Powered by Asoko Insight

See all the latest news from the Business Council for Africa and from around the continent. 

2017

February 2017

24 February 2017

NWU SCHOOL OF BUSINESS AND GOVERNANCE ECONOMIST PROF RAYMOND PARSONS: Budget 2017/2018 Press Release

MEDIA STATEMENT - IMMEDIATE RELEASE
22 FEBRUARY 2017


'THE 2017/18 BUDGET SPEECH EMBODIES A TOUGH MESSAGE ABOUT THE ECONOMY AND REINFORCES FINANCIAL PROBITY', SAYS NWU SCHOOL OF BUSINESS AND GOVERNANCE ECONOMIST PROF RAYMOND PARSONS


'The Budget speech to Parliament today by Finance Minister Pravin Gordhan was generally a realistic, balanced and predictable analysis of the socio-economic challenges in general, and the fiscal difficulties in particular, faced by SA. Apart from promoting inclusive growth, the 2017/18 Budget has also had to seek to close the fiscal 'gap' of about R28 billion still remaining in SA's public finances. This has been done mainly through the widely anticipated increases in taxation at selected levels, embodying a tough message about the SA economy.

The basic test of the Budget decisions will be their net impact on business and consumer confidence. The overall emphasis in the Budget speech on improving SA's growth prospects must be endorsed, as must the Minister of Finance's insistence on enlarging the role of public-private sector collaboration in further unlocking SA's growth potential. Yet even if the optimistic growth forecasts in the Budget are accepted, it remains clear that current weak growth strains everything else, including 'radical economic transformation'.

The Finance Minister rightly insists that it is imperative that SA breaks out of its 'low growth trap'. The Budget nonetheless appears to have been more successful in balancing the State's books than in immediately boosting inclusive economic growth, as many of the drivers of economic growth lie outside the control of the National Treasury (NT). Translating fiscal resources into tangible outcomes still also requires urgent and efficient implementation by the public sector as a whole, as well as ensuring that State funds are effectively spent. What SA therefore needs to avoid is drifting into a negative 'tax-and-spend' cycle, which will ultimately weaken economic performance. The imbalance here is that about two-thirds of the current 'fiscal consolidation' appears to be coming from tax measures, whereas approximately only one-third stems from spending ceilings and other fiscal disciplines. The danger exists that aggressive taxation may then eventually defeat its own ends by diminishing the future income to be taxed, unless renewed growth boosts tax revenues. SA probably needs at least about a 2-3% growth rate to limit the future tax burden.

The decisive message nonetheless to be taken from the 2017/18 Budget is that, despite recent political pressures, SA's fiscal policy remains highly predictable and in safe and responsible hands. The NT continues to display a strong commitment to financial probity in SA's public finances. These reassurances remain essential to the maintenance of confidence in good governance in SA. The risks and uncertainties around the expected Cabinet reshuffle are highly relevant to the future role of the NT as a trusted custodian of taxpayers' funds'.

ENDS

Prof Raymond Parsons
 

2017

February 2017

21 February 2017

Africa Confidential Weekly News Update

This week we start in Cape Town with renewed speculation about a cabinet reshuffle as Finance Minister Pravin Gordhan prepares to read his budget and then to Somalia where the IMF has promised the new government it will back a debt relief scheme. In Gambia, jubilation at President Adama Barrow's inauguration was tinged with some concern about the stability of the transition and a third high-ranking member of the South Sudan government has quit in a week, alleging ethnic bias. Finally, Nigeria's government gets a vote of confidence from investors despite the month-long absence of President Muhammadu Buhari.

SOUTH AFRICA: Zuma positions his money man ahead of budget speech
For political insiders the news that Brian Molefe, the disgraced former head of the state power company Eskom, has been 'deployed to parliament' could mean only one thing: President Jacob Zuma wants to appoint his friend as a minister or deputy minister.

Under the country's proportional representation system, party leaders can choose whom they send to parliament as MPs at will. The word for months has been that President Zuma wants to sack Finance Minister Pravin Gordhan, who is due to read the budget tomorrow (22 February), and replace him with someone more pliable, or to find a way to rein him in. 

