Headline inflation reached a 27-year high of 29.90% in January 2024. Only Zimbabwe (34.8%), Congo (42.5%), Sierra Leone (52.16%), and war-torn Sudan (63.3%) have higher inflation rates.

In a meeting in early February, Cardoso said he expects inflation to moderate to 21.4% in 2024 using CBN’s inflation-targeting policy; next week’s MPC meeting will be a stern test of the bank’s ability to match talk with action. 

Bloomberg analysts expect an interest rate increase of 500 basis points. However, Basil Abia, a co-founder at Veriv Africa and policy analyst, believes the CBN will take a more moderate path and increase rates by 100 basis points instead, from 18.75% to 19.75%. 

“It is difficult to see how raising rates can make an impact,” Abia argued in an email response. 

“Nigeria’s inflation is a cost-push inflation buoyed by a steep increase in energy costs across the board, frequent energy scarcity, a nationwide food supply shortage problem, an illiquid power generation value chain, foreign exchange scarcity,” he added. 

Mayowa Badejo, a partner at 213 Capital, an investment and risk advisory firm, believes inflation will only moderate after the naira begins to strengthen.

It’s a nod to Cardoso and the CBN’s other troubles, like a volatile Naira that has resisted every policy thrown at it. 

The central bank hiked open market rates to 19% from under 12% to mop up excess liquidity and has tweaked the rules for oil companies to repatriate FX from Nigeria, but the Naira’s slide has only worsened this week.

Cardoso, who previously dismissed the impact of monetary policy meetings, is under pressure to deliver stability. This week, an aide of President Tinubu urged Cardoso to consider the “political implications” of the CBN’s policies. 

“Inflation outturns over the past two years have risen even beyond this average historical rate and persisted for much longer than initially expected,” read a statement from the NBE.

According to data from the NBE, Ethiopia recorded consecutive months of inflation below 30%. In December 2023, the annual inflation rate increased to 28.7% from 28.3% in November 2023. Food prices, which comprise over half (53.5%) of the consumer price index (CPI) grew to 30.6% compared to the same period in 2022, and slightly higher than the 30% recorded in November 2023. The jump was linked to the nation’s internal conflict, the Tigray war.  

An overlap in malnutrition, disease, and food insecurity has worsened the situation. About 4 million people have also been affected by the ongoing drought. “Some supply-side and cost-push factors found to be statistically significant in contributing to inflation have included the internal conflict that disrupted local food transport/distribution networks and the large jump in key global commodity prices,” said the NBE. 

Other items besides food increased to 26.1% in December 2023 from 26.0% in the prior month, influenced by a weaker currency, the Ethiopian birr. Nonetheless, the NBE wants to reduce inflation to under 20% by June 2024 and under 10% by June 2025. They plan to do this by managing how much money is lent and cutting back on giving money directly to the government.

Performance of the Ethiopian birr

In December 2023, the birr lost value by 4.8%, ending the year at 56.1 birr for $1 from 53.6 birr recorded in December 2022, per a statement shared by Safaricom Ethiopia. The government made some changes in September 2022 to bring more foreign currency into the country. For instance, the NBE halted foreign currency use for purchasing in the country. Ethiopians can only keep foreign currencies for 30 days, instead of 90 when they return to the country from foreign trips. At the same time, the NBE made it easier for people to bring foreign currency into the country.

Ethiopians can bring up to $4,000 without declaring the cash at customs. However, the amount of money non-citizens can bring in without alerting customs officials has more than tripled from $3,000 to $10,000.

The major driver of Nigeria’s inflation is food, and prices of staples like bread and yam rose as many shoppers in the country struggled to afford their proteins during the festive period. December’s food inflation figure was 33.93%.

“The government has to start doing something with respect to the price of fuel and energy, including electricity, and improving the exchange rate depreciation situation,” said Sheriffdeen Tella, a professor of Economics at Olabisi Onabanjo University. “Once those things are done, we will start getting reduced inflation.”

Last week, the World Bank projected Nigeria’s inflation to ease in 2024, hinged on last year’s reforms and the expectation of the easing of the effects of petroleum subsidy removal. However, other analysts are not optimistic that inflation will slow any time soon.

The Central Bank Governor, Yemi Cardoso, dismissed the effect of rate hike meetings on curbing inflation at his last public outing.

For the second consecutive week, the Nigerian stock market began on a positive note, as investors continued to take advantage of the market’s strong performance to trade more stocks. The All Share Index, a metric that tracks the movement of share prices on an exchange, hit a 7-month high of 83,191.84 at the end of Tuesday’s trading. 

The NGX grew by nearly 4% today, driving the banking stocks of some tier-1 banks like First Bank Holdings into a trillion naira market capitalisation. Other stocks in the manufacturing, agriculture and insurance sectors also drove today’s strong results. 

