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Satchu's Rich Wrap-Up
Wednesday 19th of May 2021

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I’ve always heard of Kongo River @gufydox

I’ve always heard of Kongo River and it’s meanders and the lush greenery then I got to experience a boat ride so peaceful and immersive. Diani is so beautiful

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Boat ride along the Kongo River in Diani. @gufydox

09-MAY-2021 ::  The Lotos-eaters

In the afternoon they came unto a land 

In which it seemed always afternoon. 

All round the coast the languid air did swoon, 

Breathing like one that hath a weary dream. 

Then some one said, "We will return no more"; 

And all at once they sang, "Our island home 

Is far beyond the wave; we will no longer roam." 

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@WHO Weekly epidemiological update on COVID-19 - 18 May 2021

Globally, in the past week, the number of new cases and deaths continued to decrease, although overall counts for both remained high with just over 4.8 million new cases and nearly 86 000 new deaths reported in the past week. 

All regions reported a decline in new cases this week with the exception of the Western Pacific where the number of new cases were similar to the previous week.

The highest numbers of new cases were reported from 

India (2 387 663 new cases; 13% decrease)

Brazil (437 076 new cases; 3% increase)

United States of America (235 638 new cases; 21% decrease)

Argentina (151 332 new cases; 8% increase)

Colombia (115 834 new cases; 6% increase)


The Invisible Microbe COVID19 posted two record high weeks of Infections and then declined -4% and -12% in the two following weeks 

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28-MAR-2021 :: The Virus remains an exogenous uncertainty that is still not resolved #COVID19

The Virus remains an exogenous uncertainty that is still not resolved though all the virologists who have metastasized into vaccinologists will have you believe its all sunlit uplands from here. 

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Countries w/ high COVID-19 2wk avg death/day increase @jmlukens

Argentina 744 #COVID19 deaths yesterday above 494/day avg up 33% past 2wks

#Nepal: 495%

#SriLanka: 166%

#Malaysia: 143%

#Bolivia: 105%

#Japan: 85%

#CostaRica: 75%

#SouthAfrica: 62%

#Thailand: 41%

#Argentina: 33%

#Georgia: 33%

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Data from @sangerinstitute Indian variant B.1.617.2 is rapidly spreading and that it has a growth rate advantage of 13%/d [12-14%] over Kent variant B.1.1.7 and of 16%/d [13-20%] over B.1.617.1. @TWenseleers

Data from @sangerinstitute (which excludes data from travellers & surge testing) still how that in the UK the Indian variant B.1.617.2 is rapidly spreading and that it has a growth rate advantage of 13%/d [12-14%] over Kent variant B.1.1.7 and of 16%/d [13-20%] over B.1.617.1.

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We now see the share of S positive tests drastically increasing, which reflects the increasing share of the Indian variant B.1.617.2 (data from @PHE_uk). @TWenseleers

Non-amplification of the S gene (S dropout) has previously been used as a marker for the Kent variant B.1.1.7. We now see the share of S positive tests drastically increasing, which reflects the increasing share of the Indian variant B.1.617.2 (data from @PHE_uk).

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So let's take a look at the GISAID sequence data from India instead, where the incidence of B.1.617.2 has been high (skyrocketing in fact). @TWenseleers

Of course due to low case numbers in the UK any imported cases would have a comparatively large effect on the share of infections. So let's take a look at the GISAID sequence data from India instead, where the incidence of B.1.617.2 has been high (skyrocketing in fact).

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States with such rulers can get “seized by senility and the chronic disease from which [they] can hardly ever rid [themselves], for which [they] can find no cure”
Law & Politics

Ibn Khaldun explained the intrinsic relationship between political leadership and the management of pandemics in the pre-colonial period in his book Muqaddimah 

Historically, such pandemics had the capacity to overtake “the dynasties at the time of their senility, when they had reached the limit of their duration” and, in the process, challenged their “power and curtailed their [rulers’] influence...” 

Rulers who are only concerned with the well-being of their “inner circle and their parties” are an incurable “disease”. 

