Traction Capital to participate in the Invest in Peace Conference in Switzerland

Our world is at a crucial juncture and livelihoods of hundreds of millions of people are at a tipping point. How we deploy capital and resources shall shape our societies in the years to come.  
According to UNCCD, the surface of the earth is approximately 70.9% water and 29.1% land, and humans obtain more than 99.7% of their food (calories) from land. More than 75% of the earth’s land (excluding Greenland and Antarctica) is already in use by humans.
Just 3% of the earth’s water resources are fresh water, 70% of which is used for agricultural purposes. Large-scale extraction of groundwater for irrigation leads to a sea level rise of 0.8 mm per year, approximately one fourth of the current rate of sea level rise of 3.3 mm per year. More than 40% of the world’s population are now living in water–scarce regions and some 0.9 billion people lack access to safe water.
For an estimated world population of 9.7 billion in 2050, agricultural production must increase by about 70% globally and 100% in developing countries. If agricultural land productivity remains at its current levels, an estimated 6 million hectares of land (roughly equivalent to the size of Norway) would need to be converted to agricultural production every year until at least 2030 to satisfy the growing demand. Access to safe water also needs to be increased by comparable measures.
According to UNEP, 40% of all intrastate conflicts in the past 60 years are linked to natural resources (such as land and water), and over 70% of all countries in the world declare that climate change impacts – like land degradation, water scarcity and drought – are national security issues. The famine, hunger and starvation (of both humans and animals) that we are seeing in different parts of the world is just a tip of the iceberg. If we don’t respond in time and invest in ventures that prevent such crises like in degraded land and depleted water ecosystems, then conflicts and wars are prone to happen.
We can begin changing the narrative today, join us this July 13-15 at the Invest in Peace Conference in Switzerland where we will be exploring different ways for investors to invest in Peace including our flagship Invest in Peace Fund together with Initiatives of Change, and the Swedish Sustainable Economy Foundation. See you there!

Traction Capital announced as Finalist for the EMEA Corporate Development Awards

Announcement of the Finalists at the Eversheds Auditorium in London 

The M&A Advisor recently announced the list of finalists for the EMEA Corporate Development Awards, and Traction Capital was named as a finalist in both the Corporate Performance Award and Corporate Development Professional of the Year Award categories.

Traction Capital has been selected from the nominees in the first stage of evaluation and the independent panel of judges will now focus their attention on the challenging task of selecting the ultimate award winners.

The winners for Transaction of the Year; Corporate Performance Company of the Year; Corporate Development Team of the Year; and Corporate Development Professional of the Year categories will be announced at the EMEA Corporate Development Awards Gala on Wednesday, 22nd of February at the Lansdowne Club.

Speaking at the announcement of the finalists, David Fergusson, President and Co-Chief Executive Officer of The M&A Advisor noted “Since the inception of The M&A Advisor Awards in 2002, we have been recognizing the leading dealmakers, firms and transactions. And each year we celebrate the creativity, perseverance and ingenuity of our industry’s professionals”

The Corporate Development Awards, which are presented by S&P Global Market Intelligence aim to recognize and celebrate the leading corporations, transactions, teams and professionals who play a key role in successful corporate growth strategies.

Traction Capital is being recognized for its role in helping SMEs in Africa gain access to productive resources (capital, technology etc.) required for them to grow by linking them to partners in the Nordic region and globally, and for its work in promoting corporate sustainability within African organizations.

For a detailed list of all of the Award Finalists for the EMEA Corporate Development Awards, please CLICK HERE.

Win or Lose, the Trade Deal between EAC and EU

By Salome Ndunda – Senior Investment Analyst, Traction Capital

Tanzania cited the economic and constitutional uncertainties arising from British voters’ decision to leave the EU as the main reason for opting out of the EU-EAC Economic Partnership Agreement. The trade deal offers the EU unlimited market access to the EAC Community Countries for the next two and half decades.

The five East African Community countries decided to negotiate the deal as a bloc in the spirit of the common Market protocol which came into force in 2010.  The scheduled January 2017 EAC heads of state summit in Nairobi will be the forum where Tanzania will make its final decision on the EU trade agreement.

Currently, Kenya and Rwanda have signed and Uganda has strong indication to sign in January 2017. While the Tanzanian parliament voted against the trade pact and Burundi’s civil unrest threaten to also interfere with the renewal of the pact.

In the short run, Kenya will be the biggest loser if Tanzania makes good its threat not to sign the partnership. Unlike its partners in the EAC, Kenya is considered a lower-middle-income country. Without the agreement, Kenyan exports would therefore be subject to at least 25% taxation across the EU market.  This will mostly impact the agricultural sector that makes up approximately 90% of the country’s exports to the EU.

However, given that the trade deal is not signed, Kenya will have the option of applying for the Generalised System of Preferences Plus, (GSP Plus).  This would allow Kenya to continue exporting at current terms even if Tanzania and Burundi do not sign the lucrative trade deal with the EU.

TRACTION AFRICA explores New and Sustainable ways of fighting Poverty in Africa; empowering the African Entreprenuer!