“The market is expected to remain bullish in the short run,” said Samuel Oyekanmi, a Lagos-based financial analyst. With the market’s positive results, it resumed where it dropped off in 2023. 

Yet, other analysts warned that the bullish trend of the stock exchange will not last forever, predicting a possible dip later this month.  “Investors may begin to take profit towards the later part of the month,” Oyekanmi warned. Another analyst, Mayowa Badejo told TechCabal that the current strong performance could be a move to attract more people into the market and take profits later on. “It’s also possible that some traders are intentionally driving the prices up to attract newbies in the hope of dumping after the bandwagon effect,” he added.

For the third consecutive year, the Nigerian stock market started the year strong, as investors who may have missed out on last year’s massive gains continue to take new positions. The All Share Index, a metric that tracks the movement of share prices on an exchange, hit an all-time high of 78,020.54 this week. 

The NGX performed beyond expectations in 2023, driven by the oil and gas and banking sectors. It reached new highs, and with 45.90% growth in 2023, the returns on the NGX beat inflation. In 2024, the NGX has picked up where it stopped last year, driven mostly by banking stocks. 

“The markets are usually stronger in January based on the market data in the last four years,” said Christian Orajekwe, the managing director of Cordros Capital, a Lagos-based financial services firm. “This year will be a strong year for equities. Some people missed last year’s rally and are taking early positions.” 

Publicly available data by the NGX showed that for three years, the stock market has opened each new year on a high. 

The trend began in 2020 with Bloomberg naming the Nigerian Stock Exchange (as it was called at the time) the best-performing stock market from 93 global indexes. The NGX has continued on an upward trend since then. 

The market is also anticipating several positive full-year reports, share buybacks and new listings to drive better performance of the sector, three analysts told TechCabal.

Yet, one analyst sounded a cautionary note, predicting investors would likely sell-off to take profits in Q2.

In November, Nigerian households felt the pinch even more as consumer prices rose for the eleventh consecutive month this year, making it likely that the country’s Central Bank will raise interest rates. Official data from the National Bureau of Statistics (NBS) showed that headline inflation, which tracks the prices of food, energy and other commodities, rose to 28.20%. 

Food prices continue to be a major cost component for many Nigerians. The price of staples like bread and yam rose. Overall, November’s food inflation figure was 32.84%.

“The inflation rate will continue to rise throughout 2024 because of low economic productivity,” said Mayowa Badejo, a partner at 213 Capital, an investment and risk advisory firm. “The only way to reduce the impact is to boost local production, particularly agriculture and energy sectors which are responsible for over 50% of our inflation rate.”

The Director of the Communications Department of the International Monetary Fund (IMF), Julie Kozack recently called on the leadership of the Central Bank to further hike interest rates at the next rate meeting. However, the continuous silence of the Central Bank Governor on rate hike meetings does not inspire any hope for analysts that inflation would be curbed. Nonetheless, Cardoso, in a recent meeting with the Joint Committee on Banking, Insurance, and Other Financial Institutions assured that inflation would slump in 2024.

“Inflation pressures may persist in the short-term but are expected to decline in 2024,” he said during the presentation yesterday at the nation’s capital.

Cardoso made this announcement at the Chartered Institute of Bankers annual dinner on Friday in Lagos. Having recently postponed the second crucial rate meeting since July, he stated that the Central Bank of Nigeria (CBN) had met its quota of rate meetings for the year 2023, even as inflation hit an 18-year high of 27% in October. KPMG predicted that Nigeria’s headline inflation will hit 30% by December 2023.

Analysts have anticipated this meeting hoping to make investment decisions following what they would hear at the dinner. They also anticipated a rise in interest rates this month to help slow down inflation and protect banks from losing capital as inflation continues to rise. Cardoso did not state when the first rate hike meeting for 2024 will be held under his leadership. The governor also said that the bank had initiated foreign exchange frameworks to address the backlog of dollar demand that has weighed heavily on the naira. He said the payment of obligations will continue until they are completely cleared.

The 66-year-old former Citibank executive directed that the banks’ minimum capital ratios be increased instead, in the hopes of meeting the $1 trillion target set by the Federal Government. 

Despite acknowledging the importance of technology in payments, Cardoso promised to checkmate the sector as some payment firms had been operating outside the activities approved for their licenses. The bank chief said that CBN has been mopping excess liquidity in the market via the introduction of Open Market Operation (OMO) bills. He also assured that the bank would no longer stray from its core mandate but work towards providing the right fiscal and monetary policies that would steer the nation forward.

The deal, announced on X, formerly Twitter, will see Onega Ventures become the exclusive distributor of Wicrypt devices in China, and provide customer support and management services.

