Listen above for Founders Chat on providing Working Capital for African Micro Businesses with Ben Best, CTO of Numida (Y Combinator Winter 22).
We aim to chat with early-stage startup founders every Wednesday to break up the investing week and give us some inspiration on what startups are building as we brave a volatile Market.
Below are TAI’s Daily Brief and a profile on Numida.
April 13th, 2022
The Market was up on Wall Street’s expectations that inflation peaked in March and will begin to decrease in the coming months.
The S&P 500 climbed +1.12%
The NASDAQ jumped +2.03%
The DOW was up +1.01%
The Russell 2000 gained 1.92%
1. Federal Reserve Policy Round-Up
A pullback on consumption and easing supply chain conditions give investors hope that March inflation could be the peak before a long wind-down of the highest inflation in 40 years.
While price increases are expected to remain high in the coming months, Wall Street anticipates that they won’t be as drastic as the 8.5% for March reported yesterday.
However, the Market remains highly reactionary and volatile to inflation and the Federal Reserve’s comments on how it will use monetary policy to deal with it.
To summarize the US central bank’s signals of the past week:
Wall Street expects the Federal Reserve to increase target interest rates in May by 0.5% to between 0.75% to 1.00%
Economists believe that interest rates will climb to 2% in 2022 and peak at 3.25% by the end of 2023
Starting in May, the Federal Reserve is expected to pull $95 billion from the Market every month by selling assets from its balance sheet
Investors are starting to reduce their risk hedging positions and are evaluating where interest rates will end up at the end of 2022.
However, oil prices have climbed back up more than 10% over the past week, which could douse optimism about lower inflation if they continue to rise.
2. Introducing Wednesday Founder Chats
We’re mixing things up today. We want to supplement TAI’s daily Market commentary with a couple of profiles of really awesome Y Combinator companies in our batch.
Some of the companies in our batch are working on the trends that will make real impacts over the next decade. We think highlighting what they’re building can show us where the world is heading.
So we’re starting this week with Numida! Check out our audio short above to hear about the problem Numida is solving.
A short intro on Numida
Numida provides unsecured working capital loans to African microbusinesses
Entrepreneurs can access capital without having to turn to loan sharks
Over the past nine months, Numida has lent $8 million and sees a $5 billion market opportunity across Sub-Saharan Africa
Founders Ben, Catherine, and Mina all have extensive experience working in microfinancing and policy across sub-Saharan Africa.
How you can use an ETF to invest in Africa
While it’s complicated for individual investors to buy shares directly in foreign companies not listed in the US, ETFs can provide an easy way to access investments in different geographies.
Frankly, there aren’t many ETFs that have exposure to sub-Saharan Africa. Outside of country-specific ETFs that cover South Africa and Nigeria, only VanEck Vectors Africa ETF (AFK) provides wider investment exposure across the continent.
AFK seeks to track the performance of companies incorporated in Africa and have at least 50% of their revenue and assets located in Africa. Holdings include Kenya’s telecom provider Safaricom and Nigerian financial service provider Guaranty Trust.
As one of the projected global growth centers over the next decade, the International Monetary fund expects Africa to grow by 3.8% in 2022.
Further Reading
Project Syndicate: Africa’s Long Post-COVID Climb
Treasury Traders Pare Bloomberg: Bets on Fed Hikes as Two-Year Yield Falls
