West Africa in Focus /

Amazon is coming to Africa – risk and opportunity for the Baby Amazons

  • Amazon in Africa makes the case for the consumer market, despite inflation; jitters for EM rivals

  • Nigeria's 2023 election: presidential candidates pick running mates and the government seeks to regulate social media

  • Guinea gives mining companies a 14-day ultimatum on delayed iron ore project

Amazon is coming to Africa – risk and opportunity for the Baby Amazons
Janet Ogunkoya
Janet Ogunkoya

Senior Research Analyst

Ayobami Omole
Ayobami Omole

Research Analyst

Tellimer Research
23 June 2022
Published by

The big news this week is that Amazon is coming to Africa – the continent's 'Baby Amazons' may have to give up some market share, but could also be ripe for acquisition. Meanwhile, Nigeria’s persistent FX issues have left cUS$450mn of airline funds trapped in the country – making up a quarter of airlines’ trapped funds globally. Travelers will continue to bear the brunt with higher airfares in Nigeria, currently 3x more than peers, according to International Air Transport Association (IATA).

Nigeria’s 2023 election is a key subject again this week, with presidential candidates having now chosen their running mates, balancing religious and cultural concerns. And, as the election draws closer, Nigeria’s regulators have released guidelines on social media, but could this be a way of curtailing freedom of speech and expression?

Meanwhile, Guinea’s military leaders have set mining companies a hard deadline of 14 days to form a joint venture for an iron ore mine project, which has made little progress since the license was issued 25 years ago. We also note the rising local yields in Ghana with the one-year note printing close to 30%.

Amazon is coming to Africa – what does this mean for its EM rivals?

There have been media reports of a leaked document showing Amazon has plans to expand into Africa – specifically, Nigeria and South Africa – as well as Belgium, Chile and Colombia. Although there has as yet been no official statement from the tech giant, the report states that it plans to begin African operations in 2023 – South Africa in February and Nigeria in April. Rumours that Amazon has been recruiting in Nigeria support the claims in the report.

Amazon’s plans to expand to these newer markets is a wake-up call for the so-called “Baby Amazons” (emerging market e-commerce challengers), such as Jumia and Konga in Nigeria and Takealot in South Africa. It also perhaps shows that, despite the impact of inflation across Africa, the consumer market is still strong.

Jumia's shares fell by 6% in light of the news. However, as our colleague Nirgunan Tiruchelvam puts it, its cheap multiples and improving fundamentals bolster the chances of acquisition by tech giants like Amazon.

Baby Amazon shares have been taking a beat. Jumia's cheap multiples make case for acquisition

Nigeria holds the most trapped funds belonging to airlines (US$450mn)

At a conference in Qatar last week, the International Air Transport Association's (IATA) head of the MEA region stated that airlines’ unremitted revenues (trapped funds) in Nigeria have risen to US$450mn. This makes up 25% of the total US$1.6bn trapped funds that have been held back by central banks in various countries. Others include Zimbabwe – US$100mn; Algeria – US$96mn; Eritrea – US$79mn; and Ethiopia – US$75mn.

According to IATA, the trapped funds have forced airline operators in Nigeria to increase the fares they charge to as much as 3x those seen in other countries.

Airline operators are finding it very hard to operate in Nigeria and travelers are bearing the brunt by having to pay higher fares. This follows domestic airlines threatening to shut down operations across the country, in May, forcing the government to backtrack on plans to cut jet fuel subsidies.

Local flight airfares have been on the rise

Multilateral and bilateral lenders pledge US$26.1bn to Cote d'Ivoire's 2021-25 plan

Multilateral and bilateral lenders such as the West African Development Bank, the African Development Bank, the World Bank, the Islamic Development Bank, the EU and France have pledged a total of US$26.1bn to help Cote d'Ivoire execute its 2021-25 national development plan.

In our last sovereign analysis on Cote d’Ivoire, we highlighted its strong macro performance, which we expect to continue. We also noted the successful implementation of the national development plan and ENI's new oil and gas discoveries as upside risks to the growth story. The successful fund-raising activity is an additional welcome development.

Nigeria releases guidelines to regulate social media

Nigeria's government last week released a “draft code of practice” to guide the operation of social media platforms in the country. Regulating online privacy is becoming increasingly important across the world, so it is not surprising that Nigeria has joined in. The guidelines are not (yet) law, merely a set of rules provided by the National Information Technology Development Agency that it hopes the industry will engage with.

