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Can West Africa Lead the Way in Creating a More Sustainable Textiles Industry?

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Textile - Investors King

With textiles and fashion expected to constitute an important post-Covid-19 growth driver for West Africa, stakeholders and key players in the industry are exploring ways to implement sustainable practices and make the sector more environmentally friendly.

While one might not instinctively include it among the world’s heaviest polluters, the textile and fashion industry is a key contributor to climate change, accounting for around 10% of global carbon emissions.

Indeed, with pre-pandemic annual emissions of 1.2bn tonnes, the industry is the second-largest industrial polluter behind the oil and gas industry, surpassing emissions from all international flights and maritime shipping put together.

A major factor behind the industry’s carbon footprint is the water needed for cotton production. For example, it can take an estimated 20,000 litres of water to produce 1 kg of cotton, or one t-shirt and a pair of jeans.

In addition, with up to 8000 chemicals used to turn raw materials into clothes, the World Bank estimates that 20% of global industrial water pollution comes from dyeing and finishing fabrics.

Another major factor behind the environmental footprint of the industry is the sheer mass of clothes produced to meet the needs of modern “fast fashion”. An estimated $500bn in value is lost every year from clothes that are worn for a short period of time and not recycled, with much of it ending up incinerated or in landfill.

Pushing for environmental sustainability

To combat the environmental impact of the textiles and fashion industry, a number of industry players are turning towards more sustainable means of operation.

For example, Jendaya, a UK-based, Africa-focused online fashion retailer avoids plastic and ships goods in recyclable cardboard packaging.

The company is also one of a growing number supportinggin cott designers who produce clothes in smaller capacities on a made-to-order basis, reducing waste and the amount of clothing that is consigned to landfill.

Other examples of African companies promoting local production using natural materials under made-to-order models include Nehanda & Co in Zimbabwe, Naked Ape in South Africa, Nkwo in Nigeria and Awa Meité in Mali.

There are also efforts to support this approach on an institutional level. Fashionomics Africa, an initiative developed by the African Development Bank, aims to develop a sustainable textile value chain and help create business models that will keep garments in use, make use of renewable materials and recycle old clothes into new products.

Another company driving sustainable solutions across the entire value chain in West Africa’s textiles industry is the India-headquartered Arise.

On top of existing industrial projects in Gabon, Mauritania and Côte d’Ivoire, the company is in the process of constructing two textiles parks in Togo and Benin. The sites, which source raw materials, gin cotton, and process and manufacture final products, will emphasise environmental, social and governance (ESG) factors across all aspects of the operation.

For example, some of the sustainability credentials of the textile park in Togo include processing 100% sustainably sourced cotton, under Cotton Made in Africa standards, and using 100% renewable electricity, offsetting 20 tonnes of carbon emissions per day. The site will also reuse 90-95% of the water used during processing and comply with independent international certifications when it comes to dyeing and finishing fabrics.

“The private sector needs to implement socially conscientious governance models across the textile value chain, enfranchising local communities through fair and equitable labour practices while also managing ecological resources sustainably,” Bhavin Vyas, chief ESG officer at Arise, told OBG.

Economic benefits

The benefits of such an approach are not just environmental. Increasing textile production on the continent will also provide an economic boon to the region as countries continue their recoveries from Covid-19.

Indeed, in April the African Circular Economy Alliance, a government-led coalition that promotes environmentally and socially sustainable solutions for economic development, identified the textiles and fashion industry as one of the “Five Big Bets” – alongside food systems, the built environment, electronics and packaging – that could drive the continent’s sustainable development in the future.

The issue is particularly pertinent to West Africa. Around three-quarters of the continent’s cotton is produced in the region; however, most of this is shipped to South and East Asia for processing, meaning that West African countries miss out on much of the value-added economic benefits traditionally associated with the textile industry.

Every year leading West African cotton-producing nations Benin, Burkina-Faso and Mali export 1.8m tonnes of unprocessed cotton worth $922m, but then import $2.4bn in finished cotton textiles and apparels.

In an effort to address the situation, Arise’s textile park in Togo aims to convert 56,000 tonnes of cotton fibres valued at $73m into apparel worth $1.5bn. The company says the construction and running of the site will create 20,000 direct and 80,000 indirect jobs, ensuring that much of the profit will filter into local communities.

Meanwhile, in Benin, where the cotton industry accounts for 12% of GDP and 60% of industrial earnings, the government is playing an active role in promoting domestic production, implementing a ban on 30% of cotton lint exports by the end of 2021, with this figure rising to 70% by 2022 and 100% by 2023.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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AB InBev Opens Applications For Beer Garage Africa Innovation Challenge

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The world’s largest beer company, AB InBev, has partnered with Hindsight Ventures to launch the Beer Garage Africa Innovation Challenge, which will offer startups access to venture development and grant funding.

AB InBev, which has over 500 brands and over six million B2B customers in over 100 countries, launched Beer Garage a few years ago with the objective of driving innovation by building a strong community of ecosystem stakeholders.

As part of this initiative, AB InBev is now launching the Beer Garage Africa Innovation Challenge, a pan-African challenge to identify hi-tech, high potential startups and founders building innovative solutions across Africa.

To do so, it has partnered with Startup Réseau, an India-headquartered global startup accelerator, which will operate the programme through its Africa-focused vertical Hindsight Ventures.

Ten startups will be selected to take part in a Global Venture Bootcamp, a three-week venture mentorship and leadership development programme that will be delivered by successful founders, industry leaders, domain experts and investors. The Beer Garage Africa Innovation Challenge will culminate with a demo day, which will be attended by AB InBev’s global leadership as well as Hindsight Ventures’ global investor pool. On the demo day, one African startup will stand to win US$5,000 in grant capital. All selected startups get access to US$150,000 in technology credits from partners.