States with such rulers can get “seized by senility and the chronic disease from which [they] can hardly ever rid [themselves], for which [they] can find no cure”

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India's holiest river Ganges is swollen with Covid victims @geetapandeyBBC

India's holiest river, the Ganges, has been swollen with bodies in recent days.

Hundreds of corpses have been found floating in the river or buried in the sand of its banks. 

Those who live close to where they have washed up, in the northern state of Uttar Pradesh, fear they are Covid-19 victims.

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09-MAY-2021 The Markets The Lotos-eaters
World Of Finance

In 1929, President Herbert Hoover assured the country that things were already “back to normal,” Liaquat Ahamed writes in Lords of Finance.

The US NFP printed 266,000 versus 1,000,000 expected which was the biggest miss relative to expectations in Non Farm Payrolls since at least 1998. @bespokeinvest

On 8th March when the Bears had gotten hold of the US 10 Year, I wrote that I expected the 10 Year to target 1.45% well we got real close on Friday before the market reversed 

Ten- year yields initially plunged to a more than two-month low of 1.46%, then reversed to end the day at 1.58%. However, I am resetting my target Yield to 1.25% now.

Given the volume of money Printing and the extraordinary stimulusI have to say that the US Recovery is actually really weak and I believe it will be very short lived and the Penny will drop soon with the Bond Market and the Shorts will be forced to cover.

The Consensus View appears to be that the Global economy is going to accelerate big time and that its going to BOOM! 

I beg to differ

Partying responsibly. @BobNeiwen

Furthermore The Central Banks are in a corner. 

They have fired a lot of bullets and even if there was a meaningful bounce they cannot raise rates.

Here is why central banks are trapped and cannot raise rates even if inflation rises: @dlacalle_IA Feb 2 

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.2239

Dollar Index 89.749

Japan Yen 109.0155

Swiss Franc 0.8971

Pound 1.4191

Aussie 0.7778

India Rupee 72.995

South Korea Won 1127.7

Brazil Real 5.261

Egypt Pound 15.6805

South Africa Rand 13.9877

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''Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro."
World Of Finance

GameKyuubi posted "I AM HODLING," a drunk, semi-coherent, typo-laden rant about his poor trading skills and determination to simply hold his bitcoin from that point on.

"I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e," he wrote in reference to the now-famous misspelling of "holding." 

"WHY AM I HOLDING? I'LL TELL YOU WHY," he continued. 

"It's because I'm a bad trader and I KNOW I'M A BAD TRADER.  Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro."

He concluded that the best course was to hold, since "You only sell in a bear market if you are a good day trader or an illusioned noob.  The people inbetween hold. In a zero-sum game such as this, traders can only take your money if you sell." 

He then confessed he'd had some whiskey and briefly mused about the spelling of whisk(e)y.  [HODL Definition | Investopedia]

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The story of Sir Isaac Newton and the South Sea Bubble.
World Of Finance

Graham writes,

Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. 

Sensing that the market was getting out of hand, the great physicist muttered that he ‘could calculate the motions of the heavenly bodies, but not the madness of the people.’ Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. 

But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price — and lost £20,000 (or more than $3 million in [2002-2003’s] money. 

For the rest of his life, he forbade anyone to speak the words ‘South Sea’ in his presence.

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$BTC Bitcoin Loses Cachet in Its Challenge to Gold @business @crypto
World Currencies

The ratio of Bitcoin’s price relative to gold is down to the lowest since early February amid greater caution about speculative assets and the economic recovery from the pandemic. 

One Bitcoin is now equivalent to about 23 ounces of bullion, down from a record of 36 ounces in April. 

The largest virtual currency is also smarting after tycoon Elon Musk said Tesla Inc. would no longer accept it for payments over environmental risks from high energy usage.