“We are excited to partner with Onega Ventures as an official Wicrypt agent and sole distributor of Wicrypt devices in China. This means that you can now purchase, repair and manage your Wicrypt devices at Onega Ventures in China,” it posted.

This marks the first entry of Wicrypt into the Asian continent, where it hopes to tap into the huge demand for fast and affordable internet access.

Wicrypt is hoping to provide last-mile internet to people worldwide while harnessing the power of blockchain technology. Wicrypt’s foray into China also underscores the coming of age of Africa’s startup ecosystem – now one of the world’s most vibrant in terms of VC interest.

Founded in 2018, Wicrypt, a Web3 company, leverages blockchain technology to create a decentralised network of WiFi hotspots. 

Users can either download the WiCrypt app or buy the WiCrypto device, a customisable hotspot creator that can also display ads, surveys, and collect user data and which allows users to share their mobile data with others, safely, to create a network.

The WiCrypt network is powered by NFTs (Non-Fungible Tokens), which are unique digital assets that represent each connected device on the blockchain. All the data transactions that occur through the WiCrypt devices are recorded on the blockchain via the corresponding NFTs, ensuring transparency and security.

WiCrypt also rewards its users for providing WiFi services, both in cash and in its native token, $WNT. Users pay a small fee to access the Wi-Fi, while hosts earn income and incentives for keeping their devices online. 

The $WNT token can also be staked by hosts to join the WiCrypt Network, a community of WiFi providers that benefit from shared resources and governance.

WiCrypt has grown rapidly since its inception, reaching nearly 1,100 hotspots in over 30 countries, serving more than 45,000 accounts and transmitting over 895 terabytes of data. 

In 2021, the startup raised US$1.5 million in funding, which it used to expand its operations and target new markets, including China.

China is the world’s second-largest economy, with a population of 1.4 billion and over 800 million internet users.  It also has a vibrant tech ecosystem, with many innovations in areas such as e-commerce, fintech, and social media. 

WiCrypt aims to capture a slice of this market by offering a novel and cost-effective way of accessing the internet, especially for the underserved and rural areas.

WiCrypt CEO Ugochukwu Aronu expressed his excitement about the partnership with Onega Ventures, saying that it was a great opportunity to showcase the potential of African Web3 startups in the global arena. 

He also shared his vision of creating a passive income stream for millions of people who use the internet daily, by turning their devices into WiFi hotspots.

Bruno Yu, COO of Onega Ventures, said that he was impressed by WiCrypt’s innovative and scalable model and that he was looking forward to working with the team to grow the WiCrypt network in China. 

Yu is an early investor in WiCrypt and has extensive experience in the Chinese tech sector.

WiCrypt is not only a pioneer in the African Web3 space but also a beneficiary of the Nigerian Communications Commission, which invested US$5,500 in the startup during its early stages.

Founders…we’re not the only ones struggling.

In the past 18–24 months, we’ve heard the term “dry powder” over, and over again. Basically, the perception is that after record-setting fundraising years, VC funds are sitting on massive piles of capital that they haven’t deployed. The perception in many of my conversations with founders is that investors are sitting on cash and watching us flounder. The reality is far from that. 

I wanted to write this for my fellow founders who may not have the time to research or may not have had the exposure to capital markets as I did during an investment banking stint. Hopefully, this is helpful and informative in tying some of the different threads on this topic together. 

Sorry for the jargon; I’ve done my best to link back to useful resources to help you along the way. 

This isn’t a pity party for investors; it’s a reality check for us. There’s no one coming to save us. We have to build resilient businesses solving big problems, with great distribution/moats, adapt to the new AI world, and still grow at exceptional rates. If that sounds ridiculous, it is. But so is believing we can build a unicorn and change the world—right? 

Mario Gabriele, writing in The Generalist, once said, “If the 2020s have one ultimate message, however, it is that we live in the most chaotic timeline. This is the age of superbugs and superbubbles, lockdowns and collapses. Welcome to the roaring twenties: a decade of pandemonium.” 

The quote above captures the essence of what it means to be a founder, especially a millennial one. We’ve come of age in rapid boom and bust cycles and now need to get comfortable with the reality that until interest rates come back down, there’s no reason to believe the VC dollars will start flowing at a high clip. It would be awesome to look at the Fed Funds Future contracts and be able to predict rates, but I’d rather spend time and effort figuring out how to build a phenomenal business that solves massive problems. This allows us to endure the hard times so that we’re able to appreciate the good ones to come. 

