September 2018 / South Africa
September 1 2018
The World Bank will provide $1 billion in direct budget support to Ethiopia in the next few months, the prime minister said on Saturday, after the bank and other donors suspended budgetary help after a disputed and violent election in 2005.
“This is due to the reforms taking place in the country,” Abiy Ahmed, who has announced a series of economic and political changes since taking office in April, told a news conference in which he announced the World Bank decision.
The prime also promised free elections in 2020 for the nation of 100 million people, where parliament now has no opposition lawmakers.
September 1 2018
The UK Prime Minister Theresa May has announced a range of measures to boost much-needed investment in businesses and infrastructure across Africa, including an additional £4bn of private sector investment into the continent. As part of this, CDC, the UK’s Development Finance Institution, will significantly increase its investment into Africa – aiming to invest up to £3.5bn in businesses on the continent over four years. This will support hundreds of thousands of jobs, build stability and trigger growth in some of the poorest and most fragile countries. A new investment of up to £500m of UK aid invested through the Private Infrastructure Development Group (PIDG) will build essential infrastructure such as power, roads and water, that will lay the foundations for new trading and business opportunities across Africa in places businesses previously would not have been able to operate. Philippe Valahu, PIDG CEO, said: “We are delighted to announce this additional funding, which will enable us to do more, better. Our pioneering approach has seen significant success; with a successful track record we have supported 170 infrastructure projects, mobilised $22.9bn from the private sector and benefited an estimated 231 million people." In addition to announcing a substantial scale up of investment through CDC and PIDG, the UK is setting a clear ambition to mobilise £4bn of private investment, particularly from the City of London. In total, UK initiatives will generate up to £8bn (around $10bn) of investment for African countries between 2018 and 2021. The Prime Minister has also set a new ambition for the UK to be the largest G7 foreign direct investor in Africa by 2020. Africa’s population is set to double by 2050 and as many as 18 million extra jobs a year will be needed. There is a chronic need for private and public investment to create better opportunities in Africa to prevent the next generation falling further into poverty, potentially fuelling instability and mass migration with direct consequences for Britain. International Development Secretary Penny Mordaunt said: “Africa’s emerging markets offer huge untapped potential to the UK. There is a massive shortage of investment, infrastructure and jobs in these markets, and the City of London is uniquely placed to help fill this gap while earning benefits for the UK economy.” The City of London manages over £8trn of assets but at the moment only around 1% of those assets are invested in Africa. This partnership will mobilise further capital from pension funds, insurance companies and other investors, enabling the City to take on an even greater role as Africa’s partner of choice for financial services as the UK leaves the EU. This will create the opportunity to boost investment returns for the UK’s pension pot, while triggering essential long-term investment for African businesses, transforming the world’s poorest nations into the UK’s trading partners of the future. “We’re building mutually beneficial partnerships which are helping to stimulate long-term transformational growth and create good jobs for people in the world’s poorest countries, while also allowing UK investors to access the wealth of opportunity offered by African countries,” said Mordaunt.
September 1 2018
Egypt’s credit outlook was raised from stable to positive by Moody’s Investors Service, which cited progress in implementing a program backed by the International Monetary Fund to bolster economic growth and repair public finances. The country’s long-term rating was kept at B3, six levels below investment grade. The positive outlook signals that a downgrade is currently very “unlikely,’’ Moody’s said in a statement late on Tuesday. “The substantial progress made by the government in implementing reforms agreed with the IMF has imparted a degree of financial stability not present earlier in the decade,” Moody’s said. That has helped offset debt refinancing risk, which “remains a key credit challenge for the sovereign in an increasingly turbulent global financial environment,” it said. Egyptian authorities in 2016 launched an aggressive effort to end a crippling dollar shortage that had stymied business activity and limited investor interest. The lifting of exchange rate restrictions, accompanied by the slashing of fuel and utility subsidies, were key parts of the broader effort to shrink the budget deficit and revive economic growth.
