Tag: invest in africa

What is Investment Diversification?

When it comes to investing, diversification is a concept that seasoned investors swear by. But what exactly is diversification, and why is it important?

In this blog, we will explore the significance of diversification in investing, understand its benefits, and learn how investors can leverage it to enhance their portfolio returns.

So, fasten your seatbelts and get ready to spread your investment wings!

What is Diversification?

Diversification is a risk management strategy that involves spreading your money (investments) across a variety of different assets or asset classes.

By investing in a range of assets, such as stocks, bonds, real estate, and commodities, investors aim to reduce the overall risk of their portfolio.

The idea behind diversification is to avoid putting all your eggs in one basket, minimizing the impact of any single investment’s poor performance on your overall wealth.

Why is diversification important?

Reduces risk: Diversification is crucial because it helps reduce the risk associated with investing. Different asset classes have unique risk profiles, and by diversifying, you spread your risk across various investments. If one investment underperforms, others may compensate for the loss, potentially safeguarding your capital.

During the Global Financial Crisis of 2008 which rocked markets worldwide, for instance, investors who had diversified their portfolios beyond just stocks and bonds, including investments in real estate, commodities, or alternative assets, fared better. These diverse investments helped offset the losses incurred by traditional stock and bond holdings.

Smoothing out returns: Diversification can help smooth out the volatility or instability of your investment returns. When one asset class experiences a decline, another may be thriving. By having a mix of investments, you can potentially balance out the highs and lows, aiming for more stable and consistent returns over the long term.

Capital preservation: Diversification is an effective strategy for preserving your capital. By diversifying your portfolio, you avoid the risk of losing everything if a single investment fails. Even if one investment does poorly, the other investments may hold or increase their value, preserving your overall wealth.

How to apply diversification when investing

Asset allocation: Determine an appropriate asset allocation based on your investment goals, risk tolerance, and time horizon. Allocate your funds across different asset classes, such as stocks, bonds, and real estate, based on their historical performance and correlation with each other.

Geographic diversification: Expand your horizons by diversifying geographically. Invest in both domestic and international markets to reduce exposure to country-specific risks. For example, if your portfolio is heavily concentrated in one country and that economy suffers, your investments may be severely affected. However, by diversifying across different countries, you can potentially mitigate the impact of regional downturns.

Sector diversification: Within each asset class, diversify across sectors. Different sectors perform differently in various economic conditions. By spreading your investments across sectors like technology, healthcare, energy, and consumer goods, you can balance the risk and potential return associated with specific industries.

During the dot-com bubble of the late 1990s, many investors poured their money into internet-related stocks. However, when the bubble burst in 2000, countless companies collapsed, causing massive losses. Those who had diversified their portfolios across different sectors and asset classes were better positioned to weather the storm.

Conclusion

Diversification is a fundamental principle of investing that helps mitigate risk, smooth out returns, and preserve capital.

By allocating investments across different asset classes, geographies, and sectors, investors can enhance their chances of long-term success.

Remember, the key is not to put all your eggs in one basket.

Disclaimer: This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients.

October 16, 2023
What are Bonds and Why Should You Invest in Them?

When it comes to investment options, bonds are often considered a fundamental component of a well-diversified portfolio. They offer stability, income, and a relatively lower level of risk compared to other investment avenues.

In this blog, we delve into the world of bonds, exploring what they are, the different types of bonds available, how they work, and how investors can make money from them.

What are bonds?

Bonds are fixed-income securities that represent a loan made by an investor to a borrower, typically a corporation, municipality, or government entity.

In essence, when you invest in a bond, you are lending money to the issuer for a specified period at a predetermined interest rate, called the coupon rate.

The issuer promises to repay the principal amount, also known as the face value or par value, at maturity.

What are the types of bonds?

Government bonds: These are issued by national governments to fund public spending and manage their fiscal policies. Treasury bonds, also known as T-bonds, are examples of government bonds. They are considered the safest form of bonds as they are backed by the full faith and credit of the government.

Corporate bonds: Companies issue corporate bonds to raise capital for various purposes, such as expanding operations, acquiring assets, or refinancing existing debt. Corporate bonds offer higher yields compared to government bonds but also carry a higher level of risk. The creditworthiness of the company issuing the bond plays a significant role in determining its interest rate.

Municipal bonds: Municipal bonds, or munis, are issued by state or local governments to finance public projects such as schools, hospitals, or infrastructure development. These bonds are often exempt from federal taxes and may also offer tax advantages at the state and local levels.

How do bonds work?

When you purchase a bond, you are essentially becoming a creditor to the issuer. The bond’s principal value represents the amount you will receive at maturity. The issuer pays periodic interest, usually semi-annually, based on the coupon rate. The interest payments are fixed, providing a predictable income stream.

