of their value. The most significant funding for a female CEO was a $38 million Series B for Sabi, an e-commerce platform in Nigeria. In contrast, the top ten male CEOs secured $1.4 billion.
As compared to 2019, female-led startups saw a seven-fold increase in investments in 2021, rising from $52 million to $288 million. However, there are still disparities to address. Only 14% of million-dollar-plus ventures in 2023 had female CEOs, and their average deal size was significantly smaller than that of their male counterparts. This trend extends to more significant deals, where female-led ventures represent only 7%.
Various venture capital funds and accelerator programs have been established to combat the divide to reduce unconscious bias, improve capital accessibility, and encourage investor diversity. New funds such as FirstCheck Africa have been launched to target early-stage female-led startups, offering smaller investments to encourage more women to participate in the startup ecosystem. Encouraging a healthy work-life balance, diversity, inclusion, economic empowerment, and growth throughout the continent.
AFRICA TREND: Investments in Africa Turned Heads and Profit in 2023
A total of 397 deals were closed across the African continent in 2023, consisting of Debt and Equity, Series A, Series B, and Securitisation deals. This shows a propensity for intra-African growth and investment exploration in a previously discarded market, characterised by extractive practices and primary activities.
The evolution of African Business has shown that deals are moving towards financial tech, renewable energy, and automotive industries. Historically, Africa has been viewed as the source of materials and labour for the endeavours of the Global North. Now, the continent is reclaiming control and capitalising on what it offers the world.
The largest deal to be signed in 2023 involved a Fintech startup in Egypt known as MNT-Halan. Propelling the African banking industry forward, MNT-Halan is digitising traditional banking systems to future-proof African citizens. By using an accessible online platform, the company opens up loan opportunities to the previously “unbanked”, as approximately 67% of Egypt’s population does not have access to banking services. People previously excluded from the banking sector can now actively participate through borrowing, online payments, and peer-to-peer transfers.
South Africa and Nigeria saw five of the top signed deals, demonstrating the countries’ importance as economic hotspots and centres for growth.
UPCOMING THINK TANK: THE 2024 GLOBAL ECONOMY AND GROWTH OPPORTUNITIES
Join us for an engaging and thought-provoking webinar on “Navigating Economic Transformation: The 2024 Global Economy and Growth Opportunities” on February 14th, at 16h00 SAST featuring industry experts:
💠 Neha Anna Thomas, Growth Expert & Associate Director, Frost & Sullivan
💠 Dhiraj Nayyar, Director, Economics & Policy, Vedanta Resources Limited
💠 Craig Parker, Growth Expert & Research Director, Frost & Sullivan Africa
They will address pressing questions such as:
• How should businesses prepare for the global economy in 2024?
• What risks and megatrends should organisations watch out for as geopolitical tensions persist?
• Which industries will benefit from changing consumption and investment trends in 2024?
• How will recent geopolitical tensions such as the Red Sea crisis reshape global trade routes?
• How will emerging technologies and worker shortages impact global labour markets?
Register today and be a part of the conversation: https://lnkd.in/dQqKa6MK
UPCOMING EVENT: Africa’s Green Economy Summit 2024 | Cape Town
We are less than 2 weeks away from Africa's Green Economy Summit which takes place 21-23 February at the Century City Conference Centre in Cape Town.
Do not miss the session on the role of Sovereign Investors in catalysing investment in Africa on 21 February at 12h30 as industry experts unpack:
1. What is the role of Sovereign Investors in catalysing investment in Africa?
2. How should programs be structured for Sovereign Investors to de-risk projects?
3. What investment themes are of most interest to private and sovereign investors in the Green Economy?
Panellists include:
💠 Dr Obaid Amrane, CEO, Ithmar Capital, & Chair, ASIF, & Acting Chair, IFSWF, Morocco
💠 Hendrik Malan, Partner & Africa CEO, Frost & Sullivan Africa, South Africa
💠 Ayman Soliman, CEO, The Sovereign Fund of Egypt, Egypt
💠 Solomon Asamoah, CEO, Ghana Infrastructure Investment Fund, Ghana
With limited space running out quickly, make sure to secure your spot before it's too late - https://lnkd.in/dBcq6XFU
UPCOMING EVENT: AFRICA ENERGY INDABA 2024 | Cape Town
🌍 Join us next month for an electrifying experience at the Africa Energy Indaba Conference and Exhibition! 🚀
📆 Mark your calendar: 5-7 March 2024
📍 Where: Cape Town International Convention Centre
Don't miss your chance by registering today - https://lnkd.in/dRtVe_Mk
Empower the future with us! ⚡
To find out more about opportunities in Africa, please get in touch with Lynne Martin.