Molefe fits the bill. He wept at a briefing at Eskom after he was named in a report on state capture by Public Protector Thuli Madonsela. She had revealed that there were 58 phone calls between Molefe and the Gupta family when their company Tegeta was buying the Optimum Coal mine, which had a lucrative supply contract with the state utility. 

Molefe's defenders say at least he had the decency to resign after Madonsela had pointed to the conflict of interest. Now, he is back in the game, courtesy of Zuma's plans for another cabinet reshuffle.

Although Zuma has the constitutional right to sack Gordhan and replace him directly with Molefe such a move could provoke strong opposition from other senior ministers and figures in the African National Congress. 

A plausible alternative for Zuma would be to replace the current Deputy Finance Minister, Mcebisi Jonas, with Molefe, who could act as a brake on Gordhan or at least report on what he is doing. Jonas could then be moved to the currently vacant spot of Deputy Trade Minister. That could still panic the markets, pushing down the rand against the dollar again and forcing up interest rates – to say nothing of prompting a ratings downgrade later this year.

In terms of economic rationality, this makes no sense when Finance Minister Gordhan is due to read the budget under some of the toughest financial conditions for more than a decade. Yet according to the dictates of the power game now being played at the top levels of government it is just part of the political calculus. 

SOMALIA: The IMF talks debt relief and new currency notes
After his surprise selection by parliament, new President Mohamed Abdullah Mohamed 'Farmajo' has received another endorsement from a more unexpected quarter – the International Monetary Fund. Not only is the IMF willing to back the introduction of new Somali shilling notes, due to come into circulation this year alongside the US dollar, it is also willing to help the country negotiate a deal to get relief on some of the US$5.3 billion it owes to major creditors.

Remonetising the national currency – almost all the Somali banknotes in circulation are counterfeit – would be an important step towards economic normalisation for President Mohamed's new government. The Kenya Commercial Bank has already applied to set up in Mogadishu. Somalia currently receives about $2.5 billion a year in remittances from its highly entrepreneurial diaspora, dotted around Africa, Europe and North America.

THE GAMBIA: Mass arrests of Jammeh supporters
The formal inauguration of President Adama Barrow at Banjul's Independence Stadium last Saturday (18 February) to popular acclaim has not calmed concerns about the stability of the regime and its relations with its neighbours. The guest of honour was Senegal's President Macky Sall, who has been asked to keep some of his soldiers in Gambia to consolidate the transition after the departure of defeated President Yahya Jammeh.

The European Union has already announced an aid package worth $80 million for Barrow's government; some French officials have long suggested that a closer union between Senegal and Gambia would make sense. Yet four days before Barrow's inauguration, Britain's passionately anti-EU Foreign Minister Boris Johnson turned up in Banjul to fete the new government. Johnson said Britain would fast-track Gambia's return to the Commonwealth; Jammeh had taken Gambia out of the organisation labelling it 'colonialist'. 

And there are residual supporters of Jammeh and his Alliance for Patriotic Reorientation and Construction. Police arrested about 50 of Jammeh's supporters in Kafenda, one of his strongholds, after violent arguments with a contingent returning from the inauguration. 

SOUTH SUDAN: More senior officers quit Salva's government claiming discrimination
The resignation of Khalid Ono Loki claiming ethnic bias is the third top-level departure from President Salva Kiir's government in the past week. It follows the resignations of General Thomas Cirillo Swaka and Minister of Labour Gabriel Duop Lam. Their common complaint is that Salva's government is blatantly biased in favour of his own Dinka people. Khalid Ono, who headed the military court system, extended this criticism to the head of South Sudan's army, General Paul Malong, accusing him of covering up crimes such as murder, rape and theft.

This comes at a time of chronic economic difficulties for the Juba government: it has lost almost all its oil revenues due to the resurgence of conflict last June. Drought and war have hit food supply and the UN has officially declared famine in parts of the country. Inflation was reckoned to have hit over 800% last year. 

