Editor’s Note: March 06, 2019
Does Africa have a monopoly problem?
Nigeria’s Dangote Cement, the country’s biggest publicly quoted company company, plans to list on the London stock market in 2020 following a 12% jump in annual operating profit to $1.2bn. Much of this is thanks to a 64% profit margin in its home market, more than three times what it makes in the rest of Africa.
Great news for shareholders, but outsized margins like this suggest monopoly pricing. By contrast LafargeHolcim, the world’s biggest cement company, has a profit margin of around 19%.
It’s potentially bad news for consumers, and markets.
Monopolies or oligopolies are one contributor to the poor performance of African economies on the World Economic Forum’s (WEF) Global Competitiveness Index. Nigeria places 115th out of 140 countries in the 2018 edition, with WEF partly attributing affordable housing shortages in Africa to “monopoly pricing” of building materials.
It’s hardly a new problem, with monopolies stifling growth in sectors including power, agriculture, aviation and telecommunications.
Yet market dominance can be useful.
Last year Kenyan regulators abandoned plans to break up mobile operator Safaricom – which controls 65.4% of the market – deciding that its economic contribution outweighed competition concerns.
Meanwhile state-owned Ethiopian Airlines is proving to be the saving grace for Africa’s aviation market.
The problem is that such examples are far and few between.
From The Continent
Rwanda has accused its neighbour Uganda of supporting rebel groups opposed to the country’s government, the latest salvo in an escalating border row between the two countries. The standoff started last week when Ugandan cargo trucks were stopped from entering Rwanda at a busy border crossing. More: VOA
Nigeria's Access Bank has secured shareholders’ approval for its $235m take over of competitor Diamond Bank. The deal will create Africa’s largest bank by customers. More:Reuters
The Daily Stat
South Africa’s GDP growth in 2018. More: Xinhua
The Global Perspective
Kenya is in talks with the International Monetary Fund over a new standby credit facility, following the termination of a $1bn programme last year due to the government’s failure to meet extension conditions. This comes amid growing concerns about debt sustainability in the East African economy. More: Reuters
The UN has said Burundi has forced the organization to shut down its local human rights office. Relations between the country and multilateral institutions have deteriorated since president Pierre Nkurunziza announced contentious plans for a third term in 2015. More:Africanews