Moody’s also said:
- Egypt’s strengths arise mainly from its large and diverse economy, while weaknesses include high debt burden and “very large” annual financing needs
- Signs of business environment reforms “offer the prospect of a sustainable, inclusive growth path capable of improving competitiveness and absorbing the country’s rapidly expanding labor force”
- Government-led infrastructure projects, such as the new administrative capital, contribute to “fostering growth and employment in the construction sector”
- Political stability that has been achieved “seems likely to be sustained,” raising the likelihood of the government continuing along the current policy path
September 1 2018
Kenya has secured a deal to export agricultural products to Britain after it leaves the European Union.
Visiting British Prime Minister Theresa May said on Thursday on a visit to Nairobi that her government looks forward to increased trade with non-EU nations as a Brexit selling point.
Ms May was speaking on the third stop of a trip to Africa during which, she said, she wants Britain to become the biggest investor on the continent out of the world’s richest nations.
“As Britain prepares to leave the European Union we are committed to a smooth transition that ensures continuity in our trading relationship with Kenya, ensuring Kenya retains its duty free quota access to the UK market,” Ms May said.
This will benefit the agriculture sector, which is Kenya’s biggest foreign exchange earner and a big source of jobs.
The duty free exports will benefit flower, tea, vegetable, and coffee farmers as well as agriculture sector dealers. President Uhuru Kenyatta, speaking alongside Ms May at a news conference, said he welcomed her assurance that Kenyan duty free exports would continue after Brexit, adding that Kenya will be pressing for an increase in exports.
British companies are also keen on promoting trade opportunities outside the EU after Brexit.
“Kenya is looking forward to doing business with UK businesses that will enhance economic benefits for the two countries,” said President Uhuru.
Kenya imported goods worth Sh30 billion from the UK and exported products worth Sh38.5 billion to the country.
Margaret Thatcher was the last British prime minister to visit Kenya in 1988.
September 1 2018
The Rocky Mountain Institute (RMI) in collaboration with the Nigerian Economic Summit Group (NESG) this week released a report entitled, Minigrid Investment Report: Scaling the Nigerian Market, which shows how mini-grids can improve business profitability. According to the report, mini-grids could also stimulate a $20 billion investment opportunity throughout Nigeria. At present, only 45% of the Nigerian population has access to electricity, and only 36% of the population in rural areas has access to a centralised power source. Mini-grids can provide a cost-effective solution to the demand for rural electrification, which could help businesses tap into a revenue opportunity of up to N2.8 trillion ($8 billion) per year. “The Nigerian mini-grid space is ready to take off, and there is a huge opportunity for investment to scale the market,” said Sachi Graber, an associate at Rocky Mountain Institute and co-author of the study. “These mini-grids could drive a significant economic change in rural Nigeria,” Graber added. The research presents the following findings to show how necessary mini-grids are to the future of Nigeria’s business structure:
- Scaling mini-grids could create a $20 billion investment opportunity
- Over 80% of Nigerian business owners cite electrification challenges as their most significant obstacle, and mini-grids could solve the most common challenges through high reliability and consistent quality
September 5 2018
The African Union has launched a representational office in China’s capital, Beijing. The Chinese-funded building was unveiled in the presence of Chadian politician/ Chairperson of the African Union, Moussa Faki Mahamat, the Chinese State Councilor and Foreign Minister Wang Yi. According to Mahamat, “China welcomed the planned establishment of an African Union Office in Beijing to ensure effective and timely follow-up of the China-Africa partnership and committed to supporting the setting up of this Office. This representation will also support the work of the African Group of Ambassadors in Beijing, to ensure alignment with African Union positions.” Similarly, the African Union’s Ethiopian headquarters which cost $200 million (£127m) was funded by China as a gift to the AU; most of the materials used were imported from China and even the furnishings were paid for by Beijing. The construction, which began in January 2009 and involved 1,200 Chinese and Ethiopian workers, took three years to finish. The building is said to be a symbol of China’s drive for influence in Africa. In 2011, the AU headquarters was hacked, and China was the major suspect. French newspaper Le Monde stated that data from computers in the Chinese-built building had been transferred nightly to Chinese servers for five years. The hack wasn’t detected until January 2017 when technicians noticed a peak in data usage between midnight and 2 am every night. After a thorough investigation, it was discovered that African Union’s confidential data was being copied on to servers in Shanghai. China denied the allegations. Although the AU acquired its own servers and refused Chinese offers to reconfigure them after the hack discovery, the bugging, data theft and the alleged Chinese involvement did not put a strain on the AU-China relationship as the commission still let the Asian country build its Beijing office. The AU’s Ethiopian headquarters and Beijing office is far from the only government building China has constructed in Africa. Recently, China inked deals to build and finance parliament buildings in Zimbabwe and the Republic of Congo. Also, the entire Central Business District of Egypt’s new administrative capital was handled by China. Finished projects include parliament buildings in Malawi, Seychelles, Guinea-Bissau, and Lesotho as well as a renovation of the parliament building of Sierra Leone.