More than three mn. of the country's 11 mn. people were forced from their homes by fighting last year; 100,000 face starvation and 1 mn. are on the brink of famine, says the World Food Programme. Up to 400,000 have fled across the border to Uganda whose government says it's struggling to cope. 

NIGERIA: Vice-President Osinbajo reaches out as Buhari's health worries continue
Several investors who last week snapped up a billion-dollar Eurobond launched by Nigeria told Africa Confidential last Friday (17 February) that they were unfazed by the month-long absence of President Muhammadu Buhari from his country on medical grounds. They pointed to the orderly transfer of power, during Buhari's absence, to Vice-President Yemi Osinbajo.

A consummate technocrat and part-time pastor with no independent political base, Osinbajo has pressed ahead with the business of government. Last week his team was preparing the launch of an economic recovery plan and he led a delegation to the Niger Delta to reinforce a government agreement with local militant groups.

However, Osinbajo is treading a fine line between assuring Nigerians and outsiders that there is no power vacuum during Buhari's absence and overplaying his hand politically. Some investors say the financial team launching the bond had suggested that further exchange rate reforms were likely to be announced later in the month, probably as part of the recovery plan. So far, President Buhari has shown no sign of resiling from his long-held opposition to a sharp devaluation of depreciation of the Naira.

2017

February 2017

20 February 2017

BCA Member Speaks on Nigeria's Eurobond on the BBC World Service

Make sure you listen to Actis speaking on the BBC World Services Morning Programme (February 17th) regarding the recent Nigerian Eurobond being floated on the London Stock Exchange. See here: http://www.bbc.co.uk/programmes/p04sf9hz  

2017

February 2017

17 February 2017

IMF backs Ghana government’s one district, one factory initiative

By Bernard Busulwa | Business & Financial Times, Ghana

The Senior Minister, Yaw Osafo Maafo, has said that government and the International Monetary Fund (IMF) have reached an agreement for government to roll out its ‘one district, one factory project’ as part of the review of the Extended Credit Facility (ECF) programme.

Speaking to the media in Accra, the Senior Minister said: “IMF has a programme with Ghana, and within the programme are certain restrictions. We have gone to fight for elections and we won based on our manifesto. In our manifesto, we said one district, one factory. So we need some fiscal space to implement that one.

And the IMF knows that we need it. They know that we are in power because we promised certain things. Therefore, we are marrying the two and so far, we have not had any problem. They have agreed,” he said.

He reiterated the need for government to continue to remain committed to the programme despite earlier assertions that government will discontinue it.

“The IMF programme provides market support for countries; it provides some confidence in you as a country and you do not want to give wrong signals to the market out there. When you are going to borrow, your interest rate depends on your ratings. The programme will help for people to put confidence in you as a country, so we must look at these things very carefully and make sure that Ghana does not lose its market value,” Mr. Osafo Maafo said.

Meanwhile, the IMF has expressed some concerns about the economy after it concluded its visit to the country to review the progress of the ECF programme, citing fiscal deficit deterioration as a major worry.

Joel Toujas-Bernate, leader of the mission, noted that: “In 2016, the overall fiscal deficit (on a cash basis) deteriorated to an estimated 9 percent of GDP, instead of declining to 5¼ percent of GDP as envisaged under the IMF-supported program. The large deviation was mainly due to poor oil and non-oil revenue performance and large expenditure overruns. As a result, the government’s debt-to-GDP ratio increased further to close to 74 percent of GDP at end-2016.”

He further welcomed government’s intention to control public spending and protection of the public purse.

“Significant public spending commitments that bypassed public finance management (PFM) systems were reported. We welcome the new government’s intention to conduct a full audit of outstanding obligations, its commitment to transparency and its readiness to take strong remedial actions to ensure the integrity of the PFM systems going forward.

The large financial imbalances of state-owned enterprises in the energy sector also need to be addressed with urgency to avoid the build-up of contingent liabilities for the new government. We welcome the new government’s commitments to encourage its departments and agencies to implement growth-enhancing reforms in a fiscally sustainable manner,” he added.

Source: https://asokoinsight.com/news/imf-agrees-to-1-district-1-factory-project...