Let’s say you decide to invest in a government bond. You purchase a 5-year bond with a face value of $1,000 and a coupon rate of 3%. This means that the government issuer will pay you $30 annually (3% of $1,000) as interest income. The bond has a maturity date of 5 years.

Every year, you receive an interest payment of $30, which is typically paid semi-annually ($15 every six months). At the end of the 5-year period, when the bond matures, the government issuer will repay you the face value of $1,000.

So, in this example, over the 5-year period, you would receive a total of $150 in interest payments ($30 per year) and the $1,000 face value at maturity. By investing in this government bond, you earn a fixed income stream and will eventually get back the principal amount you initially invested.

Bonds also have a secondary market where they can be bought and sold before maturity. The market price of a bond may fluctuate based on various factors such as changes in interest rates, creditworthiness of the issuer, and prevailing market conditions. If you sell a bond before its maturity date, you may receive more or less than the face value, depending on the prevailing market rates.

How to make money from bonds

Coupon payments: As a bondholder, you earn income through the periodic coupon payments made by the issuer. The coupon rate, expressed as a percentage of the bond’s face value, determines the amount you will receive. For example, if you hold a $10,000 bond with a 5% coupon rate, you would receive $500 annually.

Capital appreciation: If interest rates decrease after you purchase a bond, its value in the secondary market may increase. Investors are willing to pay a premium for higher-yielding bonds, driving up their prices. In such a scenario, you can sell the bond at a higher price than you initially paid, earning a capital gain.

Bond laddering: By investing in bonds with different maturities, you can create a bond ladder. This strategy helps manage interest rate risk and provides regular cash flows. As each bond matures, you reinvest the principal into a new bond with a longer maturity, potentially benefiting from higher interest rates.

Conclusion

For an investor, bonds work by providing a fixed income stream through periodic interest payments and returning the principal amount at maturity. You can earn money from bonds through coupon payments, capital appreciation if the bond’s market value increases, and various strategies such as bond laddering.

Generally, bonds offer stability and can be an attractive investment option for those seeking regular income and lower risk compared to other investments.

Disclaimer: This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients.

October 16, 2023
Why Should You Invest in Africa?

Africa is not only rich in cultural heritage and breathtaking landscapes but also offers incredible investment opportunities.

But investing in the continent requires patience as strategies that succeed in one country may not work in others.

In this post, we explore five compelling reasons why you should consider investing in Africa, even if you reside outside the continent.

A young and fast-growing market

Africa has over 1.3 billion people and is the world’s youngest region, with almost 60% of its population under 25 years old while the median age is 19.

The continent also boasts a rapidly growing population and an expanding middle class. According to the World Economic Forum, by 2030, over 40% of Africans will belong to the middle or upper classes, and there will be a higher demand for goods and services.

By that time, household consumption is expected to reach $2.5 trillion, more than double that of 2015 at $1.1 trillion.

With increasing urbanization and rising disposable incomes, it presents an untapped market ready for investors to tap into a vast consumer base, which offers tremendous growth potential across various sectors.

Innovation and entrepreneurship

Africa is witnessing a remarkable surge in innovation and entrepreneurship. From fintech startups to renewable energy solutions, African entrepreneurs are harnessing technology to solve local challenges and create scalable businesses.

The continent has produced at least seven unicorns—private companies worth $1 billion or more.

One such startup is Flutterwave, a Nigerian fintech unicorn revolutionizing digital payments across the continent. Another standout is Andela, a pan-African company connecting skilled software developers with global companies.

These innovative startups demonstrate Africa’s increasing prominence in the global tech landscape, fueling economic growth and driving technological advancements across the continent.

By investing in African startups and venture capital funds, you can support these innovative minds while potentially benefiting from their future successes.

Rapid digital transformation

Africa has witnessed a rapid digital transformation in recent years, revolutionizing various sectors.

With increasing internet penetration, mobile connectivity, and innovative solutions, the continent has embraced technology in all facets of life.

According to GSMA, Africa will add nearly 100 million new subscribers by 2025, bringing the total number of subscribers to 613 million – almost half of the region’s population.

More so, the contribution of the mobile industry to its GDP will grow to almost $155 billion.

From mobile banking to e-commerce platforms, Africa’s digital revolution is empowering individuals, bridging the digital divide, and creating opportunities for socio-economic development across the continent.

The abundance of natural resources

Africa is blessed with an abundance of natural resources that contribute significantly to its economic potential.

With vast mineral deposits, the continent holds a substantial share of the world’s reserves of gold, diamonds, platinum, and other precious metals. It is also rich in oil and gas resources, with countries like Nigeria, Angola, and Algeria being major producers.

Additionally, Africa possesses extensive reserves of timber, fertile agricultural land, and a diverse range of flora and fauna.

These resources present immense opportunities for economic growth, industrial development, and foreign investment.