September 5 2018
South African President Cyril Ramaphosa unexpectedly suffered the same false start as his predecessor nine years ago: a recession in his first six months in office. The economy contracted an annualised 0.7 per cent in the second quarter from the previous three months, pushing Africa's most-industrialised economy into its first recession in almost a decade. The rand, which has already been under pressure in recent weeks as part of a rout in emerging-market currencies, extended declines after the data.
The news is a setback to the new president, whose ascent in the wake of the corruption-plagued era of Jacob Zuma initially aroused such optimism that it was dubbed "Ramaphoria."Slack farming output and soft consumer spending have put pressure on the economy. Ramaphosa's rise to power since December initially boosted sentiment and the rand following Zuma's tenure of almost nine years. That optimism has faded as structural reforms weren't implemented fast enough and global trade wars and turmoil in other emerging markets such as Argentina and Turkey soured sentiment.
"This economy remains in the doldrums, that we are in desperate need for policy certainty and structural reform to get us onto a growth path," Elize Kruger, an economist at Paarl, South Africa-based NKC African Economics, said by phone. "This type of environment is difficult for job creation. We'll get stuck in our low-growth term if we can't get out of this."
The rand weakened as much as 2.6 per cent against the greenback and was 2.3 per cent down at 15.2088 per dollar by 2:03 p.m. in Johannesburg. Yields on rand-denominated government bonds due December 2026 rose 18 basis points to 9.18 per cent, the highest level since before Ramaphosa became leader of the ruling African National Congress.
A contraction for the fourth quarter of 2016 was later revised to show growth, resulting in this being the first recession since the financial crisis of 2009.
Highlights from the release include the following:
- Agriculture declined the most, recording an annualised 29.2 per cent contraction
- Manufacturing shrank 0.3 per cent
- Trade contracted 1.9 per cent
- Mining production, however, expanded 4.9 per cent from the previous quarter
September 6 2018
Tanzania is set to receive US $1.46bn loan from the Standard Chartered Group, the British multinational banking conglomerate towards construction of phase II of the Standard Gauge Railway (SGR). Minister for Finance and Planning Phillip Mpango, confirmed the news and said the Standard Chartered Bank Group Chief Executive, Bill Winters is in agreement to grant the loan for the SGR which will begin from Morogoro to Makutupora in Dodoma Region. “We are currently building Phase I of the SGR project that runs from Dar es Salaam to Morogoro. Afterwards we will extend it to Makutupora in the second phase. In the later phases, we will connect the SGR to Isaka and Mwanza and, ultimately, to Rusumo, working in close cooperation with our Rwandan counterparts until it reaches Kigali,” said Phillip Mpango. “As a bank, we have the noble duty of ensuring that we play a significant role in financing (the country’s socioeconomic development),” said Bill Winters . High-speed electric railway The Minister added that works on the the US $1.92 bn high-speed electric railway which is part of phase one at Dar es Salaam-Morogoro is progressing well, with the Turkish firm Yapi Merkezi Insaat VE Sanayi As building the 422 km part of the line. In March this year, President John Magufuli laid the foundation stone for the Morogoro-Makutupora section, covering 426 km.It is estimated that the Standard Gauge Railway upon completion, will create 30,000 direct employment opportunities and some 60,000 indirect jobs. Other projects Additionally, Dr Mpango briefed the visiting CEO Mr. Winters on a number of development projects that the government is undertaking to improve the country’s economic infrastructure. The projects include the purchase of state-of-the-art passenger aircraft for the national carrier, Air Tanzania Company Limited (ATCL) and the 2,100MW Stiegler’s Gorge hydroelectric project. “Tanzania is only second to Brazil in terms of having the highest number of tourist attractions in the world. However, we currently receive less than two million visitors a year. This calls for prompt action so that the tourism sector brings in more of the much-needed foreign exchange earnings for the general good of the economy,” clarified Phillip Mpango.