Topics to unpack

1. New normal for founders and investors. The definition of a good deal has drastically changed. Yes, as founders, it feels like the goalposts have now moved—they did! But not just for us. VCs are struggling to raise. If you check the data, you will see that it’s hard out here for everyone. If you’re a VC that doesn’t have a good track record of DPIxTVPI or some solid name-brand exits, raising the next fund is an uphill battle. 
2. Focus on protecting portfolio value. General partners (GPs) have needed to and will likely continue to focus on the bird in hand rather than over-indexing on the birds in the bush, thinking (and/or hoping) their portfolio founders will just figure it out. Funds have ring-fenced capital to their portfolio to ensure survival for their winners and potential winners (as best as they can) to be able to ride out the storm (hopefully). It’s also a new world for a lot of VCs. Many GPs are new to this game and have never been through a bust cycle just as us founders, so we’re all learning in real time. 

We also must remember our investors have other investments and only approximately 30 days in a month. So, a good exercise for us founders is to look at the size of the fund compared to how much they invested and consider what they mark you at and the likelihood you’re a fund returner or not. It’s not easy, but that level of sobriety is critical, especially in these times. 

3. Opportunity cost for calling capital. Depending on the limited partner (LP) base (institutional, endowment, pension fund, HNWI), they can have different capital needs. In an environment where you can earn 500+ basic points (bps) risk-free and be able to get out of money markets in days, it begs the question: Why allocate into illiquid asset classes like early-stage equities, especially when your public market equities are down over-indexing the portfolio in equities in general? 

So now what? 

Ask yourself: Is this my life’s work? If it is, you’re playing an infinite game. There’s no shame in losses that come with that, as long as you operate with integrity and genuinely are obsessed with solving a problem that can improve the lives of others. This whole thing is a series of experiments. Something else that’s important to align with your leadership team and major investors is: Are we going for default alive, investable, or acquirable? Be clear and decisive here. 

Remember: build something that matters to people. We obviously all want to be fund returners, unicorns etc. Sometimes that’s not in the cards. Sometimes it is. What is in your control is being customer-focused and obsessed with solving problems using data and feedback. At Pariti, we’ve realised that by co-creating with our community building around data x AI models, we can change capital and talent markets and empower people to earn. Supercharging their efforts with AI does not replace them. Some of our community referrers are earning more monthly than the average GDP/per capita in Africa. Are we satisfied? No! But every day I get reminded that there are people in the world grateful for what we’ve built, and that reigns supreme above all else. For those of us who make it through this cycle, I believe the businesses we are building will be some of, if not the most, transformational businesses the world has ever seen. 

If you want to learn more about this and other related topics sign up here. I’ll be interviewing founders/investors over the coming weeks to unpack more of these current events and get different perspectives from early-stage to growth-stage founders & investors.

M-KOPA is finally rolling out its pilot operations in South Africa five months after it secured over $250 million of debt and equity to fund its expansion across Africa.

The company, which pioneered a pay-as-you-go model for solar panels and smartphones in East Africa, will partner with local retailers and distributors to offer its suite of smart products to low-income households in the vibrant township.

Recently, the firm sought a sales executive through postings on Glassdoor and Beebee, as it looks to bolster its drive in Soweto.

Last year, Jesse Moore, M-KOPA CEO and Co-founder said the firm would expand to more markets across Africa and scale to over 10 million customers in the next few years.

South Africa thus represents M-KOPA’s fourth-largest market, following Kenya, Nigeria and Ghana, where the company has enjoyed relative success with a diverse range of consumers.

In Soweto, M-KOPA aims to replicate its Kenyan success in a market often disrupted by power outages due to load-shedding.

Despite these challenges, South Africa’s dynamic and varied economy offers a new frontier for M-KOPA.

Choosing to start in Soweto is seen as a strategic move, given the township’s similarity to the markets where M-KOPA has previously thrived. The area’s demographics, mainly low to middle-income households, align well with M-KOPA’s product range.

According to tech analyst, Martin Macharia, the entry into the South African market is a natural pivot.

“The country, despite its economic strides, grapples with challenges such as frequent power outages and a significant portion of the population still living without regular access to important amenities,” he noted. 

“M-KOPA’s innovative solutions, therefore, which have seen great success in Kenya and to some extent Nigeria, are poised to offer much-needed relief in these areas. By partnering with local retailers and distributors, M-KOPA is not only contributing to the economy but also embedding itself within the community, ensuring that its solutions are tailored to meet the specific needs of the South African consumer.”

M-KOPA’s products include smartphones, electric motorcycles and solar power systems, which customers can pay for in small instalments over time, using their mobile phones. The products are embedded with credit through a smart digital connection, giving customers instant ownership and access to essential services.

As of March 2022, it had reached 2 million customers across four African markets, with the latest funding haul setting it on course to become the dominant player in that space, possibly a unicorn.