With the right investment strategy, you can benefit from the continent’s rich resources and contribute to its sustainable development.

Stronger and more dynamic economies

Africa is experiencing a remarkable shift towards diverse and stronger economies. With a focus on innovation, entrepreneurship, and sustainable development, several African nations are making significant strides.

The continent has witnessed a surge in technological advancements, fostering digital transformation and leapfrogging traditional infrastructure barriers.

Countries like Nigeria, Kenya, and South Africa have emerged as tech hubs, attracting global investments and nurturing homegrown startups. African governments are also supporting sectors like agriculture, renewable energy, and manufacturing to stimulate economic growth and reduce dependency on commodities.

Regional collaborations, such as the African Continental Free Trade Area (AfCFTA), are promoting intra-African trade, opening up new markets, and encouraging economic integration.

Africa’s total exports are projected to reach approximately $952 billion by 2035, driven by the growth of regional trade and enhanced connectivity, according to a new report by Standard Chartered.

This momentum towards diverse and stronger economies is poised to unleash Africa’s immense potential, empowering its people and offering investors exciting opportunities across the continent.

Investing in Africa presents a world of opportunities for those outside the continent.

With an untapped market, abundant resources, growing infrastructure, a vibrant entrepreneurial ecosystem, and favorable policies, Africa is poised for economic growth and development.

Disclaimer: This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients.

October 16, 2023
What Are Stocks and Why Should You Invest in Them?
Investing your hard-earned money can be daunting, especially with the multitude of options available in the financial market. However, one avenue that has consistently proven to be lucrative over the years is the stock market.

Stocks offer individuals the opportunity to become part-owners of companies and share in their profits.

We will explore what stocks are and why you should consider investing in them.

What are stocks?

Stocks, also known as shares or equities, represent ownership in a company.

When you buy stocks, you are essentially purchasing a small piece of that company, granting you a share of its assets and earnings.

How stocks work

Understanding how stocks work is vital for investors seeking to grow their wealth.

When an investor purchases shares of a company’s stock, they become a partial owner and gain the potential to benefit from the company’s growth and success.

As the company performs well, the value of its stock tends to increase, allowing investors to sell their shares at a higher price and earn a profit.

Let’s say an investor, John, decides to purchase 100 shares of ABC Company at a price of $10 per share. John believes that ABC Company has strong growth prospects due to its innovative products and increasing market demand.

After a few months, ABC Company announces positive earnings results, and the market responds favorably. As a result, the stock price of ABC Company rises to $15 per share. John decides to sell his 100 shares at this higher price. By selling his shares at $15 per share, John earns a profit of $500 ($15 – $10 = $5 profit per share × 100 shares).

This demonstrates how investors can benefit from the appreciation in stock prices but it’s important to note that stock prices can also decline, resulting in potential losses.

As a shareholder, you may benefit from both capital appreciation (an increase in the stock price) and dividends (a share of the company’s profits distributed to shareholders).

Stock prices are influenced by various factors, including the company’s financial performance, market conditions, industry trends, and overall economic outlook.

As an investor, you have to analyze these factors to make informed decisions about buying, holding, or selling stocks, either independently or with the help of an investment advisor.

image from Nairobi Stock Exchange

Investors can choose between different types of stocks, such as common stocks and preferred stocks. Common stocks provide voting rights and the opportunity to receive dividends, while preferred stocks offer a fixed dividend payment but typically do not carry voting rights.

Stocks are bought and sold on stock exchanges, such as the NYSE, NASDAQ, BRVM, NGX, JSE, etc. Investors can trade stocks through brokerage accounts, either by placing market orders (buying or selling at the prevailing market price) or limit orders (specifying a desired price range for buying or selling).

Investing in stocks carries risks, as stock prices can fluctuate, and investors may experience losses. Diversification, thorough research, and a long-term perspective are key to managing risks and maximizing returns in the stock market.

Pros of investing in stocks
1. Potential for high returns: Stocks have historically provided higher returns compared to other investment options over the long term, allowing investors to grow their wealth.
2. Ownership in companies: Buying stocks grants investors partial ownership in companies, providing them with a stake in the company’s success, potential dividends, and voting rights.
3. Diversification opportunities: Investing in stocks allows for diversification across different industries and sectors, reducing the risk associated with having all investments in a single asset class.
4. Liquidity: Stocks are highly liquid investments, meaning they can be bought or sold relatively quickly, providing investors with the ability to access their funds when needed.
5. Flexibility: Investors have the flexibility to choose from a wide range of stocks, industries, and investment strategies based on their risk tolerance, investment goals, and personal preferences.
Cons of investing in stocks
1. Volatility and market risk: Stock prices can be highly volatile, fluctuating in response to market conditions, economic factors, and company-specific news. This volatility can result in short-term losses and requires investors to tolerate market fluctuations.
2. Potential for loss: Investing in stocks carries the risk of losing some or all of the invested capital, particularly if the company underperforms or faces financial difficulties.
3. Lack of control: As minority shareholders, individual investors have limited control over the decision-making process of the company, leaving them reliant on the management’s actions and performance.
4. Psychological impact: Stock market fluctuations and price movements can create emotional stress for investors, leading to impulsive decision-making or panic selling during market downturns.
5. Time and expertise required: Successful stock investing requires time, research, and knowledge of financial markets. Investors need to stay informed about company performance, market trends, and economic indicators to make informed investment decisions. A lack of expertise or proper research can result in suboptimal investment choices.
Jumia’s IPO on the NYSE

Why should you invest in stocks?

