Seeds of Opportunity: The African Growth Series
April 2024 | Issue 1
In this week's issue, you will learn more about:
- AFRICA OPPORTUNITY: Risk and Non-Renewable Resources
- AFRICA TREND: Q1 Funding Drops 27% whilst Startups Raise US$466 million
- AFRICA OPPORTUNITY: Cryptocurrencies Take Hold
- AFRICA TREND: Water Scarcity Predictions Ring True
- UPCOMING EVENT: Enlit Africa 2024 | CTICC, CAPE TOWN
AFRICA OPPORTUNITY: Risk and Non-Renewable Resources
Namibia has benefitted from the discovery of oil in deep waters along the country’s coastline. This has resulted in the development of extractive expertise but has simultaneously attracted enhanced global interest as fossil fuel reserves have steadily decreased. Namibia needs to act swiftly to safeguard its resources through the development of bureaucratic capacity and protective legislation, to prevent the dreaded “resource curse” typical of African raw material histories. This can worsen economic growth and limit development outcomes, negatively impacting the current account if no protective monetary policy is implemented.
Improving institutional capacity will result in faster response times and reduced regulatory and operational risks for investors, encouraging further global investment. Namibian authorities have already taken steps by applying to the Extractive Industries Transparency Initiative, which would require all members to disclose details of contracts and licenses relevant to the ongoing extractive practices.
This presents a unique opportunity to invest in a rare and abundant fossil fuel market, providing investors with the rare capacity to get involved in this coveted, scarce resource, oil.
AFRICA TREND: Q1 Funding Drops 27% whilst Startups Raise US$466 million
The first quarter of 2024 is over, and Q1 saw U$466 million raised through US$100 thousand deals by 121 start-ups (excluding exits). This represented a -27% decrease Quarter over Quarter (QoQ), and only half of the amount raised a year earlier in Q1 2023. Equity funding accounted for 71% of the disclosed funding, with debt making up the rest. Despite the steady equity holding, the debt disclosed was halved between Q4 2023 and Q1 2022. Seven exits were announced last quarter, including significant acquisitions in South Africa. Including South Africa-based transactions of Deel acquiring both HRtech PaySpace at slightly over US$100 million and fintech nCino’s acquisition of DocFox for US$75 million. Notable, moove raised US$110 million in Q1, led by a US$100 million Series B round from Uber and a US$10 million debt deal for its India expansion, capturing 24% of the funding on the continent. The % of the funding, 87%, went to start-ups headquartered in Nigeria, Kenya, South Africa and Egypt. By sector, Transport & Logistics led in total amount raised, with fintech following closely. ClimateTech represented 31% of US$100 thousand plus deals and 27% of the total investment. Interestingly, funding favoured male-founded and male-led ventures, with less than 1% allocated to start-ups without at least one male founder and only 6.5% to female CEOs.
In a broader context, late-stage funding in Q4 2023 was 25% of the peak in Q4 2021, with a total of US$28.6 billion, down 20% Year over Year (YoY). This trend indicates a more disciplined venture market in 2023, with a potential increase in company closures in 2024 due to tightening funding markets and the absence of a significant bump in exits.
AFRICA OPPORTUNITY: Cryptocurrencies Take Hold
Africa is emerging as a key player in the global cryptocurrency landscape. With vast renewable energy potential and a tech-savvy population, the continent is attracting crypto miners seeking lower costs. This, paired with the growing use of cryptocurrencies amidst unstable local currencies, presents a compelling investment opportunity.
South Africa's regulatory progress, with the FSCA poised to grant crypto licenses and Jaltech securing a Crypto Asset Service Provider (CASP) license, further solidifies the region's commitment to legitimising cryptocurrencies within the financial system. This paves the way for greater mainstream adoption and institutional investment.
AFRICA TREND: Water Scarcity Predictions Ring True
In 2005, GRID-Arendal, a UNEP-WCMC Partner, released information on predicted freshwater stressed locations in the year 2025. within this prediction, several African countries, including South Africa, were listed as either water scarce or water stressed locations. Water stressed, depicted in yellow, refers to 1000-1700m3/capital/year, whilst orange water scarce nations experience less than 1000m3/capital/year. This means that annual water supplies fall below 1000m3 per person. In South Africa specifically, over 60% of water is used in agriculture, meaning that potential shortages may adversely affect food security and the population’s welfare.
UPCOMING EVENT: Enlit Africa 2024 | CTICC, CAPE TOWN
Join us at Enlit Africa (21 – 23 May, CTICC, Cape Town) for a game-changing experience. Connect with innovators, explore breakthrough technologies, and be part of the energy and water revolution shaping our continent's tomorrow. Secure your spot today, and let's illuminate hashtag#Africa together!
Be a part of the discussion on 22 May as energy experts discuss Africa’s Transitional Fuel Game Changer – Natural Gas: The role of LPG as a transition fuel for Africa; bearing in mind the impact of climate change and economic development pressures.
👉 Speakers include:
• Paul Eardley-Taylor, Oil & Gas, Southern Africa, Standard Bank, South Africa
• Wayne Glossop, Development Director, GLOSSOP
• Hendrik Malan, Africa CEO & Partner, Frost & Sullivan Africa, South Africa
• Olakunle Williams, Chief Executive Director, Tetracore Energy Group Limited, Nigeria
⚡Get your 𝙁𝙍𝙀𝙀 visitor pass: https://lnkd.in/dpqetdrg
⚡Unlock more opportunities, get your delegate pass: https://lnkd.in/drg_SXVs
To find out more about opportunities in Africa, please get in touch with Lynne Martin.
