Research

  • THE UQALO REPORT
  • UQALO CONSUMER INDEX
  • RESEARCH
  • The Uqalo Report provides the investment and business communities with a regular and concise update on activity in the sub-Saharan consumer products sub-sectors of most interest to Uqalo, namely Fabric & Clothing, Food & Beverage, Home & Personal Care and General Merchandise.  It also contains the Uqalo Consumer Index and a précis of recent research conducted by Uqalo which is freely available on this website

  • July Edition 2018

    Colony Capital has agreed to buy four of Abraaj’s funds, including Africa Fund III with assets of US$990m and North Africa Fund II with assets of US$375m.

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    May Edition 2018

    African private equity firm, Adenia Partners, has bought a majority stake in Kanu Equipment, a supplier of quality earth-moving equipment. The investment gives Phatisa a partial exit (a reported 55% IRR), and provides Kanu Equipment with US$20m in growth capital.

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    March Edition 2018

    According to Baker McKenzie’s Global Transaction Forecast, the value of mergers and acquisitions in the Africa’s consumer sector is expected to increase to US$6.4bn in 2018 and US$6.6bn in 2019.

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    January Edition 2018

    According to a recent report by Cyntonn Investments, the supply of retail space in Nairobi increased an average of 42% in each of the last three years. This has attracted international players and increased the expectations of a strong 2018 for Nairobi’s retail sector.

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    November Edition 2017

    Although the full story is not entirely clear, Kenyan supermarket giant, Nakumatt’s costly expansion programme, has left the retailer struggling to stay afloat. Nakumatt’s recent expansion drive, no doubt prompted in part by fears of foreign competition from the likes of Carrefour, Choppies, GAME and Shoprite, put it under significant financial strain, with debts reportedly in excess of US$300m…

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    September Edition 2017

    According to the Economist Intelligence Unit, Nigeria’s e-commerce sector is expected to reach US$50bn over the next 10 years. Industry giants such as Jumia, Konga and Jiji are likely to play a significant role in the growth of e-commerce in Africa. Euromonitor International is forecasting that Nigeria’s online apparel market will expand to around US$1bn in 2019 from US$104m in 2014.

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    July Edition 2017

    According to the 2017 Private Equity Survey released by KPMG and the East Africa Private Equity and Venture Capital Association, Kenya accounted for 61% of total Private Equity deals in Africa in 2016. According to the report, Kenya has recorded 254 Private Equity deals with a cumulative value of US$21bn since 2010.

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    May Edition 2017

    According to a global soft drinks market analysis by the German Engineering Federation, Nigeria was ranked fourth globally in the consumption of soft drinks in 2016, after the US, China and Mexico. Soft drink sales in Nigeria stood at 39m litres in 2016, a number projected to grow by 33% YoY through to 2020.

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    March Edition 2017

    According to Procter & Gamble, Kenya’s retail spending grew 13% to US$18bn in 2016; retail spend accounts for 30% of Kenya’s GDP; and Kenyans spend 60% of their total income on food and beverages and approximately 23% on personal and household care products.

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    January Edition 2017

    According to Knight Frank, Nairobi has overtaken other sub-Saharan African cities, to become the most preferred regional destination for mall developers. Nairobi has 391,000m2 of mall space with an additional 470,000m2 in the pipeline. By comparison, Lagos has 121,000m2 with 240,000m2 under development.

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    November Edition 2016

    Kenya’s largest supermarket chain, Nakumatt, is in talks with various local and international private equity investors to sell up to 25% of the business. The proceeds will be used to reduce debt, which more than tripled from US$42m in 2011 to US$150m in 2015, after aggressive expansion.

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    September Edition 2016

    According to Sagaci Research, more than 223 new shopping malls are expected to open in Africa, particularly Nigeria, by 2018. Their total surface area (excluding South Africa) is expected to reach 10m m2. A recent Broll Property Group report estimates that Nigeria, which has more than 100,000m2 of leasable area in modern-format shopping centres, is likely to add 180,000m2 of retail space by the end of this year.

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    July Edition 2016

    Schulze Global Investments has acquired a 43% stake in Ethiopian water bottling company Origin Water, for an undisclosed sum.

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    May Edition 2016

    According to the Attitude Survey by Knight Frank, the rise in global and local ecommerce businesses in Kenya is likely to cause a significant growth in the warehousing and logistics sector. The sector is likely to grow 41% in the next 10 years (compared to 24% in the last decade).

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    March Edition 2016

    Norfund has acquired a minority stake in Kenyan logistics company Freight-in-Time for US$10m. The company plans to build warehouse capacity across East Africa and invest in new delivery vehicles.

