July 2017 - African Financial & Economic Data

31 Jul

Just How Bad is Public Debt in Africa?

Well, public debt in African states is much higher if you take into account their revenue mobilization capacities. The bigger the informal sector, the lower the debt/revenues ratio.

Consider the case of Nigeria (from the FT):

Nigeria’s accumulated government debt is just 18.6 per cent of its annual economic output, one of the lowest levels in the world, implying that its debt burden is more than manageable. But is this a fair reflection of reality?

Using a different metric, the Nigerian government’s gross debt is 320 per cent of its annual revenues, according to figures from Fitch Ratings, one of the highest figures in the world and comfortably above the median of 196 per cent for countries in Africa and the Middle East that are rated by Fitch.

[via An Africanist Perspective]

28 Jul

Barclays Africa’s H1 profit rises 7 pct despite S. African downturn

JOHANNESBURG – South Africa’s Barclays Africa Group said on Friday its half-year profit rose 7 percent, driven by solid earnings growth in its local market and the rest of Africa and a strong performance in corporate banking, despite an economic downturn.

The results marked the first time that the company has reported results following Barclays Plc’s sell-down of its majority stake in the African business. Barclays retains just 15 percent of the group.

Barclays Africa Group said normalised diluted headline EPS was 9.177 rand ($0.7055) in the six months ended June compared with 8.567 rand a year earlier.

Headline EPS strips out certain one-off items and is the main profit measure in South Africa.

“We are presenting a set of results that demonstrate the real value of the 2013 acquisition of the Barclays businesses in Africa,” Chief Executive Maria Ramos said in a statement.

“Both geographically, as well as by customer segment, they are proving their worth in yielding a strong performance for the first half, even as our biggest market, South Africa, has suffered the impact of an economic downturn.”

Despite the profit rise, shares were down 1.52 percent to 144.87 rand by 0708 GMT.

In 2013, Britain’s Barclays handed over ownership of all but two of its African subsidiaries to its South African unit in exchange for a 62.3 percent stake in the new combined entity.

Barclays on Friday reported a 1.2 billion pound ($1.57 billion) attributable first half loss after taking a 2.5 billion pound hit from the sale of its Africa business.

Barclays Africa Group’s South Africa banking headline earnings grew 6 percent to 6 billion rand ($462.01 million), while the rest of Africa banking rose 19 percent to 1.5 billion rand.

The group said for the remainder of the year, its main focus will be on its retail and business bank performance, which both under-performed in the first-half, in South Africa and on driving opportunities in its businesses outside of South Africa.

The bank, which launched a court challenge on July 13 to the anti-graft watchdog’s findings that the lender’s South African unit unduly benefitted from an apartheid-era bailout, raised its interim dividend by 3 percent to 475 cents per share.

[Read More: Reuters Africa]

27 Jul

Nigeria’s new $1.5 bln fertiliser plant boosts agriculture sector

ABUJA – Nigeria’s acting president will open a $1.5 billion fertiliser plant in the southeastern city of Port Harcourt on Thursday, highlighting efforts by Africa’s largest economy to boost its agriculture industry.

Nigeria has for decades been dependent on exports of oil to support its economy, but as global crude prices have dropped and production has been hit by militant attacks the government has sought to diversify, embracing sectors such as agriculture and manufacturing.

The new factory has an annual production capacity of 1.5 million tonnes of urea fertiliser and was built by Indorama Eleme Fertilizer and Chemicals Limited, the president’s office said in a statement on Wednesday giving details of the visit by Acting President Yemi Osinbajo. He is leading Nigeria while Muhammadu Buhari is in Britain on medical leave for an undisclosed ailment

“Besides making fertiliser available to farmers nationwide at affordable cost, the plant will also boost crop yield for farmers,” the statement said.

[via Reuters Africa]

26 Jul

Gold drifts lower as dollar firms ahead of Fed

BENGALURU – Gold prices fell on Wednesday as the dollar firmed above multi-month lows, with investors waiting for clues on the U.S. Federal Reserve’s tightening plans after the conclusion of a two-day meeting.

The U.S. central bank will issue its monetary policy statement at 2 p.m. EDT (1800 GMT), where it is expected to hold interest rates unchanged and possibly hint that it will start winding down its massive holdings of bonds as early as September.

Spot gold fell 0.27 percent to $1,245.16 per ounce at 0629 GMT. U.S. gold futures for August delivery fell 0.61 percent to $1,244.50 per ounce.

“Markets are certainly a little bit cautious ahead of the Fed meeting and that’s probably hindering investor appetite,” said ANZ analyst Daniel Hynes. “I think the market will be looking for any comments around inflation.”

Economists expect the Fed’s benchmark lending rate to remain in a target range of 1.00 percent to 1.25 percent.

“At this stage, we would rather be neutral on gold as Fed wording could throw the market off (in either direction),” said INTL FCStone analyst Edward Meir.

Higher interest rates would push yields up and likely boost the dollar.

