Atta Africa Financial Update

Nigeria to cut fuel imports ahead of refinery makeover.

Sinking oil prices have hurt Nigeria’s upstream revenues, but a change is coming: long-overdue restructuring of the national oil company and improved production at Nigeria’s refineries should give the country’s downstream hydrocarbons sector a boost.

Africa's largest oil producer has seen export earnings fall this year as oil prices have tumbled worldwide. Oil makes up around 90% of the country's export earnings. Nigeria has four large refineries, with a total potential capacity of 445,000 barrels per day, but historically their utilisation rate has been low (around 30%) and they are far from able to address domestic demand. According to the Nigerian National Petroleum Corporation, domestic output meets only 9% of daily petrol consumption, 24% of dual-purpose kerosene use and 28% of automotive gas oil consumption, with the rest imported from abroad. In fact, the country still relies on imports for some 86% of its aggregate consumption of more than 50 million litres a day. Given that the country is reliant on imports for fuels and refined products – which account for 35% of foreign currency outflows – the low prices have also slowed the increase in the import bill, although higher demand for refined products has offset some of those savings.

President Muhammadu Buhari unveiled plans in July to split the NNPC into two entities, with an independent regulator for the energy sector and a separate investment vehicle, as part of his election promises to combat corruption and bring refineries back on-line. No date has been set for the restructuring.

Asset management industry in Kenya is getting traction

  • Kenya's asset management industry is the second-fastest growing industry of its kind in Africa
  • In Kenya, investment funds are known as collective investment schemes and the most common type are unit trusts - unit trusts' AUM has grown 21% year-on-year for the last 5 years

South Africa waking up to venture capital opportunities

  • South Africa's VC sector is fast building up a string of successes which is providing a catalyst for follow-up rounds of funding and corporate action
  • We Think Code_, Wigroup, BitX, Faithful to Nature, SA Florist, Ekaya, eShip are some of the notable start-ups making the press at present - anecdotally, it looks like there is a gear shift