“Courage is not the absence of fear, but rather the conquer of fear.”- Nelson Mandela. Imagine if we looked at poverty in Africa and all the challenges associated with it, no longer as problems but as opportunities, and armed entrepreneurs and small business owners in the region with the right tools to fight it, wouldn’t we have a much better world?!

Support our TRACTION AFRICA foundation, as we explore new and sustainable ways of realizing the twin objectives of ending poverty in Africa and enhancing shared prosperity! Read more

Kenya joins middle income ranks, growing middle class spurs real estate sector growth

In September 2014, Kenya effectively joined the ranks of middle income countries. This was mainly due to the ‘rebasing’ of the economy, which resulted to a 25.3% upward revision of Kenya’s GDP in 2013 from a previous estimate of US$42.6 billion to about US$55.2 billion, according to Kenya National Bureau of Statistics (KNBS). The statistical reassessment makes it the 9th largest economy in Africa, surpassing Ghana, Tunisia and Ethiopia.  In addition, Kenya’s GDP per capita was also increased to US$1,246 in 2014, from just US$994 in 2013 reflecting a growing middle class and rising incomes of all Kenyans across the board.

This positive economic development is expected to lower Kenya’s debt ratios, and improve its ability to borrow to finance a much needed construction of new transport links and a repair of existing infrastructure in the country, which is a key pre-requisite for real estate development.

The real estate sector in Kenya has seen a boom that begun somewhere in the mid to late 2000’s because the property market was responding to increased demand in the growing urban centers in the country.

In Nairobi, the capital and largest city in the country, there is one of the largest expatriate communities in the continent due to the significant number of multinationals who have chosen Nairobi as either their African hub or East and Central African hub. The rebirth of property development in Nairobi has attracted global attention. In its 2012 Wealth Report, real estate management company, Knight Frank, ranked Nairobi as the fastest-growing real estate market in the world, outpacing cities like Miami and Monaco. Real estate prices in Nairobi rose 25 percent between January and December 2011. Nairobi was also voted as one of the top 10 cities to watch by global real estate firm, Jones Lang LaSalle, out of 150 cities globally.

Kenya’s lucrative real estate sector has rapidly expanded to become the fourth biggest contributor to the country’s wealth. The contribution of the real estate sector to Kenya’s gross domestic product (GDP) increased to 10.6 per cent in 2014 down from 4.9 per cent in 2013, a more than double increment in one year.

Growth over the past 10 years has seen the real estate industry dislodge the retail sector as the fourth largest contributor to the economy even as traditional sectors such as agriculture, wholesale and financial services continued to diminish.

In terms of distribution, Kenya continues to experience some of the most decentralized growth of the real estate market as property development is not only taking place in Nairobi, but in other urban centers as well such as Mombasa, Kisumu, Eldoret and Nakuru etc.

East African currencies continue to fall against U.S. dollar, inflationary pressures loom.

East African currencies have been struggling against a strong U.S. dollar since the beginning of the year, with the Ugandan and Tanzania shillings taking the biggest hits.

The dollar, which has been on a rally due to impressive performance by the U.S. economy amidst a slowdown of other major global economies, has seen the Uganda shilling lose 27 per cent to trade at UGX 3,480, while the Tanzania currency has shed 16.8 per cent since the beginning of the year to trade at TZS 2,070. The Kenya shilling has lost 9.4 per cent to trade at KES 100.5, and the Rwandan franc 4.2 per cent and is currently trading at RWF 725.

The strengthening of the dollar against the regional currencies has sent the region’s central banks back to the drawing board, in a bid to tame the dollar’s rally and ensure stability. The central banks have frequently intervened in the financial markets to try and save the domestic currencies but this has not yielded any substantial results.

Fearing that the direct market interventions in the currency markets would dry up their foreign reserves, the region’s central banks resorted to increasing their base lending rates. Uganda’s Central Bank was the first to increase its Central Bank Rate from 11 per cent in January 2015 to 13 per cent currently, Kenya’s Central Bank followed suite by increasing its CBR from 8.5 per cent to 11.5 per cent at present.

Rwanda has for the past 12 months retained its CBR at 6.5 per cent, while Tanzania has instead raised its statutory minimum reserve ratio for commercial banks to 10 per cent, from 8 per cent, as part of efforts to check the currency volatility.

The free fall of the regional currencies has already induced inflationary pressures, which has seen inflation for Kenya, Uganda, Tanzania, Rwanda and Burundi increase from 6.0%, 1.3%, 4.0% 1.4%, and 3.5% in January 2015 to 7.0%, 4.9%, 5.3%, 2.0%, and 7.5% in June 2015 respectively, and is expected to increase further if the currencies continue to depreciate.

Regional economies and companies are also facing a rising burden of meeting interest and principal payments on foreign currency-denominated loans because of the poor performance of their currencies against the dollar and other major currencies.

