Would you buy Nigeria at 30% off?

The Naira is devalued again, Ethiopia's Teleco sector goes private, Electric Vehicles in Africa

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Now to the stories of the week

Buying Nigeria at 30% off?

Would you buy Nigeria if it was sold to you at 30% off?

Well, a Twitter user responded to this saying, “Even with free shipping, I will not buy it; I don’t want to spend more money on repairs”


What’s going on?

Yesterday, The official exchange rate between the Naira and dollar has depreciated to ₦390/$1 from ₦385/$1 but since most people buy from the Parallel market the rate available would be at about ₦503/$1.

On the Parallel Market: Also, known as the black market, it exists because people can’t readily get foreign exchange for their activities that are deemed non-essential by the government which is trying to conserve how much foreign currency it has to pay out since there’s little coming in thanks to low oil prices. 

The parallel market is not just the exchanges that happen at the airports , hotels or through mallams on the streets. It is every transaction that occurs outside the official channel: the CBN and the Importers’ and Exporters’ FX Window (IEFX). 

History of devaluation in 2020

In July, the CBN devalued the naira from ₦360/$1 to ₦368/$1 and black market responded by increasing to ₦465/$1. The exchange rate at the black market has gone from ₦395/$1 on March 27, 2020, to ₦495/$1 as of November 27, 2020, 8months later.

What happens when a currency is devalued.

When there’s a drop in the value of currency imports become more expensive (think of paying ₦500/$1 instead of ₦360/$1 for foreign goods), while exports become cheaper (think of the US paying $0.002/N1 instead of $0.00278 for Nigerian products).

The burden of more expensive imports has a positive spin to it as it means cheaper exports, which leads to more exports and an increase in GDP. But this only works out fine when the country is readily exporting products (not when there’s less demand for its major export i.e Oil) and not heavily reliant on imports for critical sectors (Manufacturing) like Nigeria.

Why it matters

Invest/Save in Naira: The value of money or assets in Naira is eroding just because it's in Naira. You might want to consider this if you earn or have assets in Naira.

Also, foreign investors have always dreaded foreign exchange risk. For instance, In less than a year, a business that had to make about ₦400M to return $1M to its investors, now has to make about ₦500M to hit the $1M mark. Not because it’s performing badly but because there are higher forces at work.

Almost there: Nigeria’s Finance Minister earlier this week stated that Nigeria has fulfilled the conditions and is in the last stages of securing a World Bank loan. $1.5 billion could really make a difference -- that’s if it’s deployed well.

No more Monopoly

The Ethiopian government didn't just shut citizens out of the internet these past few weeks, investors are also queuing to purchase a handful percentage of telecoms company Ethio.  

What's happening? 

Foreign companies are competing to have a cut in the Ethiopian telecommunication sector as the government decides to go private. Earlier this year, the Ethiopian Communication Authorities (ECA) decided to sell off a 40% minority stake in the state-run monopoly, Ethio Telecom, so they restarted plans to open up the country’s telecom market to other telecom operators. 

The lucky ones

Following the telecom reform plans, two new international telecom operators will begin operations in the Ethiopian market by April 2021. This is reportedly after about 12 telecom companies including MTN Group, Orange, Safaricom, Etisalat, etc submitted bids for mobile network operating licenses in the country. Although not yet confirmed, insiders think MTN might just be one of the two players who have bagged this deal. Each operator will obtain a 20% stake of the company and for a multi-billion dollar company, that is a lot of money up for grabs. 

What you should know about Ethio telecoms

As at June 30, the total number of mobile subscribers on Ethio Telecom was at 44.50 million. This is up from the previously reported figure of 44.03 million at the end of 2019. The company also reported total revenue of 47.7 billion ETB (US$1. 35 billion) for its financial year ending this June. The telecom company generates most of its revenues from voice services which accounted for about 50% of the 2020 revenue. 

However, it is worthy of note that about 70 million people in the African country are yet to be connected to any mobile network.

What this privatisation means for the country

If and when it pulls through, this new phase should lead to a rapid drop in the current cost of using the internet in the country. Since the sector is worth about 47.7 billion ETB (US$1. 35 billion), it will attract millions of dollars of investment in the sector and help increase competition to deliver fast internet.

Ehm! Is Ethiopia still in the heat of a fight?

Well, yes. A few weeks back, we wrote that the unrest in Ethiopia had sparked a tribal feud between a powerful region of the country, Tigray, and the federal government. Following this development, mobile networks, fixed-line internet and landline telephones are currently on cut in Tigray, Ethiopia. This is after the government ordered a military intervention in the on-going tribal crisis and shut down the internet in the Northern part of the country. 

Looking ahead

The sector’s reform goal is to unlock the transformational power of the digital economy to drive job creation, economic growth and improve telecommunication services in the country. But seeing the history of internet shutdown following lingering periods of disunity in some parts of the country, Africa is waiting to see the effect of this new development, if it would unfasten government’s control over freedom of use of the internet in the country or stiffen it further.  

How Electric vehicles are fairing in Africa

Source: Earth911

Earlier on we’ve seen and explored different kinds of innovations in delivery and logistics because of the pandemic and the need to move people and things from place to place. 

Today, we’re asking ourselves what’s happening with Vehicles -- Electric Vehicles.


While the buzz around electric vehicles has been in the 21st century, the origins can actually be traced to 1828 to a Hungarian inventor, Anyos Jedik. However, the mass production of gasoline-powered cars and crash in gasoline prices was too much of a competition for the adoption of electric vehicles

Two reasons why

Electric vehicles are generally seen as an avenue to tackle climate change and reduce global warming by contributing to the reduction of greenhouse gas emissions.

Another reason is that the price of petroleum has been on the rise for a while now. As gasoline is not a renewable energy source, it could also near exhaustion in the future.


While adoption in other parts of the world has taken off, Africa is still left behind.

For electric vehicles, there needs to be constant reliable power supply which Africa lacks. Only 10% of the population has access to electrical grids and even those guys still don’t get enough reliable power supply. Asides being inadequate in supply, electricity costs in relation to household income in Africa still remain one of the highest in the world. 

In addition to these, electric vehicles are still behind in mass production and are not as affordable as fossil-fueled cars. Private bodies and individuals would also need to assist to build its infrastructure such as its electric charging stations.

Some good news

While the industry faces a myriad of challenges, we are starting to see some adoption on the continent.

South Africa is the leading country seemingly making progress in the adoption of electric vehicles with two prominent electric car models; Nissan LEAF, and BMW i3. The country has about 180 charging stations, the highest on the continent. In 2019, the number of electric cars on South African roads was estimated to be about 1,000.

Recently in Nigeria, The Lagos State Govt launched its first home assembled electric car, Hyundai Kona. Logistics startup MAX.ng announced plans in 2019 to convert from gasoline-powered machines to electric ones.

We have also seen developments in Uganda, Kenya and Rwanda

Zooming Out: Investment

The electric vehicle boom has been one of the few bright spots for investors in 2020. Tesla has seen its stock price climb by more than 445% this year. Globally, electric vehicles are finally making the move from being a luxury for the rich to the transportation of the many.

More importantly, the entire investment world is aware of the Environmental, Social, and Governance (ESG) trend that is taking over markets.

While Africa is still playing catch up, prospective investors could keep a keen eye on recent developments in this market, in both innovation and infrastructure.

Dig Deeper: Africa And Electric Vehicles: Overtaking Mere Hype For Rare Vibe

Worth reading 📚

Quote 💭

We see people and things not as they are, but as we are.

– Anthony de Mello

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