Before we get into our main topic of the week, let’s have a look at how the African and Arab markets have been coping with the recent market jitters. Global markets have been through a few horrible sessions and sentiment is again contagious, but only to a certain extent.
While some African markets have held up quite well, except for those markets that have a place in the EM indexes have lost some ground over the past few days. The Middle East markets, which are notoriously more volatile, have also come off during the past few sessions only to recover part of the lost territory with high trading volume today.
We continue to believe that no matter how you look at it, these economies remain in great shape and most of the companies in the territory continue to grow and make money at a healthy pace. Today’s brisk recovery speaks to the fact that locas are net buyers that take advantage of dips.
The Maghreb markets (Morocco & Tunisia) are proving resilient along with those of Sub-Saharan region, despite having corrected slightly over the past week, continue to trade in line with its prodigious economic reality.
This week we focus on one of the most impressive investment stories in Africa. It is a true eye-opener and challenges our perception of what is possible in this continent. Daniel Broby, our CIO and Funmi Akinluyi, Head of Sub-Saharan Africa Equities tell us about Safaricom’s M-Pesa. I really can’t wait for this kind of service to come to Europe!
Dial M for Money
As you sit there reading this on your blackberry or on the internet, ask yourself if you are really at the vanguard of technology. Are you, for example, using your telephone as a tool to deposit money into your bank account? Can you check your bank account balance from the same mobile? What about requesting an insurance policy without having to go and see an agent, simply using that phone to send the details? Sounds impressive? How about checking to see if your telephone has an application built into it that has the ability to score your credit rating? Sounds unlikely? And what about topping it all off by having such services inter-linking to a mobile money transfer service and a conventional banking account?
Now, for the really surprising fact – all these services are being offered by Safaricom, the leading wireless company in Kenya. That’s right, Kenya, the country in Africa! Asking for short-term credit while down at the village has never been easier. There is no application form to fill, no cost of travelling and no waiting next in line to conduct your transactions. Welcome to the new reality. Some parts of Africa have caught up with, even passed the west, in wireless and banking technology.
Last week, equity Bank and Safaricom joined forces to offer M-PESA. This tie up links over 4.5 Million Equity Bank and over 9.5 Million Safaricom customers in a new banking paradigm. The two firms have previously pioneered this sort of offering with the ability to withdraw cash from a mobile phone from the over 550 ATMs.
Equity Bank’s Chief Executive Officer, Dr James Mwangi said ‘It is with great passion that we offer this range of service on your mobile phone. We want to ensure that no Kenyan is locked out of accessing basic banking services. If you look at other solutions in the market, nobody has put together all these services to provide this kind of convenience to the customer. This is in line with our mission to offer inclusive, customer-focused financial services that socially and economically empower our clients and other stakeholders.’
The Silk African lions fund has both Safaricom and equity Bank in its portfolio. We liked the companies before the tie up. We like them both even more now. As I write this, Safaricom has just reported that its earnings rose by 44% for first quarter of 2010.
If you would like to discuss this in further detail, don’t hesitate to get in touch with us. Our weekly updates with more detailed insights and perspectives can be found our our website.
With kind regards from the Silk Invest Team
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