17 February 2017

Africa has raised $5 billion from IPO’s over last five years

By Partner Press Release | Asoko Insight

2016 marked a challenging year for African equity markets in the wake of lower economic growth and political upheaval around the globe, largely as a result of the US elections cycle and the Brexit vote. African equity capital markets (ECM) broke a streak of three successive years of growth, recording a decline in overall ECM activity of 28% from 2015 in the number of transactions and 33% from 2015 in terms of capital raised.

PwC issued its 2016 Africa Capital Markets Watch publication today, which analyses equity and debt capital markets transactions that took place between 2012 and 2016 on exchanges throughout Africa, as well as transactions by African companies on international exchanges. ECM transactions included in the analysis comprise capital raising activities, whether initial public offerings (IPOs) or further offers (FOs), by African companies on exchanges worldwide, as well as those made by non-African companies on African exchanges. Debt capital markets (DCM) transactions analysed include debt funding raised by African companies and public institutions.

Darrell McGraw, PwC Capital Markets Partner based in Lagos, says: “Many African economies, in particular those dependent on resources suffered in a low growth environment, significantly reducing ECM activity, and a continued lack of clarity around foreign exchange risk in Nigeria further discouraged foreign investment.

“Although overall ECM activity decreased in 2016 in terms of both transaction volume and value as compared to 2015, there was a significant increase in ECM activity, particularly IPOs, in the second half of the year, indicating the cautious optimism of issuers and investors as the year progressed.”

Since 2012, there have been 450 African ECM transactions raising a total of $44.9bn, up 8% in terms of capital raised over the previous five year period 2011-2015.

African IPO Market

Overall, $1.5bn was raised in IPO proceeds in 2016, and while 2016 saw a decrease from the prior year, there has been an overall upward trend in IPO activity over the five year period.

Over the past five years there have been 110 IPOs raising $6.5 billion by African companies on exchanges worldwide and non-African companies on African exchanges.

In 2016, capital raised from IPOs by companies listed on the Johannesburg Stock Exchange (JSE) increased by 25% in US dollar terms as compared to 2015, mainly driven by a comparatively stronger rand and three large listings by Dis-Chem, the Liberty Two Degrees real estate investment trust (REIT) and one of South Africa’s largest private equity firms, Ethos. It was also a record year for the JSE’s AltX, which saw the secondary listing of the fledgling Mauritian private equity investor, Universal Partners, generate proceeds of more than five times greater than in 2015.

Capital raised from IPOs by companies on exchanges other than the JSE decreased by 22% as compared to 2015, largely driven by relatively smaller Egyptian IPOs in 2016. IPO activity on the Egyptian Stock Exchange (EGX) decreased significantly – by 72% in terms of value of IPO proceeds – as companies delayed listing plans in anticipation of an improved economic outlook following the August 2016 announcement of a potential stabilisation programme by the IMF and the free float of the Egyptian pound in November 2016.

Elsewhere on the continent, there were some significant increases in IPO capital raised on exchanges in Ghana, Morocco and Botswana compared to 2015, due to partial privatisations of state-owned entities.

Coenraad Richardson, PwC Capital Markets Partner based in Johannesburg, adds: “The JSE retains the leading position in the African capital markets, with capital raised from IPOs by companies on the JSE representing 42% of the total African IPO capital and 34% of the total number of transactions since 2012.” In terms of value over the past five years, the next-largest value of IPO proceeds raised was on the EGX at $1.1 billion, followed by the Nigerian Stock Exchange at $751 million.

On a sector basis, the financial services sector continued to dominate the African IPO market during 2016 with 45% of total value and 55% of total volume, followed by consumer goods and industrials with a total value of 31% and 13% respectively.

African FO Market

Over the past five years, there have been 340 FOs raising $38.4 billion on both African and international exchanges. As was the case with the IPO market, FO activity was hit by a significant decrease in terms of transaction volume and value, down 27% and 34% respectively. Andrew Del Boccio, PwC Capital Markets Partner based in Johannesburg, notes: “The decline in FO activity after a period of sustained growth reflects many of the challenges and uncertainties in Africa and around the globe.”