September 13 2018
Data from the Central Bank of Nigeria (CBN) annual report for 2017, show that equities have dominated transactions on the Nigerian Stock Exchange (NSE) in the last half-decade. Here are key highlights from the report:
The volume of securities tradedEquities accounted for 99.3% of the 656 billion securities that were traded on the NSE between 2013 and 2017. The markets are, however, far from the peak of the last 5 years as the total number of stocks traded from 2015 to 2017 were nearly equivalent to the volume traded in 2013. 267 billion stocks were traded in 2013. 93.6 billion shares were traded in 2015, 95.8 billion in 2016 and 93.2 billion in 2017.
Number of deals7,108,046 deals took place on the NSE between 2013 and 2017. 2013 had the highest number of transactions in the last five years at 3,224,639 deals. 2016 was the year with the least number of transactions at 837,421 deals. Equities again dominated activities on the NSE, accounting for 99.9% of the transactions.
Value of securities tradedA total of N6.2 trillion worth of securities have been traded in the last 5 years, with equities taking the lion share. 2013 recorded the highest value with N2.3 trillion worth of equities traded. 2016 had the least value with N576 billion worth of securities traded.
How has the market fared in the last half a decade?From a high of 41,329.19 basis points in 2013, the All-Share Index dipped to 26,847.72 in 2016 before recovering to 38,243.19 basis points in 2017.
Why were 2015 and 2016 lean years?2015 saw the economy slipping into a recession, for the first time in nearly three decades. The drop in crude oil prices and production volumes led to a foreign exchange crisis. This, in turn, led the Central Bank of Nigeria (CBN) to place supply control measures. Foreign investors, who are dominant players on the NSE, then exited the markets. A devaluation of the Naira and improved oil revenues led the apex bank to relax the controls and gave foreign portfolio investors the needed confidence to enter the market.
How will 2018 fare?Barely four months to the end of the year, and 2018 numbers may not beat the performance of 2017. The All Share Index is currently at 32,292.79 basis points, 15.56% lower than last year’s closing figure of 38,243.19 basis points. While oil prices remain stable, approaching elections and a crisis in emerging markets have led to foreign investors exiting the capital market.
September 13 2018
Dubai-based investors have inked a new deal for construction of a mini city at Mang’u in Juja, Kiambu County, on the Nairobi-Thika road at Sh8 billion.
Speaking on his return to Kenya from Abu Dhabi in the United Arab Emirates, Capitaland East Africa chief executive Rogers Obure said the investors had agreed to form a joint venture with local owners to have the project dubbed ‘Artstone Valley’ implemented within the next 40 months.
A key partner in the project, Luxury Homes developer and Costa Homes founder Constantine Mwadime, said inclusion of a mall, hospital, primary and nursery schools were value-adds aimed at making the property attractive for Nairobi workers seeking an out-of-town location to shop, seek treatment or take children to school.
“Several saccos have expressed interest in taking up housing units for onward sale to their members off-plan to be paid over a period of time,” he said.
The deal is between Capitaland East Africa, Abu Dhabi Investment and Housing, Emirate Homes Group and Royal Investment Group.
Currently, Capitaland is overseeing reconstruction of several hospitals and schools in Bangui, Central African Republic — also funded by the same investors — and has been selected to oversee construction of a five-star hotel in Mombasa to be named Black Pearl Beach Resort.
The 25-acre Juja project designed by Nairobi architect Salman Mruttu consists of seven blocks of eight-storeyed flats that will host 160 units of three bedroomed apartments with domestic servant quarters, 800 units of three-bedroomed apartments, 480 units of two-bedroomed apartments and 60 one-bedroomed apartments.