Looking ahead, Analysts expect the downward trend of the regional currencies to continue in the medium term, as they continue to hurt by a swath of factors such as; the widening trade balances, continued US dollar rally, the economic crisis in the Euro Zone, depleted foreign exchange reserves, and the geopolitical situation in Burundi and South Sudan which has shrank intra-regional trade.

Kenya becomes Africa’s top Venture Capital destination, Gateway to East Africa

A report from Venture Capital for Africa has shown that Kenya has become Africa’s second biggest venture capital destination. East Africa’s biggest economy beat South Africa, and is soon to overtake Nigeria. Kenya attracted 22% of venture capital flows to Africa, slightly less than Nigeria which attracted 23%. South Africa which has for many decades been the leading destination for private equity and venture capital in Africa is faltering over concerns of slowing growth, amidst sustained high economic growth in emerging regions such as East Africa led by Kenya. South Africa attracted only 11%, and was followed by Ghana, Cameroon and Egypt which attracted 8%, 6% and 5% respectively.

Kenya is favored by many foreign Investors, because it is a strategic gateway to the other countries in East Africa such as Uganda, Tanzania, Ethiopia, South Sudan, Rwanda and Burundi. The country has very well developed infrastructure, an organized city, Nairobi, and the biggest port in the region.

In terms of sector distribution, the biggest venture capital investments in the region were made in ICT (Software, Internet and E-Commerce), Agribusiness, Education, Media, Health Services, Financial Services, and Renewable Energy.

Global Private Equity firms eye investment opportunities in East Africa

With the East African region growing at an average growth rate of 7% annually, the region has certainly arrived on the global economic landscape. East Africa has demonstrated economic stamina over the past few years, emerging relatively stronger from the financial crisis in comparison with most other regions and continuing to grow rapidly despite concerns about slowing growth in other emerging markets, such as China and India.

Today, East Africa accounts for 3 of the 10 fastest-growing economies in Africa, driven by an expanding middle class, improved business environment, harmonized customs procedures due to the region’s economic integration, and a relatively stable political environment (in an African context) – save for the recent troubles in Burundi.

Because of this impressive performance, many global private equity firms have started exploring investment opportunities beyond the already established markets of South Africa, Egypt and Nigeria. Foreign investors, mostly from Europe and the US, are scouting for opportunities in East Africa with plans to pump $1.5 billion into the region’s private companies.

According to a recent survey by KPMG and the East Africa Venture Capital Association, large global Private Equity firms are looking to the East African market to capitalize on the growing investment opportunities available in sectors such as Agriculture, Finance, Fast Moving Consumer Goods, Real Estate, Infrastructure, ICT, Health and Natural Resources.

According to the study, of the total private equity funds of $3.7 trillion raised globally between 2007 and 2014, an estimated 0.6% ($22 billion) was earmarked for Africa, with 0.04% ($1.5 billion) destined for East Africa. Though minimal relative to what was invested elsewhere, this is an impressive start for the region, and with over 21 exits (valued at $260 million) already successfully concluded, this is expected to boost investor confidence.

The survey further showed that 79 private equity-backed deals valued at $822 million were concluded in East Africa over the same period, with signs that the upward trend could be maintained. The largest share in the region was taken by Kenya, which accounted for 63% of the total deals. Tanzania, Uganda, and Rwanda accounted for 15%, 10%, and 8% of the deals respectively.

The survey also revealed that most investors used Kenya as the financial hub and gateway to the other East African countries such as Uganda, Tanzania, Rwanda and Ethiopia.

Ugandan Parliament approves plan to build new Capital City to decongest Kampala

The Ugandan parliament unanimously passed a proposal from its finance committee on Thursday for the government to immediately embark on creation of another city to decongest the country’s capital, Kampala.


The decision was taken while considering the second five year National Development Plan (NDP) which will be implemented from financial years 2015/2016 to 2020/2021.

Although the committee did not propose where the new capital city will be built, Nakasongola has been favored by several previous governments and many urban development professionals because of its central location, which would make it easily accessible by all the regions in the country.

Nakasongola is almost 20 times bigger than Kampala with a very low population density. According to Uganda’s National Population and Housing Census 2014 released by the Uganda Bureau of Statistics (UBOS), Nakasongora’s population density stood at 51.8 people/ km² with a total area of 3,511.8 km² compared to Kampala which had 8,418.7 people/ km² with a total area of 180.1 km².

The district is close to Kiryandongo district where the 600 megawatts Karuma hydro power project is being constructed, and also close to the oil region of Bunyoro, which places it in a strategic location to tap the spill overs from the oil and gas industry to develop.

According to Uganda’s Vision 2040, four regional cities have been proposed to be established which include; Arua, Gulu, Mbale, and Mbarara, and five strategic cities which include; Hoima (oil), Nakasongola (industrial), Fort Portal (tourism), Moroto (mining), and Jinja (industrial).

These ambitious plans to build a new capital and also establish strategic and regional cities, wont only help decongest the existing capital, Kampala, but will also boost the country’s construction and infrastructure sectors creating a multitude of investment opportunities over the next 5-10 year period in these sectors with spillovers to other sectors.