Africa

1. Out of work
2. Lagging on mobile money
3. Under the sea
4. Breaking up is hard
5. New taxes

Also, Stevie Wonder’s Ghanaian homecoming.

Hello! Welcome to Semafor Africa, where we have a sense of déjà vu. That’s because African countries are grappling with internet disruption after damage to undersea cables for the third time this year. West Africa was affected back in March and, as we report in today’s main story, East African countries have been hit in the last few days. Submarine cables matter because more than 95% of global internet traffic passes through them. So it begs the question of why this keeps happening, and how the disruption can be stopped.

The contrast with other continents is striking. A think tank analyst who specializes in geopolitical risk told me European powers and NATO fear an attack — most likely by Russia or China — on subsea cables because of the damage it could cause. She was shocked when I told her we’ve grown accustomed to the disruption that seemingly accidental damage is causing in all aspects of life, from banking and shopping to streaming entertainment.

Part of the problem is that fewer submarine cables serve Africa, making it hard to re-route traffic. Plus, the relative dearth of data centers means internet traffic typically travels farther, and often via undersea cables. It’s a reminder that African countries need to find ways to bolster the digital infrastructure that underpins modern economies to avoid being left behind by the rest of the world.

🟡 I’m in Kigali this week for the Africa CEO Forum, which is taking place on Thursday and Friday, so get in touch if you’d like to meet up.

🟡🟡 Have you followed us on WhatsApp yet? What are you waiting for?

South Africa’s unemployment burden

The official unemployment rate in South Africa in the first quarter of 2024, its highest level in a year. The unemployment rate rose to 32.9% in the three months through March, up from 32.1% the previous quarter, Statistics South Africa said on Tuesday. The unemployment numbers could hurt the ruling African National Congress (ANC) party in the country’s upcoming elections. High unemployment has been among key issues used by rivals to hammer the ANC in the lead up to the vote, and the party could lose its majority for the first time in the May 29 election.

Nigeria’s small businesses lag on mobile money

Micro-entrepreneurs in Nigeria lag behind their counterparts in Kenya, Senegal, and Ghana in using mobile money for their businesses, according to a survey by GSMA, the global industry group for telecom operators. Only 16% of Nigerian micro-entrepreneurs — typically individuals who lead small businesses with limited staffing or capital — owned a mobile money account in the 2022 survey, it said, compared to between 70% to over 90% in the other three countries. “A key driver of lack of adoption in Nigeria is awareness of the workings and the benefits of mobile and digital technologies,” GSMA said, compared to “almost universal” awareness in the other countries. Awareness is growing in Nigeria, however, with new licensing regimes enabling telecom operators like MTN and Airtel to offer mobile money services. M-Pesa was launched last August in Ethiopia, where mobile money adoption is lower than in Nigeria. Its user base tripled to 3.1 million within the first four months, but has also faced operational difficulties.

East Africa outages stir fears over Africa’s internet vulnerabilities

Fresh damage to undersea cables that link African countries to the internet has raised new fears about the continent’s network vulnerabilities. The damage marks the third widespread disruption since the start of the year.

Internet users in Kenya, Uganda, Tanzania, and Rwanda reported different levels of disruption between Sunday and Monday following cuts to two submarine cables, EASSy (East Africa Submarine System) and Seacom. The cuts also caused disruptions in Mozambique, Malawi, and Madagascar, according to Cloudflare, a US internet data company.

Kenya’s communications authority said the process of recovery had begun, though “slow speeds may remain in the coming few days.” Telecom operator Safaricom said it would source “additional capacity with other undersea cable partners” to make up for the shortfall in connectivity. MTN and Telkom, two South African telecom majors operating in East Africa, said they were trying to “minimize” the disruption.

Tanzania has experienced the most severe outage, data from the Internet Outage Detection and Analysis project at the Georgia Institute of Technology shows. The US embassy in the country was closed to the public for two days until May 15 following the downtime, except for in cases of emergencies involving American citizens.

Africa’s internet economy could reach $180 billion by 2025, according to estimates by Google and the World Bank’s private investment arm, the International Financial Corporation. That prospect should increase the sense of urgency among policymakers and service providers to build more resilience into the continent’s internet architecture.

Briefing: Anglo American’s breakup plan

→ What’s happening? Mining giant Anglo American on Tuesday announced plans to break itself up. The plans include selling or demerging its South Africa-based Anglo American Platinum (Amplats) business and its De Beers diamond operation.

→ What’s at stake? The changes would mark a radical overhaul of a 107-year-old mining empire whose roots lie in South Africa.

→ Why now? The London-listed company is trying to win over shareholders after rejecting a takeover bid from rival BHP, the world’s largest mining company. Anglo on Monday rebuffed a £34 billion ($42.6 billion) offer from BHP. It previously turned down a $39 billion bid.

→ What’s South Africa’s role? Anglo’s South African shareholders could play a key role in decision making. The country’s government holds a 7% stake via its state-owned asset management firm, Public Investment Corporation. Overall, key South African shareholders are estimated to hold more than 15% of Anglo.