Higher yields increase the opportunity cost of holding non-yielding gold, while a stronger dollar makes bullion more expensive for non-U.S. investors.

“Stronger U.S. economic data has also weighed on gold, but has been negated by the weak inflation outlook,” said ANZ’s Hynes. “Assuming that we don’t see any sort of change in language from the Fed meeting, I suspect we’ll see safe haven demand pushing gold prices up.”

Long-dated U.S. Treasury yields jumped by the most in almost five months on Tuesday as stocks hit record highs. [US/]

Asian stocks steadied, while the dollar held firm as investors awaited the Fed’s policy decision. [MKTS/GLOB] [USD/]

[via Reuters Africa]

25 Jul

South Africa’s rand steadies, stocks set to open flat

JOHANNESBURG, July 25 – South Africa’s rand steadied early on Tuesday after falling the previous day, having failed to break through technical resistance at around 12.8500 against the dollar.

* At 0645 GMT, the rand traded at 12.9600 per dollar, unchanged from its overnight close.

* Stocks were set to open flat at 0700 GMT, with the JSE securities exchange’s Top-40 futures index largely unchanged.

* In fixed income, the yield on the benchmark government bond due in 2026 fell 3.8 basis points to 8.507 percent.

[via Reuters]

24 Jul

The top 10 wealthiest cities in Africa: AfrAsia Bank & New World Wealth

AfrAsia Bank and New World Wealth recently reviewed the 10 wealthiest cities in Africa by total wealth held.

“Total wealth” refers to the private wealth held by all the individuals living in each city. It includes all their assets (property, cash, equities and business interests) less any liabilities. We exclude government funds from our figures.

Top 10 Cities:

Johannesburg: Total wealth held in the city amounts to US$245 billion. Home to 18,200 millionaires (HNWIs), 970 multi-millionaires and 2 billionaires. Our figures for Johannesburg include Sandton. Major sectors in the city include: financial services (banks, accountancies, insurance), professional services (law firms), construction, telecoms and basic materials.
Cairo: Total wealth held in the city amounts to US$140 billion. Home to 8,900 millionaires, 480 multi-millionaires and 5 billionaires. Major sectors in the city include: real estate & construction, financial services and basic materials.
Cape Town: Total wealth held in the city amounts to US$135 billion. Home to 8,200 millionaires, 440 multi-millionaires and 2 billionaires. Major sectors in the city include: real estate, financial services (fund management), retail and tourism. Cape Town is also a second home hotspot for the wealthy with over 1,500 multi-millionaires living in the city during peak holiday months (many of these individuals are from outside South Africa).
Lagos: Total wealth held in the city amounts to US$120 billion. Home to 6,800 millionaires, 360 multi-millionaires and 4 billionaires. Major sectors in the city include: real estate & construction, telecoms, transport, financial services and basic materials.
Nairobi: Total wealth held in the city amounts to US$55 billion. Home to 6,800 millionaires and 280 multi-millionaires (no billionaires). Major sectors in the city include: financial services, real estate & construction, retail, tourism, FMCG, telecoms and basic materials.
Luanda: Total wealth held in the city amounts to US$48 billion. Home to 4,100 millionaires, 240 multi-millionaires and one billionaire. Major sectors in the city include: real estate & construction, transport and basic materials (oil & gas).
Durban: Total wealth held in the city amounts to US$46 billion. Home to 3,200 millionaires, 130 multi-millionaires and one billionaire. Our figures for Durban include Umhlanga, Ballito, Zimbali and La Lucia. Major sectors in the city include: real estate, finance, healthcare, construction, retail and transport.
Pretoria: Total wealth held in the city amounts to US$42 billion. Home to 2,600 millionaires and 110 multi-millionaires (no billionaires). Major sectors in the city include: basic materials, manufacturing and financial services.
Casablanca: Total wealth held in the city amounts to US$40 billion. Home to 2,300 millionaires, 110 multi-millionaires and 2 billionaires. Major sectors in the city include: basic materials, manufacturing and financial services.
Accra: Total wealth held in the city amounts to US$35 billion. Home to 2,300 millionaires and 100 multi-millionaires (no billionaires). Major sectors in the city include: basic materials, manufacturing and financial services.

Ethiopia plans to offer firms shares in road projects: finance minister

Ethiopia plans to offer shares in its road-building and maintenance projects to private investors, its finance minister said on Tuesday, the latest step to open up and modernise the state-led economy.

The Horn of Africa country has over 113,000 kilometres (68,0000 miles) of paved roads and plans to increase that to 220,000 kilometres by 2019/20, official data showed.

“We do not have private-run roads. Through public-private partnerships, the private sector is interested to develop roads,” Minister of Finance and Economic Development Abraham Tekeste told Reuters in an interview.

“Through this arrangement, we could work to share the risks and create an environment whereby the private sector can recoup returns on its investment.”

The move to partly liberalise the sector follows Ethiopa’s decision to offer foreign companies stakes in the government-operated Ethiopian Shipping and Logistics Services Enterprise early this year and its energy sector in 2013.