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08-FEB-2021 :: The Markets Are Wilding
World Of Finance

@elonmusk I am become meme, Destroyer of shorts And on February 4 He tested that hypothesis

No highs, no lows, only Doge @elonmusk Feb 4

Dogecoin is the people’s crypto @elonmusk Feb 4

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09-MAY-2021 The Markets The Lotos-eaters Gold and Silver Have finally got the Big MO

Silver is the single most important asset that I’m focused on. @TaviCosta 

If I had to boil down my entire macro thesis into one position, it would undoubtedly be that.

Once silver breaks above $30, I believe we will see an explosive move to new highs.

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Remittances flows were resilient; down a little (-1.6%) but less than global fin crisis. Instead big hit for developing countries has been historic drop in foreign direct investment (FDI), via @WorldBank @emsovdebt
Emerging Markets

Were fears money sent home as remittances by workers abroad would plummet in 2020. But flows were resilient; down a little (-1.6%) but less than global fin crisis. Instead big hit for developing countries has been historic drop in foreign direct investment (FDI), via @WorldBank

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I join @MoetiTshidi in welcoming @SuluhuSamia's leadership in strengthening national #COVID19 response and joining #COVAX. We stand ready to sustain our support and partnership. Only together can we beat this virus! @DrTedros

I join 
@MoetiTshidi in welcoming #Tanzania President @SuluhuSamia's leadership in strengthening the national #COVID19 response and joining #COVAX. We stand ready to sustain our support and partnership. Only together can we beat this virus!

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Africa is currently reporting a million new infections about every 94 days @ReutersGraphics

Botswana at peak

Angola at 97%

Cameroon crosses 75,000 reported COVID-19 infections

Réunion reports its largest number of new COVID-19 infections since the start of the pandemic: 1,100

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High Seroprevalence of SARS-CoV-2 Eight Months After Introduction in Nairobi, Kenya @TheLancet Pre-Print H/T @DrAhmedKalebi

Background: The lower-than-expected COVID-19 morbidity and mortality in Africa has been attributed to multiple factors, including weak surveillance. 

We set out to estimate the burden of SARS-CoV-2 infections eight months into the epidemic in Nairobi, Kenya.

Methods: We conducted a population based cross-sectional survey using multi-stage random sampling to select households within Nairobi in November 2020

Sera from consenting household members were tested for IgM and IgG antibodies to SARS-CoV-2. 

Seroprevalence was estimated after adjusting for population structure and test performance. 

Risk factors were determined using logistic regression and Infection fatality ratios (IFRs) calculated by comparing our estimates to reported cases and deaths.

Findings: Of 1,164 individuals from 527 households tested, the adjusted seroprevalence was 34·7% (95%CI 31·8-37·6), indicating that approximately 1·5 million Nairobi residents had been infected

Some 261 (49·5%) households had at least one positive participant, and positivity rates increased in more densely populated areas (spearman’s r=0·63; p=0·009)

Individuals aged 20-59 years had up to 2-fold higher seropositivity when compared to those aged 0-9 years or ≥60 years.

 The IFR was 40 per 100,000 infections, with individuals ≥40 years old having higher IFRs.

Interpretation: Over one third of Nairobi residents in half of the households were infected by November 2020, indicating extensive transmission in the city, comparable to countries reporting more severe forms of the pandemic. 

However, the IFR was >10-fold lower than that reported in Europe and the United States, supporting the perceived low morbidity and mortality in sub–Saharan Africa.

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The success of Sudan's transition depends largely on the reconstruction of its economy, We are advocating for debt cancellation, purely and simply. That is our commitment to the young people of Sudan. @EmmanuelMacron

The success of Sudan's transition depends largely on the reconstruction of its economy, but its debt is a burden. We are advocating for debt cancellation, purely and simply. That is our commitment to the young people of Sudan.

This is a clever move by @EmmanuelMacron.

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Turning To Africa

We are getting closer and closer to the Virilian Tipping Point

“The revolutionary contingent attains its ideal form not in the place of production, but in the street''

Political leadership in most cases completely gerontocratic will use violence to cling onto Power but any Early Warning System would be warning a Tsunami is coming

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Buy Out African Bondholders With @IMFNews Tool, @AfDB_Group Chief @akin_adesina Says @economics

International Monetary Fund resources should be used to buy out holders of African bonds and avert a crisis as a global push for debt relief runs aground, the head of the continent’s biggest multilateral lender said.