While there are risks involved, investing in well-established companies or diversified portfolios can provide significant returns over time.

Stocks can be a veritable source of extra income. Many companies distribute dividends to their shareholders, providing a regular stream of income. Dividend stocks can be an attractive option for those seeking consistent returns.

In addition, the flexibility and liquidity that stocks offer allow you to adapt your investment strategy based on changing market conditions or personal financial goals.

While investing in stocks can be rewarding, it’s important to conduct thorough research, diversify your portfolio, and consider your risk tolerance before diving in. It’s also advisable to seek guidance from a financial advisor who can provide personalized advice based on your financial situation and goals.

Overall, stocks represent ownership in companies and offer individuals the potential for long-term growth, dividends, and voting rights. Investing in stocks can be a powerful tool for wealth creation, but it’s crucial to approach it with careful consideration and informed decision-making.

Final Remarks
For those considering an entry into the stock market or diversifying their current portfolio, remember that knowledge is your most potent weapon. Invest time in understanding market trends, diversify your holdings, and never hesitate to seek advice from seasoned professionals. Your financial journey in the stock world begins with a single step, but make sure it’s a well-informed one. If you’re curious and eager to tap into this potential goldmine, start today by researching companies, understanding market dynamics, and staying up-to-date with the latest happenings. The world of stocks awaits – are you ready to dive in?

Disclosures: This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients.
September 4, 2023
Why Big Tech is Building Data Centers in Africa

A rapidly growing digital economy in Africa is drawing investments from the world’s biggest tech companies into the continent’s data center market, which is largely untapped.

For over a decade, Africa has been experiencing a massive boom in mobile internet adoption, outpacing other regions globally.

This fast-growing mobile economy has enabled the emergence of several mobile-led tech solutions on the continent, such as mobile money and online shopping.

And the startups providing these services have drawn attention, and billions of dollars in venture funding, from the world’s biggest tech companies and investors.

In 2022 alone, African startups secured $6.5 billion in venture funding, an 8% increase from the previous year, while global VC investments declined -35%.

But it’s not just startups and software solutions pulling investments in Africa’s digital economy.

Foreign capital has also flown into digital, hardware infrastructure, especially data centers.

Oracle, Microsoft, Amazon, Equinix, and Huawei are some big names building or buying data centers across Africa.

Regional operators such as MainOne, Africa Data Centers, Raxio, Icolo.Io (Digital Realty), and IXAfrica as well as the likes of Telecom Egypt, NTT Global Data Centers, Paratus Namibia, Rack Centre, Teraco Data Environments (Digital Realty), and Wingu are also big players in the space.

In 2022, the market also witnessed the entry of investors like Vantage Data Centers, Airtel Nigeria, Cloudoon, Open Access Data Centres, and Kasi Cloud.

For instance, Open Access Data Centres opened more than 20 data center facilities in South Africa and Nigeria.

Together, they’ve invested well over $4 billion in data center projects across Africa since 2021 at least.

But, what exactly are data centers, and why are big tech players racing to build them in Africa?

US-based Equinix acquired West African data center and connectivity solutions provider, MainOne, for $320 million in 2022. Image credit: The Guardian Nigeria

The backbone of the digital world

The first things that come to mind when we hear words like “online”, “digital”, “digital world” or “technology” are probably the internet, social media, mobile apps, business software, etc.

But have you ever wondered where all the information on the internet we access through smartphones or computers is stored?

Well, data centers are like giant warehouses that store and protect all the data we see online.

They’re super crucial for the internet to work smoothly and are the major enablers of online services—think digital banking, social media, streaming services, video calls, and about everything we do online.

Just as a library stores and organizes books for easy access, data centers store and manage an immense amount of digital information.

And with the increasing amount of information and data to store as the digital economy continues to grow rapidly, they have become even more critical.

How does this concern Africa?

There’s a massive opportunity to build these data centers on the continent and make lots of money from it!

Nairobi-based East Africa data center, a subsidiary of Liquid Telecom Kenya. Image credit: ESI Africa

The data center opportunity in Africa

Emerging technologies such as AI, IoT, or cloud computing are not new in Africa.