Last year, the government banned Twitter, claiming the platform facilitates insecurity, although the ban followed Twitter's removal of a post by President Buhari. The ban was lifted around seven months later – our suspicion was that the upcoming election was the main reason.

There are concerns that this new code of practice could be similarly twisted and used as a tool to curtail freedom of speech and expression, especially as the February 2023 election draws nearer. 

Nigeria's presidential aspirants pick their VPs

Many things matter in a Nigerian presidential election but chief among them is religious affiliation and the ethnicity of the aspirants, rather than economic policies. Often, it can be a difficult balance to reach for political parties and religion has become a more important criterion in recent years as violence against Christians has increased.

The unspoken regional rotation of Nigeria's presidency

Going by public sentiment, the ideal balance for the 2023 election will likely be a southern president with a northern vice president. The religious distribution seems more flexible – a Muslim president and a Christian vice president or vice versa.

The dilemma for parties, however, is that most influential northern politicians are Muslims – which means that the ideal presidential candidate is a Christian southerner. But things are not shaping up that way and some churches are beginning to vocally express their dissatisfaction. 

All of this is even more interesting when you realise that Nigeria is, constitutionally, a secular state.

Presidential candidates and their running mates

Guinea gives Simandou iron ore mine developers a 14-day deadline

On 17 June, Guinea’s ruling junta gave Rio Tinto and the Chinese-backed Winning Consortium Simandou (WCS) a 14-day ultimatum to finalise a joint venture (JV) to develop the Simandou iron ore mine. The patience of Guinea’s leaders with the mining companies is getting thin, with little progress having been made on the project since the mining license was granted to Rio Tinto 25 years ago. The site is believed to hold c4bn tonnes of iron ore.

In March, the government suspended operations at Simandou for two weeks. Upon resumption, an agreement was reached with Rio Tinto and WCS on infrastructure projects needed for the site’s operations, including developing a 670km railway costing cUS$15bn and with an ambitious completion date of 2024.

Upon completion, the Simandou mine is expected to produce 100mn tonnes of iron per year, which would give a much-needed boost to Guinea’s economy.


Nigeria PMI – 1 July

Nigeria’s purchasing managers' index (PMI) is expected to print lower in June, from 53.9 to 52.7, after a decline from 55.8 the previous month.

Senegal Q1 GDP – 1 July

Senegal’s GDP growth is expected to slow to 5% in Q1 22 from 7.1% in Q4 21, according to the consensus forecast. This would mark the second consecutive decline in GDP growth – slower growth in the secondary and tertiary sectors, and a contraction in the primary sector, caused the decline in growth in the previous quarter.

Our recent West Africa reports

  • Nigeria's among the hardest-hit countries in the current sell-off despite high oil prices, which haven’t translated to macro gains. However, spreads above 1,000bps and a cash price in the low 70s on the 10-year bonds, despite low default risk, seem excessive. The long-term macro outlook is still weak, but we upgrade to Buy on the NGERIA 7 ⅞ 02/16/2032s given attractive valuation.

  • Electricity coverage is poor in most African countries, meaning telcos rely on off-grid solutions. Higher diesel costs and the mobile industry's ambition for net-zero carbon emissions make the case for renewable energy. Given Africa’s unexplored photovoltaic potential and falling solar costs, solar is a compelling option.

  • Regulations are key brakes on fintech growth, notably capital requirements, consumer/data protection and KYC/AML. While the challenges vary by country, client fund segregation is a key issue in Nigeria. In this report, Rahul Shah highlights the regulations that are holding back emerging market fintechs.


The Nigerian equities market has declined by 3.3% in the past week, bringing the ytd return to 20%. Sentiment has been broadly negative, with 59 losers and only 14 gainers. The major losses have been in blue-chip names such as MTNN, AIRTELAF, BUAFOODS, BUACEMENT, DANGCEM and INTBREW.

As we have discussed previously, we have a negative outlook on the Nigerian equities market as an anticipated increase in domestic bond yields in the coming months and the absence of foreign investors will put a dampener on local participation.

Market indicators

Tellimer's West Africa Equities Coverage

Nigeria's yield curve (%)

Ghana's yield curve (%)