Akinwumi Adesina, president of the African Development Bank, said the Common Framework -- created by the Group of 20 leading economies to get private sector creditors involved in debt workouts alongside public lenders -- is unlikely to be used again in its current state as countries fear ratings downgrades if they apply.

Yet many African nations are in desperate need of debt relief as they’ll struggle to meet huge repayments to investors in the coming years, Adesina said. 

To get the private sector on board, he proposed buying back foreign bonds with some of the $650 billion of reserve assets known as Special Drawing Rights that the IMF is planning to issue this year.

“Those bullet payments when they become due -- and I don’t think Africa will be in a position to pay them -- will really cause a major, major debt crisis down the line,” Adesina said in an interview with Bloomberg News in Paris. 

“We need to use some of the SDRs as a way of buying down some of that debt, but also conditionally asking the private sector to join the G-20 Common Framework.”

Adesina’s proposal comes as leaders gather in Paris on Tuesday for a conference hosted by France on the financing of African economies. 

On Monday, speaking after a separate meeting on Sudan, French President Emmanuel Macron said France advocates outright debt cancelation for the country.

Yet efforts of international lenders have so far focused on suspending debt-servicing costs. 

That does little to address the size of the $700 billion debt pile or involve the private sector, which holds more than half of that debt.

The framework is available to 73 poor countries, but only Chad, Ethiopia and Zambia have so far requested it. 

Moody’s downgraded Ethiopia’s credit rating on Monday and maintained a review for further cuts, saying the protracted deliberations over country’s application to the Common Framework have increased the risk private-sector creditors will incur losses. 

Fitch Ratings already downgraded Ethiopia in February.

There are also doubts over whether the IMF’s SDR allocation alone can restore the finances of African nations, with Fitch saying in March it would not be enough to solve imbalances.

“The debt of Africa right now is too much, it’s like running up a hill with a backpack of sand,” Adesina said. 

“This issue is not going to go away unless we find a mechanism to buy down some of that private-sector debt.”

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15-MAR-2021 :: Africa Emerging from the Pandemic

The amount of debt Africa has is not sustainable (70- 75% of GDP) and it is in the hands of commercial creditors ($370 bn). 

Stiglitz added ''A Standstill is not sufficient You need to move to a Debt Restructuring ...It has to be comprehensive''

The share of commercial creditors in Africa’s external debt stock has more than doubled in the last two decades, from 17 percent in 2000 to 40 percent by the end of 2019.

At least 21 African countries accessed international capital markets between 2000 and 2020.

President Adesina made some typically pithy and forward looking comments

''There is good debt and there is ''hamburger'' debt'' and called for fiscal discipline....and closed ''There is light at the end of the Tunnel and we are running towards it''

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.@MoodysInvSvc downgrade #Ethiopia to Caa1 (Fitch were already on CCC, S&P B-). @emsovdebt

Downgrade linked to "application for debt relief under the G20 Common Framework have increased the risk of private sector creditors incurring losses."

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Rating Action: @MoodysInvSvc downgrades Ethiopia's ratings to Caa1; ratings on review for further downgrade

London, 17 May 2021 -- Moody's Investors Service ("Moody's") has today downgraded the Government of Ethiopia's long-term issuer and senior unsecured ratings to Caa1 from B2 and maintained the review for further downgrade.

The downgrade to Caa1 reflects Moody's view that protracted deliberations regarding Ethiopia's application for debt relief under the G-20 Common Framework have increased the risk of private sector creditors incurring losses. 

The passage of time since Ethiopia's application to the Common Framework suggests a relatively complex decision by the Common Framework's creditor committee, which in turn indicates that an outcome that does not impose any losses on private sector creditors is less likely than at the time of Moody's previous rating action in March. 