In terms of geography, 85% of FO proceeds in 2016 were raised either by South African companies or by foreign companies listed on the JSE. However, the nature of these FOs shows a mixed landscape–a significant portion of funds were raised for business restructuring or divesture by foreign investors looking to monetise or exit their African investments, or by South African companies seeking to diversify their portfolios via acquisition of assets outside of Africa.

Both during 2016 and over the five-year period, the vast majority of FO activity was from sub-Saharan countries representing 78% and 81% in total FOs volume, respectively, and 96% and 95%, respectively of total FO value.

Between 2012 and 2016, FO capital raised on the JSE represented 87% of total African FO capital raised and 71% of total transaction volume. In terms of movements from 2015, Nigerian FO activity dried up, with no further offers in 2016, mainly as a result of the ongoing recession and exchange rate environment. Tunisia also saw a significant decline in activity based on value of proceeds raised.

On a sector basis, the financial services sector contributed 47% of total FO value, followed by the healthcare sector at 12%.

During the five-year period from 2012, average FO capital raised per transaction of $113 million remained well above the average proceeds raised from IPOs of $59 million, as a number of large, seasoned issuers, such as Naspers, Aspen, Mediclinic and Steinhoff, among others, tapped markets 17 times for proceeds in excess of $500 million; only one IPO, that of Seplat in 2014 exceeded the $500 million threshold.

African Debt Markets

Debt capital market (DCM) activity, in particular Eurobond activity, represents only a portion of the total debt raised in Africa, with a large component of debt funding sourced from traditional bank finance, other lending arrangements with investors or debt raised in local currency on local exchanges.

Eurobond activity by African corporates continued to decline in 2016, with investment grade and high-yield proceeds from Eurobond issuances falling by 21% to $4.5 billion, and the number of issuances by 53% to just seven, including some large issuances by South African telecommunications provider, MTN, and Nigerian telecommunications infrastructure company, IHS, which raised $800 million in sub-Saharan Africa’s largest-ever high-yield bond. Proceeds from all seven of these 2016 issuances were raised in US dollars.

Domestic debt markets also played a more significant role in the overall DCM story in 2016 than in previous years, particularly in Nigeria, as companies and governments across the continent retreated from risks related to foreign currency funding in 2016 and as global appetite for African debt securities declined.

Del Boccio concludes: “Despite challenging times, we expect to see improved conditions around capital markets activity in 2017, continuing the momentum built in the final two months of 2016, including an increase in ECM activity by companies on the JSE as well as by companies pursuing privatisation plans through the capital markets in Nigeria, Rwanda, Tanzania and the BRVM region.”

Source: https://asokoinsight.com/news/africa-has-raised-5-billion-from-ipos-over...

17 February 2017

Nigeria’s $1 billion Eurobond begins trading on the London Stock Exchange

By Ugo Obi-chukwu | Nairametrics

Nigeria’s $1 billion 15-year Eurobond started trading on the London Stock Exchange yesterday.
The Offer which was nearly eight times oversubscribed, with $7.7bn in orders, is the longest ever maturity for an international Nigerian issuance, highlighting strong international investor demand and demonstrating confidence in Nigeria’s economy.

“London Stock Exchange welcomes Nigeria’s $1 billion Eurobond to start trading in London today”, said a press release issued by the exchange yesterday.

Simon Kirby, the Economic Secretary to the Treasury, in the press release, said: “I am delighted that the Nigerian government has chosen London as the location to list its $1bn sovereign bond. This issuance underlines Britain’s position as the world’s leading global financial center and strengthens our economic and financial relationship with Nigeria.”

According to Ibukun Adebayo of the International Markets Unit, and Head of Middle East, Africa and South Asia, at the London Stock Exchange: “Nigeria’s choice of London Stock Exchange for its first international bond offering since 2013 underlines London Stock Exchange’s position as a leading global venue for debt fund raising and London’s enduring status as a market open to the world.

“The success of Nigeria’s bond listing is a strong statement of international investor interest in building exposure to Nigeria’s economy. It reinforces London Stock Exchange’s status as a strong partner to Nigeria and the City’s ability to provide a deep additional channel of finance for the development of Nigerian infrastructure and the growth of the economy.”

