Photograph — Fortune

Here are three big stories from Africa’s business and policy landscape you (probably) didn’t miss but should keep in mind this week:

Nigeria increases electricity tariff by over 200%

Nigeria’s electricity regulator raised tariffs for high-consumption customers by over 200%, aiming to reduce government subsidies and ease financial strain. This specifically targets wealthier consumers who use the most power. The increase, effective immediately, jumps from a maximum of 68 naira per kilowatt hour to 225 naira, impacting roughly 1.5 million people, or 15% of the customer base. 

This decision seeks to address the significant $2.6 billion subsidy cost, aligning with President Tinubu’s economic reform plan, following the removal of fuel subsidies and currency devaluation in 2023. These reforms aim to stimulate growth but have caused significant inflation to over 30% and worsened living costs, sparking worker discontent. Although the World Bank previously recommended subsidy cuts, Nigeria faces numerous challenges in its electricity sector. These include an unreliable grid, gas shortages, high debt, and vandalism. Despite a 12,500-megawatt capacity, the country only generates a fraction, forcing many to rely on expensive generators.

State-controlled tariffs remain too low to attract investment and cover costs, leading to ballooning debt for distribution and generation companies. This recent hike follows a similar increase for Band A users (those with at least 20 hours of daily power) less than a year ago, sparking concerns amidst ongoing inflation and the fuel subsidy removal. The government maintains this new tariff only affects a small portion (1.5 million) and that most Nigerians (10.5 million) will continue receiving a 70% subsidy.

Nigerian Exchange Group invests in Ethiopian Securities Exchange, marking expansion and East Africa entry

The Nigerian Exchange Group (NGX Group) announced a significant investment in the Ethiopian Securities Exchange (ESX), marking a major step forward in its expansion strategy and entry into the East African market. This move positions NGX Group as the largest foreign institutional investor in the ESX. The investment will contribute to the operationalization of the Ethiopian bourse alongside other key players like FSD Africa, a UK-backed non-profit, and the Trade and Development Bank Group (TDB). NGX Group sees this partnership as an opportunity to drive growth and innovation across African capital markets.

NGX Group Chairman, Alhaji Umaru Kwairanga, emphasized the collaboration’s role in promoting economic development, transparency, and good corporate governance in Ethiopia. Temi Popoola, Group Managing Director/CEO of NGX Group, echoed this sentiment, highlighting the investment’s significance for their expansion strategy. The ESX fundraising exceeded expectations, raising nearly 1.3 billion Ethiopian Birr (ETB) from private investors. This strong showing reflects investor confidence in Ethiopia’s economic future. The Ethiopian government will retain a 25% stake in the exchange, with private and institutional investors holding the remaining 75%. NGX Group’s expertise will be crucial in developing ESX’s structure, trading rules, and marketing segments. Their collaboration has already resulted in a rule book to guide ESX operations. The ESX is expected to launch in 2024, potentially attracting further foreign investment to Ethiopia. 

Zimbabwe replaces collapsing currency with gold-backed one

To curb inflation and stabilize the economy, Zimbabwe is ditching its failing local currency for a new one. This “structured currency,” called Zimbabwe Gold (ZiG), will be backed by a combination of foreign currencies and gold reserves held by the central bank.

Recall that the Southern African nation had reintroduced its currency in 2019 after a decade of relying on foreign currencies. However, public trust remained low, with most transactions still conducted in foreign money. The Zimbabwean dollar’s value plummeted over 70% this year, pushing annual inflation past 55% by March. This triggered memories of hyperinflation during Robert Mugabe’s rule.

The central bank describes the ZiG as a “structured” currency, backed by a basket of foreign currencies and precious metals, primarily gold, held in reserve. Governor Mushayavanhu expressed confidence that these measures will help control inflation. The ZiG will coexist with foreign currencies, according to central bank governor John Mushayavanhu. Additionally, a significant interest rate reduction was announced, from 130% to 20%. The exact exchange rate for the ZiG will be determined based on the closing interbank rate. Zimbabweans have 21 days to exchange their old currency for ZiG, with banks converting their existing balances immediately. These announcements culminate extensive discussions between the central bank and the finance ministry regarding currency reforms.

ICYMI: Market roundup

  • Nigeria’s equities market was almost stagnant over a 5-day trading week, with the NGX All-Share Index depreciating by 1.08% to close at 103,437.67 points. The top gainers were Cutix Plc. (10.00%), Tantalizers Plc. (8.57%), C & I Leasing Plc (5.71%), and Dangote Sugar Refinery Plc (5.36%). The top decliners were CWG plc (-10.00%), Secure Electronic Technology plc (-9.37%), Omatek Ventures Plc (-9.30%), and Scoa Nigeria plc (-8.90%).
  • The naira closed the week at ₦1251.05/$1 on Friday at the investor’s and Exporters’ window.
  • Brent crude closed the week at $91.17 while US West Texas Intermediate (WTI) crude closed at $86.91.
  • The global cryptocurrency market cap stood at $ 2.58 trillion, as of 6 a.m. Monday, the 8th of April. Bitcoin stood at $69,318.77, a 1.75%, decrease over the week, Ethereum decreased by 5.36% to trade at $3,414.57 and Binance coin also increased by 2.40% over the week, to trade at $581.50 
  • BURN Manufacturing, a prominent clean cookstove production company based in Kenya, raised $12 million in carbon financing (PE), to distribute its clean cooking products throughout Africa.
  • Adenia Partners Ltd., a private equity firm focused on African opportunities, announced closing its fifth and largest Africa-focused fund to date, Adenia Africa Fund, at $470 million

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