Moreover, heightened domestic political tensions risk interfering with official sector support and undermining foreign investment that is critical for the government's financing in the near and medium term.

While the rating downgrade indicates that the risks have risen to a point no longer consistent with the previous rating, the Caa1 long-term issuer ratings acknowledge that there remain a number of potential outcomes that do not involve private creditors incurring losses.

Maintaining the review for downgrade will allow Moody's to assess the progress of the official creditor committee deliberations regarding the extent of relief that Ethiopia requires, and the apportionment of that relief to the various creditors, including private creditors. 

The review period will also allow Moody's to assess Ethiopia's financing situation following the IMF's executive board assessment of the first and second reviews under the IMF programme and the outcome of the spectrum license auction and asset sales.

The long-term local currency (LC) ceiling has been lowered to B2 from Ba3, while the foreign currency (FC) ceiling has been lowered to Caa1 from B2. 

There has been little progress since Ethiopia's 1 February announcement that it intended to seek debt treatment under the Common Framework. 

Prolonged deliberations about the precise application of the Common Framework to Ethiopia point to increased risk for private sector creditors.

Exposure to social risks is very high (S-5 issuer profile score), reflecting high income inequality, high levels of unemployment particularly among the youth, as well as high levels of poverty, which all have the potential to fuel social discontent.

Ethiopia has a low governance profile score (G-4 issuer profile). Weak governance in particular among some state-owned enterprises (SOEs) has contributed to high SOEs debt which, if left unchecked, could result in a further deterioration in the credit profile. 

Ethiopia is susceptible to frequent bouts of social and political unrest in the Horn of Africa region characterized by political instability, which undermine the strength of the institutions and policy effectiveness.

GDP per capita (PPP basis, US$): 2,772 (2020 Estimate) (also known as Per Capita Income)

Real GDP growth (% change): 6.1% (2020 Estimate) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 18.2% (2020 Actual)

Gen. Gov. Financial Balance/GDP: -2.8% (2020 Estimate) (also known as Fiscal Balance)

Current Account Balance/GDP: -4.1% (2020 Estimate) (also known as External Balance)

External debt/GDP: 27.2% (2020 Estimate)

Economic resiliency: b1

Default history: At least one default event (on bonds and/or loans) has been recorded since 1983

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#Ethiopia & #Kenya eurobond maturing in 2024 continue to tell a story. Conflict & request for debt relief increased Ethiopia's yield. @emsovdebt

Meanwhile IMF program & expectation of issuance (including a tender of bonds) has compressed Kenya's yield. Yield down = lower cost of borrowing

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South Africa's weak growth could fuel socioeconomic tensions - @MoodysInvSvc @Reuters

South Africa’s low economic growth and rising debt burden could see socioeconomic tension intensify and impede policy reforms, ratings firm Moody’s said in a research note on Tuesday.

The note, an extract from the credit firm’s annual report published on Monday, said South Africa’s credit profile was balanced, with its low level of foreign currency debt and strong core of institutions counting in its favour.

Moody’s decided this month against making any decisions on the country’s credit ratings, currently two levels deep into subinvestment, at Ba2 with a negative outlook.

The two other major ratings firms, Fitch and S&P, also rate the country deep into junk.

“Credit challenges include structurally very weak growth and a high government debt burden that will continue to rise without comprehensive economic and fiscal reforms,” Moody’s said.

“Socioeconomic inequalities also intensify tensions that drive political risk and complicate policy efforts.”

South Africa has one of the world’s highest levels of income inequality, especially between Blacks and Whites. 

This is partly because of decades of apartheid rule, which ended in 1994, and more recently an effect of government corruption and slow policy reforms.

The economy, already in recession before the coronavirus pandemic struck in March 2020, shrank by a record 7% last year. State debt is nearing 90% of gross domestic product (GDP).

“The coronavirus pandemic’s fallout will continue to weigh on South Africa’s economic growth and fiscal balance in 2021,” said Lucie Villa, a senior analyst at Moody’s. 