“We are really excited by this partnership, which allows us to drive a pan-African program. With a billion people in the continent, over 300 million new internet users expected to come online over the next three years, a fast-growing mobile internet penetration – and now, with global venture capital money making its way to African entrepreneurs, this is a great opportunity for startups to engage with AB InBev as a partner of choice,” said Ajay Ramasubramaniam, founder and chief executive officer (CEO) of Startup Réseau.

Pritam Dutta, global director for fintech ventures and innovation at AB InBev, said the Beer Garage Africa Challenge was an opportunity to leverage the emerging tech startup ecosystem and funnel novel ideas into AB InBev.

“We set out to build out a stronger connect into the Africa ecosystem, find disruptive startups which could be a great pipeline for our future disruptive innovations and further accelerate our innovation agenda, delivering strong business impact,” he said.

Applications for the challenge are now open here.

Beer Garage is one of the global innovation hubs at AB InBev with the objective of driving innovation by building a strong community of ecosystem stakeholders.

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Merger and Acquisition

Sub Saharan Africa Mergers and Acquisition Transactions Totalled US$ 78.3 Billion During First Nine Months of 2021

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Refinitiv today released the Sub-Saharan African investment banking analysis for the first nine months of 2021. According to the report, an estimated US$387.5 million worth of investment banking fees were generated in Sub-Saharan Africa during the first nine months of 2021, a 15% increase from the same period in 2020. 

While debt capital markets underwriting fees increased 148% to US$117.8 million, the highest year-to-date period since our records began in 2000, fees from equity capital markets underwriting, M&A advisory and syndicated lending all declined from the first nine months of 2020.  Equity fees declined 17% to US$50.7 million, while syndicated lending fees declined 4% to US$148.2 million. Advisory fees earned in the region from completed M&A transactions reached US$70.8 million, down 3% from last year to the lowest first nine-month total since 2013.  Fifty-eight percent of all Sub-Saharan African fees were generated in South Africa during the first nine months of 2021, and 23% were earned from deals in the financial sector. Standard Chartered earned the most investment banking fees in the region during the first nine months of 2021, a total of US$33.1 million or an 8.5% share of the total fee pool.

MERGERS & ACQUISITIONS

Boosted by the US$44.1 billion Naspers/Prosus share swap in May, the value of announced M&A transactions with any Sub-Saharan African involvement reached US$78.3 billion during the first nine months of 2021, more than four-times the value recorded during the same period last year and the highest first nine-month total since our records began in 1980.  The number of deals increased 4% from last year to a three-year high of 584.

M&A involving a Sub-Saharan African target reached US$61.8 billion, again lifted by the share swap to an all-time record first nine-month total, while the number of deals increased 8% over last year.  Inbound deals, involving an acquiror outside of Sub-Saharan Africa, increased 86% to US$9.6 billion, while Sub-Saharan African outbound M&A more than doubled to US$11.5 billion. With advisory work on deals worth a combined U$52.1 billion, Morgan Stanley held the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during the first nine months of 2021.

EQUITY CAPITAL MARKETS

Sub-Saharan African equity and equity-related issuance reached US$971.2 million during the third quarter of 2021, the highest quarterly total in more than two years.  Despite the strong third quarter, total proceeds raised during the first nine months of 2021 was down 42% from last year at US$1.2 billion, the lowest first nine-month total since 2005.   Pepkor Holdings, Lighthouse Capital and retail pharmacy chain Dis-Chem Pharmacies were among those in the region raising new equity funds from follow-on offerings during the third quarter.  There have been no initial public offerings in the region so far during 2021. Investec and Goldman Sachs share first place in the Sub-Saharan African ECM underwriting league table during the first nine months of 2021. 

DEBT CAPITAL MARKETS

Sub-Saharan African debt issuance totalled US$37.2 billion during the first nine months of 2021, up 149% from the value recorded during the same period in 2020 and the highest first nine-month total since our records began in 1980.  The number of issues increased 33% over the same period.  US$15.2 billion worth of the bond proceeds were raised during the third quarter alone, with both Prosus and the Federal Government of Nigeria raising US$4.0 billion.  Government & Agency issuance accounted for 55% of proceeds raised during the first nine months of 2021, while the financial sector accounted for 24%. Citi took the top spot in the Sub-Saharan African bond book runner ranking during the first nine months of 2021, with US$6.0 billion of related proceeds, or a 16% market share.

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Merger and Acquisition

Access Bank Completes Acquisition of African Banking Corporation of Botswana Limited

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Herbert Wigwe - Investors King

Africa’s leading bank, Access Bank Plc has now completed the acquisition of a 78.15 percent shareholding in African Banking Corporation of Botswana Limited (BancABC Botswana).

Access Bank announced in a statement signed by Sunday Ekwochi, Company Secretary, Access Bank Plc.

According to the lender, the new acquisition will form part of the Bank’s nexus for trade and payments in Southern Africa and the broader COMESA trade region.

BancABC Bostwana is the fifth-largest bank in Botswana and is a well-capitalized franchise poised for growth in its local market. The lender’s achievements in the retail banking space will provide an opportunity for the Bank to deploy its best-in-class digital platforms and product suites to the benefit of BancABC Botswana’s customers and enable it to complete strongly across its core business segments.

Commenting on the transaction, Dr. Herbert Wigwe, GMD/CEO of the Bank, “We are pleased with the successful conclusion of this transaction which will provide significant synergies by combining BancABC Botswana’s strong retail banking operation with Access Bank’s wholesale banking capabilities. It will also strengthen the quality of earnings through revenue diversification and growth in the corporate and SME banking segments for BanABC Botswana. The combination is another step towards our broader vision of becoming the world’s Most Respected African Bank.”

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