Here are three big stories from Africa’s business and policy landscape you (probably) didn’t miss but should keep in mind this week:
Naira loses ground despite Central Bank efforts
The Nigerian Naira weakened significantly against the US Dollar last week, raising concerns about the sustainability of recent gains. On Tuesday, April 23rd, the official exchange rate reached a month-to-date low of N1,300/$1, reflecting a depreciation of 17.49% in just five days. This decline comes despite earlier claims by the Central Bank of Nigeria (CBN) that the Naira was the best-performing currency globally in April. In March, the Naira had fallen as low as N1,600/$1 on the official market before experiencing a recovery.
The recent depreciation has sparked concerns about the CBN’s ability to maintain stability in the foreign exchange market. To counter the weakening Naira, the CBN has implemented various measures. These include selling foreign exchange to Bureau De Change (BDC) operators at a discounted rate (N1,021/$1 on April 23rd) and clearing airlines’ outstanding forex obligations. While these initiatives initially helped strengthen the Naira, recent market movements suggest they may not be enough. The situation is mirrored in the parallel market, where the Naira also depreciated against the USD, British Pound (GBP), and Euro (EUR). By Thursday, the parallel market rate for the USD had reached N1,450, a decrease of 8.28% from earlier in the week.
Adding to the worries is the declining level of Nigeria’s external reserves, which currently stand at $32.1 billion. The situation remains fluid, and it’s unclear whether the CBN’s efforts will be enough to stabilize the Naira. The coming days will be crucial in determining the direction of the Naira.
Kenya takes steps to regulate its growing Cryptocurrency market
Kenya is taking steps to establish regulations for the rapidly growing digital asset industry. The Kenyan government has formed a multi-agency technical working group tasked with creating a regulatory and monitoring framework for cryptocurrencies, known as “virtual assets” (VAs), and the service providers who facilitate their use (VASPs). The Central Bank of Kenya (CBK) plays a key role in this group.
This initiative follows a risk assessment conducted by the CBK’s Financial Reporting Centre (FRC) in 2023. The assessment identified potential risks associated with VAs and VASPs, including money laundering, terrorism financing, consumer protection, data privacy, and governance. This resulted in a 3% tax on digital asset trading. The Kenyan crypto community has expressed mixed reactions to the government’s regulatory efforts. The Blockchain Association of Kenya (BAK) challenged the legality of a 3% tax imposed on digital asset trading, highlighting concerns over its impact on the market. However, BAK also took the initiative by drafting the country’s first Virtual Assets Service Provider (VASP) bill, demonstrating their interest in responsible regulation that promotes innovation.
MultiChoice Nigeria hikes prices again
Last week, MultiChoice Nigeria, the dominant pay-TV operator in the country, sparked renewed outrage among subscribers with a price increase of at least 25% on all DStv and GOtv packages. This marks the third price hike in less than a year, following a 19-20% increase in May 2023. The new pricing regime, effective May 1st, 2024, will see some DStv packages experience a steeper rise of 26%. Customers were informed via email titled “Price Adjustment on DStv and GOtv Packages.”
MultiChoice has reiterated its commitment to providing the best entertainment and viewing experience with high-quality content and unparalleled service. However, the price increase has drawn criticism and scrutiny from consumers and regulatory bodies like the Federal Competition and Consumer Protection Commission (FCCPC). The FCCPC, led by Acting Executive Vice Chairman Dr. Adamu Abdullahi, plans to review MultiChoice’s justifications and involve other regulatory bodies like the National Broadcasting Commission (NBC) and the Nigerian Communications Commission (NCC) in the investigation. In a response letter to the FCCPC, MultiChoice justified the price increase by citing rising operational costs, including, increased electricity costs, generator usage due to unreliable power supply, and difficulty accessing foreign currency (dollars) for spare parts. However, the FCCPC has warned that they will not hesitate to sanction MultiChoice if they find evidence of arbitrary pricing or market manipulation.
ICYMI: Market roundup
- Nigeria’s equities market went downwards over a 5-day trading week, with the NGX All-Share Index depreciating by 1.39% to close at 98,152.91 points. The top gainers were Sunu Assurances Plc. (25.00%), CAP Plc. (20.21%), Livestock Feeds Plc (14.48%), Japaul Gold and Ventures Plc (14.37%), and Unilever Nig. Plc (11.03%). The top decliners were Oando plc (-19.57%), Sovereign Trust Insurance plc (-18.18%), Thomas Wyatt Plc (-16.82%), FBN Holdings plc, (-16.26%), and Wema Bank Plc. (-12.59%).
- The naira closed the week at ₦1339.23/$1 on Friday at the investor’s and Exporters’ window.
- Brent crude closed the week at $89.36 while US West Texas Intermediate (WTI) crude closed at $83.85.
- The global cryptocurrency market cap stood at $ 2.32 trillion, as of 11 p.m. Sunday, the 22nd of April. Bitcoin stood at $62,511.31, a 5.08%, decrease over the week, Ethereum decreased by 0.05% to trade at $3,311.18 and Binance coin also decreased by 0.86% over the week, to trade at $594.78.
- Last week, HyperionDev, a South African-headquartered tech education provider, raised $5 million, bringing its total growth investment to $31.1 million.
- TLcom Capital, an African VC firm with offices in Lagos and Nairobi and a focus on early-stage startups, concluded fundraising for its second fund, TIDE Africa Fund II, totaling $154 million.