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    January Edition 2016

    The East African Community will introduce local content requirements for projects undertaken by foreign companies, subject to acceptance by the private sector. If approved, the new policy measures will require MNCs to source a certain percentage of raw materials and services locally. The East African Business Council is currently working on a framework that will define the guidelines for cross-border investments, particularly related to technology transfer and capital.

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    November Edition 2015

    The “Africa Rising” narrative is in question as growth slows and governance issues remain. With soft commodity prices and EM currency weakness, the IMF forecasts economic growth in sub-SaharanAfrica will slow to 3.8% in 2016, the lowest growth in almost two decades.

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    September Edition 2015

    The Nigerian government plans to invest NGN37bn (US$18m) over 2016–19 to help resuscitate 80 fabric mills and 23 ginneries.

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    July Edition 2015

    Following on from a directive by the previous government of Goodluck Jonathan, the Nigerian Customs Service has lifted the longstanding ban on the importation of textiles into Nigeria. Textile products will instead be subject to an import duty of 35%. This is in line with the ECOWAS Common External Tariff regime.

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    May Edition 2015

    Kanoria Africa Textiles, promoted by Kanoria Chemicals of India, and with backing from Uqalo, the African investment initiative of the Fung family of Hong Kong, plans to commence yarn and denim fabric manufacturing at its Bishoftu (Debre Zeit) plant by July 2015.

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  • The Uqalo Consumer Index is a valuation index based on the historical Price-Earnings Ratio (PE) of listed consumer businesses in sub-Saharan Africa. The index is intended to give investors and businesses an indication of current valuation expectations in an historical context


  • Uqalo Consumer Index

    The Uqalo Consumer Index improved slightly in June, and is mirroring the MSCI Emerging Markets Index. The UCI is 10% ahead of the average.


    - Consumer Index Methodology

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    July Edition 2018

    The Uqalo Consumer Index improved slightly in June, and is mirroring the MSCI Emerging Markets Index. The UCI is 10% ahead of the average.

    May Edition 2018

    The Uqalo Consumer Index continued to drop in line with the Emerging Markets decline caused by Europe’s slowing, rising US rates and the dollar rebound.  The UCI is 21% ahead of the average which we calculate since January 2009 and 8% lower than the all-time high which was achieved in Dec 2014.

    March Edition 2018

    The Uqalo Consumer Index retreated in January in line with the sell off in global stock markets.  Markets sold off as bond yields rose sharply in the US given positive data relating to the strong growth of the economy.   The UCI is 28% ahead of the average which we calculate since January 2009 and 3% lower than the all time high which was achieved in Dec 2014.

    January Edition 2018

    The Uqalo Consumer Index rose rapidly in November and December in line with the continued upward trajectory of global stock markets. A growth boom in emerging markets, benign monetary policy in developed markets and the planned US corporate tax rate cuts were largely responsible.African nations are also benefitting from a recovery in commodity prices. The UCI is 31% ahead of the average which we calculate since January 2009 and 1% lower than the all time high which was achieved in Dec 2014.

    November Edition 2017

    The Uqalo Consumer Index declined in October despite the continued upward trajectory of global stock markets. The decline was driven by a recovery in Nigerian consumer earnings as Africa’s largest economy emerged from a recession. The UCI is 23% ahead of the average which we calculate since January 2009.

    September Edition 2017

    The Uqalo Consumer Index declined sharply in July as Nigerian consumer earnings increased ahead of share prices. Throughout August, we continued to see portfolio flows into Nigeria on the back of improved company results with increased valuations reflecting resumed confidence in Africa’s largest economy. The UCI is 27% ahead of the average which we calculate since January 2009 and a mere 5% off its all time high in December 2014.

    July Edition 2017

    The Uqalo Consumer Index continued to climb as investors favoured emerging market prospects. We continue to see portfolio flows into Nigeria on the back of improved company results. The UCI is 24% ahead of the average which we calculate since January 2009 and only 7% off its all time high in December 2014.

    May Edition 2017

    Since January 2017, the Uqalo Consumer Index has maintained a fairly consistent level. We expect some portfolio flows into Nigeria on the back of improved company results and the Central Bank of Nigeria’s new investor foreign exchange window which allows investors access to a floating Naira exchange rate. The UCI is 22% ahead of the average which we calculate since January 2009.

    March Edition 2017

    The Uqalo Consumer Index increased sharply over January and February, touching levels last reached 20 months ago. Global stock markets followed the euphoric rise of US equities as January 2017 saw the Dow Jones closed above 20,000 for the first time in history. This was followed 11 days later by a close above 21,000. Markets reacted positively to signs that the new US administration was carrying through with a number of stimulatory measures promised. The UCI is 21% ahead of the average which we calculate since January 2009.