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.@SafaricomPLC takes 56pc stake in Ethiopia firm @BD_Africa
N.S.E Equities - Commercial & Services

Safaricom has raised its controlling stake in Global Partnership for Ethiopia, the consortium that has made a bid for one of two telecoms licences in Kenya’s northern neighbour, to 56 percent from the 51 percent announced previously.

Details of the consortium’s latest ownership structure was disclosed Tuesday by South Africa-based Vodacom Group which owns a 34.9 percent stake in the Nairobi Securities Exchange-listed firm.

“The consortium is 56 percent owned by Safaricom, six percent by Vodacom, 25 percent by Sumitomo the Japanese conglomerate and 10 percent by CDC, the UK sovereign investment fund,” Vodacom’s chief executive Shameel Joosub said at an investor briefing yesterday.

He did not explain the circumstances that led to the changes in the ownership. 

The multinational’s stake has also gone up, having previously stood at five percent.

The percentages listed by Mr Joosub exclude decimal places which would bring the stakes to 100 percent. 

Vodacom’s precise ownership in the consortium, for instance, is 6.2 percent according to regulatory filings.

Safaricom was allowed to lead the consortium for several reasons, including Kenya’s geographical proximity to Ethiopia.

Vodacom earlier said that it could raise its ownership in the consortium after a couple of years into the operation.

The Ethiopian Communications Authority (ECA) confirmed that the Safaricom group and another consortium led by South Africa’s MTN Group were the only parties to make bids in the auction for two operating licences.

“We now, of course, wait for the final outcome from the Ethiopian communications authorities which should be any day now … we are quite hopeful given that we have put our best foot forward as a consortium,” Mr Joosub said.

Ethiopian authorities have indicated that successful bidders will be announced by May 26. 

Safaricom Plc’s chances of winning one of the licences got a boost after nine other firms that had expressed interest in the auction dropped out at the last stage.

Reports indicate that they were spooked by alleged lack of transparency in the process and requirements that winners build their own network infrastructure such as towers.

They also felt that they were not ready to pay the amounts expected by the Ethiopian government, with officials anticipating to raise billions of dollars from the sale of the licences in what they have described as “the deal of the century.”

The firms that dropped out of the race are Etisalat, Axian, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile, Kandu Global Communications and Electromecha International Projects.

The fact that only two bids were made has narrowed the agency’s options and the bidding process could be reopened, especially if the financial offers fall below the government’s targets.

The amounts that Safaricom and MTN put in their bids is expected to be disclosed when Ethiopia announces the results of the auction.

Besides selling the new licences, the Ethiopian government is also disposing of a minority stake in Ethio Telecom, which has a monopoly in that market. 

Safaricom and its partners have signed an agreement to borrow up to $500 million (Sh53.7 billion) from America’s sovereign wealth fund US International Development Finance Corporation to fund their planned entry into Ethiopia.

The financial investment in Ethiopia is expected to top the $1 billion (Sh107.5 billion) mark, with the DFC loan deal seen as part of the project’s fundraising efforts.

The loan is expected to help finance acquisition of the licence besides building of the mobile network infrastructure.

The DFC loan offers the consortium long-term financing on relatively favourable terms.

The international financier says its loans typically mature between five and 25 years, with repayment schedules set on quarterly or semi-annual basis.

A grace period on principal repayment at the beginning of the loan term is also common. The interest rate is a “negotiated spread over the base-cost of funds.” 

Long-term US government bonds currently have interest rates of below three percent, setting a low base on which to price the DFC loan.

Safaricom sees Ethiopia, a market with 117 million people and relatively lower uptake of mobile and broadband services, as presenting significant growth opportunities.

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.@SafaricomPLC share price data and FY Earnings here
N.S.E Equities - Commercial & Services

Price:  38.35

Market Capitalization:1,536,509,163,800



The Ethiopia Project is material because we are yet to understand the balance sheet intensity that will be required. 

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by Aly Khan Satchu (www.rich.co.ke)
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May 2021

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