→ Why not sell? BHP’s takeover proposal would require Anglo to sell shares in its Johannesburg-listed subsidiaries, Amplats and iron ore miner Kumba. Anglo says BHP’s takeover bid “significantly” undervalues the company.

→ What’s really driving this? Copper. BHP is keen on securing Anglo’s copper assets in Chile and Peru. Demand for copper is expected to boom due to its use in electric vehicles amid the green energy transition, and because of its use in the wiring for data centers that power artificial intelligence. Anglo’s planned overhaul would see it focus more on copper.

— Alexis

Kenya’s finance bill sparks investor fears

Kenya’s proposed 15% tax on interest from infrastructure bonds is sparking fears foreign currency inflows will fall. The tax is among a raft of proposals in the country’s Finance Bill 2024, which lays out plans for the next fiscal year’s budget. Treasury and Economic Planning secretary, Njuguna Ndung’u (pictured, last June) has been under pressure to raise tax revenues for the beleaguered Ruto administration.

If passed, foreigners would pay a 15% tax on interest from infrastructure bonds, while domestic investors will pay 5%. Foreign investment in tax-exempt bonds has been credited with boosting local currency, and fears are growing that the new tax could hurt foreign investment and the economy at large.

The bill would also affect global tech firms operating in Kenya, replacing the current 1.5% digital services tax with a Significant Economic Presence Tax that would increase taxes on some foreign digital businesses to 6% of gross revenue.

Other proposals in the bill have elicited sharp reactions from Kenyans. There is widespread opposition to a proposed removal of VAT exemptions on bread, and the introduction of a 2.5% annual tax on the value of cars. Other controversial proposals include tax hikes on mobile money transfer fees and transactions across banks, money-transfer firms, and other financial service providers.

— Martin K. N. Siele

The Africa Debate returns to London for the 10th edition on June 6th. London’s leading investment forum focused on Africa brings together the great and the good from across the African investment and business communities for a timely series of conversations on the continent’s role in a changing global order. The forum provides delegates with a unique platform for knowledge exchange and networking — register here.

Geopolitics

🇷🇼 🇸🇳 Senegalese President Bassirou Diomaye Faye hosted his Rwandan counterpart Paul Kagame for a two-day diplomatic visit last weekend to strengthen bilateral ties.

🇳🇪 Niger’s prime minister accused Benin of violating trade agreements by blocking it from exporting oil over a border conflict. The blockade jeopardizes landlocked Niger’s $400 million export deal with China National Petroleum Corp.

🇬🇭 Activists have urged the World Bank and IMF to pressure Ghana to reconsider a proposed law under which anyone identifying as LGBTQ+ could be jailed for three years.

Governance

🇲🇱 Participants in Mali’s national dialogue on Friday recommended extending junta-led rule by three years, to 2027. It followed months-long consultations on the return to democratic rule.

🇳🇬 Nigeria’s central bank governor told the Financial Times interest rates would remain high for as long as necessary to tackle inflation which, at 33.2%, is at its highest level in three decades.

Tech

🇹🇿 Loan apps without “a valid license issued by the Bank of Tanzania” have been prohibited from offering services to the country’s residents.

🇿🇦 South African telecoms company MTN said it is revising its internet data offerings in the country with a view to raising its prices amid a challenging business environment.

🌍 Money transfer app Chipper Cash resumed its US-to-Africa service two months after pausing it to restructure its staffing.

Deals

🇸🇳 Senegalese e-commerce startup Maad raised $3.2 million in a round led by Nigerian investor Ventures Platform.

🇰🇪 East African Cables said it had entered into an agreement to sell its 51% stake in its Tanzania subsidiary to chemicals manufacturer Msufini Tanzania, in a bid to reduce its debt.

Elections

🇹🇩 Chadian opposition politician Succes Masra (pictured) formally called on the country’s Constitutional Council to annul last week’s presidential election. Junta leader Mahamat Idriss Deby was declared the winner with 61% of the vote against Masra’s 18%.

American singer-songwriter Stevie Wonder on Monday was given Ghanaian citizenship by President Nana Akufo-Addo in the capital Accra, on the musician’s 74th birthday. Wonder, who has long been a pan-African civil rights activist, expressed his desire to permanently relocate to the West African country in an interview three years ago. Giving citizenship to the legendary artist, who has won 25 Grammy Awards, marks a milestone for Ghana in its efforts to present itself as a home for the continent’s diaspora.

• US President Biden hikes tariffs on $18 billion in Chinese goods.
• As states take on AI, tech’s top lobbyist fights back.
• Short-selling news startup didn’t disclose investment.

If you’re enjoying the Semafor Africa newsletter and finding it useful, please share with your family, friends, and Stevie Wonder fans. We’d love to have them aboard too.

Let’s make sure this email doesn’t end up in your junk folder by adding africa@semafor.com to your contacts. In Gmail you should drag this newsletter over to your ‘Primary’ tab.

You can reply to this email and send us your news tips, gossip, and good vibes.

— Yinka, Alexis, Alexander Onukwue, Martin Siele, Muchira Gachenge, and Jenna Moon