Ethiopia is one of the fastest-growing economies in Africa, but the expansion has mainly been fuelled by huge public investment. The spending has gone into roads, schools, new highways and dams for hydroelectric power.

It opened an electrified railway linking the landlocked nation to a port in neighbouring Djibouti this year.

Abraham said the government expected gross domestic product to grow 11 percent in the 2016/17 fiscal year, up from 8 percent the previous period.

Earlier this month, Ethiopia’s parliament passed a 320.8 billion-birr ($13.9 billion) budget for the 2017/18 financial year (July 8-July 7), an increase of nearly 17 percent on the previous year. About a quarter of that amount is set to be spent on roads.

The International Monetary Fund has said Ethiopia needs to attract more private investment to maintain growth. But the government has in the past tended to brush off such advice and said it would keep charge of key sectors.

“Why do we continue to invest in infrastructure? To make private investment feasible. With no roads, private investment will not be worthwhile,” Abraham said.

Though starting from a low base, foreign investment has also been rising the last five years, including for farms producing flowers and other horticultural products for export and in textiles.

Abraham said Ethiopia took in over $3 billion in foreign direct investment last year and expected that number to rise by the end of this year.

[via Reuters Africa]

20 Jul

IMF urges Mozambique to address debt audit concerns

Mozambique should take steps to address information gaps that remained regarding the use of loans granted to three state-owned companies, the International Monetary Fund said.

The IMF visited Mozambique from July 10-19 to discuss findings of an audit by risk-management firm Kroll into the country’s $2 billion in hidden loans to tuna fishing company EMATUM, security firm Proindicus and Mozambique Asset Management (MAM).

The audit showed roughly a quarter of the money remained unaccounted for.

“The team urged the government to take steps to fill the information gaps and to enhance its action plan to strengthen transparency, improve governance, and ensure accountability,” the fund said in a statement late on Wednesday.

[via Reuters Africa]

19 Jul

South Africa’s rand weakens ahead of CPI, retail data

South Africa‘s rand weakened against the U.S. dollar early on Wednesday as investors awaited consumer price inflation and retail sales data due later in the day.

* At 0645 GMT, the rand traded at 12.9450 per dollar, 0.41 percent weaker than its overnight close.

* Statistics South Africa is due to release June CPI figures at 0800 GMT and May retail sales numbers at 1100 GMT.

* “A lower CPI print will make the South African Reserve Bank rate decision difficult tomorrow, especially because growth is weak and the exchange rate is also much stronger than at the last Monetary Policy Committee meeting,” Rand Merchant Bank analyst Isaah Mhlanga wrote in a note.

* South Africa’s Reserve Bank is expected to leave interest rates unchanged at 7 percent on Thursday, but economists expect a dovish statement as the central bank gets closer to its easing cycle.

* Stocks were set to open higher at 0700 GMT, with the JSE securities exchange’s Top-40 futures index up 0.6 percent. (Reporting by Olivia Kumwenda-Mtambo; Editing by Ed Stoddard).

[via Reuters Africa]

17 Jul

South Africa considers privatisation to counter recession

South African Finance Minister Malusi Gigaba laid out an ambitious 14-point programme on Thursday to wrench the economy out of recession that included the sale of non-core assets and partial privatisation of state-owned firms.

The plans to stimulate growth in the continent’s most industrialised economy appear to represent an ideological shift by the African National Congress (ANC), whose political alliance with the unions has tended to make privatisation a dirty word.

A team commissioned by President Jacob Zuma to review state firms last year recommended that some should be sold. Now the government has set a date – March 2018 – by which to roll out a “private sector participation framework”.

“All of these items that we have announced … they constitute an important intervention to restore confidence and demonstrate action, and outline an action plan that we as government can be responsible for,” Gigaba said.

The government would also reduce the number of debt guarantees to this firms, especially those extended for operational purposes, he said.

Analysts said Gigaba’s plan could face opposition.

“I’m not sure how far he is going to be able to get with this because I think ideologically there’s a lot of opposition,” NKC African Economics analyst Gary van Staden said.

“The last time I heard the ANC even talk about privatisation or even talk about sale of state owned assets on any kind of level is when Thabo Mbeki was president. It’s been a long time.”

South Africa’s economy entered recession for the first time since 2009 in the first quarter and is also struggling with high unemployment and credit ratings downgrades.

The state of the economy is adding to the pressure on Zuma, who is also facing persistent corruption allegations and increasing calls for him to stand down from within the ANC. Parliament will hold a no-confidence vote on Zuma next month.

Many of South Africa’s 300-odd state-owned companies are a drain on the government’s purse. Ratings agencies have singled out some as threat to its overall investment grade rating.

The firms, known as “parastatals” in South Africa, include companies such as South African Airways, power utility Eskom and logistics group Transnet that are regarded as central to the functioning of the economy.

Gigaba did not say what would be going under the hammer first, saying that would be determined by an audit.

BNP Paribas South Africa economist Jeff Schultz said investors would want to see more details before endorsing it as a viable turnaround strategy.