Source: https://asokoinsight.com/news/nigerias-1-billion-eurobond-begins-trading...

17 February 2017

African countries slow execution of renewable power sources

By Staff Writer | The Exchange

There are more than half a billion people who are living in darkness, having no access to electricity. The challenge is quite prevalent in the sub-Saharan Africa region, but the states have not lagged too much to make an effort to deal with the obstacle. The statistics made by World Bank report on Wednesday also noted that in the trail of world’s government policies that promote sustainable energy, the states are on the verge of lighting such regions.

Much of the rest of the world, however, has made strides toward making energy broadly available, developing renewable power sources and increasing efficiency, the inaugural Regulatory Indicators for Sustainable Energy report said.

In a survey of 111 countries, the World Bank found that through 2015 nearly 80 percent had begun to adopt policies to expand electrical grids, connecting them to solar and wind generation, and to help make electric utilities creditworthy and financially viable while keeping energy prices down.

More than a third of countries, home to 96 percent of the global population, were at an advanced stage and progress was not limited to rich countries.

Kenya, Tanzania, and Uganda outperformed their peers in access to energy, while Pakistan made progress on renewable energy, and Vietnam had developed policies on energy efficiency.

Yet the report showed “on the whole that African countries are scoring very poorly on the policy environment for energy access,” said Vivien Foster, the World Bank’s global lead for energy economics.

“As many as 40 percent of them are in the red zone, meaning they’ve barely begun to take policy measures to accelerate access to energy.”

There were bright spots on the African continent, such as South Africa, Tunisia, and Morocco, she noted.

UN member states in 2015 adopted a set of sustainable development goals to reach by 2030, including a guarantee of cheap, reliable, sustainable, and modern energy for all people.

The report, which will be updated every two years, said local authorities should use its findings to compare their policies to regional and global peers in efforts to meet the development goals.

Riccardo Puliti, head of the bank’s energy and extractives global practice, told reporters the global lender currently had a $1.6 billion portfolio to support energy access that was mainly focused in Asia and Latin America.

“But we are moving very strongly in Africa as well,” he said.

For the current budget year, the bank had set $260 million to carry out new projects for the off-grid power generation. The countries to benefit include Kenya, Rwanda, Niger, and Zambia, he added.

Source: https://asokoinsight.com/news/african-countries-slow-execution-of-renewa...

2017

February 2017

16 February 2017

South African investor laps up Zenith and Access Bank shares

By Mohamed Momoh | This Day, Nigeria

Allan Gray Ltd., the largest manager of non-government investment funds in Africa, has increased its stake in Zenith and Access Banks.

The South African investor, based in Cape Town, is betting on Nigeria’s banking industry despite poor performances by the oil companies it depends on and widespread calls for the naira to be further devalued, reported Bloomberg yesterday.

Allan Gray’s Chief Investment Officer, Andrew Lapping disclosed the investment move in a February 10 interview in Cape Town.

He didn’t say how big the holdings are or how many shares his company had bought in each of the banks.

“We see a lot of value in Nigerian banks,” Lapping said. “Most people think they’re all going to zero because of the bad debts. We think they will survive” because high interest rates make the banks profitable and they have less debts to equity compared with European lenders, he said.

Trading data for the month of January showed that 232.210 million shares of Zenith Bank valued at N3.605 billion were traded. Last December, 224.007 million shares worth N3.234 billion were traded.

In the case of Access Bank, 264.230 million units of the bank’s shares valued at N1.789 billion exchanged ownership in January while 171.570 million shares valued at N953.045 million were traded in December.

Access Bank’s Chief Executive Officer, Herbert Wigwe said last month that the bank’s non-performing loans were expected to climb to “slightly below 3 per cent of total loans by the end of 2017”.

That compares with 2.1 per cent for the nine months through September.

The banking industry is under stress in Nigeria, where the economy was in a recession during 2016.

Non-performing loans escalated to almost three times the regulatory maximum and foreign investors are calling for authorities to boost flexible trading of the naira before putting more money into the country.

