NEWS FROM ALL AROUND
NEWS FROM ALL AROUND AFRICA Recent investments, expansions and milestones. INVESTEC’S FIRST CORPORATE DEAL IN RWANDA WILL BOOST MANUFACTURING CAPACITY Master Steel, one of the largest manufacturing companies in Rwanda, has entered into a transaction agreement with Investec, which acted as co-mandated lead arranger in a facility worth -million. The funds raised will be used to enhance Master Steel’s financial capacity to import more raw materials to satisfy demand, both locally and regionally. Rwanda’s manufacturing output for 2022 was .3-billion, a 29.9% increase from 2021 and considering the ambitious plans that are in place for industrial and social development, this is likely to increase. Rwanda is often regarded as one of Africa’s economic and development success stories, an achievement underpinned by several factors. There has been political stability for almost two decades and a range of economic and structural reforms have been enacted, including a strong emphasis on public sector investment. Furthermore, despite the global challenges of high inflation and the knock-on effects of the war in Ukraine, the country has rebounded strongly since Covid-19, growing by 8.2% in 2022. According to the World Bank, Rwanda is also now aspiring to middle-income country status by 2035 and high-income country status by 2050. Despite this, the country is still highly dependent on public sector investment, which has meant high fiscal deficits and public sector debt (estimated at 71% of GDP). “To achieve these ambitious goals, Rwanda will have to tackle many challenges, including reducing poverty even further and encouraging greater private sector and international investment,” says Nonkululeko Dlamini, a consultant in structured finance solutions at Investec Bank, and a member of Investec’s African Structured Debt Solutions team. “We believe that Rwanda’s business-friendly environment will ensure that the country remains an attractive destination for foreign investment, as it further diversifies its economy and develops trade in the region. Over the medium term, Rwanda is also likely to remain amongst the economic outperformers in Sub-Saharan Africa and we are encouraged by Master Steel’s building capacity now and for future growth.” “In addition to growing its domestic market, Master Steel aims to contribute to trade with key neighbouring countries,” says Teddy Ndayambaje, General Manager of Master Steel. “Increasing the export sales in neighbouring countries is one of our key strategies to increasing sales, in hard currency, while reducing any challenges related to foreign currencies while importing raw materials.” Master Steel is just one example of the fruits of investment facilitation in Rwanda that can help it grow its gross fixed capital formation (GFCF). “This is Investec’s first corporate deal in Rwanda, and we are proud to have been able to support one of Rwanda’s largest manufacturers in its growth by arranging this facility alongside Etihad Cap Africa and I&M Bank Rwanda. This deal aligns with our strategy of exploring new markets in Africa while partnering with trusted partners on the ground,” concludes Rowan King, Head of Business Development and Origination in Africa at Investec. 4
NEWS ENGEN AND VIVO ENERGY ARE COMBINING TO CREATE AN AFRICAN ENERGY GIANT Engen and Vivo Energy have announced a combination of their African businesses to create one of Africa’s largest energy distribution companies. The combined group will have over 3 900 service stations and more than two-billion litres of storage capacity across 27 African countries. Engen is the clear market leader in South Africa and has around 1 300 service stations across seven African countries. Vivo Energy is a major pan-African retailer and distributor of fuels and lubricants to retail and commercial customers, with over 2 600 service stations across 23 African countries, using the Engen and Shell brands. PETRONAS will sell its 74% shareholding in Engen to Vivo Energy at completion. The Phembani Group, PETRONAS’ longstanding partner in Africa and Engen’s B-BBEE shareholder, is continuing its strong association with Engen and will remain invested as a 21% shareholder in the South African business. The transaction will further benefit employees of Engen through a newly implemented 5% employee share ownership programme, resulting in Engen South Africa being 26% owned by previously disadvantaged parties. Stan Mittelman, CEO of Vivo Energy said, “Vivo Energy’s focus has been to invest to grow our business, and I am proud that we have more than doubled the size of our network since our formation in 2011. Four years ago, we acquired the Engen business in nine African markets, and have since worked to enhance and develop these. Vitol’s acquisition of 100% of Vivo Energy last year brings more opportunity to grow even faster.” The transaction is pending regulatory approvals and fulfilment of certain conditions. Rand Merchant Bank (a division of FirstRand Bank Limited) and Standard Bank advised Vivo Energy. Morgan Stanley and Rothschild and Co are advisors to PETRONAS on this transaction. INTRA-AFRICAN TRADE VOLUMES ARE SET TO INCREASE Improving transport infrastructure between Cairo and Johannesburg will greatly improve trade within the African continent. This is according to Egypt’s Ambassador to Kenya, Wael Nasr Eldin Attiya, who says the road infrastructure within the continent is 70% complete. Various countries such as Egypt have completed their sections of important routes, which will consequently see increased volumes of trade. “We are sure that trade within our two countries and the continent in general will improve once the ongoing infrastructure projects are complete. By this we mean that both roads and railways are crucial in facilitating movement of goods,” said Ambassador Attiya, who was speaking on the sidelines of the Kenya-Egypt trade mission in Nairobi in January 2024. The ambassador noted that problems have been encountered in countries that have conflict, but expressed confidence that once those issues were resolved, “we believe it will be complete in no time.” The ambassador added that countries must also work to eliminate various non-tariff and tariff barriers as they continue to stifle trade within the continent. The port of Mombasa continues to be a pivotal point in facilitating trade between Egypt and Kenya with the proximity between the two countries also working to the advantage of exporters and importers. Furthermore, the imbalance in trade between Kenya and Egypt is due to Mombasa being as a gateway to East and Central Africa. Trade volumes between the two countries continues to increase thanks to improved relations. “Transport by ship from Cairo to Mombasa currently takes about 14 days which is quite fast. Thus, we are encouraging companies from both Kenya and Egypt to explore this route as we wait for the completion of other logistics infrastructure,” the ambassador added. The ambassador also praised the entry of an Egyptian bank, Commercial International Bank (CIB), into the Kenyan market saying it will enable trade between both countries. CIB, which has assets of -billion, opened its first branch in Nairobi in 2023. Speaking at the same event, CIB Kenya CEO Daphne Maina said the bank will enable facilitate trade between the two COMESA nations. The Kenya-Egypt trade mission is organised by the Egyptian Food Export Council and consists of a series of visits by Egyptian companies to wholesale market areas and supermarket chains in Nairobi. The Kenyan companies will also have an opportunity to have meetings with the 26 visiting companies during the two-day event. E-COMMERCE IN BENIN GETS A HELPING HAND The Board of Directors of the African Development Fund, the African Development Bank Group’s concessional window, has approved a €38.8-million loan to Benin to help implement the initial phase of the Economic Governance and Private Sector Development Support Programme. This programme will increase the private sector’s contribution to economic growth by enhancing the overall business climate, developing the agri-food sector and strengthening climate action. “The aim of the Economic Governance and Private Sector Development Support Programme is to assist the Beninese government in its efforts to accelerate, develop and implement the structural reforms that are fundamental to boosting wealth creation,” said Robert Masumbuko, the Bank’s Country Manager for Benin. The programme provides for the establishment of a technical committee to finalise the national e-commerce strategy, which will define the regulatory framework for online commerce and facilitate financial transactions. It will also result in an update of the communication plan for the National Gender Strategy for the agricultural sector. Finally, the initiative will support a project to set up an electronic window to facilitate investment and exports in Benin. 5