    January Edition 2017

    The Uqalo Consumer Index declined marginally over November and December as investors withdrew funds from emerging markets in favour of US market investments which have experienced a post-election “Trump Rally”. President-elect, Donald Trump, has proposed a raft of fiscal stimulus measures which the market is expecting to bring about job creation and an end to economic stagnation in the USA. The UCI is 11% ahead of the average which we calculate since January 2009.

    November Edition 2016

    The Uqalo Consumer Index continues to recover post the Brexit shock with the initial impact being far shallower than investors feared. Emerging markets have rallied as fundamentals improve due to positive economic data out of China and subdued growth expectations from developed markets. The UCI is 13% ahead of the average, which we calculate from January 2009.

    September Edition 2016

    The Uqalo Consumer Index recovered in July as markets digested the reality of Brexit and its global growth implications. The UCI, approaching a year-to-date peak, is 13% ahead of the average which we calculate since January 2009.

    July Edition 2016

    The Uqalo Consumer Index rebounded sharply in May as emerging markets responded to speculation that the FED was unlikely to raise interest rates in 2016. This recovery was short lived, as Brexit became a reality in June and global markets sold off. The sharp swings over the two month period left the UCI 8% ahead of the average which we calculate since January 2009.

    May Edition 2016

    The Uqalo Consumer Index rebounded in March in line with the strong emerging markets rally, experienced globally. The UCI is now 4% ahead of the average, which we calculate since January 2009. Although primarily the Nigerian counters drove the UCI’s recovery, we do not anticipate this trend to spill over into private market valuations given the current tough economic conditions.

    March Edition 2016

    The Uqalo Consumer Index fell 10% in January alone and a further 1% in February, as African stock markets followed the significant global decline. Valuations across all sectors came under pressure. For the first time since February 2013, the index is below its average, which we calculate from January 2009. Valuations expectations in private markets have reduced and we expect this trend to continue.

    November Edition 2015

    Following a period of decline, the Uqalo Consumer Index increased marginally in October. The increase can be attributed to a global emerging markets rally as the FED kept rates on hold sighting fears of contagion resulting from global economic weakness. The Uqalo Consumer Index is 18% higher than its long-term average but significantly below the peak of 26.1 made in December 2014.

    September Edition 2015

    The Uqalo Consumer Index continued to decline over the past two months closing at its lowest level since March 2014. Whilst macroeconomic and growth concerns continued to weigh on global markets, the Nigerian consumer stocks were the primary drivers of the fall in our index. Unsurprisingly, Nigerian Naira depreciation and the concomitant increase in inflation resulted in a fall in disposable income. Unable to fully pass on rising costs to consumers, bellwether Nigerian consumer stocks reported poor earnings, which in turn saw share prices falling. The Uqalo Consumer Index nevertheless still stands at 23% above its 7-year average.

    July Edition 2015

    The Uqalo Consumer Index declined over the last two months as sub-Saharan
    Africa consumer stocks followed the downward trend of global markets. The Uqalo Consumer Index nevertheless still stands at 28% above its 6-year average.

    May Edition 2015

    The Uqalo Consumer Index at all time high. Following a post-election stock
    market rally in Nigeria, the Uqalo Consumer Index rose to an all time high at the end of April. The index is now at a 39% premium to the 6-year average.


    Online African Fashion and Craft Platforms

    Creative talent in Africa is blooming. This is evidenced by the growing presence of African design at international events, on the backs of high profile individuals, as well as the ever increasing number of websites for individual African brands. Also evident are online African fashion and craft platforms which aggregate talent and enable it to access global markets. We have therefore undertaken this research to to explore the online African fashion and craft platform space; to see who is active in it; which business models they are using; the challenges they face and how they have adapted their approach to overcome these challenges.

     

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    Online Retail in sub-Saharan Africa

    As a specialist sub-Saharan consumer sector investor, the expansion of Online Retail is of particular interest to us. We have therefore undertaken research to provide an overview of African e-commerce and its major players. We are pleased to make our research publicly available through our website.

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    Formal Retail in sub-Saharan Africa

    As a specialist sub-Saharan consumer sector investor, the expansion of formal retail is of particular interest to us. We have therefore researched and illustrated the current state of formal retail in sub-Saharan Africa as well as opportunities for the future. We are pleased to make our research publicly available through our website.

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    The African Print Fabric Market

    African print fabric is a key component of the African clothing market. As a specialist sub-Saharan consumer sector investor, we are intrigued by the opportunities which will arise in the sector as a result of changing fashions and increasing disposable incomes. In response to the lack of quantitative information about the sector, we have undertaken this research and are pleased to make it publicly available through our website.

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