Unicorns in Africa
Flutterwave gets a billion-dollar valuation
Welcome to the Baobab weekly by Mwango Capital.
The unicorns have landed!
The Nigerian payments startup Flutterwave is now a unicorn having achieved a valuation of over $1 billion with the latest series C raise of $170 million. It had previously raised $35 million Series B in 2020 and $20 million Series A in 2018. Avenir Growth Capital and TigerGlobal led this round with PayPal and Salesforce Ventures participating.
Elsewhere, Egyptian fintech Dayra has joined Y Combinator & raised $3 million in a pre-seed round that includes a mix of equity and debt financing.
This marks a strong start to 2021 for African start-ups.
Funding to African Start-Ups Over the Years
Source: Disrupt Africa
Lower Credit Ratings for Kenya
The S&P lowered its long-term foreign and local currency sovereign credit ratings on Kenya to ‘B’ from ‘B+’. Credit ratings help organizations assess the creditworthiness of countries and companies. The downgrade may mean that the Kenyan government has to pay more when borrowing money.
“There are significant risks to the government’s fiscal consolidation plan while external indebtedness will remain high. Consequently, we are lowering our ratings on Kenya to ‘B’ from B+”
— S&P
Loans for Vaccines
Kenya returned to the World Bank for a Ksh 10 billion loan to help purchase COVID-19 vaccines. The funds will be used to purchase 11 million doses of the Oxford AstraZeneca jab that will be used to vaccinate 5 million people.
“We are engaging the World Bank for a credit facility of Ksh 10 billion. The process is ongoing at the National Treasury”
— Kenyan Health Chief Administrative Secretary Mercy Mwangangi
More Bailouts for Kenya Airways
The Kenyan government has set aside a Ksh 10 billion bailout for national carrier Kenya Airways. The funds seem critical for the survival of the airline currently facing financial troubles with plans to restructure KQ’s debts further. The State bailout comes less than a year after Kenya Airways received a Ksh 5 billion loan from the Kenyan Treasury.
Kenya Airways PLC shares were suspended from trading at the Nairobi Securities Exchange following the publication of the National Management Aviation Bill, 2020 on 18th June 2020, which seeks to nationalize the airline. The airline’s first-half pre-tax losses for the period ended June were Ksh 14.36 billion compared to a Ksh 8.56 billion loss in the same period in 2019.
New Entrant Issues Profit Warning
Newly listed Homeboyz Entertainment PLC expects its 2020 full-year net profit to be considerably lower than the Ksh 36.6 million net profit reported at the end of 2019. The entertainment firm listed by Introduction under the Growth Enterprise Market Segment(GEMS) of the Nairobi Securities Exchange in December 2020 when 63.2 million shares were issued at an offer price of Ksh 4.66.
Roads Bond in Kenya
The Kenya Roads Board will float a third road bond of Ksh 75 billion by the end of June to finance outstanding bills to road contractors and the rehabilitation of the road network across the country. Kenyan President Uhuru Kenyatta, in 2019, signed into law, the Kenya Roads Board Act which gave the Kenya Roads Board(KRB) the power to borrow and leverage the Kenya Roads Fund to seek funds for road maintenance.
Wealth Tax in the Works in Kenya
Kenyan Treasury has opened talks to impose a tax for the rich through the Finance Bill set to be tabled in Parliament next month. The planned tax is part of fundraising for COVID-19 recovery as tax revenues have dropped amid the economic fallout from the pandemic.
“We are looking at fiscal changes that will go into the Finance Bill and we are in discussions over the wealth tax among many other fiscal reforms to boost revenues”
Kenyan Treasury Permanent Secretary Dr. Julius Muia
Other noteworthy items:
SWVL has resumed operations in Nairobi. The Egyptian ride-hailing firm’s operations were disrupted at the onset of the global COVID-19 pandemic in March last year. SWVL operates round trips to and from Kisumu, Nakuru, Kisii, Nyeri, Mombasa and Eldoret.
Stanbic-owned investment bank SBG Securities posted a 71.3 percent drop in net profit in the year ended December 2020 owing to lower advisory fees and brokerage commissions. Advisory and consultancy fees which are earned when the firm handles corporate deals fell by Ksh 83.1 million to Ksh 11.2 million in the period while brokerage commissions were down by Ksh 63.7 million to Ksh 189 million. The investment bank reported a net profit of Ksh 34.98 million in the period down from Ksh 121.85 million in 2019.
Kenyan Treasury has raised Ksh 48.3 billion in its ten-year (12.3%) and twenty-year (13.3%) bonds in March. The issue was undersubscribed by 97.41 percent.
Kenya Commercial Bank plans to officially launch its Vooma loan product, a platform developed jointly with Chinese telecom giant Huawei. Vooma, a payments and settlements platform, is expected to launch this month.
Digital content creators with YouTube will start paying taxes to the US from June this year. Google says all creators outside the US will be deducted taxes on their Adsense earnings.This is in addition to the new 1.5% digital service tax imposed on income earned through a digital marketplace.
The Nigerian Stock Exchange has completed its demutualization process after obtaining regulatory approval. A new non-operating holding company, the Nigerian Exchange Group Plc (NGX Group) has been created and will be listed soon.