An oil price at half its 2014 levels, combined with sabotage and attacks on oil installations that have cut output, has limited dollar supplies in the country, which vies with Angola as Africa’s largest crude-oil producer.

The bad-debt ratio at Nigerian banks rose to 13.4 per cent last year. The naira was devalued in June and traded at 315.50 to the dollar by 6.53 a.m. in Lagos yesterday, while the unofficial, black-market rate was 507 naira to the dollar.

The official exchange rate should fall to 370 by the end of the year, Craig Metherell, an analyst at Avior Capital Markets Ltd. in Cape Town, said in a February note to investors. Investors are frustrated by central bank policies, he said.

“Dollar illiquidity and the inability to predict the central bank’s decisions remains a constant deterrent to dollar-based investors,” Metherell said. “While we argue that valuations look cheap, we find it difficult to justify investing new money given the current status quo.”

But Allan Gray isn’t the only investor that’s interested in Nigerian lenders.

Laurie Dippenaar, chairman of Johannesburg-based FirstRand Ltd., Africa’s largest bank by market value, said last month that it’s looking to buy a mid-sized bank.

Diamond Bank Plc, Sterling Bank Plc and Wema Bank Plc were among mid-sized Nigerian lenders that plummeted more than 40 per cent last year as the domestic economy performed the worst since the 1980s.

“Everyone thinks the naira is going to weaken, but I’m not so sure,” Lapping said. “The bad-debt problem can cure itself over time.”

Nigerian banks are also attractive because of their small size — in an economy that vies with South Africa as the continent’s largest — adds to their growth potential, while lending as a proportion of equity remains low at 3.5 times, Lapping said. Still, the industry’s exposure to oil remains a concern, he said.

Guaranty Trust Bank Plc, Nigeria’s biggest bank by value, has a market capitalization of N715 billion ($2.3 billion), Access Bank is valued at about N194 billion and Zenith at about N475 billion.

FirstRand, on the other hand, has a market value of 293 billion rand ($22 billion).

The Nigerian Stock Exchange Banking 10 Index has climbed 0.7 per cent this year as gains by Access Bank, Zenith, United Bank for Africa Plc and Fidelity Bank Plc helped compensate for losses in the other six members of the gauge.

“Maybe we’ve dug ourselves into a hole” by investing in Nigerian banks, Lapping said. “Even if it’s 50-50, going bust or going up, the upside is so much that it’s worth the risk.”

Source:https://asokoinsight.com/news/south-african-investor-laps-up-zenith-acce...

16 February 2017

Nigeria yet to decide how much to borrow from World Bank

By Mohamed Momoh | This Day, Nigeria

The federal government has said it is yet to decide the amount it would borrow from the World Bank.

The Minister for Budget and National Planning, Chief Udoma Udo Udoma, disclosed this yesterday while fielding questions from State House correspondents after the Federal Executive Council (FEC) meeting at which Acting President, Yemi Osinbajo presided.

The meeting, which lasted till about 6pm was the longest in the history of this administration.

The World Bank loan is to be partly used to finance the 2017 budget.

When asked how much would the country be asking for from the World Bank, Udoma said: “The figure will depend on the (2017) budget approved by the National Assembly.”

Udoma’s response was a departure from the $2.5 billion the federal government had earmarked for borrowing from the World Bank under the three-year $30 billion foreign borrowing plan, which is still awaiting approval at the National Assembly.

The budget minister, however, admitted that funding constraints had made it difficult to release funds for capital projects.

However, he said due to the peace in the Niger Delta, revenue was beginning to improve.

He said: “Because of the funding constraints, the budget has a deficit, I travelled with the Minister of Finance and Central Bank of Nigeria (CBN) Governor to market the Eurobond.

“As you can see, the Eurobond was oversubscribed by about eight times, so the funds are coming in, there is more stability in the Niger Delta, so more monies are coming in.”
Udoma also said the council yesterday spent hours fine-tuning the Economy Recovery Growth Plan.

He also said the council had extension discussion on the plan.

According to him, the growth plan is still being fine-tuned.