But there has been a recent surge in the adoption of such enterprise digital solutions, especially among mid-to-large businesses across several sectors—a trend mainly induced by the Covid-19 pandemic.

In South Africa alone, the use of cloud computing is expected to grow 25%, generating up to $1.5 billion by 2024.

And seeing this growth, global cloud services providers such as Amazon Web Services, Microsoft, IBM, and Oracle are expanding their presence in Africa with new cloud regions being set up.

Be it enabling consumers to buy food or clothes online or make money transfers via mobile apps, these activities generate huge volumes of data that need to be stored adequately.

This, in turn, creates a higher demand for data centers.

For investors, this presents a great opportunity to fill significant gaps, as most of Africa’s data is currently stored outside the continent.

That leads to slower connections and data privacy concerns.

Messages sent from the continent’s southern tip to Europe and back can take as long as 180 milliseconds, causing frustration for individuals trading stocks or playing video games, per The Economist.

But significant multi-billion dollar investments in data centers are set to change this scenario.

These investments will significantly reduce internet latency and bring it much closer to African users, paving the way for a remarkable advancement in the continent’s digital economy.

More so, African governments are keen to build their data centers to ensure data sovereignty and stay competitive in the increasingly AI-powered world.

How a data center looks from the inside. Image credit: CIO

Investments in data centers skyrocket

As investors increasingly realize the opportunity in Africa’s data center market, the continent has seen a flurry of activities in the space over the last few years.

This ranges from the launch of new or expansion of data centers to millions of foreign investments pouring into operators.

Data from ReportLinker, an AI-driven market intelligence platform, indicate the sector recorded up to $2.6 billion in investments in 2021, including $200 million in debt and equity raised by WIOCC.

Around $5.4 billion is expected to be invested in the next four to five years alone but going by investment trends last year, the continent might smash those estimates!

In 2022, Vantage launched a $1 billion campus in Johannesburg to house three data centers.

Khazna Data Centers is entering Egypt with a $250 million hyper-scale data center.

And in April, Raxio Data Centres secured up to $170 million—from Proparco and the Emerging Africa Infrastructure Fund—for data center projects across multiple African countries.

Acquisitions are also growing…

Alongside huge capital raises, Africa’s data center market has also been seeing major investments in the form of mergers and acquisitions.

One such example is the $320 million acquisition of West Africa operator MainOne by US-based Equinix in 2021.

In the same year, Digital Realty bought Nigeria-based Medallion Data Centers and South Africa’s Teraco Data Environments.

Meanwhile, African Infrastructure Investment Managers (AIIM), a private equity firm, acquired Ngoya Etix Data Centers, all for undisclosed sums.

Most of these deals go unnoticed as digital infrastructure such as submarine cables, fiber optics, telecom towers, and data centers belong in the not-so-shiny segment of the tech ecosystem.

But they’re crucial to the continued functioning of the digital world as most people know it.

Impressive figures, but not nearly enough

Despite the investment deals and figures, Africa still needs way more data centers to match other continents than is currently being built.

Currently, Africa has 17% of the global population but only about 2% of all colocation data centers globally—quite a gap!

For a better perspective, the continent has only 0.1 data centers per million internet users, far behind the global average of 0.9.

And as of last year, it only had five more data centers than the Indian city of Mumbai alone.

To reach the global average, Africa needs around 450 more data centers and 1,500 more to match North America or Europe.

In addition to the growing demand for cloud-based services among businesses, more of these facilities are needed to support Africa’s growing digital population.

The existing data centers on the continent are also very much concentrated in a few African countries.

For instance, Nigeria, Kenya, and South Africa together host about 60% of sub-Saharan Africa’s commercial data centers.

The latter alone has the most data centers in the region and is expected to account for the bulk of Africa’s $5 billion data center market by 2026.

The major data center markets will continue to attract the lion’s share of investment into the sector.

But the good news is that smaller economies such as Ethiopia, Morocco, Algeria, Ghana, Cote d’Ivoire, Zambia, DRC, Namibia, and Rwanda are starting to attract noticeable funding.

They’ve received up to $700 million of capital investment annually for two years now, per research firm Xalam Analytics, which closely monitors the industry.

Big tech’s increasing investments in Africa’s data center capacity expansions indicate significant growth potential for the market.

And it comes as Africa’s digital revolution needs more capacity to support its growing smartphone and internet users, 4G expansion, and 5G rollout.

The increasing number of data centers across the continent also creates new opportunities for telecom players.

It’s a huge opportunity for investors that big tech companies are moving fast to capture, as the numbers show.

An exciting future

Amid a rapidly growing digital economy, we can expect more data center capacity expansion across various countries in Africa.

And as large numbers of data centers along with large power capacities come up, Africa can be called—and rightly so—the next frontier of the data center industry.

