Atta Africa Financial Update

Key commercial and political activity in Africa for private equity investors by DCE Partners, UK Private Equity advisors to Atta.

Executive summary: Kenyan banking woes.

Small banks continued to struggle for cash in the money markets last week despite the sector registering healthy overall liquidity levels, forcing the CBK to inject Sh12.8 billion (US$130 million) into the banking system in support.

In a statement from the CBK, the market remained relatively liquid on account of government payments and treasury bill redemption, but that there was concentration of cash in only a few banks. The CBK has often pointed out that the money markets liquidity has not been evenly distributed, with seven large banks controlling up to 80 per cent of the available cash.

Constrained liquidity in the small and (sometimes) in medium-sized banks forces them to take up more expensive cash, which increases their overall financing costs and which are often eventually passed on to the customer in the form of expensive loans.

Following the collapse of Dubai, Imperial and Chase banks last year, the inter-bank market has become constricted, with some industry players suggesting that the larger banks are only comfortable lending to each other to the exclusion of smaller rivals, who they perceive to carry a high default risk.

Fact: In the Donald Trump board game, released in the 1980's, the smallest denominated banknote was $10m. It has been described as a much, much simpler version of Monopoly Junior. 

Taxify cuts fares in Kenya, drives up taxi-hailing competition

  • Estonian online cab-hailing app Taxify has cut its fares amid increased competition from its rivals including Uber
  • Taxify has reduced per kilometre tariffs by 20% and is returning more of the revenues from rides to drivers than rival Uber (15% vs 25% in the case of Uber)
  • So far, the firm has over 600 active drivers, most of whom are Kenya Taxi Cab Association (KTCA) members, with about 1,500 others awaiting approval to join the platform
  • The technology set up in 2013 is operational in more than 10 countries including South Africa, Estonia, Czech, Finland, Georgia, Latvia, Lithuania, Serbia, Netherlands and Mexico

Emerging Africa Infrastructure Fund to back Helios Towers Africa

  • Emerging Africa Infrastructure Fund is contributing US$20 million to a US$105 million syndicated loan for Helios Towers Africa
  • The funding is to help finance the purchase of approximately 950 telecommunications towers in the Democratic Republic of Congo

Old Mutual to raise US$700 million for investment in Nigeria

  • South Africa’s Old Mutual Investment Group has signed a suite of agreements with the Nigerian Sovereign Investment Authority to raise a total of US$700 million
  • The capital is earmarked for investment in the real estate and agriculture sectors (US$500m and US$200m respectively)