The minister said: “But a lot of inputs were made by council members and it is virtually ready for the president to launch. However, we are doing some fine-tuning and during this period we also do some final consultation before the president launches the plan.”

He said the plan, when approved, is expected to drive economic recovery and lay the foundation for longer term growth as well as improve the competitiveness of the Nigerian economy.

The minister stated that jobs and social inclusion were also key focused areas of the plan.

He gave the immediate execution priorities of the plans as: agriculture and food security, energy-particularly power and petroleum product sufficiency, industrialisation- focusing on small and medium size enterprising, transportation which is very, very important as an infrastructure requirement to get the economy really moving, and stabilisation of the micro-economy environment.

The minister also said the council spent a lot of time looking at implementation.

Udoma said that one of the means of ensuring implementation was to have a delivery unit which he said would be in the presidency.

He gave the key principles of the plan as: Tackling constraints to growth, leveraging the power of the private sector. This is very important. This is why we have been having extensive consultations and discussions with the private sector, promoting national cohesion and social inclusion, allowing market to function, approving the core value for which this country stands.

Udoma, however, insisted that the plan was still being fine-tunined.

Also yesterday, FEC approved N126 billion for the construction of twelve roads mostly in the northern part of the country.

Minister for Power, Works and Housing, Mr. Babatunde Fashola, who announced the approval for the roads said the projects are located in Kaduna, Kano, Bauchi, Adamawa, Kwara, Gombe, Adamawa, Enugu States.

Fashola said awarding the contacts would help to reflate the economy.

He said: “The headline figures are in the region of N126 billion but I think that Is not the story, the story really is what the award of those contracts will do to the economy. It will restore confidence to the construction industry.”

Source: https://asokoinsight.com/news/nigeria-yet-to-decide-how-much-to-borrow-f...

16 February 2017

GE partners with transnet to digitise African transport

By Antony Kiganda | Construction Review Online

GE Transport and Transnet, South African-based freight logistics chain have gotten into a partnership to digitise African transport.

The move will enable a flawless link of shippers and transport operators in streamlining pricing and capacity on the network, shipment planning, fuel costs savings and distribute goods to the market more efficiently.

GE Global Chairman and CEO, Jeff Immelt said: “The digital joint venture we’re getting in with Transnet will not only advance Africa’s transport sector, but release huge opportunities for the supply chain stimulating Africa’s economy.”

Siyabonga Gama, Transnet’s Group Chief Executive said: “Disruptive innovation has become the new catchphrase for good reason. Innovation generates new markets and basically changes the way we live and work. The joint venture with GE Transport is enabling us to form a new industry and build up new skills that have the possibility to change the world as we know it.”

As a worldwide digital industrial leader and dealer of equipment, services and solutions to the rail, mining, marine, power and drilling industries, GE Transport will help Transnet to deliver goods and services with better speed and efficiency through the provision of necessary data required through Predix – GE’s cloud-based operating system for the Industrial Internet of Things.

The timing of this scheme falls in line with the vigorous growth taking place across Africa. Since 1995, Africa’s trade has almost doubled, placing huge logistical pressure on present transport infrastructure.

As it stands, managing the diverse transport routes and developing new infrastructure is difficult. GE’s innovative solution will bring simplicity to payment processes, goods management, customs inspections and lessen the trouble of a paper-based environment.

GE is encouraging development across the sectors of aviation, healthcare, transport and power as sectors that are increasingly being occupied by software companies, technology companies and industrial companies. “This joint venture is GE’s chance to take the new technology that we will develop in South Africa and launch it to the rest of Africa,” said Immelt.

Digitalization in Africa is necessary to driving growth on the continent. It plays a major role in motivating inter-Africa trade. This isn’t the first time GE and Transnet have partnered.

The two bodies have partnered since 2009 to produce and distribute more than 230 Evolution Series diesel electric locomotives, such as the “most African” locomotive, which attributed 55% locally produced content.

The move by GE to digitise African transport comes at a time when experts says transport in Africa is disorganized and poorly managed.

Source: https://asokoinsight.com/news/ge-partners-with-transnet-to-digitise-afri...