July 29, 2023
Orange CI IPO: A Lucrative Opportunity Through Daba

Daba, a ground-breaking mobile investment app in Africa, has changed the African investment landscape, particularly for retail investors. Its recent achievement of enabling individuals to participate in the December 2022 initial public offering (IPO) of Orange CI underscores Daba’s commitment to democratizing access to African investment opportunities.

The Orange IPO, a milestone in the African telecommunications sector, seemed initially exclusive to institutional investors. However, Daba, a leading African investment platform, bridged this gap. Through our user-friendly mobile investment app, retail investors effortlessly connected with the IPO. This access to private company investing in Africa promises rewarding dividends from the renowned telecom operator.

Users found navigating the IPO process on Daba’s mobile investment app a breeze. From registering interest to purchasing Orange shares, the simplified process negated complexities usually linked with such investments. As such, investing in African companies, particularly tech and fintech companies, has become more accessible.

“I couldn’t have participated in the Orange Cote d’Ivoire IPO if it weren’t for Daba. They offer unique African investment strategies and opportunities, and I am excited for more,” one user said. Another added, “As an Ivorian, Daba allowed me to invest safely and easily in one of my favorite companies before it went public.”

Now, with the announcement of dividends, retail investors who trusted Daba’s solution are anticipating substantial African investment returns. After realizing a profit dividend of 153.485 billion FCFA in 2022, Orange CI decided to offer 126 billion FCFA to shareholders. This allocation represents 82% of the group’s profit, promising each Orange CI share a net dividend of 752.76 FCFA. Given the share price of 9,575 FCFA on May 31, that’s a yield of 7.86%.

Daba’s transformative impact on the African investment landscape is significant. By democratizing access to IPOs, this innovative startup has leveled the playing field in African capital markets. It’s broken down barriers and opened a world of opportunities for those previously excluded from such ventures.

As dividends roll in, Daba continues to pave the way for retail investors in emerging African markets. Our platform allows anyone with a smartphone to capitalize on lucrative African investment trends and secure a brighter financial future.

Ready to join the future of investing in Africa? Download Daba, your gateway to investment opportunities in Africa, and start your investment journey today!

June 7, 2023
Raisons d investir dans les marchés émergents d Afrique 🌍
Le continent africain devient rapidement l’une des nouvelles destinations les plus prometteuses pour les investisseurs des marchés émergents.

En fait, depuis plus de 20 ans, le Forum économique mondial a identifié que plus de la moitié des économies à la croissance la plus rapide dans le monde se trouvent sur le continent. Avec des ressources naturelles abondantes, une main-d’œuvre jeune et de plus en plus éduquée, une stabilité politique relative et des perspectives indéniables de croissance économique, il n’y a aucun doute sur la vitalité pour les investisseurs.

De bout en bout, l’Afrique fait partie des rares marchés émergents à l’échelle mondiale ; l’expression, inventée par des économistes au début des années 1980, définit l’investissement dans les pays en développement. Comme toute décision d’investissement, il y a des risques inhérents, mais voici cinq raisons pour lesquelles notre direction croit que l’Afrique mérite une chance :
1. Potentiel de croissance 📈
Actuellement, l’Afrique représente environ 17% de la population mondiale, mais seulement 3% du PIB mondial. Ces données attestent non seulement d’un échec historique à exploiter le potentiel de développement du continent, mais mettent également en évidence les formidables opportunités à venir. Si l’Afrique continue de maintenir et d’accélérer ses réformes structurelles, beaucoup croient que le continent peut imiter la montée rapide de la Chine au cours des 50 dernières années.
1. Innovation 💡
Les révolutions industrielles, qu’elles soient entraînées par la vapeur, les chaînes de montage ou les ordinateurs, ont historiquement été lentes à balayer le continent africain. Cependant, l’ère de l’Industrie 4.0, de l’énergie propre, de l’intelligence artificielle et de l’innovation numérique promet d’être différente. Contrairement aux précédentes vagues de changement industriel, avoir une part dans l’ère numérique ne nécessite pas une expertise étendue ou des investissements massifs en capital. Au lieu de cela, les innovateurs et les entrepreneurs des marchés émergents sont en position de puiser dans les flux de talents et de connaissances numériques et de les convertir en biens, services et modèles commerciaux.
1. Valorisations plus basses 📉
Au cours de la dernière décennie, les actions africaines n’ont pas été une success story – du moins pas par rapport à des régions similaires. Les indices MSCI US et MSCI Developed World ont augmenté respectivement de 232% et 159% au cours des dix dernières années, tandis que le MSCI South Africa et le MSCI EFM Africa ex. South Africa n’ont gagné que 33% et 23%. Cela dit, certains se demandent si les actions africaines ont été à la traîne à cause de problèmes sur le continent. La réponse courte : pas vraiment. Cependant, cela présente une opportunité unique pour les investisseurs – une plus grande part de capital dans les entreprises dans lesquelles vous choisissez d’investir.
1. Diversification 📊
La diversification est la pratique qui consiste à répartir les investissements afin de réduire l’exposition aux risques associés à un seul type d’actif. Cette pratique vise à réduire la volatilité de votre portefeuille d’investissement au fil du temps. Si vous attendiez patiemment une opportunité d’investir dans des actions internationales, l’Afrique se présente comme une option digne.
1. Classe moyenne en augmentation 💼
Selon le Forum économique mondial, d’ici 2030, plus de 40% des Africains appartiendront aux classes moyennes ou supérieures ; en conséquence, il y aura une demande accrue de biens et de services. Sans parler du fait que la consommation des ménages devrait atteindre 2,5 billions de dollars (oui, billions), plus du double de celle de 2015 qui était de 1,1 billion de dollars. Une augmentation du capital ne peut signifier que plus d’opportunités de croissance économique et de développement à travers le continent, ce qui amène de plus en plus d’investisseurs à se tourner vers l’Afrique.

C’est là qu’intervient daba. Notre plateforme simplifiée fournit ce que nous appelons des « investisseurs de tous les jours » avec des analyses d’investissement et des ressources pour la création de richesse, afin de rendre leurs décisions d’investissement dans les marchés de capitaux privés et publics africains durables.

Pour en savoir plus sur daba et comment rejoindre notre communauté mondiale croissante d’investisseurs, visitez dabafinance.com ou connectez-vous avec nous sur LinkedIn !
May 22, 2023
Daba Participates in BuuPass’ $1.3m Pre-seed Round

Congratulations to BuuPass – Bus, Train & Flight bookings on their fundraising round and recent successes. We are excited to have enabled institutional and individual investors to invest in the company’s journey.

BuuPass is a B2B2C full-stack marketplace for sales and ticketing management for long-distance transport industry (bus, shuttle, train & flight) in the East African region.

The Problem: Transport services in Africa are highly fragmented and undigitized.

The Solution: A digital fullstack marketplace where transport operators can digitize their operations and increase sales via Buupass marketplace & partners and Travelers can search, compare and book their tickets.

At Daba Finance, we have a strong focus on driving capital into companies that are creating positive change and driving innovation in their respective industries. With a $40B domestic travel and transport market in Africa and $24B spent on bus tickets in Sub Saharan Africa, BuuPass is well-positioned to make a significant impact on the transportation sector.

Here are 5 reasons why investors liked BuuPass, why we listed the company and what made their capital raise a success:

1️⃣ Strong Traction and First Mover Advantage : BuuPass is the first transport marketplace in East Africa with a 73% 5-year CAGR since inception; the company reached break-even in July 2021.

2️⃣ Interoperability: BuuPass’s interoperability across multiple apps is a competitive moat; the integration of the M-PESA super app allows it to access over 500M+ mobile money users (potential customers)

3️⃣ Experienced Team: Sonia Kabra and Wyclife Omondi are amazing. The team has solid experience from World Bank, Airtel, safari com, andela, and SWVL along with a street-smart attitude. The team equally has high quality advisors.

4️⃣ Current Investors: Current investors in this round include Five35 Ventures , Founders Factory Africa, Changecom Capital, Google for Startups Black Founders Fund Program, Maxime Bayen, and Nairobi Business Angel Network. These investors have invested in notable companies such as Zazuu, Zuri Health, Shuttlers, Bitmama, Africa Foresight Group, ImaliPay among others.

5️⃣ Social Impact: BuuPass is addressing a key challenge in the transportation system across East Africa as it is making commuting easier and more convenient for individuals.

We look forward to following the growth and success of BuuPass.

To find more about how Daba powers investing in Africa opportunities for individual and professional investors visit our webpage or connect with our team – https://bit.ly/dabawebsite

Read Techcrunch article here https://tcrn.ch/3XwgcKg

February 19, 2023
Daba Joins Spleet’s $2.6m Seed Round for Affordable Apartments

daba Finance, a startup that enables investing in Africa’s best private and public companies seamlessly, has participated in a $2.6 million seed funding round by Nigeria-based Spleet, which provides residential rent management and financing products.

daba was launched in 2021 with a simple mission—to democratize investing in Africa by providing a barrier-free way for investors (of every level) to access curated investment strategies and build wealth by investing in the African private and public capital markets, through its all-in-one platform.

What is Spleet?

Spleet was founded in 2018, and its mission is to build a marketplace to connect landlords with vetted tenants looking for flexible rent payment options.

Image from Spleet

Why Spleet?

Spleet is one of the foremost startups disrupting Africa’s real estate and property market, which unlike industries such as financial services, has remained unchanged for decades. It has a focus on affordability, which remains a big pain point for residents in urban areas. This is partly because most tenants earn their incomes monthly and often find it difficult to afford the typical 1-2 years of advance rent demanded by homeowners.

Since its inception, Spleet has processed millions in rent, housed over 1,000 tenants with flexible payment options, and onboarded over 35 individual and corporate landlords.

What next?

According to Spleet CEO, Akintola Adesanmi, the funding will go into deepening its product offerings for landlords, real estate agents, and tenants across Nigeria while also testing out new markets.

“daba is proud to partner with Spleet on further scaling its robust solution that caters to the crucial needs of both sides of the housing market,” said Boum III Jr, co-founder and CEO of daba. “We’re even more motivated to help more investors back more of such companies and qualified ventures bypass the traditional barriers to accessing capital.”

Don’t miss the opportunity to invest in the next big startup. Tap here to download the daba beta application and use access code: daba3SJPov to start investing

October 4, 2022
An Angel Investor’s Guide to Startup Investing
With startups making the news and causing a ruckus for raising ridiculous amounts of funding and the VCs all swooping in to have a piece these last years, there has been a lot of talk on “startup investing” and how to go about it.

This article is here to help you break it down and thoroughly understand what it is and how to get the maximum benefit from it with daba.

Startup investing like a VC but cheaper

What is a startup?

A “startup” refers to an early-stage company founded and owned by one or more entrepreneurs, often with a new product or service and an untested business model. After finding a product-market fit, the goal is often to grow and expand rapidly, therefore, startups generally start with high costs and limited revenue. To achieve this, they look for capital from a variety of sources such as venture capitalists.

For a long time, investments in private companies like startups were reserved for ONLY accredited investors (people with a high net worth or an investment company e.g., venture capital firms) due to the large amounts required for startup investments and the high risk involved.

But with the advent of crowdfunding and law changes in lots of countries, people 18 and older can now invest in startups and gain high returns.

Why startups?

Startup investing, though risky like every other type of investment, has the potential to produce very high returns on investment if proper research and due diligence are done.

An example is Paystack, the Nigeria-based payments startup that makes it easy for businesses to accept secure payments from multiple local and global payment channels.

In 2020, US payment company Stripe acquired Paystack in a deal worth over $200 million. The angel investors who invested in the seed round of Paystack in 2016 made approximately 1,440% ROI, 14.4x their investment in just five years.

These show that although investing in startups could be risky, it could also be rewarding.

Now imagine if you had invested in 2017…..

How do you value a startup?

Before investing in a startup, it’s important to know the company’s value in actual figures. This provides insight into its ability to use the new capital to grow, and meet customer and investor expectations.

But deducing a startup valuation can be difficult. This is because company valuation is done using historical financial performance. However, most startups don’t generate profits or even revenue for a few years after starting, thus using traditional metrics for early-stage valuations doesn’t apply.

Generally, a startup valuation accounts for factors like your team’s expertise, product, assets, business model, total addressable market, competitor performance, market opportunity, goodwill, and more.

Valuing a startup is both an art and a science and some of the best ways to go about it include the cost to duplicate, market multiples, discounted cash flow, and valuation by stage.

Ways to invest in early-stage startups:
1. Equity investment: investors purchase shares in a startup at a fixed price
2. Investing in convertible securities: the investment amount is eventually converted to equity
3. Use a trusted investment platform like daba, sign up here for African startups
How do I choose startups to invest in?

Before investing in startups, it’s necessary to conduct your due diligence; a series of checks an investor might run on a startup to confirm that the investment is a good strategic fit and to identify potential red flags. Due diligence allows investors to make informed investment decisions and mitigate risk.

How do I get a return on my investment?

Startup investors can get returns when:

i) The company is bought by a bigger organization

ii) The startup goes public

iii) Dividend payments (if the business is successfully trading, and the founders are not looking for an exit via sale or IPO, they may reward investors by paying out regularly or through a one-time special dividend)

iv) Selling your stake in the company

v) Revenue from the day-to-day running of the startup

Startup investing is very risky (90% of startups fail in their first five years) but can be highly rewarding for investors willing to sit tight until the startup matures.

As the saying goes in finance; the riskier the asset, the higher the return. This is evident in the technology sector. An example is Cisco’s $3.7 billion purchase of AppDynamics, app management, and analytics tool in 2017. The latter was launched in 2008 and had been through five funding rounds, suggesting several investors got sweet returns from the deal.

It’s important to note that the return on investment you get as an investor depends on the size of your stake in the startup and the valuation it’s based on.

How to get started?

There is no need to worry about how to source for startups, their valuation, founders, how much to invest, and monitoring your investment, daba can help you get started.

daba has created a simple app to access custom investment strategies and build wealth by investing in Africa’s best private and public market opportunities.

In addition to this, daba offers resources help you sharpen your knowledge and make more informed investment decisions.

Register to get early access to daba here.
September 1, 2022